Impact of Corporate Social Responsibility on Firm's Financial Performance: The Tanzanian Perspective

There has been a significant growth of interest in the field of corporate social responsibility and the debate is still hot. There are however very few studies done in the least developed countries on the subject matter. The main objective of the study was to investigate the impact of CSR on Firm Financial Performance in the least developed countries, Tanzania being the country in question. The aim of this paper is to find out if there is a significant difference in financial performance of firms that engage in CSR relative to those that do not practice CSR. Independent sample t-test was used to test hypotheses. The data set included randomly selected 101 firms operating in Tanzania using accounting based measures of financial performance namely Return on Asset, Return on Equity. The findings presented revealed that there is a significance difference in financial performance favoring those firms that do Corporate Social Responsibility, implying that CSR has a positive influence on firm financial performance. Firms should then engage in corporate social responsibility so as to improve their financial performance and managers should not underestimate the contribution they make by committing their time and resources to make sure their CSR programs are effective in order to achieve the competitive advantage.