i 
 

 

 

SCHOOL OF GRADUATE STUDIES 

FACTORS AFFECTING PRACTICE OF CORPORATE SOCIAL 

RESPONSIBILITY IN CASE OF MANUFACTURING COMPANIES 

OPERATING IN GURAGE ZONE, WOLKITE ETHIOPIA. 

 

MBA THESIS 

 

BY: SHEMSEDIN AWOL BAGE 

 

MAY 2025 

WOLKITE, ETHIOPIA 



i 
 

 

Wolkite University 

School of Graduate Studies 

 

 

Factors Affecting Practice of Corporate Social Responsibility in Case of 

Manufacturing Companies Operating in Gurage Zone, Wolkite; Ethiopia. 

 

 

A thesis Submitted to The Department of Management in Partial Fulfillment of 

the Requirements for The Masters of Business Administration. 

 

 

 

By: Shemsedin Awol Bage 

Advisor: Tasew Shedaga (PhD) 
 

 

 

 

 

 

April 2025 G.C 

WOLKITE, ETHIOPIA 



ii 
 

APPROVAL SHEET 
We the examiners board approve that this thesis has passed through the defense and review process 

 

“Factors Affecting Practice of Corporate Social Responsibility in Case of manufacturing 

companies that operate in Gurage zone, Ethiopia”: 

By: 

Shemsedin Awol 

 

 

Members of the board of Examiners 

External Examiner                                               Signature                                      Date  

         Mengistu G. (PhD)                                                         _______________   

Internal Examiner                                                Signature                                      Date  

           Tamiru Yihun( PhD)                                  _______________                    _______________   

Chairperson                                                        Signature                                      Date  

            Tafesse Akinida (MA)                                 _______________                    _______________   

 

 

 

 

 

 

 

 

 

 



iii 
 

 

STATEMENT OF CERTIFICATION 

This is to certify that this thesis prepared by Shemsedin Awol entitled “Factors Affecting Practice of 

Corporate Social Responsibility in Case of manufacturing companies operating in Gurage zone, 

Wolkite; Ethiopia”;  has been submitted to faculty of business and economics, school of graduate 

studies for examination with my approval as the college advisor. 

 

 

 

(Advisor’s Name)                                    Signature                                        Date 

     Tasew Shedaga (PhD)                           _______________    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 



iv 
 

DECLARATION 

With the help of my advisors, Tasew Shedaga (PhD), I certify that my thesis, "Factors Affecting 

Practice of Corporate Social Responsibility in Case of Manufacturing Companies Operating in 

Gurage Zone, Wolkite; Ethiopia," is entirely original. Every source of information used in the thesis 

has been properly credited. I additionally attest that the thesis has not been submitted, in whole or in 

part, to any other university for credit toward a degree.    

 

 

 

Researcher‟s Name                                                Signature                                            Date  

      Shemsedin Awol                                            ___________                                _______________    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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ACKNOWLEDGEMENT 

First and foremost, I would like to give the Almighty God all the glory for assisting me in undergoing 

this thesis. Additionally, I would like to thank my advisor TASAW SHEDAGA (PhD), internal 

examiner TAMIRU YIHUN (PhD) and external examiner MENGISTU A. (PhD) for their insightful 

advice and remarks throughout the study and writing process.  

I would like to express my great depth of gratefulness to my family and friends for their 

extraordinary support and encouragement throughout my study. 

Last but not the least, I would like to gratitude individuals who have taken part in this study either 

directly or indirectly and provided a precious contribution to this area of study and who responded 

in such a timely and kind manner to make this work possible. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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ACRONYMS 
CSR: Corporate social responsibilities 

CSP: Corporate social performance 

RDT: Resource dependent theory 

RBT: Resource based theory 

PR: Philanthropic Responsibilities 

LP: Employee demand 

CD: Customer demand 

SL: Social license  

SU: Sustainability practice 

SLO:  Social license to operate 

UNDP: United nation developmental program 

CSA: Central statistical agency 

PLC: Private limited company  

HC: Human Competence  

 

 

 

 

 

 

 

 

 

 

 

 



vii 
 

ABSTRACT 

This study examines factors influencing corporate social responsibility (CSR) practices among 

manufacturing companies operating in Gurage Zone Ethiopia, focusing on humanistic culture, 

community participation, government policy, customer knowledge, and employee attitudes. Using a 

quantitative method approach with 297 respondents, the research found that these factors 

significantly and positively impact CSR practices. Specifically, a company’s humanistic culture had 

the strongest influence (44.5%), followed by employee attitude (23.0%), community participation 

(18.3%), customer knowledge (8.1%), and government policy (7.5%). The findings suggest that CSR 

success depends on internal culture, stakeholder engagement, and regulatory compliance. For 

effective CSR implementation, companies should prioritize community involvement, employee well-

being, and responsiveness to government and media expectations. Understanding these determinants 

can help firms enhance their CSR strategies, improve stakeholder relations, and contribute to 

sustainable development. The study underscores the importance of addressing specific, tangible 

issues in CSR communication to increase public receptivity. 

Key Words: Customers knowledge, employees’ attitude, community participation, government 

policy, humanistic culture, and corporate social responsibility. 

 



1 
 

 

TABLE OF CONTENTS 

APPROVAL SHEET ...................................................................................................................................... ii 

STATEMENT OF CERTIFICATION ........................................................................................................ iii 

DECLARATION ........................................................................................................................................... iv 

ACKNOWLEDGEMENT ................................................................................................................................ v 

ACRONYMS ................................................................................................................................................... vi 

ABSTRACT ................................................................................................................................................... vii 

LIST OF TABLES .......................................................................................................................................... 4 

LIST OF FIGURES ........................................................................................................................................ 5 

CHAPTER ONE ............................................................................................................................................. 6 

1. INTRODUCTION .................................................................................................................................. 6 

1.1. Background of the Study ................................................................................................................ 6 

1.2. Statements of the Problem ............................................................................................................. 7 

1.3. Research Questions ....................................................................................................................... 10 

1.4. Objective of the Study .................................................................................................................. 10 

1.4.1. General Objective ................................................................................................................... 10 

1.4.2. Specific Objectives .................................................................................................................. 10 

1.5. Significance of the Study .............................................................................................................. 11 

1.6. Scope of the Study ......................................................................................................................... 11 

1.7. Limitation of the study ................................................................................................................. 12 

1.8. Operational definition of terms ................................................................................................... 12 

1.9. Organization of the Thesis ........................................................................................................... 13 

CHPATER TWO .......................................................................................................................................... 14 

2. REVIEW OF RELATED LITERATURE .......................................................................................... 14 

2.1. Theoretical Framework ................................................................................................................ 14 

2.1.1. Concept of Corporate Social Responsibility ............................................................................ 14 

2.1.2. Development of Corporate Social Responsibility ................................................................... 17 

2.1.3. Dimensions of Corporate Social Responsibility ...................................................................... 18 

2.1.4. Theory of Corporate Social Responsibility .............................................................................. 22 

2.2. CSR Practices from the Perspective of Developing Countries ................................................. 26 

2.3. Determinants of Corporate Social Responsibility ...................................................................... 27 

2.3.1. Community participation and CSR .......................................................................................... 27 

2.3.2. Customer knowledge and CSR ................................................................................................ 28 



2 
 

2.3.3. Government policy and CSR ................................................................................................... 29 

2.3.4. Employees attitude and CSR ................................................................................................... 29 

2.3.5. Humanistic organizational Culture and CSR practice ............................................................. 30 

2.4. Empirical Reviews ........................................................................................................................ 31 

2.5. Conceptual Framework of the study ........................................................................................... 33 

2.6. Hypotheses of the Study ............................................................................................................... 34 

CHPATER THREE ...................................................................................................................................... 35 

3. RESEARCH METHODOLOGY ........................................................................................................ 35 

3.1. Study area ...................................................................................................................................... 35 

3.2. Research design ............................................................................................................................. 35 

3.3. Research Approach....................................................................................................................... 36 

3.4. Target Population ......................................................................................................................... 36 

3.5. Sample design and sampling technique ...................................................................................... 36 

3.5.1. Sample frame and sampling unit ............................................................................................ 36 

3.5.2. Sample size ............................................................................................................................. 38 

3.5.3. Sampling Technique ................................................................................................................ 40 

3.6. Data sources and data Collection Methods ................................................................................ 40 

3.7. Procedure of Data Collection .......................................................................................................... 40 

3.8. Validity and Reliability ................................................................................................................... 41 

3.9. Method of Data Analysis ................................................................................................................ 41 

3.10. Model specification ................................................................................................................... 42 

3.11. Ethical Considerations ............................................................................................................. 42 

CHAPTER FOUR ........................................................................................................................................ 44 

DATA PRESENTATION, ANALYSIS AND DISCUSSION ................................................................... 44 

4.1. Descriptive Statistics Results ....................................................................................................... 44 

4.1.1. Demographic characteristics of Respondents ........................................................................ 45 

4.1.2. Descriptive Statistics Results of Variables .............................................................................. 46 

a. Descriptive statistics Result of the Dependent variable of the study............................................. 47 

b. Descriptive statistics Result of the Independent Variable of the Study ......................................... 53 

