Literature review on Gucci

Based on the document provided, here is a detailed summary and guidance for your literature review structure:

Structure for Literature Review (LR):

Introductory Paragraph:

A brief paragraph explaining the purpose of the literature review and how it will be structured. No subtopics are needed here.

Theoretical Aspect of Variable One (2.1):

Discuss the theoretical background of your first variable. Make sure to replace “variable one” with the specific term you are using (e.g., “ethical challenges” or “HR analytics”).

Key Challenges Identified (2.2):

Explain the key challenges or main findings related to your first variable. This section will be aligned with your first research objective.

Theoretical Aspect of Variable Two (2.3):

Discuss the theoretical background of your second variable. Again, specify the actual term (e.g., “employee performance”).

Objective Two Analysis (2.4):

Analyze and discuss the findings related to your second research objective.

Objective Three Analysis (2.5):

Continue with the analysis for your third research objective.

Proposed Framework (2.6):

Present a proposed framework based on your findings and literature review.

Literature Gap (2.7):

Identify and discuss any gaps in the literature that your research will address.

Example Outline for a Specific Topic:

If your topic is “Mitigating the Ethical Challenges in International Business”:

Introductory Paragraph:

“This literature review aims to explore the ethical challenges faced by international businesses and the strategies employed to mitigate these challenges. The review is structured to first discuss the theoretical aspects, followed by an analysis of key challenges, and conclude with a proposed framework and identification of literature gaps.”

Theoretical Aspect of Ethical Challenges (2.1):

Discuss relevant theories such as stakeholder theory, agency theory, and other related ethical frameworks.

Key Ethical Challenges Identified (2.2):

Analyze the primary ethical challenges found in the literature, such as corruption, labor practices, and environmental concerns.

Theoretical Aspect of Mitigation Strategies (2.3):

Examine theories and frameworks related to mitigation strategies, including corporate social responsibility (CSR), compliance programs, and ethical leadership.

Analysis of Mitigation Strategies (2.4):

Discuss specific strategies employed by international businesses to address ethical challenges, with examples from case studies.

Proposed Framework (2.5):

Present a framework that integrates the findings from the literature, proposing how businesses can effectively mitigate ethical challenges.

Literature Gap (2.6):

Identify areas where research is lacking, such as the long-term effectiveness of certain strategies or specific regional challenges.

Additional Guidance:

Sources: Ensure to use high-quality journal articles, preferably within the last five years, to keep your review current. If necessary, older but seminal works can be included.

Email Submission: As instructed, email your literature review structure along with your research objectives and topic directly in the email body, not as an attachment.

Consistency: Ensure that your structure is consistent with your research objectives and provides a logical flow of information.

If you need further assistance or specific examples, feel free to ask!

did the lecturer say it shoyld be same topic than stage 1?

GPT

Yes, the lecturer did specify that the topic for your literature review should be the same as the one used for Stage 1. This ensures continuity and coherence in your research process.

To summarize, ensure your literature review topic is consistent with your Stage 1 project proposal. This approach maintains the thematic integrity of your research and builds upon the foundation laid in the initial stage. If you need further clarification or help with specific sections of your literature review, feel free to ask!

