UNIVERSITY OF GHANA 

 

 

 

 

CORPORATE SOCIAL RESPONSIBILITY AND COMPETITIVE ADVANTAGE: A 

COMPARATIVE STUDY ACROSS SELECTED GHANAIAN INDUSTRIES. 

 

 

 

 

BY 

 

MILLICENT AMPONSAH 

 

 

 

 

 

 

 

THIS THESIS IS SUBMITTED TO THE UNIVERSITY OF GHANA, LEGON IN 

PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF 

MPHIL HUMAN RESOURCE MANAGEMENT DEGREE 

 

 

 

 

 

JUNE 2015 

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DECLARATION 

I do hereby declare that this work is the result of my own research and has not been presented 

by anyone for any academic award in this or any other university. All references used in the 

work have been fully acknowledged.  

I bear sole responsibility for any shortcomings. 

 

 

…………………………………….     ……………………… 

MILLICENT AMPONSAH       DATE 

           (10249450) 

 

 

 

 

 

 

 

 

 

 

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CERTIFICATION 

I hereby certify that this thesis was supervised in accordance with procedures laid down by 

the University. 

 

 

 

…………………………………………      ………………………… 

PROF. DAN OFORI           DATE 

(SUPERVISOR) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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DEDICATION 

This work is dedicated to the author and finisher of my life, my Lord and my God who began 

with me and ended successfully with me. My mother, Margaret Amponsah, my late father, 

Eric Amponsah, Selorm Ahadzi Adogla, and my siblings. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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ACKNOWLEDGEMENT 

I wish to acknowledge the immense contribution of my supervisor, Prof. Dan Ofori for his 

timeless dedication, guidance, constructive criticisms and professionalism throughout the 

supervision of this thesis.  

 

I appreciate the contributions from all faculty members for their input during seminar 

presentations especially Dr. Kwasi Dartey-Baah, Dr. Kwesi Amponsah-Tawiah and Mr. 

Aaron Ametorwu.  

 

A special appreciation goes to Prof. A. Alemna, and Prof. Harry Akussah of the University 

of Ghana, Department of Information Studies. Also to Miss Monica Mensah of University 

of Ghana, Balme library, Mr. Isaac Nyarko Adu of University of Education, Winneba and 

Kwabena Asare of University of Ghana, Department of Statistics for their support during the 

entire programme. 

 

My sincere appreciation goes to the management of the various companies who permitted 

me to undertake this thesis work in their companies. I say God bless you all. 

 

Lastly, special appreciation goes to my course mates, Believe Quarcoo, Yvonne Barnieh, 

Bernice Adjei, and Benjamin Mekpor. Their contributions during peer reviews were very 

useful. 

 

 

 

 

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TABLE OF CONTENTS 

 

DECLARATION .................................................................................................................. i 

CERTIFICATION .............................................................................................................. ii 

DEDICATION .................................................................................................................... iii 

ACKNOWLEDGEMENT ................................................................................................. iv 

TABLE OF CONTENTS .................................................................................................... v 

LIST OF TABLES .............................................................................................................. ix 

LIST OF FIGURES ............................................................................................................. x 

ABSTRACT ........................................................................................................................ xi 

 

CHAPTER ONE: INTRODUCTION  ............................................................................... 1 

1.1 Background of the Study ................................................................................................. 1 

1.1.1 Perspectives of CSR .............................................................................................. 3 

1.1.2 Theories of CSR .................................................................................................... 4 

1.1.3 CSR in Ghana ........................................................................................................ 7 

1.1.4 The Mining, Manufacturing, and Service Sectors in Ghana ................................. 9 

1.2 Research Problem .......................................................................................................... 11 

1.3 Purpose of the Study ...................................................................................................... 12 

1.4 Research Objectives ...................................................................................................... 13 

1.5 Research Questions ....................................................................................................... 13 

1.6 Research Hypotheses ..................................................................................................... 14 

1.7 Significance of the Study ............................................................................................... 14 

1.8 Summary of Methodology ............................................................................................. 15 

1.9 Organisation of the Work .............................................................................................. 16 

 

CHAPTER TWO: LITERATURE REVIEW ................................................................ 17 

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2.1 Introduction ................................................................................................................... 17 

2.2 Theoretical Framework.................................................................................................. 17 

2.2.1 The Stakeholder Theory ...................................................................................... 17 

2.2.2 Resource Base View............................................................................................ 19 

2.2.3 The Instrumental Theory ..................................................................................... 20 

2.3 Review of Related Empirical Literature ........................................................................ 20 

2.3.1 Definitions of CSR .............................................................................................. 20 

2.3.2 Historical Perspectives of CSR ........................................................................... 23 

2.3.3 Factors Influencing CSR Activities..................................................................... 25 

2.3.3.1 Leadership and Governance ............................................................................. 26 

2.3.3.2 CSR Policy Framework .................................................................................... 26 

2.3.3.3 Project Management ......................................................................................... 27 

2.3.3.4 Monitoring, Evaluation and Reporting............................................................. 27 

2.3.3.5 Stakeholder Engagement .................................................................................. 27 

2.3.3.6 Staff Engagement ............................................................................................. 28 

2.3.3.7 Government ...................................................................................................... 28 

2.3.3.8 Beneficiation .................................................................................................... 28 

2.3.3.9 Funding............................................................................................................. 28 

2.3.4 Dimensions of CSR ............................................................................................. 30 

2.3.5 Advantages of CSR ............................................................................................. 33 

2.3.6 Arguments against CSR ...................................................................................... 35 

2.3.7 Definitions of Competitive Advantage ............................................................... 37 

2.3.8 Early Works on Competitive Advantage ............................................................ 38 

2.3.9 Dimensions of Competitive Advantage .............................................................. 38 

2.4 CSR and Competitive Advantage .................................................................................. 43 

2.4.1 The Link between CSR and Competitive Advantage ......................................... 43 

2.4.1.1 The Influence of Competitive Strategy on CSR and Competitive Advantage . 47 

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2.4.1.2 The Influence of Company Structure on CSR and Competitive Advantage .... 49 

2.4.1.3 The influence of Company Size on CSR and Competitive Advantage............ 51 

2.4.1.4 The influence of Company Type on CSR and Competitive Advantage .......... 53 

2.4.2 Integration of CSR practice and Competitive Advantage ................................... 54 

2.5 Conceptual Framework.................................................................................................. 56 

2.6 Summary of Review ...................................................................................................... 57 

 

CHAPTER THREE: METHODOLOGY ....................................................................... 58 

3.1 Introduction ................................................................................................................... 58 

3.2 Research Philosophy and Paradigm .............................................................................. 58 

3.3 Research Design ............................................................................................................ 61 

3.4 Population of the Study ................................................................................................. 63 

3.4.1 Selection of Cases ............................................................................................... 64 

3.5 Sample Size and Sampling Selection ............................................................................ 65 

3.6 Sources of Data .............................................................................................................. 66 

3.7 Measurement Instruments ............................................................................................. 66 

3.8 Interviews ...................................................................................................................... 68 

3.9 Observations .................................................................................................................. 68 

3.10 Method of Data Analysis and Presentation ................................................................. 69 

3.11 Ethical Consideration .................................................................................................. 70 

 

CHAPTER FOUR: RESULTS AND DISCUSSION OF FINDINGS .......................... 71 

4.1 Introduction ................................................................................................................... 71 

4.2 Demographic Characteristics of Respondents and Sampled Companies ...................... 72 

4.3 Test of Assumptions ...................................................................................................... 75 

4.3.1 Assumption of Normality .................................................................................... 75 

4.3.2 Assumption of Linearity ..................................................................................... 75 

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4.3.3 Assumption of Multicollinearity ......................................................................... 75 

4.3.4 Assumption of Homoscedasticity........................................................................ 76 

4.4 Findings and Discussions in Relation to the Research Objectives ................................ 76 

4.4.1 Demographic Variables ....................................................................................... 77 

4.4.2 Objective 1: The Influence of CSR on CA ......................................................... 80 

4.4.3 Objective 2: The Nature and Form of CSR Activities that Impact on CA .......... 87 

4.4.4 Objective 3: Differences in CSR and CA............................................................ 91 

4.4.5 Objective 4: The Moderating Effect of Competitive Strategy on the Relationship 

between CSR and CA ................................................................................................... 92 

4.4.6 Objective 5: The Influence of Organisational Demography (size, type and 

structure) on Firm CSR Activity and its Effects on CA ............................................... 98 

 

CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 105 

5.1 Introduction ................................................................................................................. 105 

5.2 Summary of Findings .................................................................................................. 105 

5.2.1 The Link between CSR and CA ........................................................................ 106 

5.2.2 The Influence of Competitive Strategy on CSR and CA .................................. 106 

5.2.3 The Influence of Company Demography (size, type and structure) on CSR and 

CA .............................................................................................................................. 107 

5.2.4 CSR Activities That Impact More on CA ......................................................... 107 

5.2.5 Differences in CSR and CA across Industries in Ghana ................................... 108 

5.3 Revisiting the Conceptual Framework ........................................................................ 108 

5.4 Conclusions ................................................................................................................. 109 

5.5 Recommendations ....................................................................................................... 109 

5.6 Directions for Future Research .................................................................................... 111 

 

REFERENCES ................................................................................................................ 113 

APPENDICES .................................................................................................................. 135 

 

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LIST OF TABLES 

Table 2.1 Summary of factors influencing CSR ................................................................. 29 

