CHAPTER ONE

GENERAL INTRODUCTION

1.1. Background to the Study

Microfinance institutions are usually small individual owned or family managed businesses offering basic goods and services. Micro enterprises tend to lack organisational and management structures, and are generally characterized by uncertainty, innovation and evolution. Micro enterprises are mostly sole proprietors and partners, and only few are registered as limited liability companies. It generally has a simple management structures, and in most cases the owner is a manager. With few employees who in most cases lack appropriate skill and competences. Given the simple management structure and extensive dependent on the owner, the lifespan of the enterprise is often dependent on the longevity of the owner and his/her interest in continuity the business.

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. By practicing corporate social responsibility, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.

It’s now recognized that sustainable development and reduction of poverty are the key issues that need to be addressed by the governments, mostly in the developing world. However, the government cannot meet this alone without the help of the private sector. Policy makers are paying much attention to the potential contribution of the private sector to such policy objectives. As the issue of sustainable development becomes more important, CSR becomes an element that addresses these issues and therefore it becomes more vital in the daily operations of the organizations .CSR is being used today to establish good rapport with the public according to Nolan, Norton and Co. It is also used as pre-emption strategy by the corporations to save their skin from unforeseen risks and corporate scandals, possible environmental accidents, governmental rules and regulations, protect profits making, brand differentiation, and better relationship with employees based on volunteerism terms. Corporations today are much conscious to publish their CSR activities on their websites, sustainability reports and their advertising campaigns in order to get the sympathy of the customer. CSR is also practiced because customers and governments today are demanding more ethical behaviours 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 labour and environmental laws, while taking care of the contradictory interest of various stake holders according to Kashyap .Another justification in favour 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 organisation to attract and retain customers as well as motivate employees, which in turn ensure long-term survival of the organisation. Drumright 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. 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 and Zaman .So, the significance of CSR to the organizational operations inspires the researcher to take a closer look at the impact of corporate social responsibility on organizational performance

1.2. Problem Statement

Corporate social responsibility (CSR) is viewed as a vital concept that businesses of all types and sizes need to understand. As organisational performance continues to follow momentous trends, CSR is proposed as an effective strategy for invigorating the operations and performance of small and medium size enterprises (SME). CSR has become increasingly important to the performance of small and medium-sized enterprises (SMEs).CSR has progressively gained acceptance and prominence both as a business tool and as a contribution to social progress. A positive relationship between the CSR activities of SMEs and their enhanced performance exists, at least if a long-term perspective is adopted. To continue experience organisation performance, business managers must determine how their businesses can become socially responsible, ecologically sustainable and economically important. Both business and society gain when a business actively strives to be socially responsible .Although CSR has been discussed mainly in the context of larger enterprises; it is also a strategic tool for enhancing the growth of SMEs. There are basic CSR issues that all businesses, irrespective of their size, have to respond to, such as the creation of a good working environment where diversity is encouraged, fair distribution of wealth in a community, protection of the environment, market innovations and ethical practices.

In spite of the continual public pronouncements about their assumed importance as instruments of development, SMEs in many Microfinance institutions still lack effective knowledge of promoting organisation performance techniques such as CSR. Micro enterprises may also face some negative challenges like low income earning due to their continue effort in enhancing the society and the environment, poor revenue return and inadequate capital when their efforts are more  directed toward helping the society.

It was important to show the various reasons why the CRS affected the organisational performance, the way it affected the society and environment which will end up hindering performance of MFIS.

1.3. Research Questions

1.3.1 Main Research Question

What is the effect of corporate social responsibility on organisational performance of micro finance in Bamenda the case of BAPCCUL?

1.3.2 Specific Research Questions

1. What is the effect of environmental responsibility on organisational performance of micro finance in Bamenda the case of BAPCCUL?
2. What is the effect of ethical responsibility on organisational performance of micro finance in Bamenda the case of BAPCCUL?

• What is the effect of economic responsibility on organisational performance of micro finance in Bamenda the case of BAPCCUL?

1.4. Objectives

1.4.1. Main Objective

The main objective of the study is to examine the effect of corporate social responsibility on organisational performance of micro finance in Bamenda the case of BAPCCUL

1.4.2. Specific Objectives

In order to carry out the study, the following specific objectives were put forth:

1. To analyse the effect of environmental responsibility on organisational performance in micro finance in Bamenda the case of BAPCCUL
2. To examine the effect of ethical responsibility on organisational performance in micro finance in Bamenda the case of BAPCCUL

• To evaluate the effect of economic responsibility on organisational performance in n micro finance in Bamenda the case of BAPCCUL