4.2. Inferential Statistics Results ........................................................................................................ 60 

4.2.1. Pearson Correlation Result ..................................................................................................... 60 

4.2.2. Assumption Test ..................................................................................................................... 62 

4.2.3. Multiple Regression Analysis ........................................................................................................ 65 

CHAPTER FIVE .......................................................................................................................................... 74 

SUMMARY, CONCLUSION AND REOMMENDATION ...................................................................... 74 



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5.1. Summary ....................................................................................................................................... 74 

5.2. Conclusion ..................................................................................................................................... 76 

5.3. Recommendations ......................................................................................................................... 77 

5.4. Future Research Directions ......................................................................................................... 79 

REFERENCES ............................................................................................................................................... 80 

APPENDIX – QUESTIONNARIE ................................................................................................................ 87 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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LIST OF TABLES 

TABLE 3.1: TARGET POPULATIONS AND SAMPLING UNITS .................................................................. 37 

TABLE 3.2: RESULT OF PILOT SURVEY THAT SHOW MANUFACTURING COMPANIES THAT PRACTICE 

CSR CURRENTLY........................................................................................................................ 38 

TABLE 3.3: STRATUM SAMPLE SIZE ................................................................................................... 39 

TABLE 3.4: RESULT OF CRONBACH’S ALPHA RELIABILITY TEST RESULT ........................................... 41 

TABLE 4.1: RESPONSE RATE OF QUESTIONNAIRES ............................................................................. 44 

TABLE 4.2: DEMOGRAPHIC CHARACTERISTICS OF RESPONDENTS ....................................................... 45 

TABLE 4.3: MEAN RANGE ................................................................................................................. 47 

TABLE 4.4: DESCRIPTIVE STATISTICS OF MANUFACTURING COMPANY'S ECONOMIC RESPONSIBILITY 

PRACTICES .................................................................................................................................. 48 

TABLE 4.5: DESCRIPTIVE STATISTICS OF MANUFACTURING COMPANY'S LEGAL RESPONSIBILITY ....... 49 

TABLE 4.6: DESCRIPTIVE STATISTICS OF MANUFACTURING COMPANY'S ETHICAL RESPONSIBILITY.... 51 

TABLE 4.7: DESCRIPTIVE STATISTICS OF MANUFACTURING COMPANY'S PHILANTHROPIC 

RESPONSIBILITY .......................................................................................................................... 52 

TABLE 4.8: DESCRIPTIVE STATISTICS OF GOVERNMENT POLICY RELATED FACTORS .......................... 54 

TABLE 4.9: DESCRIPTIVE STATISTICS OF COMMUNITY PARTICIPATION RELATED FACTORS ............... 55 

TABLE 4.10: DESCRIPTIVE STATISTICS OF EMPLOYEE ATTITUDE RELATED FACTORS ......................... 56 

TABLE 4.11: DESCRIPTIVE STATISTICS OF EMPLOYEE ATTITUDE RELATED FACTORS ......................... 57 

TABLE 4.12: DESCRIPTIVE STATISTICS OF HUMANISTIC CULTURE RELATED FACTORS ....................... 58 

TABLE 4.13: GRAND MEAN AND STANDARD DEVIATION OF THE VARIABLES ...................................... 60 

TABLE 4.14: PEARSON’S CORRELATION RESULT ............................................................................... 61 

TABLE 4.15: MULTI- COLLINEARITY TEST RESULT ............................................................................. 63 

TABLE 4.16: MODEL SUMMARY ................................................... ERROR! BOOKMARK NOT DEFINED. 

TABLE 4.17: ANOVA TEST RESULT ........................................... ERROR! BOOKMARK NOT DEFINED. 

TABLE 4.18: SUMMARY OF HYPOTHESIS TEST .................................................................................... 68 

TABLE 4.19: REGRESSION COEFFICIENT RESULT ............................................................................... 72 

 

 

 



5 
 

 

LIST OF FIGURES 
FIGURE 2.1: CARROLL'S MODEL OF CSR ............................................................................................ 21 

FIGURE 2. 2: CONCEPTUAL FRAMEWORK OF THE STUDY .................................................................... 33 

FIGURE 4.1: LINEARITY TEST RESULT ................................................................................................. 64 

FIGURE 4.2: NORMALITY TEST RESULT .............................................................................................. 64 

FIGURE 4.3: HETEROSCEDASTICITY TEST RESULT .............................................................................. 65 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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CHAPTER ONE 

1. INTRODUCTION 

Introduction 

This chapter deals about background of the study; statement of the problem; objectives of the study; 

significance of the study; scope of the study; limitations of the study; operational definition of key 

terms, and organization of the study. 

1.1. Background of the Study 

Corporate Social Responsibility (CSR) has become a basis of modern business strategies, showing 

the need for companies to address social, environmental, and economic challenges while enhancing 

profitability. Stakeholder involvement, economic growth, environmental protection, ethical 

approach, responsible practice, moral obligation, accountability, and company responsiveness are 

only a few of the various facets of corporate social responsibility (Rahman and Post, 2012). 

Corporate social responsibility appears to further some social good beyond the profit-making 

existence of business enterprises when a business enterprise conforms to sound ethnics and core 

values as global citizens and local neighbors in a fast-changing world (Williams, 2000).  

Corporate Social Responsibility (CSR) in the manufacturing sector includes a range of practices 

aimed at addressing the environmental, social, and economic challenges associated with industrial 

activities. These practices are essential to overcome the negative impacts of manufacturing 

processes, improve stakeholder relationships, and align business operations with sustainability goals 

(Porter & Kramer, 2011). 

In Ethiopia, the manufacturing sector plays a crucial role in national economic development, 

contributing to industrial growth, job creation, and export revenues (Ministry of Industry, 2020). 

However, rapid industrial expansion has also brought significant challenges, including 

environmental pollution, improper waste management, and labor-related concerns. The need for 

manufacturing companies to perform CSR practices has become more pressing in light of these 

challenges, particularly in smaller urban centers like Wolkite Town, located in the central Ethiopia 

Regional state (Ministry of Industry, 2020). 



7 
 

Gurage zone has experienced increasing industrial activity in recent years, with manufacturing 

companies emerging as contributors to the local economy. Studies have shown that CSR 

implementation in developing regions is often influenced by a combination of internal and external 

factors (Visser, 2008). Internal factors include leadership commitment, organizational culture, and 

financial capacity, while external factors encompass government regulations, stakeholder pressures, 

and community expectations. 

In the context of Gurage zone, several barriers to effective CSR adoption have been observed. Weak 

regulatory enforcement, limited awareness of CSR benefits, financial constraints, and cultural 

attitudes toward corporate responsibility are some of the challenges faced by local manufacturers 

(Esubalew & Berihun, 2019). Additionally, the socio-economic dynamics of the town, such as 

limited community engagement and inadequate infrastructure, further complicate CSR 

implementation.  

Minda Yirga et al. (2020). A close look at the scale of the initiating factors in the implementation of 

CSR indicated that the manufacturing companies in Gurage zone implement CSR because of 

economic performance with mean (4.00) and standard deviation of (1.19), pressure from third party 

with a mean value of (3.98) and standard deviation of (0.842), improving reputation of the company 

with mean value of (3.70) and standard deviation of (0.996), customer loyalty with rated (3.66) and 

standard deviation of (1.28) and employee motivation with (2.18) and standard deviation of (1.202). 

This research aims to investigate the factors affecting CSR in the case of manufacturing companies 

operating in Gurage zone. By examining both internal and external determinants, the study aimed to 

identify the key barriers and enablers of CSR practices in this specific context. The findings will 

contribute to the growing body of literature on CSR in developing economies and provide actionable 

insights for local policymakers, business leaders, and other stakeholders to promote sustainable and 

socially responsible manufacturing practices. 

1.2. Statements of the Problem 

The global changes in the economy, environment, and society are currently the most important 

factor in all organizations (Martínez-Garcia et al., 2018). Corporate social responsibility (CSR) is 

becoming an increasingly significant part of the business world as stakeholders in the industry are 

more concerned about a company's involvement in many economic, environmental, and social 

elements than just producing profits to stay in operation (Dunay et al., 2021). 



8 
 

While many people may not be familiar with the concept of Corporate Social Responsibility, there 

is a growing desire for businesses to be socially conscious (Carroll & Shabana, 2010). The 

interaction between society and its organizations is reflected in corporate social responsibility 

(Choi et al., 2020; Ahmad et al., 2020). Numerous complaints against private sector companies for 

not engaging in public services and enhancing citizen welfare have led to an increase in the 

significance of corporate social responsibility (Hammouri et al., 2021; Kaddumi & Ramadan, 

2012). 

Carroll and Shabana (2010) articulate that CSR is not merely a moral obligation but a strategic 

imperative that aligns business operations with societal needs, potentially yielding competitive 

advantages. Similarly, Visser (2006) highlights the unique drivers of CSR in developing countries, 

where socio-economic conditions, governance structures, and cultural contexts shape corporate 

behavior. 

