27

Impact of Corporate Social Responsibility

Practices on Marketplace Performance:
Evidence from Nepalese Banking Industry

Bal Ram Chapagain, PhD1

Abstract
This study, first, identifies the status of corporate social responsibility (CSR) practices
vis-à-vis key stakeholders and then examines whether such practices impact marketplace
performance of firms in the context of Nepalese banking industry. Perceptual data
on CSR practices and marketplace performance were collected from 131 executives
& managers including CEOs through questionnaire survey. Adequate measures
were taken to ensure validity & realiability of the study. Results indicate that CSR
practices toward customers is relatively good and CSR practices toward employees
is satisfactory whereas CSR practices toward community and environment is below
average. Likewise, there is a positive impact of CSR practices on customer attraction
& loyalty, firm’s reputation and stakeholder relationships when confounding effects of
firm’s size and firm’s age are statistically controlled. Moreover, findings also indicate
that CSR practices toward customers, CSR practices toward employees, firm’s size and
firm’s age are relatively important variables than CSR practices toward community and
CSR practices with respect to environment in explaining the marketplace performance
of firms in the context of Nepalese banking industry. Thus, this study further addresses
the concern often expressed by skeptics about the value generated by CSR practices.

Keywords: Corporate social responsibility, CSR practices, marketplace performance,

Nepalese banking industry, stakeholders

Introduction
Corporate social responsibility (CSR) is no longer an unknown phenomenon in Nepal
these days. Several researches have been done in this area particularly in recent
years. Still, researches exploring the relationship between CSR and marketplace
performance is quite scant. Current research on CSR in Nepal is mostly limited to
managers’ attitudes towards CSR (Chapagain, 2013), and status of CSR (SAWTEE &
ECCA, 2010; Adhikari, 2012) without linking it with firm performance particularly the
marketplace performance. This study intends to fill that gap. The research framework
is partially based on the past studies (Stephenson, 2009; Mishra & Suar, 2010; Peloza

1 Dr. Chapagain is a Lecturer at Central Department of Management, Tribhuvan University, Kathmandu

Nepal.
28 The Nepalese Management Review Special Issues on International Conference

& Shang, 2011) but it has been carried out in a different country, in a different time
period, and using different measures. Such replications are helpful in rebuilding the
confidence of researchers and practitioners on earlier findings.

Review of Literature

Measures of CSR
There is no general agreement regarding the basis of measurement of CSR practices
(Hopkins, 2003). Consequently, existing studies have used diversity of measures
for CSR practices. Some studies particularly in the west have used various social
performance index such as CEP index (Spicer, 1978), KLD index (McWilliams &
Siegel, 2000) and KEJI index (Choi, Kwak & Choe, 2010). Likewise, another popular
measurement tool of CSR is Carroll’s CSR construct (Shum & Yam, 2011). Besides,
some studies have used content analysis of annual reports (Mwangi & Jerotich, 2013),
charitable contributions (Lev, Petrovits & Radhakrishnan, 2010) etc. as a proxy of
CSR. However, CSR practices vis-à-vis key stakeholders of business and environment
is probably the most widely used measure of CSR. Many scholars have adopted this
method particularly in recent times (Sweeney, 2009; Mishra & Suer, 2010; Park &
Ghauri, 2015; Yusoff & Adamu, 2016).

Impact of CSR Practices on Marketplace Performance

The marketplace performance is frequently portrayed as one of the most important
sources of competive advantage for modern businses. It mainly includes the firm’s
ability to attract customers & make them loyal, business reputation and relationships
with marketplace stakeholders such as customers, suppliers, competitors and the
media. Overwhelming research evidence have shown positive relationship between
CSR practices and marketplace performance but it is not yet fully established.

Pivato, Misani and Tencati (2008) found that customer perceptions that a company is
sociallly responsible are associated with a high level of trust in that company and its
products. This ultimately leads to increased sales and customer loyalty. Likewise, a
study of 130,000 online survey respondents found that 53% of people are willing to
pay more for socially responsible products (Williams, 2005). But, Carrigan and Attalla
(2001) argue that although consumer express a desire to support socially responsible
firms and punish irresponsible firms, their actual puchase behavior often remains
unaffacted by social & ethical concerns.

