Why Socially Responsible? Determinant Factors of Organizational Performance: Case of Dangote Cement Factory in Ethiopia

Abstract

The main purpose of this study is to examine the effect of corporate social responsibility on the organizational performance of the Dangote cement factory in Ethiopia. In order to achieve the research objectives, the authors adopted both a descriptive and explanatory research design. Structured questionnaires were used to gather data from the targeted group of the study, where the probability and non-probability sampling technique was employed to draw a sample of 179. The collected data were presented and analyzed using the SPSS (version 20) statistical software package. A multiple linear regression model was applied to see the effect of CSR on organizational performance. The study showed that philanthropic activities, ethical activities, and legal activities affect organizational performance, have a positive relationship, and are statistically significant at a 1% confidence interval. It was concluded that for the existence of business industries, the community relation is key to ensuring a conducive atmosphere for the business to succeed.

1. Introduction

Corporate social responsibility (CSR) has become an emerging issue in the recent business world. Today, CSR has become a necessity of modern business. It links the organization with its social environment where interaction is required between them [1,2,3]. In today’s competitive world, society expects business firms to be more ethical and socially responsible than the legal requirements. The most crucial force in all organizations at the moment is the economic, environmental, and sociopolitical shifts taking place in the world [4]. Business stakeholders are more concerned about company engagement in numerous economic, environmental, and social aspects than solely profit making to stay in operation. In this regard, corporate social responsibility is an ever-increasing important component of the business world.

Even though the concept of corporate social responsibility started to be studied in the mid-twentieth century, it has been significantly developed in the past two decades [5]. Corporate social responsibility includes different aspects like stakeholder involvement, economic growth, environmental conservation, ethical approach, responsible practice, moral obligation, accountability, and corporate responsiveness [6]. Sustainability theory is one of the major streams of literature targeting not only investors, but also the well-being of society and customers in the form of practices focusing on conserving the natural environment [7]. The rise of international quality and environmental certifications focused on corporate social responsibility indicates the importance of such certificates in increasing competitiveness among companies [8].

Large studies have been undertaken on corporate social responsibility specifically in the past two decades [9], so that we now have a significant understanding of the drivers and effects, organizational importance, and contextual variety of corporate social responsibility [10]. However, in order to have a basic common understanding of corporate social responsibility, it is better to use theory reviews for explaining corporate social responsibility in more detail [11].

There are two major forms of theories that are employed in the corporate social responsibility literature [12]. These are theories linked to the internal and external drivers of corporate social responsibility. Institutional theory, resource dependency theory, stakeholder theory, and legitimacy theory are external and analyze the relationship between the company and society, whereas agency-based theory and resource-based theory are focused on identifying the company management and social values of the employees of the organization.

It is agreeable that a firm’s ability to flavor CSR towards improved business performance is based on employee commitment and its performance. Hence, it could be a good idea to engage in CSR for employees, given that they are an important pillar in every business. The immediate internal stakeholders and employees are a crucial component of the target group for most CSR outlines [13]. By any count, the world is altering faster than ever. Human numbers are growing faster, and the impressions of organizational activities are being felt in more and more ways. This change has philosophical inferences for business and means that the world of corporate social responsibility (CSR) is at the vanguard of this change [14].

In the African context, non-profit organizations and public snooping entities such as banks and registered companies have been noted to be greatly involved in community-based CSR activities for sustainability motives. According to [15], the term CSR in Africa is provoked by legislated demands being regularly omitted, while arguments about fitting business obligations anger workers. However, when it comes to CSR in Africa, it needs more mobilization programs from every angle at large, as CSR has acquired great importance in developing countries.

Ethiopia is one of the developing countries where the attitude of corporate social responsibility is not well developed, and the governance system also takes the form of simple control and decision making rather than inspiring the development and implementation of a well-developed ethical code of conduct. In Ethiopia, there is a lack of research work on the CSR concept and practices [16]. Businesses operating in the country are expected to integrate social demands (integrative approach) along with ethical considerations (ethical approach) in order to generate a positive impact on society. Corporate social responsibility (CSR) in Ethiopia has become a significant feature of managing businesses, which implies all the appropriate social, environmental, and economic actions that a firm must incorporate to satisfy the concerns of stakeholders and the financial requirements of shareholders [17,18].

Studies in the past have revealed incompatible results when observing the effects of CSR on a firm’s performance. Some studies have exposed CSR as having a positive effect, while others have shown it to have a negative effect. For example, the finding of [19] showed that the relation between CSR and organizational performance is either negative or insignificant for firms with low customer awareness. The authors believe that CSR philosophies do not make firms profitable given how the market works, and rather CSR was a waste of time and money. On the other hand, earlier studies such as [20,21] have shown that CSR has no effects on the financial performance of firms. Ref. [22,23] had also studied CSR. The findings of these authors only display the challenges of implementing CSR, and without doubt they said that because Ethiopia is one of the developing countries, the mindset of companies’ social obligation is not advanced. On the other hand, the findings of [24,25] disclosed that except for one firm, almost all firms considered for study did not have a standardized written guideline for how to discharge their CSR activities.

Therefore, this study aims at investigating how a CSR practice clearly affects organizational performance. Accordingly, the subsequent parts of this paper are structured as follows: theoretical frameworks of CSR are discussed, followed by an extensive literature review of the variables used in this study. Section three outlines the methodology part and data used, whereas section four portrays the result and discussion part of the study. The final part of this paper, section five, contains the conclusion and implications for further studies.

2. Literature Review and Hypothesis Development

Corporate social responsibility (CSR) is defined differently by different scholars, researchers, working groups, business executives, and other institutions. For instance, ref. [26] defines corporate social responsibility as “actions that appear to further some social goods, beyond the interest of the firm and that which is required by law”, whereas [27] considers corporate social responsibility to be wider as “the obligation to respond to the externalities created by market action”. Corporate social responsibility can also be defined as the sense of responsibility of the organization towards the social environment and community [28]. The difference depends on the societal awareness of social responsibility and corporate social responsibility between small and big industries and between individual corporate leaders [29,30].