Carroll (2016) reported that the bulk of people on Earth reside in developing nations, each of which 

faces distinct social, political, and environmental challenges. These industrializing nations frequently 

have unstable governments, high rates of unemployment, restricted technological capabilities, 

unequal wealth distribution, erratic water supplies, and underutilized manufacturing resources. The 

employment of child labor, poor or unpaid salaries, unequal career possibilities, workplace health 

and safety issues, and increased pollution are only a few of the negative social and environmental 

repercussions of these techniques, despite their obvious economic benefits (Carroll, 2016). 

As a result of environmental and social forces including globalization, economic expansion, 

investment, and corporate activity, developing countries will be compelled to implement CSR 

practices (World Bank, 2005).  

Tadele et al. (2022) explore CSR's impact on sustainable development but acknowledge the need for 

studies focusing on regional zones like Gurage, where socio-economic and cultural contexts differ 

significantly. Desta and Workneh (2019) point out that many companies struggle to reconcile profit-

making objectives with CSR commitments, often citing a lack of standardized guidelines, 

insufficient governmental support, and low levels of community involvement as major obstacles. 

In this sense, unlike their counterparts in developed countries, civil society organizations in 

developing countries do not foster responsible investment and do not serve as sources of social 

responsibility (Nigatu, 2015).  



9 
 

According to many researcher’s, Ethiopian businesses are primarily focused on ensuring their 

financial survival rather than corporate social responsibility (CSR). Mulugeta and Muhammednur 

(2022) examined the factors influencing the corporate social responsibility (CSR) practices of 

mineral water bottling companies in the Dire Dawa Administration. Their findings indicated that 

the following factors significantly influence CSR practices: labor pressure, community pressure, 

customer demand, and social license to operate.  

According to a study done by Minda Yirga et al. (2020) titled "Assessment of Corporate Social 

Responsibility: The Case of Manufacturing Companies in Gurage Zone, Ethiopia." described the 

practice of CSR in manufacturing companies that are operating in Gurage zone as, even if the 

manufacturing companies involved in CSR practice, the companies are not involved in a regular 

basis. In addition, the major goals of these manufacturing companies are profit maximization. A 

CSR strategy is a road map for moving ahead on CSR issues. It sets the firm’s direction and scope 

over the long term with regard to CSR, but the companies CSR activities does not relate with their 

business strategy. In addition to this, the managers of the companies argued that the firms did not 

have CSR strategy, policy and procedures.  

A question is raised on the mind of the researcher what factors affect manufacturing companies 

operating in Gurage zone to practice corporate social responsibilities and to include CSR policies 

with their business policies? This is a major deriving force to do a research on factors affecting 

CSR practice in the case of manufacturing companies operating in Gurage zone.  

In order to offer suggestions for encouraging ethical company conduct and sustainable growth in 

the community, the researcher also will see to determine the elements that impact the choice to put 

CSR practices into effect while some people in Ethiopia participate in Corporate Social 

Responsibility (CSR) activities, others do not. In order to make recommendations for encouraging 

ethical business conduct and sustainable growth in the community, the researcher will also consider 

to determine the elements that impact the choice to put CSR practices into effect. The researcher 

is also driven by a desire to add to the body of knowledge already available on corporate social 

responsibility in developing nations, especially Ethiopia. Consequently, the purpose of this study 

was to look into the factors that influence the manufacturing companies operating in Gurage zone 

in Ethiopia's CSR practices. 

 



10 
 

1.3. Research Questions 

This study addressed the following questions: 

External factors 

 What is the effect of government policy on CSR practice of manufacturing companies that 

operate in Gurage zone? 

 What is the effect of community participation on CSR practice of manufacturing companies 

that operate in Gurage zone? 

 What is the effect of customers’ knowledge on CSR practice of manufacturing companies 

that operate in Gurage zone?  

Internal factors 

 What is the effect of employees’ attitude on CSR practice of manufacturing companies that 

operate in Gurage zone? 

 What is the effect of company’s humanistic culture on CSR practice of manufacturing 

companies that operate in Gurage zone? 

1.4. Objective of the Study 

1.4.1. General Objective 

The general purposes of this study was to investigate the major factors that affect practice of CSR 

in manufacturing companies that operate in Gurage zone. 

1.4.2. Specific Objectives 

These were the specific objectives that the student researcher tried to achieve: 

 To examine the effect of government policy on CSR practice of manufacturing companies 

that operate in the study area. 

 To measure the effect of community participation on CSR practice of manufacturing 

companies that operate in the study area. 

 To measure the effect of employee’s attitude on CSR practice of manufacturing companies 

that operate in the study area. 

 To find out the effect of customer’s knowledge on the practice of CSR in manufacturing 

companies that operate in the study area. 

 To assess the effect of company’s humanistic culture on CSR practice of manufacturing 

companies that operate in the study area. 



11 
 

1.5. Significance of the Study 

The research's conclusions will be significant and very helpful to many different groups. It will aid 

in the upper management of the manufacturing company's comprehension of the requirements and 

needs of the community in which they conduct the business. Additionally, it would assist them in 

discovering the variables that influence their corporate social responsibility practices so that 

appropriate action may be taken. The findings will be used by the government and corporate policy 

makers to inform new policy considerations, particularly those related to sustainability and 

environmental concerns. This will allow them to develop a new plan for promoting environmental 

protection through waste recycling, consumer protection, product safety, and workplace hygiene. 

In terms of information on corporate social responsibility (CSR), knowledge and awareness of 

social issues, environmental safety, employment, health issues, and other benefits in CSR, the 

stakeholders of the organizations, including society at large, would greatly benefit. Given that 

corporate social responsibility (CSR) is still in its infancy in Ethiopia, the researcher hopes that 

this study will serve as a resource for future research on the topic and as a springboard for other 

academics. 

1.6. Scope of the Study 

The geographical scope of the study was limited to investigating factors affecting corporate social 

responsibilities in manufacturing companies operating in Gurage zone.  In the zone there are eighteen 

(18) manufacturing companies currently operating in nine (9) different business areas. Among these 

manufacturing companies seven (7) are resided in urban area and the remaining 11 are in rural area.  

From a conceptual standpoint, the study's major focus was on identifying the factors that influence 

corporate social responsibility (CSR) practices. Even though there are many determinant factors 

that can be used in research, only five predictors were chosen for the study about the determinants 

of CSR. These include the company's humanistic culture, as well as the employee’s attitude, 

customer’s knowledge, community participation, and government policy. The reason why the 

researcher chosen the factors is that these five factors represent both internal (company's 

humanistic culture, employee attitude) and external (customer knowledge, community 

participation, government policy) influences on CSR practices. They align with stakeholder theory 

(Freeman, 1984) and the triple bottom line approach (Elkington, 1997), which emphasize the role 

of economic, social, and environmental factors in CSR decision-making. 



12 
 

. Additionally, because structured questionnaires were used, methods utilized to gather data during 

performing the study was quantitative. In order to lower sample error and increase the population 

under study's representation, the sampling technique was probability sampling, which include 

stratified sampling and simple random sampling. The collected data was analyzed using inferential 

and descriptive statistics using SPSS version 25 software. 

1.7. Limitation of the study 

Adequate and reliable information is important to undertake any kind of study. However, this study 

has faced the following limitations:  

First, the target participants in this study were in manufacturing companies that operate in Gurage 

zone and generalization of this research topic was difficult to make to other area in the country 

because of this limited sample size, conclusions and generalizations could be made. 

Second, the research limited to five determinants of corporate social responsibility (variables) and 

there would be other determinants which can affect corporate social responsibility. 

Third, the research used only questionnaire and researcher would have used other method of data 

collection to get a comprehensive view of the research.  

Fourth, the research used only a cross-sectional study design and would have used other study 

designs to identify the determinants of corporate social responsibility. Future research may look into 

this issue and could narrow the gap  

1.8.  Operational definition of terms 

Here below are some of the definitions of key words in this study proposal. 

 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 (McWilliams and Siegel, 2001). 

 Legal Responsibilities: Legal activity includes performing in a manner consistent with 

expectations of government and law (Cherobon, 2014). 

 Economic responsibility: It is a firm’s responsibility to maximize earnings per share and to 

earn as much profits as possible (Carroll, 1991). 

 Philanthropic Responsibilities: It covers the activities of the company that show the 

company is like a good citizen which includes participation in supporting the arts, education, 

and other sectors that can enhance the quality of life in society (Kesto, 2017; Famiyeh, 2017). 



13 
 

 Ethical responsibility as the voluntary actions taken by firms to promote and achieve the 

goals for the society that goes beyond economic and legal responsibility (Carroll and 

Shabana, 2010). 

 Humanistic culture:  When a firm’s members not only care for their own needs and interests 

but also prioritize the needs and interests of others (Galbreath, 2010). 

1.9. Organization of the Thesis  

There are five chapters in the entire thesis. The problems statement, research questions, research 

objectives, significance of the study, scope, and organization of the study are included in the first 

chapter.  