Table 2.2 Category of CSR involvement and their activities. ............................................. 31 

Table 2.3 Summary of the dimensions of competitive advantage ....................................... 42 

Table 2.4 List of Sub-Constructs for Competitive Advantage ............................................ 43 

Table 3.1 Sample Size of the Study ..................................................................................... 66 

Table 3.2 Survey Instruments Adopted for the Study ......................................................... 68 

Table 4.1. Demographic Variables of Respondents and Sampled Companies ................... 74 

Table 4.2 Collinearity Statistics of Predictor Variables ...................................................... 76 

Table 4.3: Questions on Respondents’ Views about Their Firms’ CSR Practices .............. 80 

Table 4.4: Questions on Respondents’ Views about Their Firms’ CA Practices ................ 81 

Table 4.5 Simple Regression of the Relationship between CSR and CA. .......................... 82 

Table 4.6 The Differences in CSR and CA ......................................................................... 91 

Table 4.7 Company’s Strategy ............................................................................................ 92 

Table 4.8 The Moderating Effect of Company Strategy on the Relationship between CSR 

and CA ................................................................................................................ 93 

Table 4.9 The Moderating Effect of Company Structure on the Relationship between CSR 

and CA ................................................................................................................ 98 

Table 4.10 The Moderating Effect of Company Size on the Relationship between CSR and 

CA ..................................................................................................................... 101 

Table 4.11 The Moderating Effect of Company Type on the Relationship between CSR 

and CA. ............................................................................................................. 103 

 

 

 

 

 

 

 

 

 

  

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LIST OF FIGURES 

Figure 1.1: Carroll’s (1991) Pyramid of Corporate Social Responsibility ............................ 2 

Figure 2.1: Competing Value Framework- Organizational effectiveness ........................... 41 

Figure 2.2: Hypothesized CSR-CA Model .......................................................................... 56 

Figure 4.1: Pie chart Showing Respondents’ Reasons for Engaging in CSR ..................... 85 

Figure 4.2: Histogram Graph Showing CSR Activities that Impact on CA ........................ 89 

Figure 4.3: Pie Chart Showing responses on CSR Policy or Document ............................. 96 

Figure 5.1: Conceptual Framework before Data Collection.............................................. 105 

Figure 5.2: Revised Conceptual Framework ..................................................................... 109 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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ABSTRACT 

Corporate Social Responsibility (CSR) has become an integral part of business practice over 

the last decade and this has led many corporations to dedicate a section of their annual reports 

and corporate websites to CSR activities. Although extant literature with regard to CSR has 

examined a number of themes such as the link between CSR and financial performance, very 

few studies have been conducted on CSR and Competitive Advantage (CA). As such, this 

paper was aimed at identifying and determining the link between CSR and CA in some 

selected Ghanaian industries. The study employed a cross sectional survey design and 

adopted both qualitative and quantitative approaches for data collection. The target 

population for the study consisted of the head offices of companies listed on the Ghana Club 

100 which have consistently appeared from 2010 to 2012 in the Greater Accra Region of 

Ghana. Data used for analysis were drawn from one hundred and seventy nine (179) 

members of management from sixteen (16) companies. Findings of the study showed a 

positive effect of CSR on CA with competitive strategy, company type, and company size 

moderating the effect of CSR on CA. Company structure had no effect. The results further 

revealed a stronger relationship between CSR and CA for larger companies than smaller or 

medium-sized companies. Thus, companies with a large number of employees (large 

companies) do more CSR activities, and in turn, have a more defensible position than that 

of small or medium-sized companies. Again, the results indicated that, there were no 

differences in CSR practices and competitive advantage across the various sectors. However, 

external CSR activities especially, education and health - related CSR had more impact on 

CA. More so, it was discovered that a majority of the organizations do not have a particular 

strategy for implementing CSR activities. In addition, there were no budgets allocated for 

CSR activities, and no policies or documents on CSR activities and this means organizations 

do CSR as and when it becomes necessary. It was thus recommended that CSR activities 

should be clearly integrated as part of the firm’s corporate and business-level strategies. 

Again, management should take into consideration workplace related CSR activities so as to 

gain more competitive advantage. It was also recommended that organizations should have 

policy frameworks to set clear-cut parameters for CSR activities so as to avoid executing 

CSR haphazardly. 

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CHAPTER ONE 

INTRODUCTION 

1.1 Background of the Study 

Organizations exist in an environment and their operations can cause both positive and 

negative implications for the society and the environment in which they operate. As 

businesses perform their day to day activities, they relate with people and communities in 

their environment, hence the need to be responsible for their actions. In particular, customers 

collectively get attracted to socially and environmentally conscious businesses (Marin & 

Ruiz, 2007). Thus, Corporate Social Responsibility (CSR) has become an important part of 

business practice over the last decade and this has led many corporations to dedicate a section 

of their annual reports and corporate websites to CSR activities, illustrating the importance 

they attach to such activities (Servaes & Tamayo, 2013).  

 

Corporate Social Responsibility simply refers to the obligations of companies to society, 

more specifically, obligations to stakeholders and those who influence corporate policies and 

practices (Khanifar, Nazari, Emami & Soltani, 2012). For Carroll (1991), CSR consists of 

four elements and these elements are represented in a pyramid. The pyramid of CSR has 

enjoyed enduring popularity (Burton & Goldsby, 2009) and remains “a leading paradigm of 

CSR” (Schwartz & Carroll, 2003, p. 504).  As Windsor (2006, p. 98) describes it, more 

recent formulations of the original concept have not surpassed the “still canonical set of 

defined cumulative responsibilities, not tradeoffs, depicted classically as a subdivided 

‘pyramid’ cross-walked to stakeholder categories. The pyramid is a vertical triangle showing 

all the four internal subdivisions for economic, legal, ethical, and philanthropic 

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responsibilities in that order from foundation to apex” (shown in Figure 1.1). It seems 

appropriate to expand on the description with Carroll’s own words: 

“It portrays the four components of CSR, beginning with the basic building 

block notion that economic performance undergirds all else. At the same 

time, business is expected to obey the law because the law is society's 

codification of acceptable and unacceptable behavior. Next is business's 

responsibility to be ethical. At its most fundamental level, this is the 

obligation to do what is right, just, and fair, and to avoid or minimize harm 

to stakeholders (employees, consumers, the environment, and others). 

Finally, business is expected to be a good corporate citizen. This is captured 

in the philanthropic responsibility, wherein business is expected to 

contribute financial and human resources to the community and to improve 

the quality of life”. (Carroll, 1991, p. 42).  

 

Figure 1.1: Carroll’s (1991) Pyramid of Corporate Social Responsibility 

 

 

  

 

 

 

 

 

 

Source: Carroll, 1991  

 

  

Economic 

Legal 

 

Ethical 

Phil- 

anthropic 

Be a good corporate citizen. Contribute resources 

to the community; improved quality of life  

Be ethical. Obligation to do what is right, just and 

fair. Avoid harm.  

Obey the law. Law is society’s codification of 

right and wrong. Play by the rules of the game.  

Be profitable. The foundation on which all others 

rest.  

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1.1.1 Perspectives of CSR 

According to Friedman (1970), if a firm pursues and maximizes its profits then it completely 

fulfils its social responsibility but if they are placed in free competition, then the firm does 

not need to burden itself with social responsibilities. Nevertheless, the modern business 

environment has witnessed that firms’ sizes and their power to impact society are increasing 

than before, hence there has been increasing call for firms to take their corresponding social 

responsibility (kang, 2014). In recent times, compared with former pattern of CSR research 

on big firms, CSR research on small-sized or middle-sized firms has been on the increase 

and as such, the size of a firm has a positive effect on the level and quality of CSR disclosed 

(Branco & Rodrigues, 2006; Li, Luo, Wang, & Wu, 2013). This means that, the larger the 

firm the more likely is the firm to disclose its CSR activities. 

 

Attention to CSR as an element in corporate strategy has led to the examination of CSR 

activities through the lens of the resource-based-view (RBV) of the firm (McWilliams, 

Siegel, & Wright, 2006). According to McWilliams et al. (2006), applying the RBV to CSR 

naturally leads to the question of whether firms can use CSR to achieve a sustainable 

competitive advantage. In view of this, Reinhardt (1998) found that a firm that engages in a 

CSR-based strategy could sustain an abnormal return if it could prevent competitors from 

imitating its strategy. This finding is consistent with Barney’s (2002, 1991) arguments. 

Barney (2002) states that, for organizations to gain competitive advantage then its resources 

should be valuable, rare, inimitable and non-substitutable. In competitive markets it is 

unlikely that a firm can prevent competitors from imitating a CSR-based strategy, so 

competitive advantage based on CSR activities/attributes will be short-lived. However, this 

also means that competing firms may be forced to imitate CSR activities to gain competitive 

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parity. This raises the question of whether such competition-meeting activities should be 

considered “responsible” rather than simply strategic (McWilliams et al., 2006).  

 

Du, Bhattacharya and Sen (2010) are also of the view that, communication of CSR activities 

are very crucial for businesses to maximise their returns. Thus, if consumers cannot perceive 

the CSR activities of firms, then firms on the other hand cannot expect any positive 

consequences from engaging in CSR activities. McWilliams et al. (2006) observed that, 

many large firms and non-governmental organizations (NGO) now include statements about 

social responsibility in published documents and this creates pressure to expand and 

embellish reporting on CSR activities. It is not clear how reporting of CSR activities varies 

across nations, regions, and cultures or how differences in institutional environments will 

affect the expectations of stakeholders in regard to CSR activity and reporting. The empirical 

findings suggest that perceived cultural fit and CSR capability significantly affect CSR 

perception and, consequently, employee attachment (Lee, Park & Lee, 2012). 