Social responsibility has for a long time been defined and conceptualized in many ways by different writers; nevertheless, researchers do not share a common definition or core principles of what being socially responsible consists of; despite the growth of CSR practices, there is no single accepted method to measure CSR. Specialists have proposed many theories of CSR [31]. Today, no analysis of corporate governance structures would be complete without taking into consideration the pressures on companies to be seen as responsible corporate citizens in terms of their contribution towards their employees, consumers, competitors, community, environment, and society at large [32]. Moreover, CSR practices should be built into the corporate strategies [33].

The corporate social responsibility concept emphasizes community participation by business enterprises. It is the obligation of the firm’s decision makers to make decisions and act in ways that recognize the relationship between the business and society. It is therefore important for a business to continue in its commitment to behaving ethically and contributing to economic development while improving the quality of life of the workforce and the surrounding community at large. This means that firms can discharge CSR in different ways such as through paying standard salaries and providing securities to employees, contributing financial and non-financial resources to the community at the time of disasters, and providing educational and health services to the society if needed and possible [25,34].

Some studies have been carried out on CSR and firm value. Among such studies, ref. [19] investigated the role of customer awareness with respect to the impact of CSR on firm value. The study showed that CSR and firm value are positively related for firms with high customer awareness, with advertising expenditures as proxy. The relation is either negative or insignificant for firms with low customer awareness.

Despite worldwide discussion of the need for and benefits of CSR, there are opposing views on the pursuit of CSR activities by companies, as revealed by the studies reviewed; the result of [31] views that the only social responsibility of businesses is to use their resources and engage in activities designed to increase profits. On the other hand, others are of the opinion that firms that perform CSR know how the market works. These studies [17,28,35,36] support arguments in the literature that firms with socially responsible practices have higher valuation and lower risk.

The study of [37] revealed that there is a positive significant relationship between CSR and employee performance. This leads to CSR having significant effects on organizational performance. This indicates that employees that work in a socially responsible firm will exhibit better operating performance in terms of sales per employee and net income per employee than their peers who work in less socially responsible firms. According to [38], investigation of the impact of CSR on employees in the hotel sector in Egypt revealed that internal CSR variables have a significant positive relationship with employees’ organizational performance [38]. This implies that with any increase and/or positive change to the tested internal CSR variables, the employees’ organizational performance will be increased. The study concluded that internal CSR could be used as an important driver for enhancing employee job engagement and organizational performance.

The study of [39] showed the effect of CSR on the performance of quoted oil and gas firms in Nigeria from 2012 to 2016. The study revealed that CSR has a positive and significant impact on the performance of the oil and gas firms examined. The study concluded that firms that are socially responsible continue to flourish, partly as a result of CSR activities yielding their return. Assessing the impact of CSR on the profitability of Nigerian manufacturing firms revealed that CSR has a positive and significant impact on the net profit of manufacturing firms in Nigeria. This result implies that as the firms add to the welfare of society, this positively affects the returns of the firms in terms of profit [39].

Tehranian [40] carried out an investigation on the effect of corporate social responsibility of U.S. manufacturing firms in California. Their study covered five manufacturing firms in California, USA, and ordinary least squares was used to analyze the data collected from the respondents (management, staff, customers, and host communities of the firms). The result revealed that there is a positive relation between corporate social responsibility and organizational performance. The study recommended that manufacturing firms in California, USA, should embark more on CSR, as it positively influences their performance.

The impact of corporate social responsibility on a firm’s performance has caught the attention of several scholars in the past [41,42,43,44]. However, the outcomes of these studies were very inconsistent [45,46,47]. The findings of most of the researchers who conducted their study to see the association between CSR and organizational performance are also indecisive and vague [48,49,50,51]. In their studies, some authors found a positive relationship between corporate social responsibility and organizational performance [52,53,54]. However, other studies show a negative relationship [55,56]. A positive relationship between corporate social responsibility and a firm’s performance is also supported by recent studies [57,58]. These inconclusive results can lead scholars to undertake more investigation of corporate social responsibility to construct and test more hypotheses regarding the issue.

There are numerous features that need to be considered to measure and define organizational performance, as it has many different aspects [59,60]. That is why several researchers face challenges that make it difficult to measure and define the organizational performance [59,61,62]. Financial and non-financial methods of determining organizational performance are the two main known measurements [63]. According to Al-Sammaan [64], profitability, earnings per share, sales growth, and volume of sales are the most well-known objective measures of organizational performance.

2.1. CSR Practices from the Perspective of Developing Countries

Today, as a new phenomenon, the governance and corporate social responsibility are more well-established in the developed world than in the developing world. Unlike the developed countries, the concept of new governance is not practiced in most developing countries; rather, it takes the old traditional focus of the owner–manager relationship. In addition, it is not common to find a specific form of corporate social responsibility practices in the developing world; otherwise, it could be seen from business perspectives [22].

In the African context, not-for-profit organizations and public interest entities such as banks and listed companies have been noted to be greatly involved in community-based CSR activities for sustainability reasons. Most of these organizations are subsidiaries of multinational companies ascribing to and complying with the standards set by the corresponding global offices based in developed countries [65]. In addition, unlike in developed countries, regulatory agencies in Africa do not provide adequate capacity, if any, for the implementation and monitoring of CSR activities by organizations [65]. Therefore, further research is needed to uncover the underlying motivation for the involvement of companies in CSR in developing countries.

In describing the significance of integrating social and environmental issues in business operations, concern for social development and environmental issues is important for sustainable development to restore and protect the environment and conserve it for future generations. However, the big challenge for developing countries is that the industry environment is not the same as in developed countries and major issues affecting CSR practices also vary widely according to the local environment [66]. According to him, like many other developing countries, CSR practices in Ethiopia are guided by five recognized domains: economical, legal, ethical, philanthropic, and environmental.

A number of corporations are now following an increased commitment to CSR beyond just profit making and compliance with regulation [67]. According to [66], CSR from the Ethiopian perspective can be viewed as two-fold. Firstly, there is the current development of certain formal CSR activities made by international companies and non-governmental organizations (NGOs). Secondly, there is the existence of some informal CSR activities that are closely linked to cultural Ethiopian traits found in the national companies and organizations of Ethiopia.

