Proposal on appraisal of the impact of Corporate Social Responsibility on Organizational Image and Performance in the Banking Sector in Istanbul
- Project summary
An organization with moral obligation towards its customers and employees has a more positive image of itself in the community. Corporate social responsibility has the ability to improve the attractiveness of the corporate image, improving the performance and effectiveness on their activities (Arendt & Brettel, 2010 ).
Corporate social responsibility (CSR) has received attention in the business environment. Federick et.al (1992) stated that organization must be responsible for their action on the environment. Corporations believe that carrying out a CSR strategy will aid them in building a good reputation, which will help them stand out in their market (Kotler & Lee, 2005; Fombrun & Shanley, 1990). More corporations start to believe that CSR strategies can be a key to business success (Lichtenstein, Drumwright, & Braig, 2004). However, only a limited amount of research has been done on how CSR strategies actually have an impact on financial performance. This was due to the traditional view towards CSR, they believed that no dimension of CSR could add value, and thus for a long time CSR strategies were not seen as a possibility to increase profits (Edmans, 2014). Recently, this view changed and CSR strategies are now seen as a way to increase profitability, which increased the interest in CSR policies within corporations and increased the amount of research on the effects of CSR on performance (Giannarakis & Theotokas, 2011). Corporate social responsibility is applicable to almost all organization but the banks are keener to these programmers as they have to do extra in order to satisfy their multiplicity of stakeholders. According to Nwankwo (1991) he points the advantages of CSR as, maximizing profit to shareholders who are the real owners of the business, maintaining optimal liquidity for depositors, complying with regulators demand, Satisfying the deficit sector demand for credits, contributing to the development of the economy and Satisfying the needs of the immediate community in which they operate. However, the turmoil related to the last financial crisis resulted in a reconsideration of the impact of banks’ management on sustainable development of countries. Furthermore, over the years, many financial institutions (92 from 37 countries at April 2018) have decided to adopt the Equator Principles that were formally launched in 2003 for determining, assessing and managing environmental and social risk in project finance.
As asserted by Scholtens (2009), socially responsible banking is becoming a well-established concept, which binds the bank’s license to operate to the ability of remunerating the investors, without neglecting expectations of the community. CSR is also practiced because customers as well as governments today are demanding more ethical behaviors from organizations. In response, corporations are volunteering themselves to incorporate CSR as part of their business strategies, mission statement and values in multiple domains, respecting labor and environmental laws, while taking care of the contradictory interest of various stake holders according to Kashyap et al( 2006).
Another justification in favor of CSR actions by the leading corporations today is to gain competitive advantage which may not be enjoyed by the peer corporations. CSR actions in this respect also help corporations to attract and retain not only customers but also motivated employees, which in turn ensure longterm survival of the corporation. Drumright (1996) supported that companies with sound CSR actions developed positive social identity and enjoyed increased loyalty from both customers and employees. CSR actions are also often associated with better financial performance of the organizations. Margolis et al. (2001) has found significant positive relationship between CSR and corporate financial performance; Research has shown that companies that care for the environment and exhibit good CSR practices experience increased consumer purchase preference in addition to increased investment appeal according to Gildea (1994) and Zaman et al (1996).
The researcher used descriptive research survey design in building up this project work. The choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to appraisal of the impact of corporate social responsibility on organizational image and performance in the Banking Sector in Istanbul,
The researcher will employ oral and direct interview in administering this research questions. Responses from the respondents were needed unlike questionnaires, which is less rewarding due to late receipt and loss of responses from respondents. The method of data analysis that will be used by the researcher is the simple percentage. More so, percentage and degrees of the responses will also be used in the analysis. Here, the ratio of those whose responses were not in the affirmative will be found and conclusions will be drawn there upon. Representations of the level of responses will be made in tabular form
Banks cannot do this alone without involving the community who are the customers. For them to produce relevant services and products, they must carry out a study to get information from their customer on their perceptions towards their business operations particularly their quality of services rendered to increase customer satisfaction and ultimately their loyalty by offering a variety of products according to customer’s expectation.