 

1.1.2 Theories of CSR 

According to Garriga and Mele (2004), social responsibility theories and related approaches 

can be categorized into four groups: instrumental theories, political theories, integrative 

theories and ethical theories. The instrumental theories assume that the corporation is an 

instrument for wealth creation and that is its sole social responsibility. Only the economic 

aspect of the interactions between business and society is considered. So, any supposed 

social activity is accepted if it is consistent with wealth creation, hence the instrumental 

theories understand CSR as a mere means to the end of profits. .  Friedman is seen as a 

representative of this approach since he is of the view that "the only responsibility of business 

towards society is the maximization of profits to the shareholders within the legal framework 

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and the ethical custom of the country" (Friedman, 1970). The instrumental theories can 

further be categorized into three (3) groups depending on the economic objective proposed. 

In the first group, the objective is the maximization of shareholder value, which is measured 

by the share price leading to a short-term profit orientation. According to Husted and Allen 

(2000), the second group of theories leads in achieving long-term profits and thus, focuses 

on the strategic goal of achieving competitive advantages. From the two groups, CSR is only 

a question of progressive self-interest (Keim, 1978) since CSR serves as instrument for 

profits. The third group is connected to cause-related marketing. 

 

Political theories on the other hand emphasize the social power of corporations especially in 

their relationship with society and their responsibility in the political arena associated with 

this power. That is, the interactions and connections between business and society and on 

the power and position of business and its inherent responsibilities (Garriga & Mele). 

Corporate Constitutionalism and Corporate Citizenship are the two main theories that can 

be identified under the political theories. "Corporate citizenship" was introduced into the 

business and society relationship mainly through practitioners in the 1980s (Altman & 

Cohen, 2000). The term has become more prevalent in business and academic work in the 

late 1990s and early 21st century (Andriof & Mcintosh, 2001). According to Davis (1976), 

the equation of social power responsibility has to be understood through the functional role 

of business and managers. In this view, Davis discards the idea of total responsibility of 

business as he discarded the radical free-market ideology of no responsibility of business. 

The limits of functional power come from the pressures of different constituency groups, 

and controls organizational power just like governmental constitution. The constituency 

groups do not destroy power. Rather, they define conditions for its responsible use. They 

channel organizational power in a supportive way and to protect other interests against 

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unreasonable organizational power (Davis, 1967, p. 68). As such, his theory is called 

"Corporate Constitutionalism" (Garriga & Mele, 2004). "Corporate citizenship" has always 

connoted a sense of belonging to a community and for that reason explains why business 

needs to take into account the community where it is operating (Garriga & Mele, 2004). 

 

A third group includes theories which consider that business ought to integrate social 

demands. They usually argue that business depends on society for its continuity and growth, 

and even for the existence of business itself. This group of theories is known as the 

integrative theories. According to Garriga and Mele (2004), this group of theories looks at 

how business integrates social demands. Garriga and Mele argue that, business depends on 

society for its existence, continuity and growth. Social demands are generally considered to 

be the way in which society interacts with business and gives it a certain legitimacy and 

prestige. As a consequence, corporate management should take into account social demands, 

and integrate them in such a way that the business operates in accordance with social values. 

Basically, the theories of this group focus on the detection and scanning of, and response to, 

the social demands that achieve social legitimacy, greater social acceptance and prestige 

 

Lastly, the fourth group of theories, the ethical theories, comprehends that the relationship 

between business and society is embedded in ethical values. This leads to a vision of CSR 

from an ethical perspective, and as a consequence, firms ought to accept social 

responsibilities as an ethical obligation above any other consideration. 

 

 

 

 

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1.1.3 CSR in Ghana 
 

In recent times, there has been a call on organisations to undertake social programs, as 

government alone cannot handle societal problems and this has affected the implementation 

of the concept of CSR in the country (Amponsah & Dartey-Baah, 2011). According to Ofori 

and Aboagye-Otchere (2005), the concept of CSR is the integration of social and 

environmental concerns by companies in their business operations and in their interaction 

with stakeholders on a voluntary basis. Amponsah and Dartey-Baah (2011) also defined CSR 

as the strategic decision of an organisation to voluntarily act upon the social factors that have 

the potential of militating against the fulfilment of corporate goals. In their view, the concept 

of CSR has tended to focus on the external environment to the neglect of the internal 

environment from where employees operate in Ghana. For Amponsah and Dartey-Baah 

(2011), the problems of the country such as low per capital income, weak currency, capital 

flight, low productivity and low savings has made it impossible for indigenous companies 

to undertake CSR actions, hence placing large scale multi-national companies at an 

advantage in doing CSR.  In the same vein, Abugre (2014) states that managerial role in the 

practice of CSR is limited and ineffective in Ghana. In his study on managerial role in 

organizational CSR in Ghana, he discovered that, difficulties of effective CSR 

implementation mainly stem from leadership weak spots in the form of mismanagement and 

corruption, lack of leadership commitment and unwillingness to allocate monies due for CSR 

activities and that, organisations can do better in the practice of CSR if management’s 

attitude to CSR, corruption, and work behaviours are positive. Again, Ofori and Hinson 

(2007) in their study found out that although local companies are familiar with the concept 

of CSR, they subscribe less to the contemporary notion of CSR. That is, they are less 

strategic, moral and ethical in practicing as compared to internationally-connected 

companies.  

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In their study, Atuguba and Dowuona-Hammond (2006) in the aspect of CSR and law, 

observed that, there are no comprehensive CSR laws in Ghana. Anku-Tsede and Deffor 

(2014) suggest that even though CSR is to a large extent influenced by various regulatory 

regimes in Ghana, its efficiency is often adversely affected by deficiencies in the 

enforcement of the relevant laws and thus suggested that enforcement agencies should be 

empowered to ensure compliance with the laws to enable an effective delivery of CSR in 

Ghana.  

 

A study on executive and management attitudes on CSR and ethics in Ghana by Ofori (2010), 

concluded that although there is no legal framework for CSR in Ghana, companies are 

involved in various CSR activities like support for education, sponsorship of events and cash 

donations and that, managers and executives believe that it is important for their firms to be 

socially responsible and to be seen to be behaving ethically. Again, the study also revealed 

that ethical values of both individual managers and their firms are the major factors 

determining manager’s attitudes toward CSR. 

Similarly, a report on promoting and hindering factors in CSR implementation in Sub-

Saharan Africa by GTZ (2009) shows that, in Ghana, the government’s involvement in CSR 

rests mainly with the legal dimension, which enjoins businesses to obey the law. However, 

there is no comprehensive CSR policy or law in Ghana. There are a variety of policies, laws, 

practices and initiatives that together provide the CSR framework in Ghana and the 

government seeks to promote CSR by putting in place legislation that defines minimum 

standards for business performance such as constitutional provisions, local government laws 

and requirements for environmental impact assessments contained in an act of parliament 

(Nyuur, Ofori & Debrah, 2014). 

 

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1.1.4 The Mining, Manufacturing, and Service Sectors in Ghana 
 

The mining sector is an important segment of the Ghanaian economy and has played a 

significant role in the country’s socioeconomic development since the colonial period. The 

country was one time, a leading producer of gold in the world and accounted for about 35.5 

% of total world gold output between 1493 and 1600 (Quashie et al., 1981, p38 cited in 

Global country study and report on Ghana, 2013). In recent times, Ghana is now the second 

largest gold producer on the continent after South Africa, and it is indisputably the mining 

hub of West Africa (GIPC 2013).  According to the 2013 Ghana Statistical Service report, 

the mining sector grew remarkably by 23.5% in 2012 (cited in GIPC, 2013). Again, the 

mining sector contributed 7.9% to GDP and 27.04% of the total Ghana Revenue Authority 

collections in 2012, hence, the leading contributor to the Ghana Revenue Authority with a 

total payment of approximately 1.5 billion Ghana cedis (GIPC, 2013).  

 

The Sustainable Development Action Plan (2010) shows that the manufacturing sector 

which adds value to goods is crucial for the international competitiveness of countries such 

as Ghana. In this regard, the Medium Term Development Plan ‐ National Planning 

Development Council (NDPC) (2009) indicates that, the manufacturing sub‐sector accounts 

for over 36% of the total industrial output and has a contribution of 9% to Gross Domestic 

Product (GDP).  Again, manufacturing as the main target sector for foreign investors in 

Ghana (specifically about 90% of which is located in the Greater Accra region) accumulated 

foreign investment amounting to US$2.3 billion between 2001 and 2006, generating some 

16,400 jobs (GIPC, 2007). The Ghana National Commission for UNESCO report affirms 

this by stating that in terms of importance, the manufacturing sector, though not as strong as 

it should be, continues to play a respectable role in the economy, contributing about 9% to 

GDP. The sector provides employment for an estimated workforce of over 250,000 people. 

 

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Even though the manufacturing sector contributes to the economy of Ghana, it encounters 

difficulties including power cuts, and access to and conditions of financing (AGI, 2007). The 

Sustainable Development Action Plan (2010) shows that the manufacturing sub‐sector is 

broadly classified into textiles, food and beverages, paints and chemicals, pharmaceuticals, 

pulp and paper, wood and wood processing, metals, glass, cement, ceramics and tiles, 

thermal power plant and oil and gas refinery. However, aluminium smelting, sawmills, agro‐

processing, cement and breweries are the major activities in the manufacturing sub‐sector. 

