Institutionalizing corporate social
responsibility (CSR) in Uganda: does it
matter?
Stephen K. Nkundabanyanga and Alfred Okwee
Abstract
Purpose – The purpose of this study is to establish the relationship between CSR, managerial
discretion, competences, learning and efficiency and perceived corporate financial performance in
order to establish the legitimacy and value of CSR, taking managers’ perspectives in Uganda.
Design/methodology/approach – The study used quantitative, correlation and regression analyses
and collected primary data through a structured questionnaire on a sample of 100 firms.
Findings – The results indicate that managerial discretion and competences, learning and efficiency
are significant predictors of perceived corporate financial performance, but CSR is not. However, the
results show serendipitously that managerial discretion’s predictive potential of perceived corporate
performance is moderated by CSR.
Result limitations/implications – The study focuses on corporate social responsibility, a concept not
very well appreciated and only understood as philanthropic and not really viewed as a means for
improved financial performance in Uganda.
Practical implications – Our study implies that while upholding the ideals of CSR, companies in
Uganda need to enhance managerial discretion in their contracting process and develop competences,
learning and efficiency in order to impact positively on performance.
Originality/value – This study contributes to the dearth of CSR literature on the African experience by
examining the perceptions of managers on CSR’s predictive potential of corporate financial
performance in Uganda.
Keywords Corporate social responsibility, Managerial discretion, Competences, Performance, Uganda
Paper type Research paper
Introduction
Shareholders, investors and stakeholders at large make most of their investment decisions
based greatly on the financial performance (Boron 2000). One construct that may predict
corporate financial performance is corporate social responsibility (CSR). CSR is the
continuing commitment by a business to behave ethically and contribute to economic
development while improving the quality of life of the workforce and their families as well as
of the local community and society at large (Moir, 2001). However, there is a protracted
debate about the legitimacy and value of corporate responses to CSR concerns. For
example, Murphy (2005) described CSR as being ‘‘little more than a cosmetic treatment’’ but
Santiago (2004) reports advantages of practicing CSR, just as Waddock and Graves (1997),
Hillman and Keim (2001), Verschoor and Murphy (2002) find that increased CSR leads to
enhanced financial performance.
Accordingly, some management literature suggests that strategic leadership needs
discretion, which is seen as an important condition for rational choice and change in
transforming a desired policy into reality (Espedal, 2006); hence management is free to
choose its own constraints (Espedal, 2006). Managers make decisions related to skills,
resources, and practices that facilitate an organization’s well-being in the short term as well
DOI 10.1108/17471111111175209 VOL. 7 NO. 4 2011, pp. 665-680, Q Emerald Group Publishing Limited, ISSN 1747-1117
j
SOCIAL RESPONSIBILITY JOURNAL
j
PAGE 665
Stephen K.
Nkundabanyanga is a
Lecturer and Head of the
Department of Accounting
and Alfred Okwee is an
Assistant Lecturer, both in
the Department of
Accounting, Faculty of
Commerce, Makerere
University Business School,
Kampala, Uganda.