The theoretical and empirical literatures' debate section are covered in the second Chapter. The 

conceptual underpinning of the study is also included. The research methodology, which includes 

the model formulation, sample size and sampling strategies, data sources and collection methods, 

data analysis methods, and ethical considerations, are presented in the third chapter.  

Data analysis and interpretation—specifically, data gathered from questionnaires and interview are 

covered in the fourth chapter. Chapter five concluded the research findings and suggested potential 

directions for future research. 

 

 

 

 

 

 

 

 

 

 

 



14 
 

CHPATER TWO 

2. REVIEW OF RELATED LITERATURE 

Introduction 

This chapter focuses on providing theoretical review and empirical models that are relevant to the 

present work of the study. The theoretical review for factors affecting corporate social 

responsibilities is clearly set up discussing all the important factors related to the topic. The purpose 

of this part of the research work is to set up a foundation for the theoretical frame of corporate social 

responsibilities concepts. Moreover, it also presents the findings of previous researchers work and 

different author’s ideas that puts ground particularly for setting hypothesis and conceptual 

framework of the study that what the researcher wants to work on. 

2.1. Theoretical Framework  

2.1.1.  Concept of Corporate Social Responsibility 

Since there is no single universally accepted definition of CSR many scholars defined in different 

ways with different language but with a relatively similar idea (Carroll, 1999). CSR can be defined 

as a voluntary as well as obligatory activity of a business or an institution towards labor treatment, 

consumer protection, community welfare, environmental protection, human rights, transparency and 

anti-corruption, health and quality of life to enhance economic, social, political, ethical and 

environmental standards of the society as a whole (Carroll, 1999).  

Paul (2007) explained corporate social responsibility (CSR) is also known by several other names. 

These include corporate responsibility, corporate ethics, corporate citizenship or stewardship, 

corporate accountability, responsible entrepreneurship, are to name just a limited. As CSR matters 

become progressively incorporated into modern business performs, there are inclinations towards 

mentioning it as “responsible competitiveness” or “corporate sustainability” (Paul, 2007) 

Carrol (1999) explains corporate activities as a pyramid of responsibilities with economic 

responsibilities at the bottom, followed by legal, then ethical, and with philanthropic responsibilities 

at the top. Carrol (1999) argues that CSR is about taking responsibility for the pyramid's top parts, 

as well as the economics and legal responsibilities of the firm and significantly points out that CSR 

includes philanthropic contributions, however, is not limited to it and also developed this reasoning 

and explains that these responsibilities are less important than the other three categories. 



15 
 

This is because firms are not seen as irresponsible if they do not fulfil these responsibilities. To fulfil 

all responsibilities firms should be profitable, while operating within the boundaries of the law, be 

ethical, and be a good corporate citizen (Lantos, 2001)  

Corporate social responsibility (CSR) has been argued since the 1950s. The contemporary CSR (also 

called corporate responsibility, responsible business, corporate social opportunity, and corporate 

citizenship) covers the relationship between the corporations and the society within which they 

interact (Werther, & Chandler, 2010). However, slight theoretical and empirical consideration has 

been devoted to understanding the reasons that why or why not organizations act in socially 

responsible ways (Galbreath 2010; Rowley & Berman, 2000)  

Most of the theoretical and empirically concerned with a study on this matter has shed light on 

relationships between CSR and corporate financial performance (Cambel 2007; Rowley 2000). The 

most emphasis there has been being on determining the impact of CSR on financial performance 

rather than on determining the drivers of corporate social responsibility as well as corporate 

performance (Galbreath 2010). Corporate social responsibility consists of the economic, legal, 

ethical, and discretionary responsibilities of firms towards their stakeholders (Maignan & Ferrell 

2000).  

According to Dahlsrud (2008), a study of numerous explanations and indicated that CSR is the 

activities through which companies attempt to develop all their actions concerned with the five 

organizational dimensions: stakeholders, economic, voluntariness, social, and environmental. They 

demarcated corporate social responsibility as activities of companies carried out to meet the 

economic, legal, ethical, and discretionary responsibilities that are imposed on them by their 

stakeholders (Dahlsrud, 2008). Economic responsibility refers to producing profits and meeting 

consumer needs, and the legal responsibility of firms is to fulfill their economic operations and 

mission within a legal framework. Concerning ethical responsibilities, firms should obey moral rules 

defining appropriate behaviors in society. Lastly, discretionary responsibilities are those corporate 

actions that are not compulsory but are expected by stakeholders as an indication of good citizenship 

(Galbreath, 2010) 

The operational definition of CSR focuses on the stakeholder management framework rather than 

society in general because this defines that companies are accountable to their stakeholders 

(Maignan, 2000). Stakeholders are those whose welfares are related to the companies, and they can 

be shareholders, investors, suppliers, employees, and customers. Governments are also stakeholders 



16 
 

as they provide arrangements and their laws must be followed. Communities and even the natural 

environment is also stakeholder (Ferrell, 2000).  

Marrewijk (2017) stated that often biased toward specific interests and thus prevent the development 

and implementations of the concept. Not only has the issue become commonplace in the business 

press and among business and political leaders but a body of academic literature has also emerged 

around it (Walsh et al., 2003) 

 Still, little theoretical consideration has been devoted to understanding why or why not companies 

act in socially responsible ways (Cambell, 2007). Certainly, much of the literature on corporate social 

responsibility was more descriptive or regulative than positivist in tone (Maignan & Ralston, 2002). 

Theorized corporate social responsibility as inspiring ideologies (directed by values, stakeholders, 

performance); processes (programs and activities to implement the CSR principles and/ or handle 

specific stakeholder issues, including philanthropic, sponsorships, volunteer, code of ethics, quality, 

health, and safety, and managing environmental impacts); and stakeholder issues (community, 

customer, employee, shareholders, suppliers).  

Corporate social responsibility (CSR) can be categorized as a charming ground of study with 

«suggestions for university, business and people» which are value devotion (Okoye, 2009). 

Regardless of the concern to the theme and comprehensive theoretical dialogue, there is still a 

considerable absence of agreement regarding a correct or universal definition of CSR. Even hasty 

inspections of external resources on CSR lean towards to propose that there is a propensity to the 

progression of business conduct and changes of the model (Yevdokimova et al., 2019)  

The present literature also reminds us of the diversity of CSR in different countries, which should 

also be taken into consideration e.g. the Canadian (Montreal school of CSR), the Continental 

European, and the Anglo-Saxon approaches to CSR have their specifics (Saether, et al, 2008 cited 

by Yevdokimova et al., 2019). 

These differences are known as a belief and clichés, some of the examples are, for Chinese 

consumers, a socially responsible company makes safe, high-quality products; for Germans, it 

provides secure employment; in South Africa, it makes a positive contribution to social needs such 

as health care and education. And even within Europe, the discussion about CSR is very 

heterogeneous (Marques et al., 2014)  



17 
 

The most common method of CSR is corporate philanthropy. This includes monetary donations and 

aid given to non-profit organizations and communities. These aids could be made in areas such as 

the arts, education, housing, health, social welfare, and the environment, among others, excluding 

political contributions and commercial event sponsorship (Marquis & Tilcsik, 2016) 

 Theoretically, CSR is not a traditional management instrument, thus it can be observed as a moral 

duty rather than a business tactic which is strengthening the need for clear guidance and a deeper 

understanding of social responsibility (Zwetsloot, 2003). A different suggestion is possible when 

CSR is broken down into manageable pieces and processes. CSR must be defined to contain several 

minimum requirements and to entail a system of corporate accountability through regulatory 

intervention and enforcement of responsibilities (Hack et al., 2003).  

According to the Commission of European Union (2001), the definition of CSR is a concept by 

which organizations incorporate environmental and social subjects in their business dealings and in 

their collaboration with their stakeholders on a voluntary foundation. 

2.1.2. Development of Corporate Social Responsibility  

The concept of CSR has had a long and varied history in the literature. Even though orientations to 

CSR occurred several times before the 1950s, that decade accompanied what might be called the 

“modern era” concerning CSR definitions. Howard Bowen‟s (1953) book Social Responsibilities of 

the Businessman, stands out during this period. It was proposed that Bowen deserves the appellation 

of the Father of Corporate Social Responsibility. In the 1960s, the literature on CSR developed 

considerably. Most of this definitional literature was promulgated by academics, and the names that 

seemed to dominate that period included Davis, Frederick, McGuire, and Walton. (Okpara & 

Kabongo, 2013) 

Descriptions of CSR initiated to flourish in the 1970s. The meanings of CSR became more specific; 

also during this time, alternative emphases, such as corporate social responsiveness and CSP, became 

commonplace. The most notable contributions to the definitional construct during the 1970s included 

the works of Johnson, Davis, Steiner, Eells and Walton, Sethi, Preston and Post, and Carroll.  

In the 1980s, we witnessed fewer original definitions of CSR, more attempts to measure and conduct 

research on CSR, and alternative thematic frameworks. In terms of definitional contributions, the 

contributions of Jones, Drucker, Wartick, and Cochran, and Epstein stood out (Gond & Moon, 2011) 



18 
 

Finally, in the 1990s, the CSR concept transitioned significantly to alternative themes such as 

stakeholder theory, business ethics theory, CSP, and corporate citizenship. During that period, it 

should be noted that writers did not reject the CSR concept, but there were no new definitions added 

to the body of literature. Wood (1991) extended and set forth a CSP model that took CSR matters. 