Frazer (2004) also adds that, there are four major sectors in the manufacturing industry in 

Ghana, namely woodworking, metal-working, food processing, and textiles and garments, 

and together, they comprise 70 percent of manufacturing employment in Ghana. 

 

According to the 2004 Ghana Banking Survey, on average, the services sector has been the 

fastest growing sector in the country.  The 2014 Ghana statistical report (2014) corroborates 

this fact. The report states that, the services sector recorded the highest growth of 8.9 percent 

even though there has been a decline from 11 percent in 2012 to 8.9 percent in 2013. Again 

from the same report, the services sector remains the largest sector, contributing about half, 

49.5 percent of GDP in 2013 from 48.4 percent in 2012. The Ghana statistical report (2014)  

categorizes the services sector into trade; repair of vehicles, household goods, hotels and 

restaurants, transport and storage, information and communication,  financial and insurance 

activities, real estate, professional, administrative & support service activities, public 

administration and defence; social security, education, health and social work, community, 

social and personal service activities. 

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1.2 Research Problem 

Extant literature with regard to Corporate Social Responsibility (CSR) has examined a 

number of themes such as the link between CSR and financial performance (Khanifar et al., 

2012; Ofori, Nyuur, & Darko, 2014); the effect of CSR on sustainable development 

(Baumgartner, 2013; Moon, 2007; Rodriguez, Ricart & Sanchez, 2002); CSR and 

stakeholder management (Cheng & Ahmed, 2010; Chomvilailuk & Butcher, 2013; 

McDonald & Rundle-Thiele, 2007); the nexus between CSR and corporate branding 

(Blomback & Scandelius, 2013; Klein & Dawer, 2003; Scharf, Fernandes & Kormann, 2012; 

Werther & Chandle, 2005); the perceptions that companies have on CSR (Ofori & Hinson, 

2007; Wagner, Lutz & Weitz, 2009); the influence of CSR on employee retention 

(McCallum, Schmid & Price, 2013; Musgtaq, 2013; Nejati & Ghasemi, 2013; Skudience & 

Auruskeviciene, 2012; Vitaliano, 2010) as well as, the effects of CSR on company’s 

reputations (Musgtaq, 2013; Othman, Darus & Arshad, 2011). Other studies have also 

looked at the factors influencing CSR activities (Nilsson & Rahmani 2008; Nyuur et al., 

2014).  Only a few studies have examined the CSR-CA nexus (Battaglia, Testa, Bianchi, 

Iraldo & Frey, 2014; El-Garaihy, Mobarak & Albahussain, 2014; Luo & Bhattacharya 2006; 

Marin, Rubio & Ruiz de Maya, 2012). 

 

It has been argued that, CSR activities lower economic efficiency and profit; impose unequal 

cost amongst competitors; impose hidden costs passed on to stakeholders; and place 

responsibility on business rather than individuals, hence the main focus of businesses is to 

concentrate on making profits for its shareholders (Friedman 1970; Jensen 2001; Lantos 

2001). From the above, the question to ask is whether an organization’s CSR activities create 

value for its shareholders or, focussing too much on other stakeholders lowers the firm’s 

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value? It is for this reason that this study seeks to investigate whether this argument holds 

against the link between CSR and CA in the Ghanaian industries. 

 

Again, most studies in the field of CSR across the world concentrated on only one sector of 

the economy. These include the banking sectors (Baba, 2012; Choudhary & Tandon, 2013; 

Hinson, Boateng & Madichie, 2010; Ofori et al., 2014; Mushtaq, 2013; Relano & Paulet, 

2012; Yeung, 2011), telecommunication sectors (Giannarakis & Litinas, 2011), SMEs 

(Cowling, 2003; Lamberti & Noci, 2012) and the mining sectors (Fonseca, 2010). Limited 

studies have been done by simultaneously comparing firms in different sectors such as the 

manufacturing, mining and the services industries. This research thus seeks to fill this gap. 

 

More so, the few studies done in the area of CSR (Luo & Bhattacharya, 2006; Marin, Rubio 

& Ruiz de Maya, 2012; Porter & Kramer, 2011; Porter & Kramer, 2006) seem to focus more 

on the western origin context and therefore leave little or no research done in Africa and to 

be specific, Ghana. Current studies in the field of CSR in Ghana (Baba, 2012; Hinson, 2011; 

Ofori et al., 2014), have been silent on the issues concerning CSR and CA as a strategy for 

business. Porter and Kramer (2008) maintain that, CSR activities can serve as a strategic tool 

for companies in gaining competitive advantage.  In this vain, this study investigates whether 

the view of Porter and Kramer (2008) could hold in the context of Ghana. Thus, can 

companies in Ghana use CSR activities to gain a defensible position over their competitors? 

A study in this area in Ghana becomes imperative. 

1.3 Purpose of the Study 

The purpose of this study is to determine the link between Corporate Social Responsibility 

(CSR) and Competitive Advantage (CA) in selected Ghanaian industries. Thus, it seeks to 

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understand how CSR and CA interplay in enhancing business growth and survival in an 

emerging economy. 

 

1.4 Research Objectives 

Key objectives of the study are to: 

1. Investigate the influence of CSR on Competitive Advantage among selected 

Ghanaian industries. 

2. Ascertain the nature and form of CSR activities that impact on Competitive 

Advantage in selected Ghanaian industries. 

3. Explore the differences in CSR and Competitive Advantage across selected 

Ghanaian industries  

4. Examine the extent to which company strategy influences firm CSR activity and how 

it affects Competitive Advantage in selected Ghanaian industries. 

5. Examine how organisational demography (size, type and structure) influences firm 

CSR activity and how this affects Competitive Advantage in selected Ghanaian 

industries. 

1.5 Research Questions 

The research is guided by the following research questions: 

1. To what extent is the competitive advantage of a firm influenced by its CSR activities 

among Ghanaian industries? 

2. What form of CSR activities impact on competitive advantage in Ghanaian 

industries? 

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3. Are there differences in CSR and Competitive Advantage across Ghanaian 

industries? 

4. Does company strategy influence firm CSR practice, and how does it affect 

competitive advantage in the Ghanaian industries? 

5. Does organisational demography influence firm CSR practice, and how does this 

affect competitive advantage in the Ghanaian industries? 

1.6 Research Hypotheses 

In the light of the above aims and objectives, the study is set to test the following: 

H1: Corporate Social Responsibility will have a significant positive influence on 

Competitive Advantage in the Ghanaian industries. 

H2: Competitive strategy will moderate the relationship between CSR and Competitive 

Advantage in the Ghanaian industries. 

H3a: Company structure will moderate the relationship between CSR and Competitive 

Advantage in the Ghanaian industries.  

H3b: Company size will moderate the relationship between CSR and Competitive 

Advantage in the Ghanaian industries. 

H3c: Company type will moderate the relationship between CSR on Competitive Advantage 

in the Ghanaian industries. 

1.7 Significance of the Study 

This research attempts to provide a comprehensive view of CSR to CA. It also seeks to 

highlight the relationship between both concepts. The study presents the advantages and 

perceptions of CSR. Hence, it is significantly useful for management to justify on CSR 

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implementations that will give them an edge over their competitors in their organizations as 

a form of practice. In terms of research, the study goes a long way to add to existing 

literatures which can be used for further research, since it goes into details by analysing the 

link between CSR and competitive advantage in Ghana. Considering significance to policy, 

the study provides guidelines for industries in Ghana on effective CSR activities that will be 

suitable for gaining competitiveness in the various industries they find themselves. 

1.8 Summary of Methodology 

The study adopts the cross sectional survey to examine the influence of Corporate Social 

Responsibility on Competitive Advantage across selected industries in Ghana. The 

Quantitative-Qualitative method employs the use of both primary and secondary data 

collection techniques. Primary data was collected using questionnaires and structured 

interviews. The target population of the study comprised of the head office of companies 

listed on the Ghana Club (GC) 100 which have consistently appeared from 2010 to 2012 in 

the Accra/Tema metropolis found in the Greater Accra Region of Ghana. The multi-stage 

sampling technique was adopted for the study. Precisely, purposive, stratified and 

convenience sampling techniques were used in selecting sixteen companies. The managers 

and persons in charge of CSR activities in sixteen companies were sampled for the study.  

 

With respect to measuring instruments, Corporate Social Responsibility was measured using 

Maignan and Ferrell’s (2000) scale, whereas Zhang’s (2001) scale was adopted in measuring 

Competitive Advantage. All the two instruments were anchored on a five-point Likert format 

ranging from “strongly disagree” to “strongly agree”. According to Marin et al. (2012), the 

CSR scale has a Cronbach’s alpha coefficient of 0.79 whereas, the Cronbach’s alpha 

coefficient of the Competitive Advantage scale, according to Bratic (2011), yielded a 

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Cronbach’s alpha ranging 0.71 and 0.89. The Multi-Item Scale for Identification of Realized 

Competitive Strategies was selected to measure strategic orientations. This scale was 

adapted from Conant, Mokwa, and Varadarajan, (1990) which has 11 items. The instrument 

according to McLaren, Head, Yuan and Chan (2011) was reported to have a Cronbach’s 

alpha coefficient of 0.74. Hage and Aikens’ (1967) scale on organizational structure with 16 

items rated on a 5-point Likert-type scale was modified to measure organizational structure. 