2.2. Dimensions of CSR

• Philanthropic responsibilities

An important aspect of the business–community relationship is corporate philanthropy or corporate giving [68]. Every year, businesses around the world give generously to their communities through various kinds of philanthropic contributions to nonprofit organizations. Typically, gifts by corporations and their foundations take one of three forms: charitable donations (gifts of money), in-kind contributions (gifts of products or services), and volunteer employee service (gifts of time).

The distinguishing feature between philanthropy and ethical responsibilities is that the former is not expected in an ethical or moral sense. Communities desire firms to contribute their money, facilities, and employee time to humanitarian programs or purposes, but they do not regard the firms as unethical if they do not provide the desired level [69,70]. It covers the activities of the company that show the company is like a good citizen. Among cases where companies can have a share include participation in supporting the arts, education, and other sectors that can enhance the quality of life in society [25,67]. The philanthropic responsibility is the highest level of CSR, and it is measured in terms of various practices that include charitable donations to the society, assistance provided to employees, voluntary participation in charitable activities provided by the community, and assistance provided by the firm to projects that enhance quality of life [1]. Therefore, we proposed the following hypothesis:

Hypothesis 1 (H1).

Philanthropic activity has a positive impact on organizational performance.

2.

Ethical activities

Carroll and Shabana [5] defined ethical responsibility as the voluntary actions taken by firms to promote and achieve the goals for the society that go beyond economic and legal responsibility. The expectations of the public of companies’ social contributions are rising, while the perceived performance of companies on social goals is progressively declining [28,35]. Despite this, society and business share tacit knowledge that is a part of humanity, and this leads to the creation of a moral fabric. Ethical responsibilities embody those standards, norms, or expectations that reflect a concern for what consumers, employees, shareholders, and the community regard as fair, just, or in keeping with the respect or protection of stakeholders’ moral rights [70].

In one sense, changing ethics or values precede the establishment of law, because they become the driving force behind the very creation of laws or regulations. For example, the environmental, civil rights, and consumer movements reflected basic alterations in societal values and thus may be seen as ethical bellwethers foreshadowing and resulting in the later legislation. In another sense, ethical responsibilities may be seen as embracing newly emerging values and norms society expects business to meet, even though such values and norms may reflect a higher standard of performance than that currently required by law [70].

Ethical responsibilities in this sense are often ill-defined or continually under public debate as to their legitimacy, and thus are frequently difficult for business to deal with. Superimposed on these ethical expectations emanating from societal groups are the implied levels of ethical performance suggested by a consideration of the great ethical principles of moral philosophy. This would include such principles as justice, rights, and utilitarianism. The business ethics movement of the past decade has firmly established an ethical responsibility as a legitimate CSR component [31,70]. Ethical responsibility takes one step further in which it goes beyond economic and legal responsibilities. Ethical responsibility includes meeting the social expectations that are not documented by law (e.g., doing what is right, just, and fair, respecting the rights of individuals in society) [71]. Therefore, we proposed the following hypothesis:

Hypothesis 2 (H2).

Ethical activities have a positive effect on organizational performance.

3.

Legal activities

Legal activity includes performing in a manner consistent with expectations of government and law; complying with various federal, state, and local regulations; being a law-abiding corporate citizen; successfully meeting all legal obligations; and offering goods and services that at least meet minimal legal requirements [72]. The challenge of the legal aspect, on the other hand, requires that businesses should comply and legally agree with the frameworks of the host country. Legal responsibilities reflect a view of the philanthropic responsibility of “codified ethics” in the sense that they embody basic notions of fair operations as established by our lawmakers [70].

According to [73], CSR is a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. Organizations need to be compelled to honor their environmental responsibilities, since their primary preoccupation of creating economic value invariably leads to social costs or external costs necessary for creating environmental value but not borne by producers. Carroll [74] indicated that the majority of the world’s population lives in developing countries, and each country experiences its own unique social, political, and environmental issues. As managers expect business to make a profit as an incentive and reward for its efficiency and effectiveness, society also expects business to obey the law. The law, in its most rudimentary form, represents the basic rules of the game by which business is expected to function [25].

As a result of rapid industrial development, policies are pursued that aim to attract greater foreign investment, and the investors are often keen to start benefitting from fiscal incentives and cheap labor. While these strategies make economic sense, they have adverse social and environmental effects, including the use of child labor, low or unpaid wages, unequal career opportunities, occupational health and safety concerns, and increased pollution [74]. Moreover, [71] defined this responsibility as the positive and negative compulsions defined by the law of a country on firms. In fact, legal responsibility may include obeying legal requirements such as the tax law, employees’ safety, or environmental standards. Therefore, we proposed the following hypothesis:

Hypothesis 3 (H3).

Legal activities have a positive impact on organizational performance.

2.3. Organizational Performances

Performance has been viewed from various perspectives depending on the objectives and expectations of the users of information generated. Organizational performance comprises the actual output or results of an organization as measured against its intended outputs or goals and objectives [35]. It is important to note that the moment any firm can fulfill its own part of the obligation, the employees will be left with no choice other than to give their best, which will in turn affect the firm’s output, leading to an increase in its profit [59,61].

Generally, performance is also used as a general measure of a firm’s overall health over a given period of time, and can be used to compare similar firms across the same industry or to compare industries or sectors in aggregation [1,17]. The following Figure 1 depicts the conceptual framework of the study in graphical form.

3. Methodology

Dangote Cement is Africa’s leading cement producer with operations in 10 African countries and revenues in excess of US$2.3 billion. Dangote Cement is the largest company on the Nigerian Stock Exchange, having listed its shares in October 2010. The company has a fully integrated quarry-to-customer producer with production capacity of up to 48.6 million tons per annum across Africa as of 2020. Dangote Cement has operational facilities in Cameroon, Congo, Ethiopia, Ghana, Senegal, Sierra Leone, South Africa, Tanzania, and Zambia.

