Effect of Corporate Social Responsibility on Organizational Profitability in the Case of Vision Fund Micro Finance Institution North West Area”.

Abstract

This study's main purpose was to examine corporate social responsibility's effect on organizational profitability in the case of Vision Fund MFI S.C North West Area. To achieve the research objectives, the researcher employed both descriptive and explanatory research designs. The study used both primary and secondary data sources and as well as quantitative research approach was used. Structured questionnaires were used to gather data from the targeted group of the study, and both probability and non-probability sampling technique was employed. Five Likert scale structured questionnaires were used for data collection. The validity and reliability of the questionnaire were checked by using the pilot test and Cronbach's alpha test, respectively. The study targeted employees and potential customers of Vision Fund MFI North West Area. The Yamane sample size formula was used to obtain 255 respondents from company employees and potential customers. Data was collected using a closed-ended questionnaire. The collected data were presented and analyzed using the SPSS Software Statistical Package for Social Science. Data collected were coded and analyzed using both descriptive statistics (frequency, percentage, mean, and standard deviation) and inferential statistics (Multiple regression and Pearson correlation) with the help of the Statistical Package for Social Science (SPSS). Philanthropic activity and legal activity have a strong effect on the dependent variable while economic activity and ethical activity have a moderate effect. The study showed that philanthropic activities, ethical activities, legal activities, and economic activities affect organizational profitability, have a positive relationship, and are statistically significant. The microfinance should consider establishing a separate department for CSR, which is responsible for formulating policy and strategy of CSR and its integration with the daily operations of themicrofinance. As Vision Fund Micro Finance is the leading and the first profitable private microfinance in the country, it should enhance its reputation and goodwill by achieving CSR and that will help the company to retain its reputation and attract more customers leading to better profitability for microfinance.