The instrument was reported to have a Cronbach’s alpha coefficient of 0.63 in a study 

conducted by Nicholson (1983). Descriptive and regression analysis were employed in data 

analysis. In all, the Statistical Package for Social Sciences (SPSS) version 22 software was 

used in coding, screening and analyzing the results. 

1.9 Organisation of the Work  

This study was organized and presented in five chapters. Chapter one covers the background 

information to the study, theories in CSR a brief overview of CSR in Ghana, research 

problem, purpose of the study, objectives of the study, the research questions, research 

hypotheses, significance of the study, as well as, organization of the research. Chapter two 

reviews relevant literature on the subject and also the research theories and frameworks for 

the study. The third chapter addresses the methodological approach of the study. It highlights 

the research design, study population, sample size, sampling techniques, data collection 

instrument and method, data processing and analysis. Chapter four analyses and discusses 

the data collected for the study. Finally, chapter five presents the summary of findings, 

conclusions and recommendations of the study. The references and appendices follow this 

chapter. 

  

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CHAPTER TWO 

LITERATURE REVIEW 

2.1 Introduction 

This chapter reviews literature in three main areas, namely: a) the theoretical framework; b) 

the content of CSR and CA and c) the link between CSR and CA. This will be followed by 

concluding remarks. 

2.2 Theoretical Framework 

This section discusses the theoretical frameworks which informed the study. The theoretical 

framework is any empirical or quasi- empirical theory of special and/or psychological 

process at a variety of levels that can be applied as ‘lens’ to the understanding of the 

phenomenon” (Creswell, 2009). Hence, the theoretical framework brings out the rationale 

for conducting a study. For the purpose of this study, three theories were looked at. These 

are the Stakeholder theory, Resource Based View theory (RBV) and the Instrumental theory. 

These theories were chosen because, the researcher presumed that they would help make 

logical sense out of the relationship between the variables that are important to the study. 

 

2.2.1 The Stakeholder Theory 
 

According to Dima (2008), the stakeholder theory has gained currency in the business and 

society literature in recent years in light of its practicality from the perspective of 

managers and scholars. The author also suggests that, the stakeholder approach offers a 

practical alternative to assessing the performance of organizations vis-a-vis key stakeholder 

groups. 

 

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The stake holder theory encompasses the idea that, businesses can be seen as systems whose 

survival depend on their ability to satisfy a particular set of audience. These audiences are 

referred to as stakeholders who can be identified by their ownership, rights, or interests in a 

business and its activities, past, present, or future (Blomback & Wigren, 2009). The theory 

also advances that, organizations have a social responsibility that requires them to take into 

consideration the interest of all groups or parties affected by their actions. This means that, 

managers should not only consider the interest of their shareholders in terms of decision 

making, but those important stakeholders who are affected by the decisions made by the 

organization (Branco & Rodrigues, 2007). To be precise, beyond shareholders of an 

organization, there are other agents who have interest in the actions and decisions of 

organizations that need to be noted by the organization.  

 

According to Freeman (1984), stakeholders are individuals or groups that affect or are 

affected by the operations of a firm. In another definition, Freeman (2006) maintains that 

stakeholders are seen as groups or individuals who are vital to the survival and success of 

the organization. Freeman (1984) grouped stakeholders into two categories: primary and 

secondary stakeholders. The primary stakeholder group includes owners, management, local 

community, employees, customers and suppliers whose existence mean a lot to the survival 

and success of the organization. Secondary stakeholders on the other hand, are the 

government and the community who provide market sources and infrastructure for 

organizations, and their presence, though not critical, is essential to the success of the 

organization. Considering the vital role that stakeholders play in organizations, managers 

should pay attention to the needs and rights of important stakeholders as a useful way of 

developing socially responsible activities (Maigan & Ferrell, 2004).  

 

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From the above, the researcher is interested to know whether satisfying the interest of an 

organization’s stakeholders through the practice of CSR will serve as a strategic means of 

creating a defensible position over their competitors. 

 

2.2.2 Resource Base View  
 

According to Barney (1991), the understanding of competitive advantage creation through 

resources has been a major research area for strategic management scientists for years now. 

To be able to comprehend the concept of CSR and its link to competitive advantage, the 

Resource Based View was used for this study. Numerous studies show that, in the RBV 

framework, CSR can create a defensible position for an organization (Hart, 1995; 

McWilliams & Siegel, 2001; Russo & Fouts, 1997). Barney (2001, 1991) suggest that, there 

are four characteristics of resources that can help organizations to gain competitive 

advantage. These characteristics include rareness, valuability, inimitability and non-

substitutability. Research has shown that, the resource-based perspective can help explain 

reasons why organizations do CSR (Branco & Rodrigues, 2006). These activities help in 

obtaining support from stakeholders. Intangible assets such as technological know-how, 

reputation and corporate culture are resources that impact on financial performance of the 

organization. 

 

Resources are the core of the Resource Base View, and are specific assets that create value 

for an organization. This value creation occurs when different resources are combined to 

obtain competitive advantage. CSR promotes the products and services of an organization 

hence, customers will prefer products and services from socially responsible organizations. 

From the above, the question to ask is whether the practice of CSR by organizations can be 

used as a resource that can create value. In so doing, the research seeks to investigate whether 

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CSR activities could be valuable, rare, inimitable or and non-substitutable which could lead 

Ghanaian industries to gain competitive advantage (Barney, 2001; 1991).  

 

2.2.3 The Instrumental Theory 
 

The Instrumental theory is seen as a means to an end where organizations use CSR as a tool 

to maximize shareholders wealth. Thus, the instrumental theory recognizes CSR as a means 

to achieve profit (Dusuki, 2009). The proponents of instrumental theory are of the view that, 

organizations may choose to support certain social programmes for reasons of competitive 

advantage, good image or other strategic reasons without endangering the interests of its 

primary stakeholders - shareholders (Dusuki, 2009; Greenfield, 2004; Johnson, 2003; 

Lantos, 2002). In this case, the Instrumental theory can be seen as the link between how 

organizations manage their stakeholders and the attainments of their goals. This theory is 

important to CSR since it focuses on achieving economic objectives through social activities, 

thereby maximizing shareholder value in the long term.  

 

2.3 Review of Related Empirical Literature 

2.3.1 Definitions of CSR 
 

The concept of Corporate Social Responsibility (CSR) has been defined and explained from 

diverse perspectives. These definitions came from economists, organizations, researchers, 

governmental agencies and other international bodies across the world. As suggested in the 

work of Ofori et al. (2014), these different definitions could be as a result of different 

interchangeable terminologies assigned to CSR. Bassen, Holz and Schlange (2006) 

documented such interchangeable concepts as corporate responsibility, corporate 

citizenship, social enterprise, sustainability, sustainable development, triple-bottom line, 

corporate ethics, as well as, corporate governance in some cases (cited in Ofori et al., 2014). 

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According to Margolis and Walsh (2003), the different definitions given to the concept of 

CSR have created a lot of confusion. Moon (2007) also stipulated that, corporations are 

likely to define their CSR initiatives to match their practical orientations towards their 

stakeholders. The author continues to explain that, the definitions given to CSR vary in terms 

of “the underlying strategic purpose (e.g. legitimacy, responsibility for externality, 

competitive advantage), substantive content (e.g. economic, legal, ethical, discretionary) and 

the approach deployed by organizations to identify responsibilities and evaluate practices to 

which stakeholders’ policies are oriented or around which principles or values have been 

developed” (Moon, 2007, p. 298). Other researchers are of the view that, the spread of the 

definition of CSR reveals the pervasive attention paid to CSR, not only by organizations, but 

also governments and international institutions and other stakeholders (Ofori, et al., 2014).  

 

The World Business Council for Sustainable Development (WBCSD), (1999) defines CSR 

as a “business commitment to contribute to sustainable economic development, working 

with employees and their families, the local community, and society at large to improve their 

quality of life”. This definition sees CSR as a means to sustainable development by 

improving people’s quality of life and attaining economic growth. The European 

Commission (EC) defines CSR as a concept whereby companies integrate social and 

environmental concerns in their business operations and in their interaction with their 

stakeholders on a voluntary basis (EC, 2010).  This definition indicates that, business 

operations and social concerns are put together. A similar definition was also given by the 

Corporate Social Responsibility Newswire Service (2003), where CSR was defined as the 

“integration of business operations and values whereby the interest of all stakeholders, 

including customers, employees, investors and the environment, are reflected in the 

company’s policies and actions”.  

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From the definitions given above, it can be said that, business practices and stakeholder 

concerns are put together. This means that, organisations should be held accountable for any 

of their actions that affect their stakeholders (customers, owners, employers, community, 

suppliers and the government). Also, a corporation’s CSR initiatives or activities should be 

driven by the organization’s vision and purpose, that is, corporate social responsibility must 

go complementary to, not competing with, the corporation’s mission. When organizations 

practice CSR that goes in line with their goals, vision and mission, it makes them to be 

strategic and hence are able to get economic benefits from such practice (Porter & Kramer, 

2006). 