Likewise, Branco and Rodrigues (2006) noted that when firms are able to demonstrate,
by communicating effectively with a wide range of stakeholders, that they operate in
accordance with the social and ethical criteria, they can build a positive reputation,
whereas failing to do so can be a source of risk to their reputation. In line with the
 Impact of Corporate Social Responsibility Practices on Marketplace Performance: Evidence ... 29

same argument, Wang (2008) found that positive CSR news has a positive effect on
a corporation’s image & reputation but the negative effect of negative CSR news is
much more extensive. However, Brammer and Pavelin (2006) have slightly different
observations. They found that different types of CSR practices have varying reputational
impacts and that these impacts are contingent upon size of the firm, age of the firm and
the industry sector in which the firm belongs to.

Scholars argue that CSR is also instrumental to foster stakeholder relations, which
ultimately creates value for both business and society (Freeman, 1984; Porter &
Kramer, 2006). In the similar vein, a study conducted by Sen, Bhattacharya and
Korschun (2006) revealed that individuals tend to purchase products, seek employment
and invest money in socially responsible firms condition provided they are aware of
responsible business practices.

Conceptual Framework and Statement of Hypotheses

Based on the review of literature and the research gap particularly in the Nepalese
context, a conceptual model or framework has been developed. Figure 1 depicts
the framework for examining the impact of firm’s CSR practices on its marketplace
performance in the context of banking industry of Nepal.

The conceptual model proposed here comprises various aspects of CSR practices as
independent variables, firm’s marketplace performance as the consequences of of
CSR practices, various hypotheses indicating the hypothesized relationships between
CSR practices and marketplace performance, and the control variables that confound
the relationships between CSR practices and marketplace perforamnce.

• Firm’s Size (totalassets)

• Firm’s Age (in years)

CSR Practices
Marketplace Performance
H1
Customer Attraction & Loyalty
• CSR – Employees
H2
• CSR – Customers Firm Reputation
• CSR – Community H3
Stakeholder Relationships
• CSR - Environment

Figure 1: Conceptual Framework for Examining the Relationships between

CSR Practices and Marketplace Performance in Nepalese Banking Industry
30 The Nepalese Management Review Special Issues on International Conference

The hypotheses are mainly based on the theoretical underpinings (such as stakeholder
theory and share value approach) as well as the overwhelming past research evidence
indicating the positive relationship between CSR practices and firm’s marketplace
performance. The various hypotheses, thus, stated are as follows.

H1: There is a positive relationship between firm’s CSR practices and its ability to
attract customers and make them loyal to the firm.

H2: There is a positive relationship between firm’s CSR practices and its reputation.

H3: There is a positive relationship between firm’s CSR practices and its ability to
promote relationships with different marketplace stakeholders.

Research Methodology

Population and Sampling Framework

The population of the study consists of 158 companies listed in the NEPSE which
provide banking services (viz., commercial banks, development banks and finance
companies) in Nepal. In total, 151 questionnaires were handed over to executives
& managers. Of which, 131 questionnaires were dully filled in and returned. Thus,
the overall response rate is 86.7%. Note that, the unit of analysis in this study is
organization represented by one of the senior executives or managers, and the sample
size is adequate as per the generalized scientific guideline for sample size decisions
suggested by Krejcie and Morgan (1970).

Data Collection Method and Instrument

Questionnaire survey method was used to collect data on CSR practices and marketplace
performance of sample firms. This method was employed mainly due to the lack of
objective data on CSR practices and firm’s marketplace performance prepared by
independent agencies in Nepal. The structured questionnaire was designed in line with
the research questions raised in closed and scaled format. The questionnaires were
annonymous, and thus there was no reason to present a more favorable (or unfavorable)
picture than is in fact the case. The questionnaires were designed in English, because
the respondents of this study were CEOs or senior level executives/managers who
usually have good command in English and, additionally, some CSR and performance
related terminologies are better understandable in English.

