This qualitative study examined the relationship between Corporate Social Responsibility (CSR) and Financial Performance (FP) of tobacco companies in Malawi. Despite inconsistent findings in previous research, CSR has become an important tool for firms to demonstrate their commitment to social responsibility, particularly in industries such as tobacco that have negative impacts on the environment and social well-being. The Instrumental Stakeholder Theory served as the theoretical basis for this study.
The study developed the CSR/FP Link Conceptual Model to qualitatively test the link between CSR and FP for nine tobacco firms in Malawi. The researcher applied triangulation and reviewed 27 CSR activities by the firms, surveyed 46 senior employees using a questionnaire, and analyzed documents that included firm-specific reports, peer-reviewed scholarly and professional journals, totalling 206. Data analysis was done using Excel PivotTable.
The study findings revealed a relationship between CSR and FP and a positive impact of the former on the latter among tobacco companies in Malawi, indicating an impact of CSR on overall firm performance. This research provides new insights into the link between CSR and financial performance in the tobacco industry, particularly in Malawi where the CSR activities of tobacco companies have been under scrutiny.
The findings have practical implications for decision-makers in the industry, who can review their strategies in light of CSR. The study also contributes to the academic literature by reconciling inconsistent findings on the relationship between CSR and FP in previous research. The study highlights the importance of CSR in enhancing the financial performance of firms and provides insights into the potential benefits of CSR in industries with negative impacts on social well-being.
This study recommends that companies incorporate CSR into their strategic plans. Investing in CSR improves public image and customer confidence, and it should be taken seriously when evaluating business performance. Future research should focus on defining CSR, analysing its impact across different industries and stakeholders, and also harmonize measurement bases for comparable results.