The Use of Artificial Intelligence in Human Resource Management Practices to Improve
Employee Performance in the Global Manufacturing Industry
2.0 Literature review
2.1 Theoretical overview of HRM and artificial intelligence
The Contemporary technologies are revolutionizing the field of human resource management
(HRM) in a dynamic manner (Ancarani, et al., 2019). The proliferation and swift progress of
Artificial Intelligence (AI) and other innovative technologies are inducing a fundamental
transformation in the interplay among corporations, their workforce, and their clientele.
Additionally, there is a heightened level of automation of administrative aspects of Human
Resource Management (HRM) functions and duties (Lariviere, et al., 2017). This outcome holds
significant importance because of the Fourth Industrial Revolution.
Human resource management has been around since the industrial revolution. However, it is only
in recent years that technology advances have changed the way physical and mental services are
given. According to (Luo, et al., 2019) new technologies have made it possible to replace human
resources in jobs that used to require human contact and communication. Furthermore, the
changes that have happened have caused both the structure of companies and the way people
work to change. Several studies done by (Lariviere, et al., 2017) show that robotic service robots
and artificial intelligence bots are being used more and more in the business world. The abovementioned intelligent entities have changed the way human resource management (HRM) is
done, giving HRM more powers and chances. Furthermore, (Lariviere, et al., 2017) points out that
they also face big problems, like the chance of being fired from their jobs. According to (Cooke,
et al., 2019) using deep learning algorithms, smart devices, and the Internet of Things (IoT) can
give global businesses a lot of benefits by making it easier for them to work together and
coordinate. Using advanced technologies like electronic human resource information systems and
other new tools can improve some HRM tasks, such as employee performance reviews (Abraham,
et al., 2019) and evaluations of job applicants (Cooke, et al., 2019). As technology improves, there
are many ways to make human resource management jobs more efficient and save money on
costs.
The Technology Adoption Model (TAM) is a crucial theoretical construct employed to comprehend
the adoption and assimilation of technology, encompassing Artificial Intelligence (AI), by
consumers (Taherdoost, 2018). According to the research conducted by (Wicaksono & Maharani,
2020) the Technology Acceptance Model (TAM) posits that the adoption of technology is
influenced by individuals’ perceptions of its perceived usefulness and ease of use. The present
theory will be employed to examine the integration of artificial intelligence technology into
human resource management practices in the global manufacturing sector.
2.2 Theoretical overview of employee performance
The evaluation of an employee’s achievement encompasses not solely their actions, but also their
inactions.
The success of an employee is contingent upon various factors such as their
punctuality, work ethic, and adaptability. The success of an employee is evaluated based on both
the quantity and quality of work performed. According to (Yazici, 2018) research on employee
performance, it is not possible to validate an individual’s performance in isolation. According to
the findings (Yang, 2018) suggests that organizations have the option of providing direct bonuses
and awards to employees who demonstrate individual success, provided that their performance
is observable. Furthermore, it is found (Yazici, 2018) conducted a study on employee
performance, which revealed that the act of acknowledging, recognizing, and rewarding workers
for their accomplishments facilitates the assessment of individual productivity levels. According
to (Yang, 2018) research, this discovery aligns with his own findings. According to (Yazici, 2018)
assertion, the efficacy of a firm and the effectiveness of its incentive management scheme
significantly influence the motivation and efficiency of its workforce. Organizations exert
considerable effort to ensure customer satisfaction, yet comparatively less effort is dedicated to
ensuring employee satisfaction. It is a fact that client satisfaction is contingent upon employee
job satisfaction. According to (Ahmad, et al., 2014) , there is a positive correlation between
employee satisfaction and productivity, which in turn can lead to increased customer and client
satisfaction. According to (Ameeq & Hanif, 2013)research, motivation significantly impacts
employee performance as it prompts workers to exert additional effort in their job, resulting in
enhanced performance.
The Social Exchange Theory offers a theoretical construct for analyzing the dynamic interplay
between employees and their respective organizations (Ahmed, et al., 2018). According to this
theoretical framework, laborers participate in a social transaction with their employers, whereby
they negotiate their labor and expertise in exchange for acknowledgement and support from their
employers. The application of the Social Exchange Theory can prove to be valuable in analyzing
the fundamental factors employed to measure the job output of workers within the worldwide
manufacturing sector.
2.3 How AI technology is adopted in the Human Resource Management practices by
global Manufacturing Industry
Artificial intelligence is gaining popularity in the manufacturing industry, where it is being utilized
to automate recruitment and selection. This comprises both soliciting applications and selecting
individuals from among those who apply (Brown & Sharma, 2018). Based on the study conducted
by (Gil, 2021) on industrial firms and found that the use of AI-based recruiting solutions resulted
in enhanced efficacy and efficiency of the recruitment process. The study conducted an analysis
of data and empirical evidence to evaluate the present state of AI technology integration in HRM
operations across the industry. Human resource professionals may benefit from automated
resume screening and applicant matching algorithms that allow them to quickly filter through
many resumes. These algorithms also enable HR experts to match applicants with open positions.
AI-powered chatbots and virtual assistants are being employed for first candidate engagement
and preliminary interviews, according to (Cappelli, et al., 2018). Furthermore, the author believes
that this trend will continue.
According to (Kim, et al., 2019), industrial firms utilize AI-driven predictive analytics to forecast
future labor demands based on historical data, market trends, and other relevant variables. As a
result, manufacturing firms may be able to make better use of their resources and cut costs
(Pradhan & Jena, 2017). Predictive models, according to (Marler & Fisher, 2018), assist human
resource departments in identifying skill gaps, calculating attrition rates, and planning for future
talent acquisition and development programs.
The studies were found Employee Performance and Engagement is another key area that HRM
use AI. To provide insights on individual and team performance, machine learning algorithms may
analyze massive amounts of data from several sources, like performance assessments,
productivity measures, and employee surveys (Davenport, 2018). These data might come from a
variety of sources, including performance assessments, productivity indicators, and staff surveys.
AI-powered systems can also recognize patterns and symptoms of employee disengagement,
allowing human resource management professionals to take preemptive action (Parry &
McCarthy, 2018).
AI-powered learning and development systems are gaining popularity in the industrial sector for
use in a variety of training and development programs. This is because these platforms allow users
to learn. VR and AR technologies are used to deliver immersive and interactive teaching
experiences, particularly for professions involving intricate machinery or potentially hazardous
condition (Parry & Tyson, 2020). Virtual reality (VR) and augmented reality (AR) technologies are
used to provide immersive and interactive training experiences. According to (Cappelli, et al.,
2018), personalized learning paths and artificial intelligence-driven recommendation systems
enable employees to acquire appropriate training resources depending on their individual
requirements and performance.
Artificial intelligence technology aid in identifying Employee Retention and Succession Planning
in the manufacturing industry, as well as succession planning. This assistance is especially useful
in the manufacturing industry. To forecast employee attrition and give applicable cures, natural
language processing (NLP) techniques may assess employee feedback, sentiment analysis, and
social network data (Cappelli, et al., 2018). Natural language processing (NLP) approaches can
also yield acceptable answers. Techniques from the natural language processing (NLP) area can
also be utilized to examine consumer feedback. Additionally, AI-powered algorithms may analyze
employee performance data to identify high-potential candidates for succession planning
(Davenport, 2018).
2.4 Key elements to measure employee performance in the global Manufacturing
Industry
Key Performance Indicators (KPIs) are commonly employed in the manufacturing industry to
evaluate the comprehensive performance of individual employees. The variability of duties and
responsibilities among members of an organization implies that the indicators are susceptible to
modification. According to (Syed & Kramar, 2017), key performance indicators (KPIs) commonly
used in the manufacturing industry include measurements for productivity, quality, efficiency, and
adherence to production schedules. These KPIs may include the number of units produced in an
hour, the defect rate, the amount of time machines is down, and other similar metrics.
Productivity is determined by the quantity of units manufactured within an hour. The assessment
of quality is conducted through the utilization of the defect rate (Syed & Kramar, 2017). Efficiency
is calculated based on the duration of machine downtime. Adherence to production schedules is
imperative. The utilization of key performance indicators facilitates a numerical evaluation of an
