Impact of Corporate Social Responsibility on the Performance of Manufacturing Firms in Nigeria

INTRODUCTION Background of the StudyCorporate social responsibility (CSR) has become a global issue today and has been adopted by companies to help them face pressure from stakeholders and increase their competitive advantage and superior performance (Jenkins 2009, Torugsa et al. 2012).Several studies have shown different findings in analysing the relationship between CSR and firm performance.Babalola (2012), Mishra and Suar (2010), Teimouri et al. (2011) revealed a positive relationship between CSR and firm performance.Here CSR activities involved external perception on the firm.Surroca et al. (2010) and Maduenoa et al. ( 2015) also indicated that maximizing the firm"s intangible resources as a mediating factor will improve CSR influence on the firm"s performance.Olowokudejo et al. (2011) Olusanya et al. (2012), and Okwemba et al. (2014) on the other hand, emphasized that there is no relationship between CSR and firm"s performance.Maduenoa et al. (op.cit) stated that CSR indicates a very close reciprocal relationship between firm and stakeholders.Therefore, the relationship of CSR can be mediated by relationship capacity to improve the firm performance.The relational capacity can be done through active involvement of a community in CSR programs of firm"s activities and hence, be beneficial to the community.The CSR practice of manufacturing industries focusing on environmental issues in order to reduce negative effects of the firm"s activities and hence be beneficial to the community.The CSR practice of manufacturing industries focusing on environmental issues need the involvement of environmental management (Post et al. 2011).For a manufacturing firm whose activities require the involvement of wider community, whether as Abstract: Manufacturing firms contribute to environmental pollution and social costs in Nigeria today.To pay back to society and also increase long-term performance and stakeholder trust, manufacturing firms undertake corporate social activities in communities they are located.This study examines the impact of Corporate Social Responsibility (CSR) on the performance of manufacturing firms in Nigeria.A casestudy of Ariaria shoe making and footwear company ltd, Abia State, Nigeria (2005-2006).An ordinary least square regression is applied to annual aggregate data to determine the type of relationship that exist between the dependent and independent variables.A simple linear regression model is used in this study.The dependent variable is the performance indicator while the independent variable is: corporate social responsibility expenditure (ECSR).The financial performance indicators include: Profit after tax (PAT), Asset Financial Value (AFV) and Return on Investment (ROI), while the non-financial performance indicators are; Average Manufacturing Capacity Utilisation (AMCU), Employee's Productivity rate (EMR) and Company's output rate (COR).The technique used in estimating the parameters of the specified model is the Ordinary Least Squares (OLS) estimation method.The results of this study show that Corporate Social Responsibility Expenditure (ECSR) has a positive and significant impact on the Financial and non-financial Performance of Manufacturing Firms.A number of recommendations are made based on the research questions, research objectives and research findings prominent among them is the need for increased spending on CSR to improve the symbiotic sustainable relationship between CSR activities and firms' performance.