 

It can also be noted from the definitions that, CSR occurs more on a voluntary basis. This 

means that, behaviours that are required by law are not part of CSR. It is assumed that, 

corporations must conform to legal requirements and CSR extends beyond those 

requirements to include additional voluntary initiatives consistent with the public good 

(Danko, Goldberg, Goldberg & Grant, 2008; Nyuur et al., 2014). Again, it can be said that, 

CSR is a voluntary action that a corporation implements as it pursues its mission and fulfils 

its perceived obligations to stakeholders, including employees, communities, the 

environment, and society as a whole (Halme,  Roome & Dobers, 2009). It can be concluded 

that, the definitions given above are sensitive to the achievement of three basic things: 

concern for people, the environment, and profit. As corporations take into consideration the 

interest of the community, they end up achieving their profits in the long run for 

sustainability. 

 

  

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2.3.2 Historical Perspectives of CSR 
 

According to Carroll (1999), the concept of CSR has a long and varied history. Smith (1790) 

points out that, the early phase of CSR was seen as an invisible hand which focused on the 

economic model. He adds that, every individual in society intends to promote their goods 

and services through the marketplace. In the quest of satisfying their self-interest, they end 

up promoting societal interest. The growth of CSR was known as Social responsibility (SR) 

because during the 1950s the word ‘corporate’ had not yet emerged (Carroll, 1999). 

 

Bowen (1953) defined CSR as “the obligations of businessmen to pursue those policies, to 

make those decisions, or to follow those lines of action which are desirable in terms of the 

objectives and values of our society” (as cited in Wolff & Barth, 2005, p. 6). Bowen 

explicitly highlighted the ethical considerations over the economic ones. According to 

Bowen (1953), the action of large corporations impact on the lives of citizens.  

 

Schwalb and Garcia (2003) categorized the 1960s stage as the developing stage where the 

focus was the processes that ensured the capacity of a firm to respond to its environment. In 

the 1960s, Davis (1960) put forward that, businessmen are concerned with the long-term 

economic profits so as to return profits to their society. Davis mentions that "social 

responsibilities of businessmen need to be commensurate with their social power" (Davis, 

1960 p. 71). Conversely, in 1976, Davis went back to add to his concept that CSR goes 

beyond the individualistic contract to institutional actions and their impacts on the society 

(Davis, 1976). McGuire (1963, p.144) suggested that ‘the corporation has not only economic 

and legal obligations, but also, certain responsibility to society which extends beyond these 

obligations’.  

 

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Most scholars in the 1970s attempt to look at the meaning of CSR in both academic and non-

academic terms. Heald (1970) also relates CSR to businessmen as seen in earlier works 

above. However, Johnson (1971) argues that, CSR can be viewed in four ways. First with 

the notion that, firms do not only have to serve the interest of their shareholders but also the 

interest of other stakeholders. This view is parallel to that of McGuire’s whereby CSR 

activities go beyond economic obligations. Secondly, Johnson is of the view that CSR 

activities are implemented to increase profits. The third view of CSR follows the principle 

of utility maximization. This means that “the enterprise searches for multiple goals rather 

than only maximum profits” (Johnson 1971, p. 59). The final view adjudged CSR as 

“lexicographic view”. In other words, “the strongly profit-motivated firms may engage in 

socially responsible behaviour. Once they attain their profit targets, they act as if social 

responsibility were an important goal- even though it isn't” (Johnson 1971, p. 75). 

 

 To add to the definitions given to CSR, Carroll (1979) also sees CSR in four concepts 

namely, economic, legal, ethical and discretionary (philanthropic) expectations. According 

to her, economic expectations of businesses is by increasing return on investment and 

maximising profits. Complying with rules and regulations is the legal expectations while 

being fair and right with moral and ethical activities is seen as fulfilling ethical expectations.  

Discretionary (philanthropic) expectation is to be a good corporate citizen. It is apparent that 

her concept is integrated with several definitions of other researchers today widely referred 

to.  

 

Carroll (1999) named the period of 1980 as “few definitions, more research and alternative 

themes”. This era brought out new approaches to the concept as more scholars attempt to 

conduct researches. For instance, Dalton and Cosier (1982) create the model in order to find 

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the relationship between "illegal" and "legal" and "irresponsible" and "responsible". While 

Strand (1983) searches for the relationship among social responsibility, social 

responsiveness, and social responses connected to an organization environment model. 

Additionally, Aupperle, Carroll and Hatfield (1985) conduct an empirical study to 

understand the relation between CSR and profitability. As a result of more research, new 

concepts such as Corporate Social Performance (CSP), public policy and stakeholder theory 

were introduced (Carroll, 1999). 

 

In the 1990s, CSR shifted to alternative approaches. First, Wood (1991) developed CSP 

model based on three-dimensional CSR model (Carroll, 1979) and the Wartick and Cochran 

(1985) model. Like two models, the CSP model integrates many CSR definitions. However, 

in terms of business performance orientation, this model is more explicit than earlier ones. 

Second, Carroll revisited the four criteria of CSR definition in order to embrace the 

philanthropic perspective as ‘corporate citizenship’ (Carroll, 1991). According to Lee (2008) 

the last two decades have seen the concept of CSR focused on corporate strategy, which is 

closely linked with financial and competitive performance goals. Hence, CSR is no longer 

seen as moral but as a strategic resource that can be used to improve the bottom line 

performance of businesses (Mcwilliams & Siegal, 2001). 

 

2.3.3 Factors Influencing CSR Activities 
 

According to Nyuur, et al. (2014), there are nine factors influencing CSR. These factors 

could be supporting and hindering CSR activities within companies in Sub-Saharan Africa. 

Each of these nine factors could be a supporting factor when wholly integrated into the CSR 

activities of companies, and at the same time, may be a hindering factor when not wholly 

developed and integrated into the CSR activities of companies. These factors include, 

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leadership and governance, CSR policy framework, project management, monitoring, 

evaluation and reporting, stakeholder engagement, staff engagement, government, 

beneficiation and funding. 

 

2.3.3.1 Leadership and Governance 

In discussing the influence of leadership and governance on CSR activities, Du et al. (2010) 

recognize that, it is important for managers to understand the main issues of CSR and be 

committed to them. Hence, it is important for them to know how to manage and integrate 

stakeholders into CSR activities so as to gain strategic benefits from these activities. This 

factor has to do with executives and senior management identifying the business of CSR and 

their willingness and commitment to incorporate it into the mission and vision of the 

organization. This involves management’s commitment to creating a dedicated CSR 

function, recruiting qualified persons with appropriate knowledge, skills and abilities, and 

empowering responsible staff in the field of CSR. This factor also involves top management 

being able to motivate, lead and communicate CSR visions to staffs and the community they 

found themselves through their policies. 

 

2.3.3.2 CSR Policy Framework 
 

This involves the extent or not to which CSR policies are available and aligned with business 

objectives, value systems and core business considerations. It came out in Nyuur et al. (2014) 

findings that, for a policy to promote CSR, it should contain CSR strategies and also clarify 

other issues such as the rules of engaging with stakeholders; how to fund CSR activities; and 

what to report to the public. It was noted that, the CSR policies should also be influenced by 

international guidelines such as the UN Global Compact, Millennium Development Goals, 

and the Global Reporting Initiatives on CSR, national directive guidelines either demanded 

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by government or agreed upon by industry stakeholders since the guiding principles can 

direct CSR activities. 

 

2.3.3.3 Project Management 
 

Project management was also seen to be one of the factors that can promote CSR. In project 

execution, the manager should have the necessary prerequisite skills and potentials. These 

skills and potentials include the ability to select, design and the delivery of the project within 

the timeline and objectives. The study shows that when CSR officials are well resourced and 

empowered, it enables them to initiate and execute CSR activities appropriately in 

congruence with the business objectives to the mutual benefits of all stakeholders. In 

addition, it enables them to regularly engage and communicate with all the stakeholders. 

 

2.3.3.4 Monitoring, Evaluation and Reporting 
 

This factor of CSR plays a vital role in influencing CSR activities because it allows 

stakeholders to provide feedbacks on CSR activities which in turn allows businesses to know 

whether they are achieving their intended objectives or not. Consequently, monitoring, 

evaluation and reporting in general enables CSR officials and companies to find ways of 

improving their CSR performance. 

 

2.3.3.5 Stakeholder Engagement 
 

In the execution of policy formulation as well as reporting of CSR activities, stakeholder 

involvement is vital to the success of CSR activities. Hence, there is the need to engage and 

communicate CSR activities to all stakeholders. CSR activities will be unsuccessful without 

the involvement of stakeholders. Other factors such as insufficient management capacity in 

stakeholder networks, low levels of commitment to mutually agreed objectives, competing 

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interests among partners, and divided attention from stakeholders’ involvement in other 

initiatives are some of the issues pointed out as making it difficult to fully secure proper 

stakeholder engagement. 

 

2.3.3.6 Staff Engagement 
 

Nyuur, et al. (2014) reported that, firms’ ability to motivate and secure commitment, support 

and participation of staff, as well as, influence appropriate behaviours in establishing CSR 

culture within the organisation, is very paramount in enhancing CSR in Sub-Saharan Africa. 

 

2.3.3.7 Government 

Government plays a critical role in CSR activities. The willingness and ability of government 

to create a more conducive environment, through policy development, tax rebates, 

stimulation of CSR dialogue, provision of supportive resources, and the endorsement of CSR 

involvement are very important in promoting CSR activities within the region. 

 

2.3.3.8 Beneficiation 
 

The study also suggested that, mutual exchange of benefits of CSR activities between 

companies and their localities play a key role in CSR success. Conversely, there will be 

hindrance in CSR activities if there is no mutual exchange of benefits.  

 

2.3.3.9 Funding 
 

Finally, respondents indicated that funding, which is not only limited to the availability of 

funds for CSR projects but also the monetary translation of CSR policy to create socio-

economic value, is also very critical in enhancing or hindering CSR in the region. 

