Corporate Social Responsibility and its impact on profitability (A case study of Oil MNCs in Ethiopia) (TOTAL, OILIBYIA, AND KOBIL)

Abstract

The study examined the relationship between CSR and profit and the impact of CSR on profitability of the selected Oil and Gas distributing Multi-National Companies in Ethiopia. The objective of the study was to determine if there is any significant relationship between social responsibility cost and corporate profitability in the selected business firms. The study was based on the stakeholder theory of social responsibility which emphasized the need for a corporate organization to satisfy the requirements of various interest groups. Exploratory research design was employed together with correlation method to test the hypothesis and determine whether there is significant relationship between social responsibility cost and corporate profitability in the selected firms. Findings revealed relationship between social responsibility cost and corporate profitability. Therefore, the study concluded that social responsibility is vital to organizational performance. It is recommended that firms in Ethiopia endeavor to increase their commitment to social responsibility by allocating funds proportional to their income in social responsibility schemes. Business organization should make efforts to organize and assign a responsible section and staff to carry-out and periodically report status to internal and external stakeholders. Government authorities and civic groups should periodically assess the CSR activities of business operations to ensure adherence to various laws and guidelines.