Validity and Reliability

The data collection instruments & procedures, the data itself, and the overall
methodology should be both valid and reliable. Validity suggests truthfulness whereas
 Impact of Corporate Social Responsibility Practices on Marketplace Performance: Evidence ... 31

realiability indicates consistency (Neuman, 2006). The various measures taken to

ensure the validity of this study are briefly discussed as follows.
• The survey questionnaires were anonymous. Thus, there was no reason to
provide biased information.
• The survey questionnaires were developed after extensive review of literature
and finalized only after pretesting with actual respondents (i.e., managers),
experienced academics and experts in the field.
• After collecting data through survey questionnaires, they were edited for
accuracy, legibility and consistencies.
• The number of cases or sample size in this study is 131, which confirms the
sample size requirement: N > 50 + 8m (where m = number of independent
variables) for regression analysis as suggested by Tabachnick and Fidell
(2001, p. 117).
• Assumptions of normality, linearity, homoscedasticity and independence of
residuals were tested in order to make sure that the statistical tools used for
data analysis are appropriate. Data transformations were done with care – as
needed.
• Additionally, the Pearson correlation coefficients among items under all
CSR as well asmarketplace constructs revealed that the items under the same
construct are significantly positively correlated with each other, which implies
that all items in a particular construct are revolving around the same central
idea or theme.

Likewise, appropriate measures were taken to ensure reliability as well. To this end, first
of all, objectives were clearly formulated and a clear conceptual model for examining
the relationship between CSR practices and firm performance was developed. Second,
all questions under different study variables were designed in five-point Likert scale
rather than on dichotomous scale (e.g., yes/no). Third, pre-testing of questionnaires
was done before finalizing it. Additionally, Inter-item consistencies of constructs used
in the study were tested by Cronbach’s Alpha coefficient. The values of Cronbach’s
alpha for all constructs fall within the range of 0.70 to 0.90. Thus, all constructs used
in the study are reliable and no construct has redundant items. Note that, the value
of Cronbach’s alpha is considered to be good if it is 0.70 or higher (Nunnally, 1978).
Conversely, a high value of alpha (>0.90) may also suggest redundancies (Tavakol &
Dennick, 2011).
32 The Nepalese Management Review Special Issues on International Conference

Results

Status of CSR Practices

Figure 2 clearly shows that overall status of CSR practices in banking industry of
Nepal is only slightly above average (mean = 3.13, measured in five point Likert scale).
Likewise, the least socially responsible firm has aggregated mean value of 2.27 and
the most socially responsible firm has aggragated mean value of 4.14 measured via. 29
items arranged under four different constructs.

Among the four constructs, CSR practices toward customers has highest values under
each category: minimum = 2.33, maximum = 4.67, and mean = 3.57. Likewise, CSR
toward employees seems only fairly satisfactory (mean= 3.21).However, the overall
CSR practices toward community (mean= 2.97) and environment (mean= 2.77) seem
relatively unsatisfactory in the context of Nepalese banking industry.

Figure 2: Status CSR Practices in Nepalese Banking Industry

Correlation Among Studied Variables

Pearson correlation among the studied variable are presented (Table 1). Positive
correlations were found between CSR practices variables and size of the firm as well
as age of the firm. This implies that status of CSR practices tend to increase with the
increase in size of the firm as well as age of the firm. However, correlations between
size of the firm and CSR toward customers as well as customer attraction & loyalty are
not statistically significant.
 Impact of Corporate Social Responsibility Practices on Marketplace Performance: Evidence ... 33

Table 1: Correlations among Studied Variables

Variables 1 2 3 4 5 6 7 8 9 10
1. Size of the firm
1
(log10 of TA)
2. Age of the firm (in
.297** 1
years)
3. CSR - Employees .350** .102 1 .
4. CSR - Customers .149 .138 .538 **
1
5. CSR - Community .287** .180* .576** .469** 1
6. CSR - Environment .234 **
.183 *
.555 **
.461 **
.527** 1
7. Aggregated CSR .320** .187* .839** .772** .802** .788** 1
8. Customer Attraction
.142 .282** .272** .398** .352** .326** .420** 1
& Loyalty
9. Firm Reputation .379** .223* .528** .466** .495** .468** .611** .580** 1
10. Stakeholder
.247** .186* .382** .342** .348** .316** .435** .356** .513** 1
Relationships
N = 131; *p<0.05; **p<0.01.

It is also clear that there is no significant association age of the firm and CSR toward
employees & customers. Likewise, the correlations between all aspects of CSR
practices and firm’s marketplace performance (i.e., customer attraction & loyalty,
reputation, and stakeholder relationships) indicated that more favorable CSR practices
resulted in a higher level marketplace performance of firms in the context of Nepalese
banking industry.

The correlation between two variables incorporates bidirectional relations that are
unreserved in regression analysis. Thus, to examine the impact of control variables,
aggregated CSR practices, and segregated CSR practices on marketplace performance
of firms (i.e., customer attraction & loyalty, firm reputation and stakeholder
relationships), hierarchical regression analyses were carried out.