individual’s job performance and plays a substantial role in the overall achievement of an
enterprise.
The competency-based performance assessment are commonly employed as the primary means
of conducting employee performance evaluations with the manufacturing industry. These
frameworks explicate the requisite information, competencies, and conduct that are necessary
to accomplish a job proficiently (Syed & Kramar, 2017) and (Pradhan & Jena, 2017). Competencybased performance evaluations provide a thorough assessment of an employee’s abilities,
enabling employers to pinpoint areas of deficiency, provide targeted training, and render
informed decisions regarding advancements and professional development.
The 360-degree feedback method of performance evaluation is widely utilized in the
manufacturing sector. The objective of this approach is to acquire a comprehensive evaluation of
an employee’s job performance by gathering feedback from a varied cohort of individuals,
comprising the employee’s managers, colleagues, juniors, and clients (Pradhan & Jena, 2017).
Feedback is commonly obtained through surveys or interviews and provides a comprehensive
evaluation of an employee’s strengths, weaknesses, and potential areas for improvement.
Objective-based Performance Management systems are widely utilized in the manufacturing
industry, with a focus on establishing and achieving both organizational and individual objectives.
The proposed approach encompasses the provision of SMART objectives to employees, which are
characterized by their precision, measurability, attainability, relevance, and time-bound nature,
coupled with the ongoing monitoring of their advancement. The SMART framework represents a
set of objectives that are specific, measurable, attainable, relevant, and time bound. Further (Syed
& Kramar, 2017) discovered that companies can effectively assess the input of their personnel
and maintain congruity with their strategic objectives by establishing a correlation between
individual accomplishments and the overall accomplishments of the organization.
Real-time performance monitoring systems are increasingly prevalent in industrial firms due to
recent technological advancements. These systems employ a combination of sensors, Internet of
Things (IoT) connected devices, and data analytics to oversee staff activities, equipment
utilization, and process efficacy. Organizations that implement real-time monitoring mechanisms
are better equipped to promptly identify performance-related concerns, provide swift feedback
and guidance, and enhance production processes to enhance productivity and quality (Syed &
Kramar, 2017).
2.5 How AI enabled HR practices improve the employee’s performance in global
Manufacturing Industry
The study conducted by Gaur et al. (2021) serves as an example of research aimed at determining
the efficacy of AI-based training and development programs in enhancing the capabilities of
personnel. Furthermore, (Gaur, et al., 2021) have reported that there exists empirical evidence
supporting the evaluation of AI-powered performance management systems in enhancing
employee engagement and motivation. The findings have been derived from a comprehensive
analysis of pre-existing research. Moreover, studies have been conducted to ascertain the efficacy
of performance management systems utilizing artificial intelligence in enhancing employee
engagement and motivation.
Enhanced Recruitment and Selection: The utilization of artificial intelligence (AI) technology in
the recruitment and selection process has been shown to improve employee performance within
the manufacturing industry. (Davenport, 2018) posits that automated algorithms for screening
resumes aid human resource practitioners in identifying individuals possessing pertinent skills
and attributes. According to (Hughes, et al., 2019) suggests that the utilization of AI-powered
chatbots and virtual assistants can facilitate the preliminary candidate engagement process by
providing prompt responses and streamlining the initial candidate interaction. Organizations may
improve their workers’ overall performance by hiring the best competent candidates for available
roles.
The implementation of AI-powered personalized learning and development systems has been
observed to enhance the performance of employees in the industrial sector. These platforms offer
tailored learning and development opportunities. It is argued by (Syed & Kramar, 2017) posits
that these platforms utilize machine learning algorithms to customize training content and
delivery to suit the specific requirements and inclinations of individual employees. According to
(Syed & Kramar, 2017), the utilization of AI-powered solutions facilitates the acquisition of novel
skills, enhances performance, and enables individuals to adjust to evolving job demands.
The integration of artificial intelligence technology allows manufacturers to incorporate real-time
performance monitoring and feedback. (Syed & Kramar, 2017) assert that the utilization of
Internet of Things (IoT) devices, sensors, and data analytics systems enables the monitoring of
both staff behaviors and machine utilization and production characteristics. (Syed & Kramar,
2017) posit that the utilization of real-time feedback enables swift detection of performance
deficiencies, thereby facilitating the timely implementation of interventions and coaching to
enhance employee performance. The implementation of artificial intelligence (AI) in the
monitoring of performance within manufacturing organizations has the potential to optimize
operational efficiency, pinpoint opportunities for enhancement, and establish a correlation
between individual performance and overarching company objectives. The feasibility of all these
benefits is attributed to the implementation of artificial intelligence (AI).
The utilization of predictive analytics, which is driven by artificial intelligence, has significantly
simplified the process of performance management in the manufacturing industry. Conducting
comprehensive analyses of extensive historical data, market trends, and staff performance
indicators can enable organizations to identify patterns and make projections about future
performance outcomes (Pradhan & Jena, 2019). The utilization of predictive models enables
human resource practitioners to anticipate potential performance issues, make informed
decisions based on data, and take proactive measures to improve employee performance
(Pradhan & Jena, 2017).
The implementation of artificial intelligence technology is a vital component in the manufacturing
industry’s endeavors to enhance employee engagement and retention. According to (Cappelli, et
al., 2018) findings, the utilization of natural language processing (NLP) techniques can provide
valuable insights into the levels of employee engagement through the analysis of sentiment and
input from said workers. Cascio (2018) posits that AI-powered systems possess the capability to
identify factors that contribute to disengagement, thereby enabling organizations to implement
remedial measures aimed at enhancing employee motivation and satisfaction. Organizations can
enhance the overall performance of their employees and reduce turnover rates by establishing a
conducive work environment and attentively addressing and resolving the concerns raised by
their workforce.
References
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Marmara: Marmara University, Institute of Social Sciences.
The Relationship Between Corporate Social Responsibility (CSR)
Spending and Financial Performance in the Banking Industry in Sri
Lanka
1
Table of Contents
1.0
Research Background ……………………………………………………………………………………………….. 4
1.2 Rationale ………………………………………………………………………………………………………………….. 4
1.3 Scope of the Research ………………………………………………………………………………………………… 5
1.4 Research Aim and Objectives ……………………………………………………………………………………… 5
1.5 Theoretical Overview ………………………………………………………………………………………………… 6
1.5.1 CSR spending …………………………………………………………………………………………………….. 6
1.5.2 Financial Performance …………………………………………………………………………………………. 6
1.5.3 The relationship between CSR spending and Financial Performance …………………………. 7
1.6 Methods of Analysis ………………………………………………………………………………………………….. 8
1.7 Research Method ………………………………………………………………………………………………………. 8
1.8 Research Strategy ……………………………………………………………………………………………………… 8
1.9 Data Analysis ……………………………………………………………………………………………………………. 8
2.0 Literature Review …………………………………………………………………………………………………………. 9
2.1 Theory Overview of CSR …………………………………………………………………………………………… 9
2.2 Key factors of CSR Spending ……………………………………………………………………………………. 11
2.3 Theory overview of financial performance …………………………………………………………………. 13
2.4 Key determinants of financial performance in commercial banks ………………………………….. 14
2.5 The relationship between CSR spending and financial performance in the banking industry in
Sri Lanka……………………………………………………………………………………………………………………… 15
2.6 Literature Gap …………………………………………………………………………………………………………. 15
3.0 Chapter Three: Research Methodology ………………………………………………………………………….. 16
3.1 Methodological Choice…………………………………………………………………………………………….. 16
3.2 Research Strategy ……………………………………………………………………………………………………. 17
3.3 Research Approach ………………………………………………………………………………………………….. 17
2
3.4 Data Collection ……………………………………………………………………………………………………….. 18
3.5 Research Population ………………………………………………………………………………………………… 18
3.6 Sample Method and Sample Selected ………………………………………………………………………… 18
3.7 Operationalization of Research Variables …………………………………………………………………… 18
3.8 Hypothesis Development ………………………………………………………………………………………….. 19
3.9 Data Analysis ………………………………………………………………………………………………………….. 19
4.0 Discussion and Conclusion …………………………………………………………………………………………… 22
4.1 CSR spending factors ………………………………………………………………………………………………. 22
4.2 Financial Performance determinants ………………………………………………………………………….. 23
4.3 Relationship between CSR spending and financial performance ……………………………………. 23
4.3.1 Relationship between CSR spending and ROA ………………………………………………………… 23
4.3.2 Relationship between CSR spending and ROE …………………………………………………………. 24
4.3.3 Relationship between CSR spending and Net Profit Margin ………………………………………. 24
4.4 Identification of appropriate CSR spending strategies that enhances financial performance. 24
4.5 Conclusion ……………………………………………………………………………………………………………… 25