 

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Table 2.1 below summarizes the eight supporting and nine hindering factors influencing 

CSR activities within companies in the Sub-Saharan Africa as discussed above. 

 

Table 2.1 Summary of Factors Influencing CSR 

Supporting Factors Hindering Factors 

Executive management commitment and 

support 

Low executive management commitment and 

support 

 

Availability and management of funding Lack of sufficient financial resources 

Ownership and cooperation of beneficiaries Low ownership and cooperation of 

beneficiaries 

 

Project management skills and efficiencies Limited project management skills and 

Efficiencies 

 

Stakeholder/partnership involvement and 

Management 

Stakeholder/partnership involvement and 

Management 

 

Company objectives and CSR policy 

alignment 

Absence of CSR policy 

 

Monitoring and evaluation Barriers to monitoring and evaluation 

Staff commitment, support and participation Low staff commitment, support and 

Participation 

 

 Insufficient support structures for CSR 

activities 

 

Source: Adapted from (Nyuur, et al., 2014) 

 

To add to the above factors, Nilsson and Rahmani (2008) also suggest that, CSR activities 

could be affected by four basic factors namely culture, regulation and law, global standards 

and NGOs. In a study on how CSR creates competitive advantage and builds capital in the 

hospitality industries in the United States, Sydnor, Day and Adler (2014) state that, corporate 

response to social issues is not uniform and companies may respond to specific issues in 

different ways based on corporate culture. Hofstede (1984) argues that, individualism or 

collectivism, masculinity or feminism, power, etc, which are the various elements of culture 

in each country influence the approach given to CSR.  

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Again, regulations and laws influence CSR activities. These are set of acceptable and 

unacceptable behaviours. It is important to note that, different countries have different rules 

and regulations that are used to govern businesses. Carroll (2004) asserts that, businesses are 

obliged to obey the laws of the community in which they operate as part of their business 

operations. Global standards, codes and guidelines are very necessary in issues relating to 

CSR performance. The standards, codes and guidelines are many to the extent that, 

businesses should know how to integrate those codes with the local codes. NGOs also 

influence the implementation of CSR activities. According to Freeman (2006), NGOs 

confront and exert pressure on institutions whose conducts do not meet set standards to 

refrain and conform to the set standards.  

 

2.3.4 Dimensions of CSR 
 

According to Mohamed and Sawandi (2007), CSR activities can be categorized into five 

main dimensions namely: environmental concerns, involvement in welfare or charity, 

community involvement, products or services and natural disaster-related issues. This 

categorization is summarized in Table 2.2 below. It shows that under environmental 

concerns, businesses engage in activities such as pollution control, recycling, collaborating 

with government agencies in organizing ‘green’ operations and developing environmental 

policy.  

 

Under welfare and charity concerns, businesses get themselves involved in developing 

infrastructure such as buildings, school libraries, sponsoring the treatment of chronic 

diseases and providing counselling, special bonus plan and reward system and material 

support to employees. In the case of community involvement as a CSR activity, businesses 

contribute to scholarships and research programmes in the field of market reaction and 

customer satisfaction, games and sports events and sponsor any community programmes. 

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Businesses, by ensuring healthy services and products, and also ensuring that all registered 

complaints about products and/ or services are treated as important, perform product or 

services CSR. Lastly, under natural disasters, businesses engage in activities such as 

organizing charitable programmes to collect funds, or contributing money to help victims. 

From Table 2.2 below, it can be inferred that, businesses do CSR activities in different areas 

not necessarily related to gaining profits.  

 

Table 2.2 Category of CSR Involvement and their Activities. 

Category of 

CSR 

Involvement  

 

Activities Involved in by business  
 

Environmental 

Concerns  

 

1. Pollution control.  

2. Product complies with environmental regulations. 

3. Recycles the unused components of products that would impact the environment. 

 4. Collaborates with government agencies in organising ‘green’ campaigns. 

 5. Develops environmental policy to be used at multiple levels of operations. 

Welfare or 

charity 

1. Directly contributes some amount of money for the community and business 

welfare.  

2. Involved in developing infrastructure such as buildings, schools, libraries or houses 

for donation to families.  

3. Sponsors the treatment of certain types of chronic diseases.  

4. Contributes to selected individuals for personnel development in certain areas that 

could contribute to the development of the business and industry.  

5. Provides counselling and material support to increase motivation amongst the 

employees.  

6. Provides a special bonus plan and reward system to employees to encourage a 

positive competition amongst them.  

7. Establishes a sound placement system for the employee who volunteers to move to 

another business with valid reasons.  

Community 

involvement 

1. Contributes to scholarships and research programmes in the field of market reaction 

and customer satisfaction.  

2. Donates some amount of money to build infrastructure for public use.  

3. Jointly sponsors any continual community programmes.  

4. Contributes to games and sports events 

Products or 

Services 

1. Ensures services and products have no unknown reaction to human health.  

2. Ensures all registered complaints about products and/or services are treated as 

important.  

Natural 

Disasters 

1. Takes action effectively in certain situations by immediately contributing in the 

form of cash to support the victims.  

2. Jointly organises charitable programmes to collect funds for victims of natural 

disasters.  

Source:  Adapted from (Mohamed and Sawandi, 2007) 

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In addition, the activities of CSR can be categorized in terms of the group involved. 

According to Nae and Grigore (2008), the activities of CSR can be classified based on the 

target group. According to them, in order to get closer, businesses should only concentrate 

on the main target group. In view of this classification of CSR activities, other studies have 

identified environment-related CSR, workplace CSR, community-related CSR and market 

place CSR as CSR related areas of initiatives (Battaglia, Testa, Bianchi, Iraldo & Frey, 2014; 

Kramer, Pfitzer & Lee, 2005; Szabo, 2008). 

 Environment-related CSR: 

These activities of CSR are related to environmental issues. These are actions 

companies take to alleviate their negative impacts on the environment in which they 

operate. Such activities include efficient use of resources, energy efficiency 

measures, the reduction in pollutants, water saving initiatives and a reduction in 

dangerous waste production, designing environmentally friendly products or 

production processes and informing business partners, consumers in the society 

about environmental issues. 

 Workplace CSR: 

These category refers to how businesses treat their employees. These issues are 

related to staff development and the provision of job security for all employees. 

These practices include recruitment, work-force diversity and equal opportunities, 

fair pay or financial support, job satisfaction and improvement in working conditions, 

health and Safety, human rights, work/life balance, training and staff development, 

communication or information of employees and participation in business decisions. 

 Community-related CSR: 

Community-related CSR deals with the relationships between a business, citizens 

and communities who may be affected by the operations of the business. They are 

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activities that are linked to societal and community involvement. They include the 

improvement of the local infrastructure, donations to local community institutions, 

dialogue and partnership with potentially affected communities and active 

contribution to social wellbeing. 

 Marketplace CSR: 

The last CSR activity covers how a company operates in relation to its suppliers, 

customers and other economic actors operating along the supply-chain. It embraces 

concerns, such as responsible advertising and marketing, dealing with customer 

complaints, ethical commercial practices, fair pricing, and activities to improve the 

quality or safety of products, provision of voluntary services to the client, contracting 

local partners, supporting the establishment of local or regional business alliances 

and imposing social and environmental requirements on suppliers. 

 

2.3.5 Advantages of CSR 
 

Bernstein (2000) states that businesses are important and active members of society. It is 

therefore in their control to maintain and improve the society’s prosperity. The author 

believes that, companies do not exist only to make maximum profits for the shareholders but 

to serve society as well. Profits exist in order to reward a company’s performance, and it is 

remarkable if it also serves society. If companies stop serving the society, then society will 

not tolerate their profits and in the long term not even their existence. 

 

According to Lee (2008), Valor (2008) and Vogel (2005), there has been an empirical 

evidence to show that the market outcomes of CSR are still inconclusive. There is much 

research on how strategic adoption of CSR could lead to financial rewards in the long run 

(Lee, 2008). Smith (2005) states that, equal employment opportunity policies as a form of 

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CSR activity enhance long-term shareholder value, with a positive impact on cost and 

structures. CSR activities that are geared towards the natural environment help to achieve 

cost and risk reductions. In this case, initial investments tend to pay off over time, thanks to 

cost savings from a better and more rational management of natural resources, lower 

litigation expenditure and lower insurance costs (Miles & Covin, 2000; Porter & Van der 

Linde, 1995). Barman, Wicks, Kotha and Jones (1996) added that, positive community 

relationships may contribute to achieving tax advantages for firms. Similarly, Carroll and 

Shabana (2010) suggested that, CSR activities help to reduce the level of regulation imposed 

on the firm if they are able to implement standards that can help them fulfil society’s 

expectations as well as protect themselves.  

 

Battaglia et al. (2014) assert that, CSR activities can also have a positive impact on human 

resources. Research has identified that CSR increases job satisfaction (Wang & Hsieh, 

2012). According to Cochran (2007) and Vitaliano (2010), a firm can lower its employee 

turnover rate and improve employee motivation when it has good relations with its 

employees. Cochran continues to add that, on the basis of the experiences of large firms such 

as Google, good employee relations are critical in attracting new staffs. Smith (2005) 

maintains that, a clear declaration of employee equal opportunity policies help firms to gain 

competitive advantage over other companies since they provide the opportunity to recruit 

and retain the most talented employees. A study on human resource management by Aldana 

(2011) has also proved that programs that focused on the health and safety of employees 

reduce absenteeism. This was not different from Carroll and Shebana (2010) who identified 

the competitive advantage created by CSR and proposed that the business case for CSR also 

incorporates cost and risk reduction, reputation and legitimacy, and synergistic value 

creation.  

