Effect of Strategic Corporate Social Responsibility on Competitive Advantage of the Banking Sector in Kenya

Abstract

The purpose of the study was to investigate the effect of strategic internal corporate social responsibility on organizational competitive advantage of the banking sector in Kenya. The specific objectives of the study were to; determine the effect of organizational competencies on organizational competitive advantage, examine the effect of organizational resources on organizational competitive advantage, evaluate the effect of organizational citizenship behaviour on organizational competitive advantage, examine the effects of organizational ethics on organizational competitive advantage, and to determine the moderating effect of organizational policies on the relationship between internal corporate social responsibility and organizational competitive advantage in the banking sector in Kenya. The study employed explanatory research design. The survey was carried out in 25 banks within Eldoret town, Uasin - Gishu County. The target population was 748 respondents. A two stage sampling technique was used whereby cluster sampling techniques was used to select the banks, thereafter; simple random sampling was a used to select sample of 261 respondents from a population. Sample size was calculated using Yamane formula and distributed within the clusters according to Neyman allocation formula. Structured questionnaire was used to collect primary data while secondary data was obtained from published sources such as library, internet and research done by other scholars. A pilot study was undertaken at Kenya Women Finance Trust (KWFT) and Agricultural Finance Corporation (AFC), both based in Uasin - Gishu County. Validity and reliability tests were conducted on the pilot data. Validity test was done using Principal Component Analysis (PCA) to extract the factors. The research instrument was tested for reliability using Cronbach Alpha. Data was analysed using descriptive and inferential statistics. Descriptive statistics like frequencies, mean and standard deviation were used. For inferential statistics Pearson Correlation, ANOVA and Multiple Regression were used. Findings were presented using figures and tables. The overall regression model was significant thus a joint contribution of all the predictors of CSR was significant in predicting organizational competitive advantage with organization policies as a moderator. For all the five variables, there was a probability of R2= 0.754 which means there was 75.4 percent probability of CSR predicting competitive advantage without moderation at 5% level of significance. With a moderator R2 is .760. Organization competencies had the highest B values of .267, while Organization citizenship behaviour B =.253, Organization resources B=.122, Organization ethics B=.097 all of which were positive. All the study variables had a positive and significant correlation with competitive advantage. Organization competencies =.787 organization resources =.796, Organization citizenship behaviour =.714 Organization Ethics =.727. In conclusion banks should embrace CSR practices and strategically align them to organization policies for competitive advantage. The study recommends that all the predictors of CSR should be ingrained in the organization policies to foment competitive advantage.