4.6 Recommendations …………………………………………………………………………………………………… 26
Annexure 1 – Data collection to calculate the regression test between independent variable and
dependent variables. …………………………………………………………………………………………………………. 27
Reference ………………………………………………………………………………………………………………………… 28
Figure 1. Relationship between CSR spending and ROA ………………………………………………………. 20
Figure 2. Relationship between CSR spending and ROE ………………………………………………………. 20
Figure 3. Relationship between CSR spending and Net Profit Margin …………………………………….. 21
Figure 4. CSR spending on 3 factors in 3 banks in years 2021 & 2020 ……………………………………. 22
3
1.0 Research Background
In the business environment, corporate social responsibility (CSR) has drawn a lot of attention andhas
become vital in business practice. CSR goes beyond the legal requirements to how businessesof all
sizes and other organizations interact with their customers, suppliers, employees, and the
communities in which they operate in addition to how much they try to safeguard the environment
(Lee, 2002). According to the contemporary notion of CSR, businesses should consider the social
interests of society’s people when making decisions (Wijesinghe and Senarathne, 2011). Meanwhile,
the measurement of an organization’s financial positions over a given time period is referred to as
financial performance. Additionally, it can be used to evaluate and examine a company’s financial
goals to determine whether they have been achieved or not (Kotler, 2005).
The banking sector plays a significant role in the expansion and development of the economy. CSR
has drawn more attention as a counterpoint to financial statements for evaluating financial
performance, and businesses are more motivated to improve financial performance that is linked to
social and economic factors.
1.2 Rationale
To identify the relationship between CSR spending and financial performance in the banking
industry in Sri Lanka is the focus of this study. There have undoubtedly been many studies done
on the relationship between CSR spending and financial performance. Thus, many outcomes of
CSR spending and financial performance have been demonstrated by many academics. However,
in developing countries such as Sri Lanka, less research has been done on measuring the impact
of CSR spending for financial performance (Nimsith, Mafaza and Safna, 2016). It is crucial for
the banking industry to measure the relationship between CSR spending and financial performance
(Madhusanka and Herath, 2020). Therefore, to bridge this research gap, this study determines to
evaluate the effects of CSR spending on the financial performance of a limited group of licensed
commercial banks in Sri Lanka (Nimsith, Mafaza and Safna, 2016). Some scholars show that there
is a positive relationship between CSR spending and financial performance (Balagobei and
Anandasayanan, 2018; Lee and Jung, 2016; Awan and Akhtar, 2014; Wijesinghe & Senaratne,
4
2011). On the contrary, (Basnayake, 2015; Cortez et al., 2009; Balabanis et al., 1998) argues that
there is a negative relationship between CSR spending and financial performance as CSR spending
leads to a reduction in financial performance. Furthermore, (Hing, 2003; McWilliams and Siegel,
2000) states that there is no significant relationship between CSR spending and financial
performance. Therefore, considering the above, the findings of this area exhibit an ambiguity.
Hence, this research attempts to clarify this.
1.3 Scope of the Research
The scope of this research is primarily to identify the determinants of CSR spending, nature of the
relationship between CSR spending and financial performance and how CSR spending can be
managed. Hence this research will be concentrated on the banking industry in Sri Lanka.
Moreover, this study will solely evaluate domestic banks while analyzing the data from Sri Lanka’s
five leading licensed commercial banks. The combination of state- and privately-owned licensed
commercial banks (LCBs) will be the focus.
1.4 Research Aim and Objectives
The aim of this research is to determine the relationship between CSR spending and financial
performance in the banking industry in Sri Lanka.
The objectives of the research are:
1. To evaluate the key factors of CSR spending
2. To identify key determinants of financial performance in the banking industry
3. To evaluate the relationship between CSR spending and financial performance inthe banking
industry in Sri Lanka
4. To identify most appropriate CSR spending s t r a t e g i e s that could enhance financial
performance in the banking industry in Sri Lanka.
5
1.5 Theoretical Overview
1.5.1 CSR spending
The goal of businesses used to be to increase shareholder value and make a profit, but in the modern
world, they are unable to operate without considering the community (Adhikari, 2021). Atthe same
time, stakeholders are also pressuring businesses to be environmentally and socially responsible
(Oeyono, Samy and Bampton, 2011). Similarly, Maqbool and Zameer (2018) states that the
business world cannot succeed unless they are aware of their local community. The stakeholder
theory states that managers should ponder about whether expectations of both shareholders and
other stakeholders are met. Moreover, the degree to which a company satisfies the needs of all
stakeholders determines its level of success (Theodoulidis et al., 2017; Jitaree, 2015; Lech, 2013).
For that, the author states that businesses can provide public health services, green products, safe
working environments, and socially responsible production methods (Chtourou and Triki, 2017).
Hence, through CSR initiatives, businesses can directly achieve their goals by improving their
customers’ perceptions of the company (Kabir and Thai, 2017). Finally, this leads to enhance the
financial performance (Ramzan et al., 2021). Meantime, CSR gives businesses the tools they need
to improve their brand, develop credibility, respond to opportunities, protect themselves from
external risks and obstacles, and raise profits (Choongo, 2017; Barnett, 2016).
1.5.2 Financial Performance
Financial performance is the measurement of a company’s financial status over a given time period
to determine how effectively it is using its resources to create revenue (Nimsith, Mafaza and Safna,
2016). Moreover, the financial health of the company is assessed using measures such as Return
on Asset, Return on Equity, Net Profit, Earnings Per Share, etc. (Malik and Nadeem, 2014).
6
1.5.3 The relationship between CSR spending and Financial Performance
Bolanle (2012) conclude that investments in CSR are better in the long run. Moreover,
demonstrates the positive correlation between CSR spending and bank profitability. Therefore,
there is a link between corporate social responsibility and bank profitability. It is because the cost
or investment on CSR will further lower the tax that banks pay. It improves the favorable
environment for businesses.
In the banking sector, there hasn’t been much research on the relationship between CSR and
financial performance, and the few studies that have been done so far provide contradictory results.
According to Cheung and Mak (2010) there is a negative relationship between CSR spending and
financial performance. The author states that companies that give back to society incur additional
costs relative to their competitors but also benefit from a competitive advantage.
Similarly, Abeysinghe and Basnayake (2014) showed a negative relationship which was done
using regression analysis, descriptive statistics, anova, correlation statistical tools. In particular,
the study discovered that banks’ performance might occasionally fluctuate in response to changes
in macroeconomic and financial conditions and that financial performance was not entirely
dependent on CSR.
7
1.6 Methods of Analysis
1.7 Research Method
The two data gathering methods are primary and secondary data, according to Saunders et al.
(2011). Primary data is information that has come directly from a source or was personally
acquired. Furthermore, research is carried out to offer solutions to urgent problems; this can be
done by questionnaires, surveys, or interviews (Driscoll & Brizee, 2009). Whereas secondary data
is derived from the research or viewpoints of other researchers (Newman, 1998). Moreover,
secondary data can be found via effective sources such as books, peer-reviewed journals, annual
reports, and government publications (Saunders et al., 2016). Hence, the researcher chose
secondary data sources because of time restrictions and ethical considerations.
1.8 Research Strategy
The researcher has selected multiple case study strategy by carefully choosing an appropriate
sample from all Sri Lankan banks. Moreover, it is a universal truth that evidence derived from
multiple case studies is solid and reliable (Baxter & Jack, 2008). Not only that, but multiple cases
also provide deeper exploration of research problems and theoretical development (Eisenhardt &
Graebner, 2007).
1.9 Data Analysis
There are three methods in analysing data such as qualitative method, quantitative method, and
mixed method. Quantitative research is based on numerical data and is powered by either a
datagathering method (questionnaire) or process data analysis (graphics, statistics) (Morgan,
2014). Thus, in this research, quantitative data analysis will be adopted by the researcher. The
researcher will use hypothesis testing via regression analysis through excel sheet.
8
2.0 Literature Review
2.1 Theory Overview of CSR
CSR is how businesses contribute to efforts for sustainable development, considering the effects of
their social and environmental actions as well as how they help to improve overall society and the
environment in which they operate (Danciu, 2013). Meanwhile, Mcwilliams and Siegel (2001),cited
in Madhusanka and Herath (2020) explains CSR as engaging in all those actions that are notrequired
by local law in the nations where their businesses are located and that serve public benefitrather than
the needs of the business in the first place. According to stakeholder theory, managers should
consider the interests of every group or person (a stakeholder) who can influence or be affected by
the accomplishment of the organization’s goals (Freeman, 2004, cited in Mahmud et al., 2020).
The goal of the stakeholder theory is to define and produce value, link capitalism with ethics, and