Impact of Firm’s CSR Practices on Customer Attraction & Loyalty

Table 2 lists the summary of two models. Model 1 refers to the first block of variables
that were entered (firm’s size, firm’s age), while Model 2 includes all the variables that
were entered in both blocks (firm’s size, firm’s age, different aspects of CSR practices).
After the variables in Block 1 have been entered, the overall model explains 8.3 percent
of the variance. After Block 2 variables have also been included, the model as a whole
explains 24.3 percent.
34 The Nepalese Management Review Special Issues on International Conference

Table 2: Model Summaryc of Hierarchical Multiple Regression Analysis of

Customer Attraction & Loyalty Against Various CSR Practices
Adjusted Std. Error Change Statistics
R
Model R R of the R Square F Sig. F
Square df1 df2
Square Estimate Change Change Change
1 .289a 0.083 0.069 0.49061 0.083 5.817 2 128 .004
2 .493 b
0.243 0.206 0.45300 0.160 6.533 4 124 .000
a
Predictors: (Constant), Firm’s size (log10 of total assets), Firm’s age (in years)
b
Predictors: (Constant), Firm’s size (log10 of total assets), Firm’s age, CSR-employees, CSR-
customers, CSR-community, CSR-environment
c
Dependent Variable: Customer attraction & loyalty

Likewise, the R square change value under Model 2 indicates that different aspects of
CSR practices explain an additional 16 percent of the variance in customer attraction
& loyalty when the effects of firm’s size and firm’s age are statistically controlled.
Similarly, Table 3 indicates that the model as a whole (which includes both independent
and control variables) is significant [F(6, 124)=6.630, p<.0005)].

Table 3: ANOVA Tablea Indicating the Significance of the Relationship between

CSR Practices and Customer Attraction & Loyalty (Hypothesis 1)
Model Sum of Squares df Mean Square F Sig.
1 Regression 2.800 2 1.400 5.817 .004b
Residual 30.809 128 0.241
Total 33.609 130
2 Regression 8.163 6 1.361 6.630 .000c
Residual 25.446 124 0.205
Total 33.609 130
a
Dependent Variable: Customer attraction & loyalty
b
Predictors: (Constant), Firm’s size (log10 of total assets), Firm’s age (in years)
c
Predictors: (Constant), Firm’s size (log10 of total assets), Firm’s age, CSR-employees, CSR-
customers, CSR-community, CSR-environment

As shown in the Table 3 Model 2, p<.0005 provides the evidence that there is a low
probability that the variation explained by the model is due to chance. Thus, it can be
concluded that enhanced customer attraction & loyalty results from positive changes
in various CSR practices when firm’s size and firm’s age are statistically controlled.
Hence, the first hypothesis of the study, that is, “there is a positive relationship between
 Impact of Corporate Social Responsibility Practices on Marketplace Performance: Evidence ... 35

firm’s CSR practices and its ability to attract customers and make them loyal to the
firm” is accepted in the context of Nepalese banking industry.

Similarly, Table 4 portrays the contribution of each independent as well as control

variable in explaining the variation in dependent variable. Looking at the Sig. column
of Model 2 in Table 4, it is clear that firm’s age and CSR toward customers make a
statistically significant contribution (p< 0.05) in explaining the variation in customer
attraction & loyalty. But, CSR toward community and CSR with respect to environment
have no significant contribution in attracting customers and making them loyal to the
firm in Nepalese banking industry. It is also clear from the Table 4 that there is no
problem of multicollinearity in the regression models since all the Tolerance values
are greater than 0.10 and all the VIF (variance inflation factor) values are less than 10
(Pallant, 2005, p.150).

