The Effect of Corporate Social Responsibility on firm’s Profitability: In case of BGI Ethiopia Brewery Share Company in Addis Ababa, Ethiopia

Abstract

Corporate social responsibility (CSR) is the way organizations integrate social, environmental and economic concerns legally and ethically. The aim of the study was to explore the effect of CSR on business profitability. The study applied a qualitative approach using primary and secondary data collection technique. The targeted population was BGI Ethiopia management team & (internal & external stakeholders) similarly; FGD respondents and key informants were selected by non-probability sampling method using convenience sampling technique, since not every member of the population have a chance of being selected and purposive sampling techniques were selected respectively because the ROA taken was the most recent data which is 6 years of data(2013-2018). While the qualitative data were analysed using ATLAS software through narrative analysis since thematic analysis is a good approach to find out knowledge & experiences from a set of qualitative data. And then the quantitative data were analysed using ratio analysis (ROA) by applying year to year comparison (trend - analysis). The results indicated that it is hard to figure out whether the direct or indirect plays a more pivotal role in influencing the firm’s profitability. Because, of the complexity of tangible and intangible factors, those intangible factors that related to the CSR were not measured in this study. The study recommended that it is not adequate to choose only the accounting-based approach to measure the CSR effect in profitability; the regular CSR profitability relationship may be influenced by the financial crisis; It is hard to define the timescale for the financial return of CSR due to the ambiguous word ‘‘long-term’’. Finally, companies need to constantly make a promise of applying the CSR. Also, the study will, benefits policymakers to gain insight into CSR practices in the alcoholic beverage sector and helps to establish a code of conduct & resolve problems that discourage the implementation of CSR in Ethiopia.