pinpoint effective management techniques (Parmar et al., 2010, cited in Fares et al., 2021).
Furthermore, (Freeman, 2004 cited in Theodoulidis et al., 2017) states that the creation of value is
recognized by the stakeholder theory as the main driver of the business, but it also acknowledges
that this value is to be shared by a group of stakeholders, which includes not only shareholders and
managers but also any societal actors who might be interested in how the firm operates. Gioia
(1999), cited in Mahmud et al., (2020) argued that firms should treat all stakeholders fairly, and it
has been advocated that they should pay close attention to resolving local social issues and
contributing significantly to the advancement of society. In a nutshell, CSR researchers can use
stakeholder theory to conceptualize and empirically define the social responsibility of firms
(Mahmud et al., 2020).
The term triple bottom line refers to an accounting framework for reporting organizational
performance that also incorporates social and environmental factors besides considering the
financial or economic aspects (John Elkington, 1998, cited in Munjal, Malarvizh, and Sharma,
2019). Moreover, triple-bottom-line reporting is also known as sustainability reporting which
integrates the evaluation of both financial and non-financial performance (Global Reporting
Initiative, 2018). The triple bottom line framework assesses a company’s success in terms of three
factors which are also known as the 3Ps: People, Planet, and Profits (Dixon, 2014). As a result, it
enables organizations to evaluate the effects of their decisions from a legitimately long-term
9
perspective (Slaper and Hall, 2011 cited in Munjal, Malarvizh, and Sharma, 2019). In the meantime,
the likelihood of a business surviving into a sustainable future increase when it accepts its
responsibility for the triple bottom line. According to studies, banks adhering to triple-bottom-line
principles provide higher financial returns while experiencing less instability (Korslund, 2016).
10
2.2 Key factors of CSR Spending
According to (Kraus and Brtitzelmaier, 2012 cited in Bindhu and Niyaz, 2022) environmental
protection, employee welfare, social development goals, and managerial effectiveness may all be
included in a company’s social responsibility factors. At present, businesses are not only focused
on generating revenue but also acting responsibly towards its stakeholders (Murawska, 2020).
One of the key factors of CSR is environmental sustainability. Chuang and Huang, (2018) state that
environmental conservation is a corporate responsibility and can serve as a strategic directive for
how businesses might achieve sustainable development, hence it plays a crucially essential part in
CSR. Due to the finite resources and capability of all biological systems, business activities must
be conducted at a level that does not endanger the well-being of the environmental system (Matten,
2006 cited in Sujin, 2019). Similarly, Moisescu (2015) claims that firms continually work to protect
the environment and spend money on environmental research and development. Meanwhile, some
authors argue that environmental protection can help a company’s financial health by reducing the
cost of energyand raw materials.
A corporation must practice CSR toward its employees if it wants to stay in business and achieve
better results (Şahin and Bayramoğlu, 2015). Moreover, the implications of implementing CSR are
vast and provide numerous advantages for the business. The researcher lists a few of the CSR’s
empirically supported advantages, including improved employee performance (Terrero-De La Rosa
et al. 2017), improved business performance (Valmohammadi 2014), improved reputation and
perceived attractiveness of the company, which led to the recruitment of talented employees (Story,
Castanheira and Hartig, 2016) and increased employee engagement and a lower risk of burnout at
work (Lin and Liu 2017).
People in a community getting together and interacting with each other to resolve local issues,
enhance their quality of life, and influence their future wellness constitutes corporate CSR as a
mechanism of community development (Samer, Rawan, & Omar, 2018). According to Enwereonye
et al (2015), they argued that health programs, sponsoring educational institutions, playgrounds or
community centers, employee volunteer programs, or signing memorandums of understanding with
communities impacted by a bank’s impacts are just a few of the social initiatives that community
investment supports. In the meantime, activities for community development may be directed at
addressing negative economic issues like poverty and unemployment or at promoting community
welfare, open communication, and social responsibility.
11
An evaluation of the existing literature on factors affecting CSR depicts that CSR towards the
environment, employees, and local community are among a few common factors identified as key
factors of CSR. Therefore, this research will focus on the total cost of the above key factors as a
whole and thus, it will be considered as the independent variable.
12
2.3 Theory overview of financial performance
The financial performance of a company during a specific time is measured to determine how well
a company is employing its resources to generate income is known as financial performance
(Nimsith, Mafaza, and Safna, 2016). In other words, financial performance assesses how well the
company uses its available assets to create revenue. According to Kotler (2005), financial
performance is the measurement and analysis of a firm’s financial goals to determine whether they
have been met or not. Gupta (2017) researched on Economic Value Added (EVA) theory, which is
a financial performance measure that, more accurately than any other metric, measures the
underlying economic profit of the company. Moreover, the author states that the quantity of value
created by the management, or the shareholders are emphasized in it. In other words, it is a
management performance indicator used internally. EVA is distinct from those conventional
techniques and instruments that rely on accounting data that might not accurately reflect the true
state of the business. Thus, to make EVA commercially viable, accounting data must be adjusted.
Furthermore, compared to other operating performance indicators, EVA is a stronger predictor of a
company’s market value from the perspective of an investor (O’Byrne, 1996, cited in Sabol and
Sverer, 2017). Not only that, but it also considers a company’s social responsibility.
A series of financial accounting and other information are used in ratio financial analysis to
ascertain an organization’s financial performance and condition. Moreover, financial data from
various ratios are compared to establish whether or not the firm’s finances are well-developed and
to assess profitability (Sari and Daryanto, 2021). The profitability ratio is a ratio used to evaluate
management’s efficiency in carrying out operational tasks and the company’s capacity to make
profits during the present period (Sari and Daryanto, 2021). Some common profitability ratios are
profit margin, return on assets (ROA), and return on equity (ROE). Meanwhile, liquidity ratios are
financial indicators that are used to assess a debtor’s capacity to settle current debt obligations
without the need for outside financing (Hayes, 2022). Some common liquidity ratios are quick ratio,
current ratio, and operating cash flow ratio. Hence the researcher will use some of these common
financial ratios in the study to analyse the financial performance of the banking industry in Sri
Lanka.
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2.4 Key determinants of financial performance in commercial banks
Many financial ratios can be used to assess a company’s performance and determine whether its
resources are being used efficiently (Samiloglu, Oztop and Kahraman, 2017). Malik and Nadeem
(2014) state that a firm’s financial performance is assessed by evaluating Return on Asset (ROA),
Return on Equity (ROE), Net Profit, Earning Per Share (EPS), etc. Furthermore, in several Asian
nations, Ashraf, Khan, and Tariq (2017) investigated the relationship between banks’ financial
performance and their engagement with CSR. The financial performance was evaluated through
Return on Assets (ROA), Return on Equity (ROE), Earn per share (EPS), and Price-Earnings Ratio
(PE). In the meantime, these ratios assist in both qualitatively assessing the firm’s financial
performanceand summarizing the vast amounts of financial data (Thukaram, 2006, cited in Tibebe,
2020). Using these ratios, the financial performance of the banks is being analysed for decisionmaking mainlyIt serves as a measure for evaluating management’s effectiveness in generating profits
from the use of available resources (Salehi et al., 2020). In most research that examine the
connection between corporate social responsibility and financial success, ROA is one of the most
frequently used financial ratios (Rahman et al., 2020; Nguyen & Nguyen, 2020; Nirino et al., 2019).
Another commonly used measure to evaluate financial success is ROE. This demonstrates how
effectively the company generates profits from each share of shareholder ownership by measuring
the return achieved on both preferred and common stockholders’ investments in the company on a
yearly basis (Nguyen & Nguyen, 2020; Rahman et al., 2020; Zhang et al., 2019; Nirino et al., 2019).
(Al-Tamimi, 2010, cited in Gautam, 2018), states that both internal and external factors may have
an impact on commercial banks’ performance. Moreover, the author states that these elements can
be divided into macroeconomic variables and bank-specific (internal) variables. The performance
of the bank is impacted by internal factors, which are specific bank characteristics. Furthermore,
external factors affect the profitability of banks and may be sector- or country-wide and out ofthe
company’s control. Meanwhile, (Tarawneh, 2006, cited in Gautam, 2018), claims that banks with
large total capital, deposits, credits, or assets do not necessarily have better profitability and
performance. Together with the size of the bank, efficiency, and asset management has a favorable
impact on these banks’ financial performance.
For this research, Return on Asset (ROA), Return on Equity (ROE), and Net Profit Margin, will be