Table 4: Coefficientsa Indicating the Contribution of Independent and Control

Variables in Explaining the Variation in Customer Attraction & Loyalty
Unstandardized Standardized Collinearity
Coefficients Coefficients Statistics
Model t Sig.
Std.
B Beta Tolerance VIF
Error
(Constant) 1.825 1.621 1.126 0.262
1 Firm's size 0.118 0.164 0.064 0.717 0.475 0.912 1.097
Firm's age 0.026 0.009 0.263 2.972 0.004 0.912 1.097
(Constant) 1.674 1.553 1.078 0.283
Firm's size -0.03 0.162 -0.016 -0.187 0.852 0.796 1.256
Firm's age 0.02 0.008 0.206 2.471 0.015 0.881 1.135
2
CSR - employees -0.04 0.114 -0.039 -0.352 0.725 0.493 2.029
CSR - customers 0.284 0.103 0.269 2.767 0.007 0.644 1.552
CSR - community 0.172 0.11 0.16 1.559 0.121 0.577 1.732
CSR -
0.117 0.112 0.105 1.044 0.299 0.603 1.66
environment
a Dependent Variable: Customer attraction & loyalty

Impact of Firm’s CSR Practices on Firm’s Reputation

Table 5 lists the summary of two models. Model 1 comprises firm’s reputation regressed
against only two control variables whereas Model 2 comprises firm’s reputation
regressed against two control variables as well as four independent variables in terms
of firm’s CSR practices. After the variables in Block 1 have been entered, the overall
model explains 15.7 percent of the variance. After Block 2 variables have also been
36 The Nepalese Management Review Special Issues on International Conference

included, the model as a whole explains 41.6 percent. Likewise, the R square change
value under Model 2 indicates that different aspects of CSR practices explain an
additional 25.9 percent of the variance in firm’s reputation when the effects of firm’s
size and firm’s age are statistically controlled.

Table 5: Model Summaryc of Hierarchical Multiple Regression Analysis of Firm’s

Reputation Against Various CSR Practices
Change Statistics
R Adjusted Std. Error of
Model R R Square Sig. F
Square R Square the Estimate F Change df1 df2
Change Change
1 .397a 0.157 0.144 0.49755 0.157 11.949 2 128 .000
2 .645 b
0.416 0.388 0.42077 0.259 13.743 4 124 .000
a
Predictors: (Constant), Firm’s size (log10 of total assets), Firm’s age (in years)
b
Predictors: (Constant), Firm’s size (log10 of total assets), Firm’s age, CSR-employees, CSR-
customers, CSR-community, CSR-environment
c
Dependent Variable: Firm’s reputation

Similarly, Table 6 indicates that the model as a whole (which includes both independent
and control variables) is significant [F(6, 124)=14.731, p<.0005)].As shown in the
Table 6 Model 2, p<.0005 provides the evidence that there is a low probability that
the variation explained by the model is due to chance. Thus, it can be concluded that
enhanced reputation of the firm results from positive changes in various CSR practices
when firm’s size and firm’s age are statistically controlled. Hence, the second hypothesis
of the study, that is, “there is a positive relationship between firm’s CSR practices and
its reputation” is accepted in the context of Nepalese banking industry.

Table 6: ANOVA Tablea Indicating the Significance of the Relationship between

CSR Practices and Firm’s Reputation (Hypothesis 2)
Model Sum of Squares df Mean Square F Sig.
1 Regression 5.916 2 2.958 11.949 .000b
Residual 31.687 128 0.248
Total 37.603 130
2 Regression 15.649 6 2.608 14.731 .000c
Residual 21.954 124 0.177
Total 37.603 130
a
Dependent Variable: Firm’s reputation
b
Predictors: (Constant), Firm’s size (log10 of total assets), Firm’s age (in years)
c
Predictors: (Constant), Firm’s size (log10 of total assets), Firm’s age, CSR-employees, CSR-
customers, CSR-community, CSR-environment
 Impact of Corporate Social Responsibility Practices on Marketplace Performance: Evidence ... 37

Similarly, Table 7 depicts the contribution of each independent as well as control

variable in explaining the variation in dependent variable (i.e., firm’s reputation).
Looking at the Sig. column of Model 2 in Table 7, it is clear that firm’s size, CSR toward
customers and CSR toward employees make a statistically significant contribution (p<
0.05) in explaining the variation in firm’s reputation.