 

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In the same vein, in a survey carried out amongst Italian SMEs from different industries, 

Long, Mura and Bonoli (2005) emphasized that, the implementation of CSR-related 

practices have a positive effect on human resources management, with a decrease in the costs 

related with retention and absenteeism. Similarly, in an empirical study which tested the 

relationship between the maturity of safety management systems and competitive 

performance, Fernandez-Muniz, Montes Peron and Vazquez-Ordas (2009) explored a 

structural equations model with a sample of 455 Spanish firms. The findings show a positive 

influence of health and safety management systems on competitive variables such as image 

and reputation, productivity and innovation. 

 

With regard to customer satisfaction, research has confirmed that CSR is key in the quality 

of products and services offered (Battaglia et al., 2014). Nicholls (2002) who laid emphasis 

on the relevance of a growing market for fair trade products in the United Kingdom showed 

a positive relationship between customer satisfaction and CSR. Again, evidence of a positive 

relationship has been shown by Manaktola and Jauhari (2007), who highlighted the 

significance of increasing awareness among consumers concerning corporate engagement in 

CSR activities. 

 

2.3.6 Arguments against CSR 
 

Despite the advantages accruing from the practice of CSR, there have been criticisms 

levelled against the practice. Carroll and Shabana (2010) indicated that, since the start of 

CSR there have been numerous academics who have opposed its validity and have advanced 

a number of arguments against it. Friedman (1962) was the first to oppose CSR as a concept. 

He maintains that, the ultimate responsibility of companies is to maximize profit for its 

shareholders and owners and for that matter, companies should not be concerned with the 

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problems that arise in the society. He continues to explain that, legislations and governmental 

agencies should be responsible for dealing with societal issues.  

 

Furthermore, Hayek (1969) argued that whenever companies get involved in CSR activities, 

it takes away the main purpose of the company- profit maximization as issues concerning 

the society are not really related to the ultimate goal of companies. This means that, CSR 

activities impose unequal cost among competitors. The argument here is that, on a global 

scale, if a business gets involved in CSR activities, it will not be able to compete on the same 

level compared with rivalry companies who mainly focus on their primary business activities 

(Davis, 1973; Friedman, 1962). 

 

Another argument against CSR is that, it requires social skills businesses may lack. Davis 

(1973) believes that, the activities regarding the society should not be dealt with by business 

people as they do not have the necessary skills or expertise since their main area of 

knowledge, skills and capabilities are embedded in finance and operations. He continued to 

give another argument by suggesting that, businesses possess significant power and there is 

no reason why social power should be added. 

 

However, the researcher suggests that these arguments have been in literature for more than 

fifty years and could be regarded as dated. Hence, the practice of CSR has grown from that 

stage and going forward with these arguments will no longer be valid especially in this 

twenty first century.   

 

  

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2.3.7 Definitions of Competitive Advantage 
 

Competitive advantage is defined as the “capability of an organization to create a defensible 

position over its competitors” (Li, Ragu-Nathan, Ragu-Nathan, & Rao Subba, 2006, p. 111). 

To gain competitive advantage over its rivals, an organization must either provide equal 

value to the customer, or perform activities more efficiently than its competitors (lower cost), 

or perform activities in a unique way that creates greater buyer value and commands a 

premium price (Olson, Slater, & Hult, 2005). Additionally, Thompson and Strickland (2003) 

observed that, a company has competitive advantage whenever it has an edge over its rivals 

in securing customers and defending against competitive forces. To Besanko, Dranova and 

Shanley (2000, p. 389), when a firm earns a higher rate of economic profit than the average 

rate of economic profit of other firms competing within the same market, the firm has a 

competitive advantage in that market. A competitive advantage exists when the firm is able 

to deliver the same benefits as competitors but at a lower cost (cost-advantage), or deliver 

benefits that exceed those of competing products (differentiation advantage). Thus, a 

competitive advantage enables a firm to create a superior value for its customers and superior 

profits for itself (Porter, 2003).  

 

Saloner, Shepard and Podolny (2001) postulate that, “most forms of competitive advantage 

mean either that a firm can produce some service or product that its customers value than 

those produced by competitors, or that it can produce its service or product at a lower cost 

than its competitors.” Barney (2002, p. 9) states that, “a firm experiences competitive 

advantages when its actions in an industry or market creates economic value and when few 

competing firms are engaging in similar actions.” The European Competitiveness report 

(2008) puts forward that, the concept of competitive advantage can be applied at two levels, 

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firm (micro) level and, regional/national (macro) level. According to the report, a sustained 

rise in the standards of living can be likened to the macro level of competitive advantage.  

 

2.3.8 Early Works on Competitive Advantage  
 

By tradition, Competitive Advantage (CA) involved the choice regarding the markets in 

which a firm would compete, defending market share in clearly defined segments using the 

attributes of price and product performance (Day, 1994). Day further contends that, in this 

present day, however, competition is regarded as a “war of movement” (Day 1994, p. 62) 

that rests on forestalling and responding quickly to the changing needs of the market (Stalk, 

Evans & Shulman, 1992). According to Jones (2003), Porter’s works (1979, 1980, 1985, and 

1990) remain the initial idea for any discussion on competitive advantage even though there 

are many economists who earlier used the concept of competitive advantage before Porter. 

Barney (2002), Straub and Klein (2001) stipulated that, the term competitive advantage was 

used by Ansoff (1965) and Penrose (1959) before Porter. Again, Barney (2002) argued that, 

the term competitive advantage was used by other authors (Barney, 1986; Caves, 1984; Day, 

1984; Spence, 1984) around the same time as Porter. Competitive advantage arises from the 

formation of superior competencies that are in a position to achieve cost and or 

differentiation advantages and to create value for customers, resulting in market share and 

profitability performance (Barney, 1991). 

 

2.3.9 Dimensions of Competitive Advantage 

Business managers evaluate and choose strategies that they think will make their businesses 

successful and these businesses become successful because they possess some advantages 

relative to their competitors (Pearce & Robinson, 2009). According to Pearce and Robinson, 

the two most prominent sources of competitive advantage can be found in the business’s 

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cost structure and its ability to differentiate the business from competitors. With regards to 

cost, the business must be able to provide its products and services at a cost below what its 

competitors can offer, while differentiation requires businesses to provide buyers with 

something uniquely valuable to their buyers. Dess and Lumpkin (2001), as well as, Robinson 

and Pearce (1988) found out that, businesses that do not have either form of advantage 

perform the poorest among their peers, while businesses that possess both forms of 

competitive advantage enjoy the highest levels of profitability within their industries. 

Similarly, Porter (1991) agrees to this assertion. Porter’s approach to competitive advantage 

is mainly on a firm’s ability to be a low cost producer in its industry or to be unique in its 

industry in some aspects that are popularly valued by customers (Porter, 1991).  

 

D’ Souza and Williams (2000) observed that, most managers agree that cost and quality will 

continue to remain the competitive advantage dimensions of a firm. In addition to the cost 

and quality dimensions of competitive advantage asserted by D’Souza and Williams, 

Wheelwright (1978) added dependability and speed of delivery as some of the critical 

competitive priorities for manufacturing. Moreover, other researchers recognise time as a 

consistent element that is critical for achieving competitive advantage (Holweg, 2005; 

Vokurka, Zank & Lund III, 2002; Zhang, 2001).  Price/cost, quality, delivery dependability, 

and time to market have been consistently identified as important competitive capabilities 

(Roth and Miller, 1990; Skinner, 1985; Vokurka, et al., 2002; White, 1996). 

 

In view of this, a study conducted by Ven and Jeurissen (2005) offered that, a firm’s price 

and cost and required investment and brand reputation management are the main elements 

that help a firm to gain an advantage over its competitors. The study further found five forces 

(entry of new competitors, threat of substitutes, bargaining power of buyers, bargaining 

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power of suppliers and rivalry among existing competitors) which influence firm’s price and 

cost and required investment which are the constituents of return on investment. In terms of 

reputation, company policies are the main factors. The study further adds that, company 

policies, even when they do not affect the quality of product can cause negative reputational 

effects among customers, especially when they perceive the policy as indecent, hence 

customers can boycott a product or a firm decreasing its competitive advantage. These 

findings are consistent with El-Garaihy, Mobarak & Albahussain (2014) who also found 

that, corporate reputation can have a positive impact on competitive advantage. 

 

Again, Quine and Rohrbaugh (1983) proposed the Competing Values Framework which has 

four-dimensional constructs for competitive advantage. The dimensions include internal 

processes, open systems, rational goals and human relations. The internal process model 

places a great emphasis on control and internal focus, stability, and stresses the role of 

communication and information management. The open system emphasizes on the 

flexibility and external focus and support and resource acquisition. The human relation deals 

with morale and human resource development, while the rational goal stresses the 

effectiveness shown in planning, productivity and efficiency.  

 

  

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Figure 2.1: Competing Value Framework- Organizational effectiveness 

 

 

 

 

 

 

 

 

 

 

Source: Quinn and Rohrbaugh (1983, p. 369) 

 

Figure 2.1 above illustrates the Competing Values Framework. The first value dimension is 

related to organizational focus, from an internal, micro emphasis on the well-being