During that time, there was a continuation of a trend begun earlier to operationalize the CSR concept 

and to articulate other concepts that were consistent with CSR theory but that took alternative 

emphases or themes as their centerpiece. In virtually all cases, these new directions and themes were 

consistent with and built on the CSR definitions and constructs discussed in this article (Rosli et al., 

2017)  

Furthermore, presently the word CSR remains vigorous. As we exclude the 1990s and focus forward 

to the new period, it is predictable that devotion will be given increasingly to measurement initiatives 

as well as theoretical advances. For these ideas to develop more, empirical research is undoubtedly 

required so that practice may be submissive with theory. The CSR concept will remain a vital part 

of business language and practice because it is a vital support to many of the other theories and is 

repeatedly reliable with what the public thinks of the business community today.  

As theory is developed and research is conducted, scholars may review and familiarize current 

definitions of CSR, or new definitions may come into the literature; however, at present, it is hard to 

imagine that these new concepts could develop apart and distinct from the groundwork that has been 

established over the past half-century. In this context, it appears that the CSR concept has a bright 

future because, at its core, it addresses and captures the most important concerns of the public 

concerning business and society relationships (Carroll 2021) 

2.1.3. Dimensions of Corporate Social Responsibility  

One of the most common and highly cited models detailing approaches to CSR is Carroll‟s four-part 

models. Carrol (1999) regards CSR in a four-stage conceptualization framework that includes 

economic responsibilities, legal responsibilities, ethical responsibilities, and discretionary 

responsibilities. These four categories are shown as a pyramid, in which the economic 

responsibilities are the foundation for all other types of CSR. 

A. Economic Responsibility 

Businesses were initially established as commercial entities with the goal of serving the needs of 

the general public by offering goods and services. Business organizations served as our society's 

fundamental economic unit before anything else (Carroll 1991). Establishing oneself as the main 



19 
 

driving force behind enterprise was the main goal. Companies were established to provide 

required and desired goods and services to customers (Carroll, 1991). Carroll (1991) elucidates 

that dependable performance is critical for firms to optimize earnings per share and generate 

maximum profits. The author also emphasized the significance of CSR in maintaining a strong 

and competitive position in the market. To reach a high level of operation efficiency and to have 

a successful organization by being defined as one corporation that is consistently profitable 

(Carroll, 1991). 

B. Philanthropic Responsibilities 

 Corporate philanthropy, or corporate giving, is a crucial component of the relationship between 

businesses and the community (Moharana, 2013). Businesses all throughout the world 

generously support their communities each year by contributing in a variety of ways to nonprofit 

organizations. Corporate and foundation gifts typically fall into one of three categories: monetary 

gifts to charities, in-kind gifts (gifts of goods or services), or volunteer labor (gifts of time). The 

difference between ethical responsibilities and philanthropy is that the former is not demanded 

in a moral or ethical sense. Corporate philanthropy, or corporate giving, is a crucial component 

of the relationship between businesses and the community (Moharana, 2013). Businesses all 

throughout the world generously support their communities each year by contributing in a variety 

of ways to nonprofit organizations. Corporate and foundation gifts typically fall into one of three 

categories: monetary gifts to charities, in-kind gifts (gifts of goods or services), or volunteer labor 

(gifts of time). The difference between ethical responsibilities and philanthropy is that the former 

is not demanded in a moral or ethical sense voluntary participation in charitable activities 

provided by the community, and assistance provided by the firm to projects that enhance quality 

of life (Ajao et al., 2020).  

C. Ethical Responsibilities 

Carroll and Shabana (2010) defined ethical responsibility as the voluntarily undertaken by 

businesses to advance and accomplish societal objectives that transcend financial and legal 

obligations. Public expectations of businesses' social contributions are growing, yet businesses' 

perceived social objective achievement is gradually deteriorating (Siddiq and Javed, 2014; 

Chemwile, 2017). In spite of this, business and society exchange implicit knowledge that is 

inherent to humanity, which fosters the development of a moral fabric. Standards, conventions, 

and expectations that show consideration for what customers, staff, shareholders, and the 



20 
 

community believe to be reasonable, fair, or consistent with upholding or protecting stakeholders' 

moral rights are collectively referred to as ethical duties. 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 (Mekonen, 2018).  

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. The implicit standards 

of ethical behavior indicated by an examination of the major ethical principles of moral 

philosophy are superimposed on these ethical expectations originating from societal groups. This 

would cover ideas like utilitarianism, fairness, and rights. Over the past ten years, the business 

ethics movement has made ethical responsibility a recognized component of corporate social 

responsibility (CSR) (Nasieku and Olubunmi, 2014; Mekonen, 2018).  

The concept of ethical responsibility extends beyond merely fulfilling legal and financial 

obligations meeting societal norms that are not codified in law, such as upholding the rights of 

individuals in society and acting in a way that is just and fair, is a component of ethical 

responsibility (Tuan, 2017).  

D. Legal Responsibilities 

Legal activity includes acting in a way that complies with the law and the expectations of the 

government, following numerous federal, state, and local regulations, abiding by the law as a 

corporate citizen, fulfilling all legal obligations successfully, and providing goods and services 

that at the very least abide by the bare minimum of requirements (Cherobon, 2014). However, 

the problem of the legal side demands that companies adhere to and legally consent to the host 

nation's frameworks. Legal obligations represent a perspective on the altruistic duty of "codified 

ethics" in that they represent fundamental principles of just practices as defined by our legislators 

(Mekonen, 2018).  

CSR, according to Carroll (2016), is the idea that businesses choose voluntarily to make 

contributions to a cleaner environment and a better society. Companies must be forced to uphold 

their environmental obligations since their main focus on generating profits inevitably results in 

social costs or outside expenses that are required to generate environmental value but are not 

covered by producers. The bulk of people on the planet, according to Osisioma (2015), reside in 

developing nations, each of which faces particular social, political, and environmental 



21 
 

challenges. Businesses should follow the law, just as society expects them to, as management 

want to see a profit as a reward for their hard work and efficiency. In its most basic form, the law 

serves as a representation of the fundamental guidelines that govern how company is expected 

to operate (Kesto, 2017).  

Rapid industrial development has led to the pursuit of policies intended to increase foreign 

investment, and these investors are frequently eager to begin taking advantage of tax breaks and 

low labor costs. Furthermore, according to Tuan (2012), this obligation encompasses the legal 

obligations that a nation's laws impose on businesses, both good and negative. As a matter of 

fact, legal responsibility might also mean abiding by laws pertaining to taxes, worker safety, or 

the environment.  

This study used Carroll‟s four dimensions of CSR model as dependent variable those are economic 

responsibility, legal responsibility, ethical responsibility, and philanthropic responsibility because 

the four-part Carroll‟s model the most widely accepted and cited model and concerning the practice 

as well as the activity of the CSR. 

 

Figure 2.1: Carroll's model of CSR 

• Be a good corporate citizen

• Contribute resources to the community, improve 
quality of life

Philantropic 
responsibilities

• Be Ethical

• Obligation to do what is right, just and fair. play by 
the rule of the game.

Ethical responsibilities

• Obey the law

• law is society's codification of right and
wrong. play by the rule of the game

Legal responsibilities

• Be profitable

• the foundation upon which all 
others rest.

Economic responsibilities



22 
 

2.1.4. Theory of Corporate Social Responsibility 

There are different of theories in the concept of CSR which are premeditated in different 

perspectives. In reality, most CSR theory have four dimensions these are related to profits 

(economic), political performance, social demands and ethical values (Lorraine, 2009). 

Corporate social responsibility performance of organizations has theoretical foundations; hence 

some theories have been selected which will be served as theoretical guide for the study and these 

includes stakeholder’s theory and uncertainty reduction theory.  

A. Stakeholder’s theory 

Stakeholder theory is one of the CSR theories. According to Freeman (1984), stakeholder theory 

indicates that a company's duty is to raise stakeholder satisfaction in addition to maximizing 

profit. The concepts and values of managing an organization are the focus of this theory of 

organizational management and business ethics (Freeman & Phillips, 2002). A group of persons 

who are interested in the actions of the organization is recognized as stakeholders, according to 

Freeman (1984); Friedman and Miles (2006). Owners (financial, added value); Employees (pay, 

work satisfaction, training); Customers (supply of goods and services, quality); Community 

(safety and security, contribution to community); Government (compliance, improved 

competitiveness) are the expectations that stakeholders have of their organizations (Cannon, 

1994). 

 Stakeholder pressure is also defined by many writers (Fassin, 2009; Kassinis & Vafeas, 2006) 

as the ability and capacity of stakeholders to influence organizational decisions and hence effect 

an organization. Extending this idea, many scholars have identified a number of CSR dimensions, 

including those pertaining to consumers, workers, shareholders, society, the environment, the 

media, and others (Decker, 2004; Turker, 2009). Measuring CSR through stakeholder perception 

is a more accurate approach. It is difficult to identify and quantify CSR based on stakeholder 

perspective (Turker, 2009). The stakeholder theory has been used as a framework to represent a 

company's many obligations to stakeholders (Oberseder Set al., 2013; Perez, et al., 2013; Turker, 

2009).  