selected since the above empirical research depicts that these ratios are common variables that are
selected as ratios that determine the financial performance.
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2.5 The relationship between CSR spending and financial performance in the banking industry in
Sri Lanka
Madurasinghe and Jahfer (2016), in their study, analyzed the relationship between financial success
and corporate social responsibility in Sri Lanka’s banking industry. Moreover, they have considered
employee relations, environment, and community involvement factors as the dimensions of CSR,
and company performance was measured by using Return on Asset (ROA) and Return on Equity
(ROE). According to correlation and regression analysis, financial performance as assessed by
return on Asset (ROA) and Return on Equity (ROE) are positively correlated with CSR.
Some researchers have found that CSR has an impact on a company’s ability to perform financially
(Balagobei and Anandasayanan, 2018; Wijesinghe and Senaratne, 2011). Whereas, Basnayake
(2015) asserted that CSR contributes to a reduction in financial performance. Nevertheless,
Gunawansha and Swarnapali (2021), stated that various CSR practice types have varying effects on
financial performance.
Gunawansha and Swarnapali (2021) claimed that customer and employee-related CSR practices
have a greater positive impact on financial performance than environmental CSR, despite the
findings of Gamhewage et al., (2018) showing that there is a positive relationship between
environmental CSR and financial performance. On the other hand, Hettiarachchi andGunawardana
(2012) claim that CSR does not interact significantly with ROA or Tobin’s Q model.However, they
have a positive and combined impact on financial performance as assessed by ROAand Tobin’s Q.
2.6 Literature Gap
Due to the intense rivalry and quickly shifting economic environment, corporate social
responsibility (CSR) is a crucial topic for the banking sector (Madhusanka and Herath, 2020). The
least understood area in CSR constitutes the relationship between CSR and financial performance
(Massetti and Egan, 2008, cited in Nimsith, Mafaza, and Safna, 2016). Moreover, the banking
industry in Sri Lanka has developed over time thanks to a vast and in-depth understanding from
academics as well as industry experts in practically all disciplines. Previous research has mostly
concentrated on developed nations. Whereas in less developed nations like Sri Lanka, there are less
research on how corporate social responsibility affects financial performance. Most businesses in
less developed nations do not yet fully understand the significance of corporate social
15
responsibility, and as a result, do not give it much thought (Nimsith, Mafaza, and Safna, 2016). Not
only that, but many studies on CSR have also been undertaken when taking the Sri Lankan context
into account. However, they are also insufficient to establish a direct connection between CSR and
financial performance (Gunasekara and Wanniarachchige, 2022). Thus, this study aims to evaluate
the effects of CSR on the financial performance of a select groupof licensed commercial banks in
Sri Lanka to address these research gaps. This study looked for a connection between CSR and
financial performance and looked at how CSR affected the financial health of a few Sri Lankan
commercial banks.
3.0 Chapter Three: Research Methodology
3.1 Methodological Choice
Research methods are a method for collecting information to assist in making sound judgments. The
research methods can be qualitative, quantitative or mixed. Quantitative method relies on numerical
16
data and is driven by process data analysis or a questionnaire as a data collection tool (Morgan,
2014). Conversely, the focus of the qualitative method, which employs a variety of data collection
techniques and analysis procedures, is on the perceptions, meanings, and interconnections among the
participants. Whereas the mixed method makes equal or unequal use of both the quantitative and
qualitative methods (Saunders, Lewis & Thornhill, 2012).
Because earlier studies in this field employed similar approaches (Madhusanka and Herath, 2020;
Gunasekara and Wanniarachchige, 2020; Nimsith, Mafaza and Safna, 2016; Abeysinghe and
Basnayake, 2015) and since quantitative study is more objective and saves time. Moreover, to
establish the relationship between CSR spending and financial performance in Sri Lankan banks, the
study requires the researcher to collect numerical data from Bank’s annual reports, such as ROE
ROA, and net profit margin. Therefore, the research method can be stated as quantitative method.
3.2 Research Strategy
The research strategy outlines the steps that will be taken to respond to the research questions and
achieve the study objectives (Yin, 2012). Some of the strategies that can be used by a researcher are
experimental research, survey research, case study research, action research, grounded theory,
ethnography, and archival research. In multiple case studies, cases can be carefully chosen using
many case studies so that similar outcomes can be predicted for each one of them (Yin, 2009). Hence,
multiple case study strategy has been selected by the researcher by choosing a relevant sample
cautiously across the banks operating in Sri Lanka.
3.3 Research Approach
The two types of research approaches: inductive and deductive approaches which are used to gather
data, gather results, and draw conclusions (Saunders et al., 2016). Moreover, Saunders et al., (2009)
these two approaches as follows. Inductive approach comprises gathering data and formulating a
hypothesis in consideration of the results of the data analysis. Whereas deductive approach
emphasizes on formulating concepts and hypotheses that can be supported from the literature. The
researcher will be in responsible of conducting hypothesis tests for this study, which will adopt a
deductive approach (Gill and Johnson, 2002) and theories that have been applied in a way that will
make it possible to quantify the correlation between CSR spending and financial performance
(Saunders et al., 2016).
17
3.4 Data Collection
Saunders et al (2011) signify that there are two data collection methods such as primary and
secondary. Secondary data are gathered from current sources such as books that have already been
published, peer-reviewed journals, business records, and government publications (Sekaran and
Bougie, 2010). In this study, the researcher will employ secondary data collection method over
primary data collection method due to time restrictions and ethical concerns. Thus, this study uses
data related to ROE, ROA, Net profit Margin and spendings of CSR towards community,
environment and employees from the annual reports of five selected domestic commercial banks
during the period 2021-2017 (Appendix A).
3.5 Research Population
A population is a group of elements with comparable characteristics that a researcher examines
(Johnson and Christensen, 2012). Based on the hypothesis, the banks operating in Sri Lanka make
up the population used for the underlying study and as per Central Bank of Sri Lanka (2022) there
are 30 banks currently operating in the country out of which 26 are licensed commercial banks and
the rest of the banks are licensed specialized banks.
3.6 Sample Method and Sample Selected
20% of the total population has been selected as the sample size. Sampling is choosing a sample of
individuals from a big group to conduct an analysis (Walliman, 2011). Main sampling techniques
are probability and non-probability sampling. Equal probability is given to each unit in the population
by probability sampling, however the researcher’s personal opinion is used in non-probability
sampling (Etikan & Bala, 2017). Thus, the researcher intends to use non-probability, purposive
sampling technique to select samples that are especially tailored to meet researcher’s requirements.
3.7 Operationalization of Research Variables
Table 1. Operationalization of Research Variables
Variable type
Dimension
Indicator
Measure
Independent variable
CSR spending
Disclosure
Total cost of CSR spendings
18
(CSR spending measure)
on environment, employees,
and community.
Dependent variable
Return On Assets
ROA
Net Income/Total Asset
(Determinants of
Return On Equity
ROE
Net Income/Total Equity
Financial Performance)
Net Profit Margin
NPM
Net Income/Sales
Source: Author developed (2023)
3.8 Hypothesis Development
Based on the critical evaluation in the literature review of the other studies, the current study looked
at the multivariate relationship between CSR spending and FP in developing nations, particularly Sri
Lanka. The following hypotheses were then put forth by this research.
H1 – There is a relationship between CSR spending and ROA.
H0 – There is no relationship between CSR spending and ROA.
H2 – There is a relationship between CSR spending and ROE.
H0 – There is no relationship between CSR spending and ROE.
H3 – There is a relationship between CSR spending and Net Profit Margin.
H0 – There is no relationship between CSR spending and Net Profit Margin.
3.9 Data Analysis
To determine the essential indicators used to measure both dependent and independent variables, the
researcher has collected data from 5 licensed commercial banks’ annual reports and financial
statements from 2021 to 2017. The data used to find the CSR spending, which is the independent
variable, has been taken by the sum of costs incurred by the banks on environment, employees and
community from the annual reports. Whereas financial performance, which is the dependent variable
is calculated using the ratios ROA, ROE and Net Profit Margin. For this research, Microsoft Excel
has been used to get a summary of the collected data and the researcher used correlation and
regression analysis to determine the relationship between the dependent and the independent
variables.
19
Figure 1. Relationship between CSR spending and ROA
Source: Author developed based on the annual reports from 2021 to 2017
As per the above, the test results indicate that the corelation coeficient is between 0.5 to 0.8 which
shows that the correlation coefficient indicates a moderate positive relationship between CSR
spending and ROA. Moreover, the relationship is statistically significant (≤0.05). Hence, Hypothesis
H1 is positively proven while H0 is rejected.
Figure 2. Relationship between CSR spending and ROE