According to Danilo Trugillo, the Country Manager of Dangote Cement Ethiopia, to support Ethiopia’s strategic plans and ambitions, the government developed two Growth and Transformation Plans (GTPs), each lasting five years. The first phase (2010–2015) focused on agriculture development and support services including infrastructure preparations like human development, education, healthcare, and banking. As a result, however, the country began spending millions of dollars on cement imports, as local production could not sustain demand. Thus, in 2012, the Ethiopian government called for a series of cement plants to be built locally, leading both national and foreign investors to construct new such facilities in different locations across the country in which Dangote Cement, Africa’s leading cement producer, become one of these investors in Ethiopia. Embracing the challenge and opportunities to make a critical contribution to Ethiopia’s sustained growth and development, the company earmarked $650 million for the construction of a flagship cement manufacturing facility at a 135-hectare site in Mugher, a town situated 83 km west of Addis Ababa, the capital city of Ethiopia, inaugurated in May 2015.

3.1. Description of the Study Area

The study was conducted on the Dangote Cement factory, which is located in Ethiopia, Oromia Regional State, West Shoa Zone of Ada’a Berga District or wereda. Geographically, the district is located 64 km north-west of Addis Ababa on the road of the Mugher Cement Enterprise at 9°12′ to 9°37′ N latitude and 38°17′ to 38°36′ E longitude as depicted in Figure 2 below. In Ethiopia, Dangote Cement is the largest plant capable of producing high-quality cement to meet market needs since May 2015.

3.2. Research Design

To address the research problem and to achieve the stated objectives, the authors used both a descriptive and exploratory research design. A descriptive research design was used to describe aspects of CSR practices that had been undertaken by the Dangote cement factory and their implementation to improve the performance of the organization in terms of graphs, tables, frequencies, and percent and inferential statistics. In addition to this, the authors employed an explanatory research design to examine the effects of corporate social responsibility activities (philanthropic activities, ethical activities, and legal activities) on organizational performance.

3.3. Sampling Technique and Sample Size Determination

The researchers used both a probability and non-probability sampling technique. The Dangote Cement factory is selected purposely from cement companies in Ethiopia to draw a conclusion and forward suggestions for respective governmental officials, cement factory owners, and managers in the country and to place a stepping stone for further studies on the issue of CSR and organizational performance in developing countries, particularly in Ethiopia. According to the official source of the company, Dangote Cement is a leading cement producer in Africa, and its facility in Ethiopia is able to produce 2.5 million tons of cement every year and accounts for 30 percent of the entire local market in the country. Moreover, Danilo Trugillo, the Country Manager of Dangote Cement Ethiopia, confirms that the Dangote Cement plant in Ethiopia changed the cement business perspective of the country and it takes a lion’s share of controlling the cement market of the country. Therefore, it is plausible to consider this giant company as a better representative for this particular study. Regarding the probability sampling, simple random sampling was employed in order to avoid bias while distributing a questionnaire for the participants. The total population of the study is 325, in which only permanent employees of the company whose educational level is diploma and above with more than three years work experience were considered. In addition to this, participants for qualitative data collection for this study were determined purposely based on the richness of the information the participants have on the issue.

The number of respondents (sample size) to collect quantitative data for this study was determined using a statistical formula suggested by Yamane, [75] with a confidence level of 95% and margin of error of 5% (0.05), to ensure a more accurate result. Yamane’s sample size determination formula was the following and respective calculations of sample size in

Table 1. Respondent’s levels of education with their relevant experiences.

Respondent’s Level of Education	Target Population	Sample Size
Diploma with > 3 years of experience	72	37
First degree with > 3 years of experience	167	78
Above degree with > 3 years of experience	86	64
Total	325	179

Source: Own compilation.

:

$$n=\frac{N}{1+\left(N\right)e^2}$$

(1)

where n = number of samples; N = total population; e = margin of error.

Therefore, $n=\frac{325}{1+\left(325\right){0.05}^2}$ = 179.

3.4. Source of Data and Data Collection Instrument

The study used both primary and secondary data sources. The primary data were collected directly from the employees of the Dangote cement factory using well-designed closed-ended questionnaires and semi-structured interview questions. The researchers also used secondary sources of data related to the issue at hand from files, brochures, office manuals, circulars, and policy papers to provide additional information where appropriate. Additionally, a variety of books, published and/or unpublished government documents, websites, reports, and newsletters were reviewed to make the study more fruitful.

3.5. Reliability and Validity of the Instruments

The most important action to ensure quality of research output is to confirm the validity and reliability of data collection instruments. According to Creswell [76], reliability measures the stability and consistency of the instruments used to gather data, whereas validity is a measure of the meaningfulness of the data and soundness of the data collection instruments.

As Kothari [77] indicates, researchers can ensure validity by pretesting questionnaires and interview questions to identify vague questions and getting suggestions from pilot study participants to correct the deficiencies of the instruments used. Pilot studies can help the researchers in the framing of questions and refinement of the research approach or tailoring of efficient research instruments [78]. Therefore, the results from the pilot study give the researcher a chance to check and validate the research instruments for the actual research. Accordingly, a pilot study was undertaken to check the validity of the questionnaire and interview questions before distributing them to the actual samples in order to generate quality data by using the specified instruments for this study.

To ensure the reliability of the instruments, the researchers conducted a Cronbach alpha test. According to Field [79], Cronbach’s alpha determines the internal consistency or average correlation of items in a survey instrument to gauge its reliability. The alpha coefficient ranges from 0 to 1 and is used to describe the reliability of factors extracted from dichotomous and/or multi-formatted questionnaires or scales [80]. Accordingly, the reliability of instruments used in this study was duly checked using Cronbach alpha statistics.

3.6. Model Specification

Saunders et al. [80] stated that multiple regression analysis as a statistical technique focuses upon the structure of simultaneous relationships among three or more phenomena. This multiple linear regression model was used in determining the effects of the three variables that are categorized as independent variables on the dependent variable, as indicated below:

• Y = β0 + β1X1 + β2X2 + β3X3 + ε

Where:

• Y = dependent variable (organizational performance)
• β0 = the intercept/constant value;
• X1 = philanthropic activities;
• X2 = ethical activities;
• X3 = legal activities;
• ε = the error term.

4. Data Analysis, Results, and Discussion

In order to assess the effects of CSR on organizational performance, multiple regression analysis was conducted. A total of 179 questionnaires were distributed, and 170 questionnaires were returned. Among the 170 questionnaires returned back, four of them were discarded because they were not fully completed. After removing incomplete questionnaires and missing questionnaires, 166 complete questionnaires were useable (93% effective response rate). The collected data were presented and analyzed using SPSS (version 20) statistical software, and multiple regression analysis was also used to test the hypotheses of the study and the effects of the independent variables on the dependent variable.