The motivations behind a company's decision to engage in CSR initiatives in order to maximize long-

term returns can be explained by the theory of stakeholders (Samy, et al., 2010). Isaksson and Steimle 

(2009) reported that the impact of stakeholders resulted in organizations becoming more sustainable. 

Sustainability, which illustrates the need for businesses to priorities concerns like the environment 



23 
 

and human resources while also making sure that resources needed for future generations are not 

destroyed, becomes a means of fostering corporate growth.  

According to Ismail (2009), corporate social responsibility (CSR) is the obligation of companies to 

consider the interests of all parties involved, including communities, suppliers, shareholders, 

employees, customers, and the environment. The goal of this study is to evaluate how the chosen 

companies are implementing corporate social responsibility (CSR) for their employees, shareholders, 

and the environment.  

B. Legitimacy theory  

The Legitimacy theory states that CSR is a response to many environmental pressures on 

organizations which include economic, political, and social pressures. Therefore, for organizations 

to survive and develop, it is important to be socially responsible including if the distribution of 

economic, social, or political benefits to the groups from whom they obtain power (Lawrence, 2011). 

Organizations may embrace CSR to obtain power and legitimacy as well as developing 

organizations‟ reputations (Carroll & Shabana, 2010). In the tertiary education sector context, 

universities are expected to behave in a manner that meets the social expectations and demands of 

communities and stakeholders (Nejati et al., 2011) 

C. Institutional theory  

The institutional theory explains that firms are influenced by institutional settings in which they 

operate (Frynas, & Yamahaki, 2016). All in all, firms operate within the defined institutions of their 

respective societies. Institutional differences create a context where particular CSR activities may 

lead one stakeholder group to confer legitimacy to the firm but meanwhile may lead another 

stakeholder group to withdraw its legitimacy (Mellahi et al., 2016). The institutional theory 

highlights the contested nature of CSR.  

D. Resource dependence theory  

According to Bondy (2008), RDT is underpinned by the idea that firms can be characterized as open 

systems, dependent on contingencies in the external environment. The survival and growth of firms 

hinge on accessing the required resources from external parties (Mellahi et al., 2016).  

It is argued that institutional pressures may affect firm policies and practices (e.g. Campbell, 2007), 

but firms may enact different responses to such institutional pressures according to the critical 

resources they wish to control (Frynas & Yamahaki, 2016). Thus, the need for critical external 



24 
 

resources controlled by external parties can affect firm policies and practices. Kor & Sundaramurthy 

(2009) indicated a link between RDT and CSR. They discussed the relationship between social 

performance and the resource-provision role of outside directors. Accordingly, outside directors are 

resource-rich directors which move in broader social networks and provide resources that impact 

firm strategies and legitimacy. In terms of social performance, resource-rich directors are more likely 

to be knowledgeable about social issues and are better placed to ensure that firms pursue positive 

social performance.  

Therefore, the survival of firms depends on ensuring the flow of critical external resources (e.g. 

knowledge, personal ties, legitimacy) from external parties. RDT theorists argued that the need for 

critical external resources can result in particular CSR performance. Researchers offered support for 

RDT theory and showed that firms with a high proportion of outside (inside) and women directors 

are associated with higher (lower) levels of CSR. 

E. Resource-based theory (RBT)  

Similar to the aforementioned RDT, resource-based theory (RBT) contains the term resource. 

However, unlike the RDT which addresses the ability of firms to exploit critical external resources, 

RBT addresses the heterogeneity of firms concerning their ability to exploit internal resources in the 

quest for competitive advantage (Frynas & Yamahaki, 2016) 

 According to Mellahi et al (2016), the core assumption of RBT is that performance differentials of 

firms are influenced by firm-specific resources and capabilities and that these specific resources and 

capabilities can lead to competitive advantages. Based on RBT, Barney (1991) introduced a 

framework to understand the relationship between firm resources and sustained competitive 

advantage. He stated that a firm‟s competitive advantage is rooted in the application of valuable 

resources which are difficult to obtain and hard to imitate and/or substitute. Therefore, the RBT 

recognizes the importance of internal resources.  

RBT theorists argued that CSR is influenced by firm-specific internal resources and capabilities. 

Researchers offered support for resource-based theory (RBT) and showed that firms with high levels 

of innovation and other internal resources (e.g. financial resources) are associated with higher levels 

of CSR. (Bruns et al., 2017)  

 

 



25 
 

F. Agency theory  

Agency theory examines the relationship between principals and agents (Frynas & Yamahaki, 2016) 

According to Mellahi et al. (2016), the core assumption of agency theory is that agents have distinct 

incentives and objectives from their principals. 

 Accordingly, it is concerned with identifying situations in which principals and agents are likely to 

have conflicting goals and described mechanisms that limit the agent‟s self-serving behaviour (Calvo 

& Calvo, 2018). Barnea & Rubin (2010) in their study examined the principal-agent relationship 

regarding CSR. 

The researchers focused on the relationship between ownership and CSR and asserted that different 

types of owners have different interests in CSR. Two types of ownership are analyzed: (1) inside 

ownership (managers and large shareholders who are connected with the firm), and (2) outside 

ownership (institutions and others who are not connected with the firm). Results revealed that inside 

ownership is negatively and significantly related to social performance. Barnea & Rubin (2010) 

assumed that higher social performance is associated with higher levels of CSR expenditure.  

Therefore, agents have distinct incentives and objectives from their principals. Researchers offered 

support for agency theory and showed that firms with a high proportion of outside (inside) directors 

are associated with higher (lower) levels of CSR and that firms with highly concentrated ownership 

are associated with significantly lower levels of CSR (Bruns et al., 2017) 

G. Motivation theory of CSR  

Vogel (2005) stated that there are many reasons why some companies choose to behave more 

responsibly or virtuously in the absence of legal requirements. Some are strategic, others are 

defensive, and still, others may be altruistic or public-spirited.  

Graafland & Mazereeuw (2012) identified three motives for CSR, the first one is financial motive as 

an extrinsic driver and the second one is ethical and the third is altruistic; the latter two are considered 

as intrinsic motives. Consequently, based on the theories here, the motivation for CSR could be 

intrinsic- such as based on ethical duties or extrinsic, focusing on external drivers such as regulatory 

requirements or profit motive.  

H. Stages theory of CSR  

According to Zadek (2004), there are five steps that organizations go through as levels to CSR 

maturity: the defensive stage, compliance stage, managerial stage, strategic stage, and civil stage. 



26 
 

The defensive stage is characterized by a situation that companies be given unanticipated criticism 

and the companies are inclined to consider legal options or a PR strategy to handle the problem. 

 At the managerial stage, companies admit to the reality that the problem lingers, and something 

really needs to be done; thus the companies assume responsibility along with a commitment for a 

lasting solution. In the civil stage, that is the last stage, companies go beyond taking responsibility 

and start to promote a cause to prevail upon other companies in the industry to get involved to better 

serve the society responsibly together (Elifneh, 2015) 

I. Uncertainty Reduction Theory 

This theory was originated by Berger and Calabrese in 1975; they drew on the work of Heider 

(1952). The uncertainty reduction theory states that people have a desire to reduce uncertainty 

about others by obtaining timely information to predict their behavior and action. Uncertainty 

normally occurs when two strangers meet and each of them try to read the other. By 

communicating each other, they will feel more comfortable and can usually predict future 

behavior.  

Berger and Calabrese (1975) were the formers to study the role of communication in early 

interactions with the development of a theory of uncertainty reduction. Although the theory was 

originally formulated to explain how people can secure their relationship using interpersonal 

communication. After that, corporate social responsibility and organizational communication can 

use it. The hypothesis is crucial to this research since uncertainty is depressing and motivates 

people, which is why communication is necessary to lessen it. Therefore, in order to calm 

stakeholder uncertainty, colleges must inform stakeholders about their corporate social 

responsibility initiatives. 

2.2. CSR Practices from the Perspective of Developing Countries 

The industrialized world has a stronger foundation in corporate social responsibility and 

governance than the developing world, which is a relatively new phenomenon. In contrast to 

industrialized nations, the majority of developing nations adopt the outdated, conventional focus 

of the owner-manager relationship instead of implementing the idea of modern governance. 

Furthermore, corporate social responsibility (CSR) practices are uncommon in developing 

nations; if they were, business perspectives would be able to observe them (Bedada and Eshetu, 

2011).  



27 
 

For sustainability-related reasons, it has been observed that public interest organizations and not-

for-profit banks, as well as listed firms, are heavily involved in community-based corporate social 

responsibility (CSR) initiatives in Africa.  

Most of these organizations are divisions of multinational businesses that follow the policies set 

out by their respective global offices located in developed countries. Moreover, regulatory 

agencies in Africa, unlike those in industrialized countries, provide little to no ability for firms 

to monitor and manage corporate social responsibility (CSR) programmers (Jamali et al., 2017). 

