The Determinants of Corporate Social Responsibility: The case of Surrounding Finfine Oromia Special Zone

Abstract

The purpose of this study is to examine the determinants of CSR: the case of Oromia Special Zone Surrounding Finfinnee. Regarding CSR, prior studies were limited to customer and employee satisfaction and neglected the local community's worth of research findings. The study used both primary and secondary sources of data. A multistage purposive, proportional probability system, stratified simple random sampling technique was employed to select 154 samples, while 143 respondents responded to the questionnaires. The data collected were analyzed by descriptive statistics and inferential statistics (Logit econometric model) analysis.

In line with the general conceptual understanding of CSR, the result of the finding reveals that the majority of respondents did not have a detailed understanding of the subject. Regarding practices applied by firms, findings reveal only one third of companies were committed to engaging in CSR. Financial donations based on requests, supporting infrastructural development, sponsoring social events and cultures, and employment opportunities are most of the activities that are implemented by firms.

The study investigated that firm size, profitability, media pressure, age of the company and legal environment variables are statistically significant at 5 percent level of confidence keeping other things constant holding their expected positive signs. While the company's diverse board of directors and family ownership are statistically significant at a 10% level of confidence, keeping other variables constant is a positive expected sign. Among explanatory variables, industry type was not statistically significant. Based on the study results, the researcher recommends that there should be regular dialogue and communication to enhance the understanding of CSR. Policymakers should give due attention by formulating legal bindings and motivating stakeholders through the media. Moreover, companies should be obliged to disclose their CSR implementation at regular intervals of time.