To measure the consistency of the scores obtained, the study used Cronbach’s alpha (a measure of the internal consistency of the questionnaire items) by using data from all the respondents, and separate reliability tests for each of the variables were computed. Cronbach’s alpha measures the extent to which item responses obtained at the same time correlate highly with each other, and the widely accepted social science cut-off is that alpha should be greater than 0.70 for a set of items to be considered a scale [81,82,83]. Accordingly, the Cronbach’s alpha test was carried out by using SPSS, and the results are presented in

Table A1. Reliability Statistics.

Reliability Statistics
Cronbach’s Alpha	Cronbach’s Alpha Based on Standardized Items	N of Items
0.964	0.974	4

Source: SPSS Output.

of Appendix B.

Table A1 in Appendix B shows the Cronbach’s alpha reliability statistics value of the scale for all predictor and outcome variables. The calculated coefficient alpha for this study was found to be 0.964 for all variables, which is greater than the required threshold of 0.70, confirming the variables to be internally consistent. Accordingly, all variables result in the table suggested that the threshold of the reliability test is > 0.7, which is statistically significant, and the data are reliable. Additionally, it can be seen that all of the four items contribute positively to yield the highest Cronbach’s alpha for the instrument. The total item result is shown in

Table A2. Item-total statistics for Cronbach’s alpha.

Item-Total Statistics
	Scale Mean if Item Deleted	Scale Variance if Item Deleted	Corrected Item-Total Correlation	Squared Multiple Correlation	Cronbach’s Alpha if Item Deleted
Philanthropic	12.8807	3.588	0.974	0.954	0.935
Ethical	13.191	3.418	0.985	0.983	0.935
Legal	12.8855	3.966	0.957	0.969	0.939
Performance	12.7151	5.142	0.85	0.779	0.987

Source: SPSS Output.

(item total for Cronbach’s alpha) in Appendix B.

The results of

Table A3. Inter-item correlation matrix.

	Philanthropic	Ethical	Legal	Performance
Philanthropic	1	0.974	0.951	0.866
Ethical	0.974	1	0.982	0.851
Legal	0.951	0.982	1	0.8
Performance	0.866	0.851	0.8	1

Source: SPSS Output.

in Appendix B show the inter-item correlation, which gives the correlation coefficients for items in the study’s scale. Therefore, the study needed to use the inter-item correlation table to check if the items interrelate well, where the inter-item correlation must be greater than 0.3 [80]. From the result of this study, the correlations between items for all variables are well above 0.3, which is encouraging.

4.1. Effects of CSR activities:

4.1.1. Effects of Philanthropic Activities on organizational performance

The study required finding the effects of philanthropic activities on organizational performance in the Dangote cement factory. The findings of the study are discussed in

Table 2. Effects of philanthropic activities on organizational performance.

Descriptive Statistics
	N	Mean	Std. Deviation
Any donation, financial aid, or training support given by your organization to local community has increased your organizational performance.	166	3.9277	1.38637
Your company’s educational supports, like supports for private and public educational institutions and scholarships for individuals or groups, have provided inspiration for your employees to improve their performance.	166	4.5	0.50151
The participation of your company’s managers and employees in charitable activities in their local communities has increased the goodwill of the factory	166	4.512	0.85094
The support of your company for physically and mentally handicapped peoples has advantages in improving its performance, such as retaining employees and improving the company’s corporate image.	166	4.4337	0.61679
Valid N (list wise)	166

(Source: Research Survey, 2020).

.

The respondents’ views on the effects of philanthropic activities on organizational performance had variously agreed on the table above. For the case of donation, financial aid, and training support given to the local community, there was a mean of 3.9277 and standard deviation of 1.38637. For the case of educational support like supports for private and public educational institutions and scholarships for individuals or groups, there was a mean of 4.5000 and standard deviation of 0.50151. For the case of managers and employees participating in charitable activities in their local communities, there was a mean of 4.5120 and standard deviation of 0.85094.

For the case of supporting physically and mentally handicapped peoples, there was a mean of 4.4337 and standard deviation of 0.61679. The findings in the above results show that most of the respondents do support those philanthropic activities. Hence, the majority of respondents strongly agree that encouraging philanthropy can be better through educational support like supports for private or public educational institutions and scholarships for individuals or groups and through facilitating managers and employees to participate in charitable activities. These findings relate to the findings of [74], which argues that corporate philanthropy is a potential source of other-oriented, extrinsic value, since it entails the benefits of supporting others to the need of promoting the firm’s performance.

4.1.2. Effects of Ethical Activities on Organizational Performance

The study required finding the effects of ethical activities on organizational performance in the Dangote cement factory. The findings of the study were discussed in

Table 3. Effects of ethical activities on organizational performance.

Descriptive Statistics
	N	Mean	Std. Deviation
Your company does not compromise the ethical norms of society to achieve its corporate goal.	166	3.1325	1.23358
Your company operating its business within the ethical standards of the society and preventing unethical behaviors in order to achieve organizational goals has provided encouragement for retaining employees and customers.	166	4.1687	0.80633
The company’s work, with the obligation to avoid harm and to do what is right, has enabled the organization to become a socially responsible factory.	166	4.3313	1.11403
The firm strives to deliver high value and a quality product that meets and/or exceeds customers’ expectations, which has effects on customer retention.	166	4.5	0.50151
Valid N (list wise)	166

(Source: Researcher’s Survey, 2020).

.

The respondents’ views on the effects of ethical activities on organizational performance in the Dangote cement factory had varied agreement on the table above. For the case of the ethical norms of society in a fair of objective manner, there was a mean of 3.1325 and standard deviation of 1.23358. For the case of a company operating business within the ethical standards of society and preventing unethical behaviors, there was a mean of 4.1687 and standard deviation of 0.80633. For the case of the company’s obligation to avoid harm, there was a mean of 4.3313 and standard deviation of 1.11403. For the case of delivering high-value and quality products that meet and/or exceed customers’ expectations, there was a mean of 4.5000 and 0. 50151.