Therefore, further research is needed to ascertain the underlying motivation for companies' 

involvement in corporate social responsibility in developing countries. According to the 

requirement of integrating social and environmental issues in company operations, concern for 

social development and environmental issues is important for sustainable development to restore 

and maintain the environment and conserve it for future generations.  

The main obstacle facing developing nations, nevertheless, is that their industrial environments 

differ greatly from those of wealthy nations in terms of major challenges affecting corporate 

social responsibility (CSR) practices (Abebe, 2020). He claims that Ethiopia, like many other 

developing nations, bases its corporate social responsibility (CSR) policies on five established 

domains: economic, legal, ethical, philanthropic, and environmental.  

Many businesses today have a stronger commitment to CSR than just maximizing profits and 

adhering to legal requirements (Famiyeh, 2017). CSR can be seen in two ways from an Ethiopian 

perspective, according to Abebe (2020). First, there are the formal CSR initiatives that worldwide 

corporations and non-governmental organizations are currently developing. Second, there are 

some unofficial CSR initiatives that are directly associated with Ethiopian cultural characteristics 

that are present in national businesses and organizations in Ethiopia. 

2.3. Determinants of Corporate Social Responsibility 

This study will be conducted based on the following five predicator variables. Those variables are 

employee attitude, community participation, Humanistic organizational Culture, Customer 

knowledge and government policy. Those variables were discussed below. 

2.3.1. Community participation and CSR 

Socially conscious business activities that promote social issues and enhance community well-

being are part of the industry's corporate social responsibility (CSR) efforts (Kinder & Domini, 



28 
 

1998; Kotler & Lee, 2005). Additionally, it involves community support through projects for 

housing and education for the economically underprivileged, as well as creative and generous 

giving, the arts, and health (Sen& Bhattacharya, 2001). Regarding Agarwal (2008), society 

anticipates that institutions would preserve traditional customs and advantages while delivering 

security, a better standard of living, jobs, infrastructure, and environmental protection.  

Additionally, according to Idemudia and Ite (2006), business CSR initiatives mostly focus on 

reducing poverty, preventing human rights violations, and Environmental protection. It can be 

observed through the sustainable activity which is most commonly found in small and medium-

sized enterprises, the local communities are the stakeholders receiving the greatest attention. 

Moreover, Information and transparency to new candidates, which is related to providing equal 

opportunities for employment to all candidates interested in joining the company, which gives 

CSR practice great visibility (Larrán Jorge, et al., 2016). 

2.3.2. Customer knowledge and CSR 

According to Graafland et al. (2004), CSR for customers should priorities respect for them, the 

delivery of sustainable alternatives, and the product's safety and quality. Companies may have to 

take into account things like the accessibility of consumer information, honest advertising, and 

advertising to minors (Lambooy, 2010; Porter & Kramer, 2006).  

Berens et al. (2005) discovered that when a company's goods are viewed as stand-alone brands 

(i.e., low corporate brand dominance) as opposed to being a part of a monolithic corporate brand, 

consumers react to the company's CSR more favorably. Cone (2017) discovered that consumers 

are rewarding socially conscious organizations with a variety of pro-business actions (such as 

advocacy, loyalty, and purchases), making CSR for businesses not just a moral but also a 

commercial imperative in today's world.  

Customers are prepared to pay more for goods produced by companies that practice social 

responsibility (Bhattacharya & Sen, 2004). Research demonstrates that CSR initiatives can increase 

bank clients' pleasure and loyalty. Additionally, it suggested that CSR initiatives can raise client 

satisfaction levels. Customer satisfaction and loyalty are thought to have a strong beneficial 

association with CSR efforts. High levels of customer loyalty can result from satisfied customers 

(Al-Ghamdi & Badawi, 2019). 

 



29 
 

2.3.3. Government policy and CSR 

It has regulated businesses to comply with the law in order to enhance waste treatment and 

management and provide secure working environments for workers. According to Campbell 

(2007), the normative research stream, which views the state as a powerful regulator and assumes 

a significant role for government, has a significant impact on how Europeans view corporate 

social responsibility (CSR). However, it has been verified by Friedman (1962) and Helmig et al. 

(2016) that there may be no need for stringent government rules. When it comes to the pressure 

from the main stakeholders, the government is the least powerful. Social responsibility ought to 

be incorporated into the, according to Shahin and Zairi (2007). 

Corporate Governance is a critical component for promoting excellence in CSR because it covers 

the management structure and procedures of the organization to ensure that, to the greatest extent 

feasible, all social responsibility issues are anticipated, covered by corporate policy, and handled in 

a way that demonstrates an understanding of the issues involved and a willingness to help solve 

societal problems. According to Friedman (1970), governments themselves ought to set the 

standard for social responsibility by enacting rules and laws that permit businesses to operate in a 

way that does not degrade or disadvantage them.  

2.3.4. Employees attitude and CSR 

Businesses that practice social responsibility look out for the needs and interests of their workers 

and continuously endeavor to enhance their working circumstances and general well-being 

(Buciuniene & Kazlauskaite, 2012). According to research by Lee, Park, and Lee (2013), 

employees see the company's CSR initiatives favorably when they have a more positive 

perception of the CSR skills. It was also mentioned that employee attachment to the organization 

rises when workers view CSR initiatives more favorably. Employees are more likely to believe 

that their company is successfully implementing CSR if they believe that CSR and company 

culture are aligned.  

Increasing CSR capabilities is another crucial element in guaranteeing that staff members see 

CSR initiatives favorably. According to Aguilera et al. (2007), employees have the power to 

pressure companies to take part in CSR activities. They also argue that employees' attitudes and 

behaviors towards companies are influenced by their perceptions of CSR. Employee dedication 

to Ghana's rural and community banks is greatly impacted by CSR (Mensah et al., 2017). Human 

competence (average annual pay, average employee age, and average years of service) and 



30 
 

attitude components (regular employee ratio, employee retention rate, and first three years) 

combine to form human capital. Hence, various social activities are carried out by employing 

more skilled and motivated HC. The research analysis result suggests that increasing HC is 

effective in increasing CSR activities. Moreover, it suggests the importance of enhancing in a 

low birth rate and an aging society (Iwamoto & Suzuki, 2019). 

2.3.5. Humanistic organizational Culture and CSR practice 

According to Simons and Ingram (1997), culture has to do with social responsibility since 

decisions made by corporations are influenced by explicit values ingrained in the organization, 

which are founded on organizational vision, mission, and worldview. The organization's entire 

performance—financial or reliability—is influenced by the culture of the firm, and more 

precisely, by its orientation.  

Direction and intensity are two aspects of a company's cultural orientation that are pertinent to 

corporate social responsibility, according to Galbreath (2010). Long-term corporate performance 

and ethical behavior are guarantees of a culture that exhibits responsibility towards its 

stakeholders (Sinclair, 1993). For example, a competitive culture prioritizes confrontation, 

personal accomplishments, and dominating people over creating a collaborative atmosphere 

(Cooke and Rousseau, 1988).  

In a society that is competitive, people tend to put their own success ahead of others', and they 

are unlikely to give others much thought. As a result, it is more probable that the needs and 

interests of stakeholders will be disregarded, and social responsibility will be subpar (Galbreath, 

2010). However, the emphasis on people, cooperation, teamwork, sensitivity, and cooperation 

with others predominates in humanistic types of cultures. Humanistic cultures are those that value 

caring for one another and encourage members to be open and supportive of one another in their 

interactions, according to Cooke and Lafferty (1994).  

Humanistic cultures priorities the maintenance of peaceful and enjoyable relationships over 

competition. According to Galbreath (2010), in companies that foster a humanistic culture, 

employee’s priorities the needs and interests of others over their own. Furthermore, it is possible 

that external stakeholders will also be affected by culture's orientation towards the goals and 

interests of others. All things considered, employees at companies with humanistic cultures are 

probably going to find it difficult to meet stakeholder requests for CSR. 



31 
 

2.4. Empirical Reviews  

The empirical part of a literature review is based on an analysis of several research findings on 

the subject matter. The reviewed findings are discussed as follows. 

There are considerable works of literature and empirical evidence that show the concept and practice 

of CSR in Africa is categorically different from that of developed countries. Ethiopia does not look 

like an exception in this regard. Like any other African country, the concept and practice of CSR are 

new in Ethiopia (Tsegaw, 2018). There are limits in literature and empirical evidence regarding 

socially responsible practices. Research into this area is quite scarce. There are extremely limited 

academic publications that exhibit the status of CSR in Ethiopia.  

Yusuf (2013) conducted a research thesis on the assessment of corporate social responsibility 

practices and determinants. The study was comparatively conducted in Addis Ababa Tannery and 

Awash Tannery including 88 and 35 workers in Awash and Addis Ababa tanneries were selected 

from the total employees of 654 and 275 in each tannery. Data were collected through questionnaires 

and structured & unstructured interviews. He identified CSR practices based on ISO 26000 seven 

fundamental subjects of CSR which are supported by lots of research findings of CSR. In the study 

conclusion, CSR (dependent variable) was found to have a strong positive relationship with 

employee demand, consumer demands, community enforcement, sustainability, and profitability. 