Source: Author developed based on the annual reports from 2021 to 2017
20
As per the above, the test results indicate that the corelation coeficient is between 0.5 to 0.8 which
shows that the correlation coefficient indicates a moderate positive between CSR spending and ROE.
Moreover, the relationship is statistically significant (≤0.05). Hence, Hypothesis H2 is positively
proven while H0 is rejected.
Figure 3. Relationship between CSR spending and Net Profit Margin
Source: Author developed based on the annual reports from 2021 to 2017
As per the above, the test results indicate that the corelation coeficient is less than 0.5 which shows
that the correlation coefficient indicates a weak positive between CSR spending and net profit
margin. Moreover, the relationship is statistically not significant (≥0.05). Hence, null hypothesis H0
is accepted, and hypothesis H3 rejected.
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4.0 Discussion and Conclusion
4.1 CSR spending factors
Figure 4. CSR spending on 3 factors in 3 banks in years 2021 & 2020
Source: Author developed (2023) based on Annual reports (2021 & 2020)
As mentioned in Figure 1, the author has taken data from three different banks that have spent on
three factors of CSR such as the environment, employees, and the community during the years 2021
and 2020. Moreover, as per the above figure, it is visible that each of these banks have spent big
amounts on environment, employees, and community. As stated by Chuang and Huang (2018),
Moisescu (2015), businesses invest money in environmental research and development and strive
tirelessly to protect the environment. In the meantime, when firms spend on its employees, the
businesses would achieve greater heights and would have various other benefits like improved
business performance, increased employee performance, good reputation and many more (TerreroDe La Rosa et al. 2017; Lin and Liu 2017; Story, Castanheira and Hartig, 2016; Şahin and
Bayramoğlu, 2015). Not only that, Enwereonye et al (2015) claimed that involvement in community
by promoting health programs, sponsoring educational institutions, building playgrounds or
community centers, employee volunteer programs would help the businesses to create a positive
22
image about the company. Meanwhile, Kuta (2018), argues that a company’s contribution to social
causes could come in the form of cash, in-kind gifts, manpower, or other resources. However, based
on the above facts the author concludes that CSR spending towards environment, employees and
community are three important initiatives which could lead to have many advantages for the banks.
Although Gamhewage et al., (2018), found a positive relationship between environmental CSR and
financial performance, Gunawansha and Swarnapali (2021) stated that customer and employeerelated CSR practices cause to enhance financial performance than environmental CSR.
4.2 Financial Performance determinants
After evaluating most of the journal articles that have been used for the purpose of this study, it
shows that the main key determinant of financial performance are profitability ratios. Moreover,
annual reports too use these profitability ratios to compare its own financial performance through
different years. It could be seen that majority of the articles use ROE, ROA, and Net Profit Margin
as a measure of financial performance while few other articles use Earnings Per Share, Dividend Per
Share and Return on Capital Employed. It can be seen that Al-Shwiyat et al. (2013) used ROA, ROE
and EPS as the three financial indicators to measure financial performance.
Financial profitability ratios demonstrate a company’s management success and provide useful
insights on the operation of its departments. This is backed up by a study conducted by Samiloglu,
Oztop and Kahraman (2017). Thus, profitability ratios like ROE, ROA, and Net Profit Margin were
chosen by the researcher of the underlying study to be the primary financial drivers.
4.3 Relationship between CSR spending and financial performance
Relationship wise, the author has developed three hypotheses because there are certain limitations in
annual reporting of CSR initiatives therefore, in order to do the quantitative analysis, the author
created assumptions to use CSR spending with the profitability ratios to get the input of the CSR
initiatives.
4.3.1 Relationship between CSR spending and ROA
As per the data analysis (Refer Pg 8), it was identified that there was a positive moderate correlation
between CSR spending and ROA. Meanwhile, no statistically significant correlation was discovered
between CSR and ROA in studies conducted by (Matuszaka and Róaskaa, 2017; Hafez, 2015;
Taşkin, 2015).
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4.3.2 Relationship between CSR spending and ROE
According to the data analysis which has been done the author (Refer pg 8), it was identified that
there is a positive moderate correlation between CSR spending and ROE. Similarly, several previous
studies that’s been conducted have found evidence of a positive relationship between CSR spending
and ROE (Szegedi et al., 2020; Buallay, 2019; Khan et al., 2018; Hafez, 2015). On the contrary, in a
study conducted by Nguyen and Tang (2022), CSR actions connected to human resources impacted
ROE negatively, while CSR variables pertaining to community activism group, environmental
activist group, and social service group had a similar but not statistically significant impact.
4.3.3 Relationship between CSR spending and Net Profit Margin
As per the analysis of the data (Refer pg 9), it was identified that the correlation coefficient is
positively low. Meanwhile, the findings between CSR spending and net profit margin showed a
statistically insignificant relationship. In other words, the results of the correlation between Net Profits (NP) and CSR spendings are completely different, indicating that there is no connection
between the two. Hence, CSR is not the factor when assessing the banks’ net profitability of the
banks. CSR is one of the many factors that could affect the profit. Few possible reasons which could
affect the profits of the banks would be, deliberate manipulations of the profit in the annual reports,
rising interest rates, external factors like recession, and increase in competition (Li, 2019).
4.4 Identification of appropriate CSR spending strategies that enhances financial performance.
In the data analysis, it is visible that the CSR spending and financial performance has a relationship
in the commercial banks in Sri Lanka. Moreover, this area of the study will identify the appropriate
CSR spending strategies that enhances the financial performance.
As per the discussion in the theoretical review, it is visible how theories explain CSR spendings
influence financial performance. In the study of Gangi et al., (2018) discusses that the banks
reputation could serve as both a motivator of competition and a safeguard against unfavourable
circumstances. Further, in their study they show that engaging in CSR activities improve the
reputation of the banks. However, Zhou et al., (2021) discusses in their study that if banks invest
excessively in CSR, it may negatively affect their regular business operations in the short run.
Therefore, it is the function of the managers to manage the daily business operations effectively and
24
focus more on CSR activities as it will help consumers to develop a favourable opinion of the banks
and as a result the financial performance would improve due to the trust built by the stakeholders.
Meantime, as explained by Şahin & Bayramoğlu, (2015) in the literature review, if a company wants
to stay in business and provide better outcomes, it must practice CSR toward its employees.
Moreover, many advantages have been discussed in that area by the researcher. Not only that, but
the data also extracted from the annual reports from 5 different banks related to CSR included the
contribution towards employees for the data analysis and showed a positive relationship with ROA
and ROE. Therefore, investing in training and development and education will boost employee
commitment and finally will enhance future performance in the long run. Thus, this can be declared
as another appropriate strategy that has been identified throughout the study by the author.
4.5 Conclusion
The overall purpose of the research was based on four objectives. These objectives directed the
author towards achieving the aim of the research. The first objective was attained as the researcher
discovered the factors of CSR spending as environment, employees, and community through the
literature review. Similarly, the second objective was achieved as the researcher identified
determinants of financial performance as ROA, ROE, and Net Profit Margin. Previous academic literature
related to CSR and financial performance were critically analysed.
Meanwhile, the third objective was achieved as the author critically evaluated the relationship
between CSR spending and financial performance inthe banking industry in Sri Lanka. The data was
collected by the researcher from 5 licensed commercial banks’ annual reports and correlation and
regression analysis was conducted to test the hypotheses created to determine the relationship
between CSR spending and financial performance.
Thus, these results arrayed that the first two hypotheses have a positive and a significant relationship
between CSR spending and ROA and CSR spending and ROE whereas, a negative and an
insignificant relationship was visible between CSR spending and Net Profit Margin accepting the
null hypothesis.
Finally, a discussion has been done by the author regarding the factors of CSR spending and the
determinants of financial performance. Lastly, the author has identified suitable CSR spending
strategies that would help boost the financial performance.
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4.6 Recommendations
Some scholars have argued that excessive engagement in CSR in banks tend to have disruptions in
the regular operations in the short run. To avoid such disruptions, it is recommended that the banks
should have a CSR policy in place such that it would benefit both the stakeholders and the bank. The
CSR policy should not simply exist in written form. But the CSR policy should be in place for a
predetermined amount of time before being reinstated.
