Influence of Strategic Corporate Social Responsibility on Competitive Advantage in Commercial Banks in Kenya

Abstract

In contemporary years, scholars and executives alike have dedicated their attention to the implication of corporate social responsibility practices as well as their relationship to a strategy which has led to Kenya banks devoting time in it. The banking industry is highly competitive and dynamic sector owing to globalization, technology advancement, privatization of public banks and the deregulation of financial services. Therefore, to curb these challenges and be sustainable in the fragile business environment, banks have shifted their focus toward strategic corporate social responsibility. Banks today engage in CSR with a strategic intent as it is considered to be a lasting investment that leads to improved competitive advantages, reputation, customer relations, and employee retention. Hereafter, CSR is considered to be a part of the strategic management field. Therefore, this study purposed to investigate the influence of strategic corporate social responsibility on competitive advantage in commercial banks in Kenya. It mainly focused on Strategic CSR Resources, Strategic CSR communication, strategic CSR Firm approach, Strategic CSR Stakeholders, and bank size as a moderating variable. The study results should assist commercial banks managers to strike a balance in strategic corporate social responsibility. A descriptive cross-sectional survey was used to collect data. The target population was 305 branches within Nairobi County, a sample size of 170 branch managers or community champions. Branch managers or community champions were administered with questionnaires in banks within Nairobi County which formed our sample size. Reliability was tested using Cronbach’s alpha test to analysis the hypotheses developed for the study and appropriate statistical tests. This was achieved through structural equation modeling, correlation analysis, multiple and simple linear regression analysis, and lastly ANOVA. Data were processed through the use of SPSS and presented in pie charts, bar charts, and tables. The correlation coefficient was used to determine the nature of the relationships. The correlation coefficient between strategic CSR dimensions namely, Resources, communication, Firm Approach, and stakeholders was found to be significant. The study found that resources were oversupplied and were not having significant effect on competitive advantage. The research confirmed that strategic CSR communication significantly influences competitive advantage in commercial banks in Kenya. The study found that firm approach significantly influences competitive advantage in commercial banks in Kenya and lastly the study found out that strategic CSR stakeholder significantly influences competitive advantage in commercial banks in Kenya. Bank size does not moderate strategic CSR factors and competitive advantage except for strategic CSR Resources. The study, therefore, recommended that commercial banks in Kenya should not oversupply resources to allow them to remain competitive. Commercial banks in Kenya should continuously design good channels of communication. Internal and External communication should be clear and understood by every stakeholder. Managers and leaders in the sector should take emphasis on carrying out more research and development to come up with more innovative strategies to remain competitive enough. Core business integrated to CSR strategies place the banks way ahead of the competition and need to be looked into by the top management of commercial banks in Kenya. Top management in commercial banks in Kenya should allow employees to come out with innovative strategies and be part of the implementation. Customers should be involved in carrying out major CSR activities for this leads to customer retention and feel that they are part and parcel of the organisation. Top management agenda should be to maximize the shareholder’ wealth while also increasing total value adds and this comes from stakeholder involvement. This study recommended further research should be done in commercial banks in Kenya to investigate strategic CSR activities that have the greatest influence in building competitive advantage.The study also recommends the same study to be carried out on other sectors.