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ISSUES IN CORPORATE SOCIAL RESPONSIBILITY:
Impacts of CSR in Companies’ Financial Performances
Institutional Affiliation
Student’s Name
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The main focus of this paper is to identify whether there is a connection between CRS
practices and the companies’ financial performances. It will also demonstrate whether the
connections are positive or negative if they exist. This issue is important in companies'
performances because it helps identify the profitability and market returns of the company. Our
group identified that CSR affects companies’ financial performances positively.
The relationship between CSR and the company's financial performance is positive for
many reasons, making it more applicable in many organizations. The first reason CSR is relevant
in companies is that it makes the company more appealing to investments, which consequently
improves the organization's performance.i. CSR also helps to increase sales in the company such
that there is a better chance of having customer loyalty, which generally improves financial
performancesii. Through CSR, there is improved ethics within the organization. This is a major
aspect because it emphasizes the relevance of the companies' policies and laws, making it
possible to support all companies' strategies to perform well.1. Additionally, it is important to
realize that all these aspects are a major part of understanding CSR's relationship and the
companies' financial performance. It would also establish an improved system where all aspects
of the organization align with their goals and strategies. Therefore, it impacts both the company's
external and internal environment, which is important in promoting its success.
CSR has proven to show a positive relationship with companies' financial performances
because it presents more support for the company, making it possible to acquire financial aid.
For example, CSR provides an opportunity to get investors for the company, such that it is more
possible to invest in strategies that are more beneficial for the company (Gaio and Henriques
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Gaio & Henriques CSR shows high financial performance for organizations; it attracts investments in the
company.
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2020). Getting investors for the company can be a good thing, especially when the company
wants to expand its resources and acquire more advantages in their market2. Therefore, CSR
helps attract more shareholders and new purposes for the company. According to Gaio &
Henriques, companies have started to refer to CSR as a sustainable development feature that
makes it possible to incur economic growth within the company. Therefore, it is fair to say that
the relationship between CSR and the companies' financial performances is because of its
attraction with investors.
Another important CSR to the companies' financial performance is that it creates a
positive relationship between the company and customer loyalty. CSR creates a good
relationship between the company and the customers, such that all expectations set by the
customers are met by the company (Ni Business 2022). Meeting all customer expectations can
help highly in increasing sales for the company. A positive reputation is more likely to be found
in the relationship between the company's financial status and customer loyalty. This positive
reputation will also help get more customers, which will generally help to improve the
company's finances.
CSR has also shown its importance in improving the company’s ethic such that all
stakeholders of the company find it easier to adhere to ethics and policies of the company3. It is
easy to share companies' goals with the employees and other companies' shareholders. With
ethics come other companies' responsibilities, such as financial responsibilities. It is important
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Customer loyalty directly influences organizations' performance because it promotes an increase in the
number of sales, collectively improving performance.
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positive business reputation, operational cost-saving, and improved financial performance
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for the company because it promotes a better way to look at employee responsibility to pr...