Corporate Social Responsibility Expenditure on Environment and Financial Performance of Tea Development Agency Managed Factories in Kenya

Abstract

Kenya Tea Development Authority registered factories continue to face the challenge of financial performance in regard to declining return on equity across the period 2017-2021. To ameliorate this challenge, Kenya Tea Development Authority firms are undertaking corporate social responsibility activities in order to gain social license in the areas they operate. However, there has been limited empirical evidence linking corporate social responsibility of environment and financial performance particularly on these Kenya Tea Development Authority firms. Thus, against this background, this study determined the effect of Corporate Social Responsibility on environment on financial performance of Kenya Tea Development Authority managed factories in Kenya. The study was anchored on resource-based view theory, stakeholder theory, institutional theory and social contract theory. The study was based on positivism research philosophy guided by explanatory research design. The target population consisted of all the 67 Kenya Tea Development Authority managed factories clustered into 7 Seven regions as at December 2022. The study applied census technique where data was sought from the entire population. Information in its primary form was gathered through structured questionnaire on corporate social responsibility while secondary data from 2017-2021 was obtained on financial performance and firm size. The Statistical Package for Social Sciences was used to compute descriptive statistics that entailed means and standard deviation. Besides, inferential statistics covering regression analysis were used to test the formulated hypotheses. Presentation of the data was done through tables and figures. The study established that Corporate Social Responsibility expenditure on environment (β=0.505, p<0.05) was a significant predictor of financial performance of Kenya Tea Development Authority managed factories in Kenya. At the same time, firm size was found to have significant moderating effect on the relationship between Corporate Social Responsibility and financial performance of Kenya Tea Development Authority managed factories. The study concluded that there exists significant relationship between Corporate Social Responsibility on environment and financial performance which is moderated by firm size. The study recommended that senior managers working among Kenya Tea Development Authority managed factories in Kenya continue to invest in environmental Corporate Social Responsibility initiatives.