Table 7: Coefficientsa Indicating the Contribution of Independent and Control

Variables in Explaining the Variation in Firm’s Reputation
Unstandardized Standardized Collinearity
Coefficients Coefficients Statistics
Model t Sig.
Std.
B Beta Tolerance VIF
Error
1 (Constant) -3.755 1.644 -2.284 0.024
Firm's size 0.673 0.167 0.343 4.039 0 0.912 1.097
Firm's age 0.013 0.009 0.122 1.431 0.155 0.912 1.097
(Constant) -3.003 1.442 -2.082 0.039
Firm's size 0.368 0.151 0.188 2.442 0.016 0.796 1.256
2 Firm's age 0.007 0.008 0.069 0.938 0.35 0.881 1.135
CSR - employees 0.2 0.106 0.184 1.883 0.042 0.493 2.029
CSR - customers 0.213 0.095 0.191 2.229 0.028 0.644 1.552
CSR - community 0.183 0.102 0.162 1.788 0.076 0.577 1.732
CSR - environment 0.16 0.104 0.136 1.541 0.126 0.603 1.66
a Dependent Variable: Firm’s reputation

But, firm’s age has no significant contribution in its reputation in the Nepalese banking
industry. It is also notable that all control as well as independent variables are positively
associated with firm’s reputation though some of them are statistically insignificant.
It is also clear from the Table 7 that there is no problem of multicollinearity in the
regression models since all the Tolerance values are greater than 0.10 and all the VIF
(variance inflation factor) values are less than 10 (Pallant, 2005, p.150).

Impact of Firm’s CSR Practices on Stakeholder Relationships

As given in Table 8, Model 1 comprises stakeholder relationships regressed against
two control variables whereas Model 2 comprises stakeholder relationships regressed
against two control variables as well as four independent variables. After the variables
in Block 1 have been entered, the overall model (i.e., Model 1) explains 7.5 percent of
the variance. After Block 2 variables have also been included, the model as a whole
(i.e., Model 2) explains 21 percent.
38 The Nepalese Management Review Special Issues on International Conference

Table 8: Model Summaryc of Hierarchical Multiple Regression Analysis of

Stakeholder Relationships Against Various CSR Practices
Std. Error Change Statistics
Adjusted
Model R R Square of the R Square F Sig. F
R Square df1 df2
Estimate Change Change Change
1 .274a 0.075 0.061 0.46312 0.075 5.188 2 128 0.007
2 .459 b
0.21 0.172 0.43471 0.135 5.32 4 124 0.001
a
Predictors: (Constant), Firm’s size (log10 of total assets), Firm’s age (in years)
b
Predictors: (Constant), Firm’s size (log10 of total assets), Firm’s age, CSR-employees, CSR-
customers, CSR-community, CSR-environment
c
Dependent Variable: Stakeholder relationships

Likewise, the R square change value under Model 2 indicates that different aspects
of CSR practices explain an additional 13.5 percent of the variance in stakeholder
relationships when the effects of firm’s size and firm’s age are statistically controlled.
Likewise, Table 9 indicates that the model as a whole is significant [F(6, 124)=5.509,
p<.0005)].

Table 9: ANOVA Tablea Indicating the Significance of the Relationship between

CSR Practices and Stakeholder Relationships (Hypothesis 3)
Model Sum of Squares df Mean Square F Sig.
1 Regression 2.225 2 1.113 5.188 .007b
Residual 27.453 128 0.214
Total 29.679 130
2 Regression 6.246 6 1.041 5.509 .000c
Residual 23.432 124 0.189
Total 29.679 130
a
Dependent Variable: Stakeholder relationships
b
Predictors: (Constant), Firm’s size (log10 of total assets), Firm’s age (in years)
c
Predictors: (Constant), Firm’s size (log10 of total assets), Firm’s age, CSR-employees, CSR-
customers, CSR-community, CSR-environment

As shown in the Table 9 Model 2, p<.0005 provides the evidence that there is a low
probability that the variation explained by the model is due to chance. Thus, it can be
concluded that better stakeholder relationships of a firm results from positive changes
in various CSR practices when firm’s size and firm’s age are statistically controlled.
Hence, the third hypothesis of the study, that is, “there is a positive relationship between
 Impact of Corporate Social Responsibility Practices on Marketplace Performance: Evidence ... 39

firm’s CSR practices and its ability to promote relationships with different marketplace
stakeholders.” is accepted in the context of Nepalese banking industry.

Similarly, Table 10 depicts the contribution of each independent as well as control

variable in explaining the variation in dependent variable (i.e., stakeholder relationships).
Looking at the Sig. column of Model 2 of Table 10, it is noteworthy to mention that
none of the independent variable alone makes a statistically significant contribution
in explaining the variation in firm’s stakeholder relationships but all variables have
positive contribution in the context of Nepalese banking industry. It is also obvious
from the Table 10 that there is no problem of multicollinearity in the regression models
since all the Tolerance values are greater than 0.10 and all the VIF (variance inflation
factor) values are less than 10 (Pallant, 2005, p.150).