From the above result, the researchers found that the majority of the respondents strongly agreed that ethical responsibilities have positive effects on organizational performance. Hence, the researcher found that there is a growing public interest in this subject, since the recognition that the lack of ethics often declines the performance and capabilities in many organizations. Therefore, the researchers conclude that the ethical obedience mechanism helps to develop and build corporate status and so contributes to corporate stability and growth, since it instils confidence both inside and outside the organization. This is supported by [84], who studied the relationship between unethical behavior and the nine dimensions of the ethical climate survey.

4.1.3. Effects of Legal Activities on Organizational Performance

The study required the establishment of the effects of legal activities on organizational performance in the Dangote cement factory. The findings of the study were discussed in

Table 4. Effects of legal activities on organizational performance.

Descriptive Statistics
	N	Mean	Std. Deviation
Your company’s equal opportunities assured for all workers without bias either directly or indirectly in any labor practice play an important role in employee retention.	166	4.3012	0.75855
The distribution of rights and obligations for both employers and employees has played a key role in motivating employees and bringing efficiency to increase the company’s profitability.	166	4.5843	0.49433
Promotion of people based on their credentials, not discriminating in terms of race, gender, religion, or ethnicity, plays a great role in improving overall organizational activities.	166	4.3313	1.11403
Your company obeying the environmental laws, rules, and regulations to promote environmental protection plays a key role in the company’s performance.	166	4.6687	0.47211
The protection of customer rights when they have grievances regarding products and service offers within the company plays a great part in customer retention.	166	3.8072	1.03815
Valid N (list wise)	166

(Source: Researcher’s Survey, 2020).

below.

The respondents’ views on the effects of legal activities on organizational performance in the Dangote cement factory had varied agreement with the table above. For the case of equal opportunities assured for all workers, there was a mean of 4.3012 and standard deviation of 0.75855. For the case of the distribution of rights and obligations for both employers and employees, there was a mean of 4.5843 and standard deviation of 0.49433. For the case of the promotion of people based on their credentials and not discriminating in terms of race, gender, religion, or ethnicity, there was a mean of 4.3313 and standard deviation of 1.11403. For the case of obeying environmental laws, rules, and regulations to promote environmental protection, there was a mean of 4.6687 and standard deviation of 0.47211. For the case of the protection of customer rights when they have grievances regarding products and services, there was a mean of 3.8072 and a standard deviation of 1.03815.

From these results, the authors found that the majority of the respondents strongly agreed that legal responsibilities have fruitful effects on organizational performance; for example, society has not only certified businesses as economic entities, but it has also established the minimal ground rules under which businesses are expected to operate and function. Hence, the authors conclude that businesses organizations are expected and required to comply with the laws and regulations as a condition of operating. This result is also supported by the results of [85], which illustrated the manner in which the social contract has been conducted, particularly on behalf of corporations during the past, that makes the issue of corporate social responsibility so prominent and important today.

4.2. Regression Analysis

The authors used multiple linear regression analysis to evaluate the effects of corporate social responsibility on organizational performance. To do so, we tested for the classical linear regression model assumptions for the model specified, as presented below. There are several assumptions that are compulsory to provide valid results in multiple linear regressions. Before running the analysis, we tested some of the basic assumptions of multiple linear regression, which are commonly advanced as follows.

Assumption 1.

The relationship between the dependent and the independent variables should be linear.

Organizational performance is supposed to be linearly related to CSR dimensions, meaning that the dependent variable (organizational performance) is assumed to be affected by changes in CSR dimensions (the independent variables). The association between the two variables should be linear. This means that the scatter plot of scores should be a straight line, not a curve [83]. The scatter plots of this study show that there is a virtually linear relationship between the variables, as indicated in Figure A1 of Appendix C. The plots do not show any evidence of non-linearity; therefore, the assumption of linearity is satisfied.

Assumption 2.

Normality dispersion of the data should be normally distributed.

A normal distribution is a continuous, symmetric, bell-shaped distribution of a variable. The shape and position of a normal distribution curve depend on two parameters, the mean and the standard deviation [86]. Thus, as indicated in Figure A2 of Appendix C, there is no problem of normality in this model, as the data are normally distributed around the mean.

Assumption 3.

There should be no multi-collinearity or perfect correlation between independent variables.

Table A4. Check for collinearity.

Collinearity Coefficients
Model		Collinearity Statistics
		Tolerance	VIF
1	(Constant)
	Philanthropic	0.071	1.737
	Ethical	0.089	1.864
	Legal	0.085	1.238

in Appendix B shows the test for multi-collinearity, which is relatively easy to detect by calculating the tolerance or VIF (variance inflation factor) values. A tolerance value below 0.10 indicates a collinearity problem. The VIF is just the reciprocal value of the tolerance. Thus, VIF values above ten indicate collinearity issues. According to this measurement, none of the variables’ tolerance level is below 0.10 with their VIF above ten. Therefore, there is not a multi-collinearity problem with the variable.

Assumption 4.

Assumption of no auto correlation.

Regression analysis is based on uncorrelated error/residual terms for any two or more observations [83]. This assumption is tested for each regression procedure with the Durbin–Watson test, which tests for correlation between variables residuals. The test number can vary between 0 and 4, with a value of 2 meaning that the residuals are uncorrelated [82]. A value greater than 2 indicates a negative correlation between adjacent residuals, whereas a value below 2 indicates a positive correlation.

As a general rule, the residuals are independent (not correlated) if the Durbin–Watson statistic is approximately 2, and an acceptable range is 1.50–2.50 [87]. In this study, the Durbin–Watson value was 1.830, which is very close to 2; therefore, it can be confirmed that the assumption of independent error has almost certainly been met.

4.3. Regression Results

Regression analysis is one of the most frequently used tools in market research that allows analyzing relationships between independent and dependent variables. In this study, the regression model presents how much of the variance in the measure of organizational performance is explained by the underlying variables of corporate social responsibility, as indicated in

Table 5. Model summary.

Model Summary b
Model	R	R Square	Adjusted R Square	Std. Error of the Estimate		Durbin-Watson
					Sig. F Change
1	0.883 a	0.779	0.775	0.21339	0.000	1.830

^a. Predictors: (Constant), legal, philanthropic, ethical. ^b. Dependent variable: performance. Source: SPSS output.

below.