At present, investing in CSR activities enhance the financial performance as it indirectly builds the
trust of the stakeholders leading to an improved reputation of the banks. Therefore, it is recommended
that banks creating a safe working environment, moving into green banking, contributing to the
community help to build trust among stakeholders and it would help to improve the financial
performance of the banks in the long run.
26
Annexure 1 – Data collection to calculate the regression test between independent variable and
dependent variables.
27
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Theory into Practice Project
IMPACT OF OCCUPATIONAL-RELATED STRESS ON
EMPLOYEE PERFORMANCE IN ASIAN BANKING SECTOR.
Student Name: L.T.M. Cabral
UOB ID: 2021961
COURSE: MBA (General)
UNIT ID: BSS063-6
SUBMISSION DATE: 2022-01-XX
WORD COUNT:XXXX
Abstract
Asian banking sector is renowned to be the largest regional bank in the world accounting to more
than 50% of the market-share with expectation of $69 trillion of growth in assets by the year of
2025. However, occupational-related stress has seen a sharp rise within the banking industry in the
recent times due to rapid organisational changes taking place focusing on increased productivity,
profitability and competitiveness thanks to globalisation and intense competition. As a result,
banking professional has been adversely affected both physically and mentally which in turn has
affected their performance, detrimentally affecting the growth of the industry. Understanding the
significance of this issue, this study focuses on critically evaluating the impact of occupationalrelated stress on employee performance in the Asian banking industry. As part of achieving this
objective, key factors contributing occupational-related stress, key factors contributing to
employee performance in Asian banking industry and th e relationship between occupationalrelated stress and employee performance in the context of Asian banking industry was evaluated.
Furthermore, based on the insights gained from these objectives, a comprehensive organisational
process model was developed aiming to both minimize occupational-related stress and increase
employee performance.
As part of achieving these objectives, author conducted a systematic review utilizing Dunscomb’s
seven step model for systematic review. Accordingly, 15 journal articles were identified for the
review based on rigorous selection and filtering process. Based on the thematic analysis conducted,
it was identified that work-overload, work-relations, role stressors and work-condition as key
factors contributing to occupational-related stress in Asian banking sector while compensation,
work-conditions and career developments as key factors affecting employee performance.
Furthermore, it was also identified that relationship between the employee performance and stress
to be overwhelmingly negative but due to certain factors such as stress tolerance level and job
motivation and job satisfaction, it could be varying representing a curvilinear relationship.
Capitalizing on this unique relationship, author proposed an organiz ational process model
consisting of a 5-pronged approach to both reduce work-place stress and to channel it as a effective
positive influence towards employee performance, through improved job -motivation, job
satisfaction and stress-tolerance level of employees, thereby contributing to effective growth of
banking industry amidst the prevalent workplace-stress.
1
Table of Contents
1.0 Introduction ……………………………………………………………………………………………………….. 4
1.1 Background …………………………………………………………………………………………………….. 4
1.2 Rational………………………………………………………………………………………………………….. 5
1.3 Scope……………………………………………………………………………………………………………… 6
1.4 Aims and Objectives ………………………………………………………………………………………….. 6
1.5 Potential for insightful outcome ……………………………………………………………………………. 7
1.6 Application of theory into practice………………………………………………………………………… 7
1.7. Method of analysis ……………………………………………………………………………………………. 8
1.8 Evidence …………………………………………………………………………………………………………. 9
2.0 Literature Review ………………………………………………………………………………………………..10
2.1 Theoretical overview of occupational-related stress …………………………………………………..10
2.2 Theoretical overview of employee performance………………………………………………………..11
2.3 Key factors of occupational-related stress in Asian Banking Sector ………………………………13
2.4 Key Determinants of employee performance in Asian banking sector ……………………………15
2.5 Relation between work- stress & employee performance in Asian banking sector. ……………16
3.0 Method of Analysis……………………………………………………………………………………………….18
3.1 Research Approach …………………………………………………………………………………………..18
3.2 Research Strategy……………………………………………………………………………………………..19
3.3 Systematic Review …………………………………………………………………………………………….20
3.3.1 Scope………………………………………………………………………………………………………..20
3.3.2 Search Strategy …………………………………………………………………………………………..21
3.3.3 Quality Evaluation ………………………………………………………………………………………21
3.3.4 List of articles included for systematic review …………………………………………………….21
3.3.5 Descriptive Summary …………………………………………………………………………………..23
3.3.6 Thematic Analysis ……………………………………………………………………………………….25
4.0 Discussion ………………………………………………………………………………………………………….27
4.1 Key Determinants of occupational-related stress. ……………………………………………………..27
4.2 Key Determinants of employee performance……………………………………………………………30
4.3 Relation between work-stress & employee performance in Asian banking sector. …………….32
4.4 Organizational process model for minimizing work stress in Asian banking……………………33
5.0 Conclusion & Recommendations……………………………………………………………………………..37
5.2 Implications …………………………………………………………………………………………………….38
2
5.3 Contribution to knowledge………………………………………………………………………………….38
5.4 Limitations ……………………………………………………………………………………………………..39
5.5 Recommendation for future research work …………………………………………………………….40
6.0 References ………………………………………………………………………………………………………….41
7.0 Appendix……………………………………………………………………………………………………………47
7.1 Appendix A – Presentation Slides ………………………………………………………………………….47
7.2 Appendix B – Thematic Analysis ………………………………………………………………………….49
3
1.0 Introduction
1.1 Background
Depression and anxiety caused by occupational stress costs global economy about one trillion US
dollars in loss of productivity (WHO, 2013) while 40% of adults in worldwide experienced workplace stress in 2020, 5% increase from 2019 of the same survey (Harlan and Nichols, 2021).
More than 40 of the world’s 100 largest banks reside in Asia, accounting to 50% of the market
capitalisation of global banks. However due to the challenges arising from globalisation and
competition, Banks have undergone substantial organisational change focusing on increased
productivity, profitability and competitiveness (Dahl and Sengupta, 2020).
As a result of such circumstances, banking professionals have been subjected to high work -loads
under strict regulatory environments while being forced to be flexible to shift to new-roles, gain
new skills/knowledge for handling the ever-changing business processes, leading to a widespread
increase in workplace-stress that goes beyond depression & physical-health, affecting their
performance (Purkait, 2016).
4
1.2 Rational
Studies conducted assessing the effects of job-stress on employee performance has revealed mixed
results. Significant proportion of studies suggest that job-stress leads to employee-performance
degradation with time-pressure, high-work-load, role-conflict and resource-reduction acting as
main causes (Lopes & Kachalia, 2016; Chienwattanasook and Jermsittiparsert, 2019; Rahman et
al, 2014), While some researchers found that better working-conditions, greater control over-work
and organizational-support can result stress being a motivational factor, improving employeeperformance (Nangia & Chaturvedi, 2015; Ehsan et al, 2019) leading to a conflicting-ambiguous
understanding of the relationship.
Additionally, limited study has been done in assessing this aforementioned-relationship focusing
on banking sectors in Asia as majority of such research focuses predominantly on the western,
rich, educated and democratic societies (Moreno-Fortes et al, 2020) with industries such as
healthcare, defence & public-administration where occupational-stress is rampant (Purkait, 2016).
The covid-19 pandemic has also created a stressful-uncertain situation, significantly impacting the
mental-wellbeing people through issues such as psychological-confusions, anxiety, socialdeprivation and depression. From a workplace point-of-view, the pandemic has led to a drastic
change in working environments in terms of changed working-patterns of employees as well as
organizational work-practices such as remote working, rapid digitization and the adoption of both
safety and hybrid-work as integral component to the organizational-culture (Saleem, Malik and
Qureshi, 2021). However, there is only limited research done on investigating contribution of such
mental-issues and work-place changes towards occupational-stress and how it impacts the
employee performance, giving further strength to the timely-requirement of this research.
Therefore, this research would be timely-significant since it would attempt to bridge the gap
between occupational-stress and employee-performance leading to development of more effective
stress management HR practices targeting better employee performance through the focus on
stress-inducers relevant to an under-researched banking sector that has undergone rapid
transformation in work environment at recent times.
5
1.3 Scope
It’s critically important for the scope of study to be highly focused avoiding vagueness, while
ensuring the relevancy of the findings (Denscombe, 2017). Work-stress can be recognized as a
multi-dimensional issue affecting employees both physically and emotionally (Lopes & Kachalia,
2016). However, this research would focus only on psychological effects of occupational-stress.
Additionally, employee performance would be assessed using three key areas, namely task performance, contextual-performance & adaptive-performance (Koopmans et al, 2011), while
geographically research would focus on Asian banking sector due to its recent trends in
occupational-stress, impacting performance (Sengupta and Seshadrinathan, 2019).
.
1.4 Aims and Objectives
Aim of this research is to critically evaluate the impact of occupational-related stress on employee
performance in Asian banking sector…