Table 10: Coefficientsa Indicating the Contribution of Independent and Control

Variables in Explaining the Variation in Stakeholder Relationships
Unstandardized Standardized Collinearity
Coefficients Coefficients Statistics
Model t Sig.
Std.
B Beta Tolerance VIF
Error
1 (Constant) -0.04 1.53 -0.026 0.979
Firm's size 0.367 0.155 0.211 2.365 0.02 0.912 1.097
Firm's age 0.011 0.008 0.123 1.386 0.168 0.912 1.097
(Constant) 0.476 1.49 0.319 0.75
Firm's size 0.167 0.156 0.096 1.074 0.285 0.796 1.256
2 Firm's age 0.008 0.008 0.089 1.052 0.295 0.881 1.135
CSR - employees 0.156 0.109 0.162 1.425 0.157 0.493 2.029
CSR - customers 0.148 0.099 0.149 1.501 0.136 0.644 1.552
CSR - community 0.109 0.106 0.108 1.03 0.305 0.577 1.732
CSR - environment 0.064 0.107 0.062 0.601 0.549 0.603 1.66
a Dependent Variable: Stakeholder relationships

Discussion and Conclusion

Increased awareness on CSR and even socially responsible aspirations among
executives & managers are of no use unless they are applied in day-to-day practice.
Analysis revealed that overall status of CSR practices is only slightly above average
in Nepalese banking industry. Likewise, CSR toward employees seems only fairly
satisfactory despite the fact that employee is strategically very important stakeholder
of the firm (Berman, Wicks, Kotha & Jones, 1999). However, CSR toward customers
is relatively good. This is in line with the argument that the core purpose of business
40 The Nepalese Management Review Special Issues on International Conference

is not only to maximize profits for shareholders but also to create & sell products or
services to satisfied customers (Carrington & Neville, 2015). Analysis also disclosed
that Nepalese banking industry is not serious enough regarding its responsibility
towards community and there are several rooms for improvement on CSR with respect
to environment. Thus, it is clear that among three 3Ps (people, profit and planet) of
CSR, Nepalese banks have not still given due importance to particularly the planet
component. “Planet” in Triple Bottom Line (or 3Ps) CSR framework deals with
ecological environment where the company operates and takes natural resources for
its production or operations (Elkington, 1997; Krishnawati, Yudoko & Bangun, 2014).
In essence, the overall status of CSR practices in Nepalese banking industry is neither
very encouraging nor frustrating.

While a lot of research studies point in favor of a positive relationship between CSR
and marketplace performance (Orlizky, Schmidt & Rynes, 2003), this connection has
not been fully established (Park & Lee, 2009). This research found that all the aspects of
CSR practices are positively correlated with marketplace performance of firms. Likewise,
testing of hypothesis by using hierarchical multiple regression analysis revealed that
firm’s CSR practices have positive impact on its marketplace performance. Specifically,
CSR toward customers has significant positive contribution on customer attraction &
loyalty and firm’s reputation. Likewise, CSR toward employees has significant positive
contribution on firm’s reputation. These findings closely resemble to the argument
that the employees, shareholders and customers are strategically the most important
stakeholders of the firm (Berman et al., 1999).

However, CSR toward community and environment have positive but insignificant
contribution in explaining marketplace performance of Nepalese banks. These findings
are consistent with some previous studies (Balabanis, Phillips & Lyall, 1998; Schreck,
2011) but inconsistent with some others (Brugmann and Prahalad, 2007; Owen &
Scherer, 1993). It may be attributed to the fact that certain community related CSR
activities such as philanthropic activities might not give tangible benefits to business at
least in the short run. Likewise, Nepalese people are not yet fully aware of environmental
issues as in developed country context. It is also noteworthy to mention that firm’s age
has significant contribution on customer attraction & loyalty whereas firm’s size has
significant contribution on firm’s reputation.

In a nutshell, CSR toward customers, CSR toward employees, firm’s size and firm’s age
are the important predictors whereas CSR toward community and CSR with respect
environment are the less important predictors of firm’s marketplace performance in the
context of Nepalese banking industry. Thus, it may be advised to the Nepalese banks
 Impact of Corporate Social Responsibility Practices on Marketplace Performance: Evidence ... 41

to take CSR policies & programs as one of the mainstream business issues without any
hesitation.

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