The R-value of the model summary in Table 5 represents correlation and is 0.883 (the R-column), which indicates the high degree of correlation between the independent variables (legal, philanthropic, and ethical) and the dependent variable (organizational performance). That is 88.3%, indicating that there is a strong relationship between the dependent variable (organizational performance) and independent variables (legal, philanthropic, and ethical).

R-square (R-square column) indicates how much the total variation in the dependent variable (organizational performance) can be explained by the independent variables (legal activities, philanthropic activities, and ethical activities); in this case, the value of R-square is 77.9%, which is very strong. This means that about 78% of variance in the data can be explained by the variables; this amount is considerably large.

Adjusted R-square indicates the percentage of variance in the dependent variable or outcome variable explained by the independent variable or predictor variable. In this case, 77.5% of the variance in organizational performance can be explained by legal activities, philanthropic activities, and ethical activities. The three independent variables that were studied explained 77.5% of variance to investigate the effects of corporate social responsibility on organizational performance. This means that other factors that are not included in this research contribute about 22.5% of variance in the dependent variable. Therefore, further research should be conducted to investigate the effects of corporate social responsibility on organizational performance by including other variables that are not addressed in this study.

An ANOVA test shows how well the regression equation fits the data, that is, predicts the dependent variable and also shows an overall fitness of the model used. The last column in

Table A5. ANOVA-table (test for an overall fitness of the model used).

ANOVA a
Model		Sum of Squares	Df	Mean Square	F	Sig.
1	Regression	25.985	3	8.662	190.225	0.000 b
	Residual	7.376	162	0.046
	Total	33.361	165

^a. Dependent variable: performance. ^b. Predictors: (Constant), legal, philanthropic, ethical. Source: SPSS Output.

of Appendix B (ANOVA-table) indicates the goodness of the model. From the result of F-test, it is known that the F statistic is 190.225 and the p-value or the Sig. value is 0.000, which less than 5%. Thus F (3,162) = 190.225, p < 0.05, and R = 0.779. This indicates that the overall regression model is statistically significant.

Table 6. Regression analysis.

Coefficients a
Model		Unstandardized Coefficients		Standardized Coefficients	T	Sig.
		B	Std. Error	Beta
1	(Constant)	2.983	0.169		17.639	0.000
	Philanthropic	0.365	0.095	0.633	3.860	0.000
	Ethical	0.603	0.147	1.099	4.091	0.000
	Legal	0.574	0.128	0.881	4.488	0.000

^a. Dependent variable: performance. Source: SPSS Output.

below showed the regression analysis.

The unstandardized coefficient refers to the direction of the relationship and the amount of change that the different independent variables contribute to organizational performance given that one unit change in the value of the independent variable. The regressions coefficients that are shown in the above table indicate that the intercept, 29.83%, is representing the estimated average value of organizational performance when the philanthropic activities, ethical activities, and legal activities of the firm are zero. Thus, a firm with no philanthropic activities, ethical activities, or legal activities will have a severe influence on the performance of the firm.

The slop of independent variables, which is listed in beta value, also displays useful predictive information about the implication. The slop of philanthropic activities, ethical activities, and legal activities of the firm is 0.633, 1.099, and 0. 881, respectively, meaning that the firm’s performance changed or increased by 0.633, 1.099, and 0.881, respectively, for the three independent variables. This result is also supported by [88,89,90]. Using the regression coefficients for independent variables and the constant term given under the column labeled B, the researchers constructed the regression equation for predicting firm performance as follows:

• Y = β0+ β1X1 + β2X2 + β3X3 was interpreted to mean
• Y = organizational performance;
• X1 = philanthropic activities;
• X2 = ethical activities;
• X3 = legal activities.
• Therefore, Y= 2.983 + 0.365X1 + 0.603X2 + 0.574X3.

According to the above equation, if all factors (philanthropic activities, ethical activities, and legal activities) remain constant at zero, overall organizational performance in the firms will be 2.983. The findings also show that a percentage increase in philanthropic activities will lead to a 36.5% increase in organizational performance of the firms; a percentage increase in ethical activity will lead to a 60.3% increase in organizational performance of the firms; and a percentage increase in legal activities will lead to a 57.4% increase in organizational performance of the firms. This means that the most significant variable is ethical activities, followed by legal activities, among the three independent variables.

4.4. Discussion of Hypotheses

The following

Table 7. Hypotheses.

Hypothesis	Beta Value	Sig	Result
Hypothesis 1	0.365	0.000	Positive and accepted at 1% significance level (p = 000)
Hypothesis 2	0.603	0.000	Positive and accepted at 1% significance level (p = 000)
Hypothesis 3	0.574	0.000	Positive and accepted at 1% significance level (p = 000)

Source: Survey results of 2020.

showed, discussions of the hypothesis built for this particular study.

The finding of the study reveals that there is a positive and significant relationship between independent variables (philanthropic activity, ethical activity, and legal activities) and organizational performance. Thus, we can support the hypothesis of the study as follows:

Hypothesis 1 (H1).

Philanthropic activity has a positive impact on organizational performance. Result: p = 0.000 and beta value = positive; then, hypothesis 1 is accepted.

Hypothesis 2 (H2).

Ethical activity has a positive impact on organizational performance. Result: p = 0.000 and beta value = positive; then, hypothesis 2 is accepted.

Hypothesis 3 (H3).

Legal activity has a positive impact on organizational performance. Result: p = 0.000 and beta value = positive; then, hypothesis 3 is accepted.

4.5. Discussions of the Main Findings

This section presents the findings of the study in line with the objectives of the study based on the analysis made, and the results of this research are also further explained. The main objective of this study is to examine the effects of CSR practices on organizational performance in the case of the Dangote cement factory in Ethiopia. To this end, it is compulsory to know how much the CSR initiatives of the Dangote cement factory are known or observed by the respondents. Among employees’ responses, many of them believe that the Dangote cement factory takes part in CSR practices out of genuine interest in contributing to the wellbeing of society with respect to maximizing profit. The empirical findings are also combined with the theory in order to provide a wider standpoint.

