Chapter 1

Introduction

Rationale of the Study

In the last few decades, the concept of Corporate Social Responsibility

(CSR) has developed continually, and today in the 21st century, it has become

a key problem of large firms (Kanwal, Khanam, Nasreen, & Hameed, 2013).

After the financial crisis that emerged, companies learned that establishing

CSR would earn back their credibility (Cornett, Erhemjamts, & Tehranian,

2014). The European Commission (2016) characterizes CSR as the duty of

undertakings for their effect on society. An expansion to the definition is that

organizations assume liability for their effect to the general public and strive to

enhance the general public through activities (Fan & Moore, 2016). Regardless

of the various examinations about CSR, the intention behind it stays unclear

(Karlsson & Hagberg, 2015). Numerous banks have completed various CSR

exercises that show up in their reports to open to their stakeholders their

interests in the social welfare (Fan & Moore, 2016). Questions and

vulnerabilities develop whether the CSR exercises of banks and different firms

are directed just for them to look better to their stakeholders and raise their

profit or because they worry about the general public and its welfare (Wu &

Shen, 2013).
 Financial Performance is the measurement of how well a firm can utilize

its resources from its essential method of business and produce income. This

term is additionally utilized as a general proportion of a company's by and large

money related well-being over a given time frame and can be utilized to look at

comparative firms over a similar industry or to analyze ventures or areas in

combination. Maqbool and Zameer (2017) affirmed that CSR is an imperative

driver of improving financial performance. Then again, some attest to the

negative variables of CSR where it expends the rare assets of the organization

with no substantial return and that social activities include a cost which

influences benefits contrarily. For example, cost brought about in various CSR

exercises like philanthropies, eco-accommodating gear, better working

conditions, contamination control, will press benefits.

Each organization makes an effort to keep up or enhance their status

and reputation in the general public through solid activities (Fan & Moore,

2016). The issue is to see whether there is a coercive relationship between

CSR and Financial Performance (Johansson & Kulmala, 2015). Cheng,

Loannou, and Serafeim (2014) contended that CSR can help in reinforcing the

organization as it lifts the connection between the organization and the

stakeholders. In the consequent years, a few scientists have discovered

indistinguishable investigations that additionally came about to a positive

connection among CSR and Financial Performance (Saedi S., Sofian, Saedi P.

& Saaeidi S.,2015). In any case, a few analysts contended that they have
discovered irregularities in the outcomes, which might be caused by the

distinctive techniques, approaches, and the determination of factors

(Girerd-Potin, Jimenez-Garces & Louvet, 2013).

There has been various examination about CSR and Financial Performance all
outside and inside the Philippines. However, it focuses more often than not on
the banking sector. The reason for this examination is to inspect the connection
between CSR and Financial Performance of manufacturing companies for the
year 2018 in Davao City.