The result indicates that little is known about the demographic profile of the Dangote cement factory that was analyzed through descriptive statistics. Accordingly, regarding the “sex” of the respondents, the study can conclude that most of the respondents (58%) were males. The Dangote cement factory seems dominated by males, and most of the age dispersal of respondents in the factory ranges from 18–30, which is too young. In addition, all of the respondents were educated, and also, they had been working in the factory for more than three years.

The result also shows CSR undertaken by Dangote cement factory through descriptive statistics. Accordingly, it was found that the majority of the respondents believed Dangote cement factory strongly encourages employees to actively participate in corporate social responsibility. The authors also found that the company pays attention to philanthropic issues, ethical issues, and legal issues as CSR to link them with its business performance. In other ways, the majority of respondents believed that the company’s level of awareness about CRS is high relative to other companies. Hence, the researchers can conclude that the majority of the respondents believe that CSR had positive effects on organizational performance.

Regarding the interview questions designed to assess the prior knowledge of the organizations, the manager of the Dangote cement factory suggested that the organization did practice CSR. The factory manager said after some briefings given by the interviewer that today issues related to CSR with respect to quality of the product/service are more commonly heard in the community, and suggested that this topic is very relevant and should be given high priority by organizations to make awareness of CSR practices and their impacts on their organizational performance.

The authors also analyzed the effects of philanthropic activities as CSR on organizational performance through descriptive analysis. The finding shows that most of the respondents do support those philanthropic activities. This means that philanthropy can be better through educational support like supports for private and public educational institutions and scholarships for individuals or groups and through facilitating managers and employees to participate in charitable activities. These findings relate to the findings of [73]. From the findings of descriptive analysis, it can be noted that the majority of the respondents strongly agreed that ethical responsibilities have positive effects on organizational performance in that in the present context, the subject of organizational ethics has assumed a particular importance. This result is also supported by [91]. The researcher also analyzes the effects of legal activities as CSR on organizational performance. From the findings, it can be noted that the majority of the respondents strongly agreed that legal responsibilities have positive effects on organizational performance; for example, the society has not only certified businesses as economic entities, but it has also established the minimal ground rules under which businesses are expected to operate and function. Businesses are expected and required to comply with these laws and regulations as a condition of operating. This result is also supported by [91].

The factory participates in various CSR activities to conduct its business responsibly and dedicates a large amount of money to the cause. From an analysis of variables through the use of multiple regressions, it would be logical to deduct that other things being constant, there is the influence of CSR on the accomplishment of the company’s target performance. The regression analysis further strengthens this claim.

Accordingly, the coefficient of philanthropic responsibility was 0.365, which indicates that keeping other factors constant, a unit change in philanthropic responsibility causes a 36.5% increase in organizational performance and the effects of the independent factor (philanthropic responsibility), whose t-statistic value was found to be 3.860 at p-value of 0.000, and that of the dependent variable (organizational performance) is found to be positive and statistically significant, which is supported by [90,91].

On other hand, ethical responsibility has a positive relationship with the dependent variable (organizational performance). The value of the coefficient for ethical responsibility was 0.603, and its significance level was 0.000, which is less than 0.05. This result indicates the value of b is positive and shows that ethical responsibility has a positive relationship with dependent variables and statistically significant effects on organizational performance. Additionally, this result is supported by [90,91,92,93].

The coefficient of legal activities was also computed to be 0.574, which means that a unit change in legal activities has the influence to increase organizational performance by 57.4%, assuming all other variables are constant. The calculated t-statistic value of this independent variable is 4.488 at p-value of 0.000, which proves a positive and significant relationship with the dependent variable (organizational performance). Additionally, this result is supported by [67,90,91].

The regression estimates also showed an adjusted R2 value of 0.775, indicating that about 77.5% of organizational performance of the firms under consideration was explained by the independent variable, while the remaining 22.5% variation in the organizational performance of the firms was caused by other factors not included in the model. This shows that the model has a good fitness of the regression line. The computed F-statistic showed a value of 190.225, while the p-value was 0.000, which is less than the critical value of 0.05; as a result, the null hypothesis is rejected, while the alternate hypothesis is accepted. This indicates that CSR has a significant effect on the organizational performance of the firms. This result is consistent with the postulation of the stakeholder theory and also in line with the result of previous studies such as [37,38], which found that there is a significant relationship between CSR and organizational performance, meaning that CSR has a positive and significant impact on profitability [94]. In general, based on the findings of this study the researcher tried to address the major aim of investigating how the corporate social responsibility feature would have an effect on organizational performance.

5. Conclusions and Direction for Future Research

5.1. Conclusions

This study proposed to find out the effects of CSR activities on organizational performance in the case of the Dangote cement factory in Ethiopia. It contributes to the knowledge of the effects of CSR activities on organizational performance, which has only occasionally been addressed in prior research, and to the best of the researchers’ knowledge has not been analyzed in such an inclusive manner or covering all three independent variables of CSR activities included in this study. The finding highlights that the Dangote cement factory had undertaken different aspects of CSR in order to enhance its performance; hence, the factory pays attention to philanthropic, ethical, and legal activities as CSR. According to the respondents’ view of point, the factory knows CSR has positive effects on its performance, but lacks awareness of which forms of CSR have significantly affected the organization’s performance.

The authors found out that CSR had a positive effect on a factory for continual growth. This was attributed to the fact that CSR activities create a platform for the factory to improve its corporate image, employee retention, customer retention, and the profitability of the firm. The findings also provided enough evidence that CSR is more important as a direct factor that influences firm performance. Therefore, it can be concluded that emphasis on the implementation of corporate social responsibility activities is very important and ensures the continuous organizational performance of firms, which enhances service delivery to the organization, employees, customers, and the community. It can be also concluded that corporate social responsibility activities in firms cannot operate in isolation from other elements of the business.

5.2. Suggestions for Further Research

This study dealt with developing an insight into the effects of CSR on organizational performance. Hopefully, this study provides an opportunity for government agencies, private organizations, and non-government organizations to create awareness of CSR and is a good start for further study. The authors take into account that this study needs to be broadened. Therefore, it provides room for investigation of other sectors of the economy to see whether a positive relationship exists between CSR and firm performance. Further research could be undertaken on other firms other than the Dangote cement factory with the aim of connecting CSR to the value of the company.