A study conducted by Tsegaw (2018) in the title “Factors Affecting the Practices of Corporate Social 

Responsibility in the Health Sector: Empirical Evidence from Local Hospitals in Ethiopia” revealed 

that Corporate social responsibility has been recognized as a weapon to survive in a globally 

competitive environment. But CSR has been little studied in the health sector. The goal of the thesis 

was to investigate and analyze factors affecting the practices of CSR in St. Paul‟s, MCM, and 

Hamelin fistula hospitals to form a baseline for further research. The study used two sampling stages. 

The first one is to sample out the hospitals and secondly the number of respondents within the 

selected hospitals. The purposive sampling method was used to select 3 hospitals and all the 

management team members of the selected hospitals as a sample. The data for the study had been 

collected through a self-administered standard questionnaire.  

Descriptive statistics, correlation, and regression analysis were used to analyze the data with the aid 

of SPSS version 20. The results show that organizational culture, government policy, and pressure 

group positively and significantly influence the level of CSR adoption. Employees' demand, 

Competition, and customers demand to have a positive relationship but not significant in explaining 



32 
 

the level of CSR. The study recommended that hospitals should see social performance as an 

enlightened self-interest and should therefore handle it with great concern. 

A study conducted by Mulugeta & Muhammednur (2020) investigated determinants of corporate 

social responsibilities (CSR) of mineral water bottling companies in the Dire Dawa Administration. 

Eight water bottlers in the city and four stakeholder organizations were included in the study. The 

result of the study indicated that community pressure (CP), employee demand (LP), customer 

demand (CD), and social license to operate (SL) are significant determinants of CSR, while 

sustainability practice (SU) is not a significant determinant of CSR practice. The study recommended 

companies should practice CSR that accommodate the interested and influential stakeholder namely 

community, employee and customers. 

A study conducted by Williams et al. (2008) stated that corporate social responsibility (CSR) is a 

term progressively engaged to represent ethical manners concerning numerous shareholder like, 

supplier, consumer, employee, and competitor stakeholder groups. It is often designed and stated 

through community engagement strategies in which firms reach out to these groups to address 

societal concerns as well as corporate objectives. Little research analyses how CSR relationships are 

initiated and evolve in tourism destinations. The article outlines the key theoretical foundations of 

CSR and illustrates how these concepts may be translated into stakeholder engagement strategies in 

mountain resort destinations. It is argued that the extent to which these CSR strategies are employed 

is a function of both in situ stakeholder saliency and the ability of community stakeholders to provide 

what has been referred to as a “social license to operate.  

Wilburn & Wilburn (2011) indicated that the idea of corporate social responsibility (CSR) is gaining 

support in the worldwide business atmosphere. Certain organizations are adopting a model, the 

Social License to Operate (SLO), as part of their CSR strategy. The paper provides background on 

the ideas of Corporate Social Responsibility and Social License to operate with examples supporting 

the business case for them. It proposes a process based on stakeholder theory for identifying and 

classifying stakeholders that divides stakeholders into two groups: vested and non-vested. Vested 

stakeholder groups have a vote in the awarding of a social license to operate, while non-vested 

stakeholder groups have only a voice. By using a process based on the alignment of the norms and 

values of the company, and the stakeholder groups, social licenses to operate can be negotiated that 

can allow a company to succeed in different countries and cultures. 



33 
 

Nidasio, (2012) claims that in recent years the concept of Corporate Social Responsibility (CSR) has 

gained momentum in Europe, and EU Governments are defining reporting and management 

frameworks to implement CSR on a larger scale. European Institutions, on their side, are working on 

the union of CSR tools. The paper classifies the CSR reporting and management frameworks adopted 

according to two levels of analysis: top-down vs. bottom-up, Government-centred vs. multi-

stakeholder oriented. Furthermore, it attempts to evaluate to what extent the analyzed reporting 

instruments integrate social and environmental concerns into business operations - CSR as 

sustainable management – rather than promoting CSR as social activities or simply viewing it as an 

emerging issue in management. The findings on CSR frameworks and corporate policies argue for a 

bottom-up and multi-stakeholder approach to sustain corporate sustainability management. 

2.5. Conceptual Framework of the study 

The conceptual framework is a graphic that illustrates how the independent and dependent 

variables are related, along with indicators that further explain the variables. A conceptual 

framework is an arrangement of the main ideas and concepts from theories, important research 

findings, policy declarations, and other expert knowledge that directs the study (Shikalepo, 

2020). A conceptual framework provides an illustration of how your variables should relate to 

one another. It outlines the pertinent goals for your investigation and shows how those goals 

connect to produce logical findings (Swaen and George, 2022). The research area's 

manufacturing enterprises' corporate social responsibility practices are determined by the factors 

illustrated in Figure 2.2 of the conceptual framework. 

                                  Dependent variable                                     Dependent variable  

       

 

Figure 2.2: Conceptual framework of the study 

Source: Adapted from Galbreath (2010), Yu & Choi (2016) 

Corporate social 
responsibility 

practices

Employees’ attitude 

Customer's knowledge 

Government policy 

Company’s humanistic culture

Community participation

Interna factors 

External factors 



34 
 

The review of the literature has been analyzed to see the relationship and effects between 

determinants of corporate social responsibility (independent variable) and corporate social 

responsibility (dependent variable). 

2.6. Hypotheses of the Study 

Based on the above theoretical and conceptual reviews the study formulated and tested the 

following null hypothesis; 

H01: Government policy has no statistically significant effect on CSR practice in manufacturing 

companies that operate in Gurage zone. 

H02: Community participation has no statistically significant effect on CSR practice in 

manufacturing companies that operate in Gurage zone. 

H03: Employees attitude has no statistically significant effect on CSR practice in manufacturing 

companies that operate in Gurage zone. 

H04: Customers knowledge has no statistically significant effect on CSR practice in manufacturing 

companies that operate in Gurage zone. 

H05: Company’s humanistic culture has no statistically significant effect on CSR practice in 

manufacturing companies that operate in Gurage zone. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



35 
 

CHPATER THREE 

3. RESEARCH METHODOLOGY 

Introduction 

The main purpose of this chapter is to provide an overview of the research approaching detail to 

address the research objectives. It discusses issues such as research design, sampling technique, 

sample size (numbers of people to be contacted), source and method of data collection, methods of 

data analysis and ethical considerations. 

3.1. Study area 

Gurage is a zone in the Central Ethiopia Regional State of Ethiopia. The region is home to 

the Gurage people. Gurage is bordered on the southeast by Hadiya and Yem Zone, on the northwest 

by Kebena Special Woreda, north and east by the Oromia Region, and on the southeast by Silt'e. Its 

highest point is Mount Gurage. Welkite is the administrative centre of the zone.  

Based on the 2007 census conducted by the Central Statistical Agency of Ethiopia (CSA), Gurage 

has a total population of 1,280,483 The six largest ethnic groups reported in Gurage Zone were 

the Gurage people (85%), the Amhara (3.36%), the Kebena (3.34%), the Silt'e people (2.71%), and 

the Oromo (1.69%); all other ethnic groups made up 2.62% of the population. Gurage languages are 

spoken as a first language by 84.54% of the population, 5.28% spoke Amharic, 3.2% spoke Kebena, 

2.98% spoke Silt'e, and 1.06% spoke Oromo; the remaining 2.85% spoke all other primary languages 

reported.  

In Gurage zone there are eighteen (18) manufacturing companies currently operating in nine (9) 

different business areas. Among these manufacturing companies seven (7) are resided in urban area 

and the remaining 11 are in rural area.  

3.2. Research design 

A research design is the setup of parameters for data collection and analysis with the goal of 

balancing procedural economy with relevance to the research question. Research design is essential 

because it makes the many research activities run more smoothly, making research as efficient as 

feasible and producing the most information with the least amount of time, money, and effort 

(Kothari, 2004). As per Saunders et al. (2009), an explanatory research is one that shows causal 

relationships between variables.  



36 
 

Consequently, the study mostly used an explanatory research approach and design in order to show 

causal relationship between the dependent variable (Corporate social responsibility practices) and 

independent variables (customers’ knowledge, community participation, employees’ attitude, 

government policy and company’s humanistic culture). This is due to the fact that the study's primary 

goal was to identify the key factors influencing CSR practice in the research region through casual 

analysis. Because the data was gathered all at once, the researcher also utilized a cross-sectional 

design. A study using a cross-sectional design samples different demographic segments at one 

particular period in time (Zikmend, 2003). 

3.3. Research Approach 

According to Babbie (2016) the capacity of quantitative research is to produce numerical data for 

statistical analysis, which can offer more in-depth understanding of a given phenomenon or topic, is 

one of its primary contributions. As stated by Creswell (2014) additionally, it helps researchers 

determine cause-and-effect linkages by allowing them to measure associations and relationships 

between various variables. (Bryman (2015) Furthermore, quantitative research makes it easier to test 

predictions and hypotheses, which enables researchers to draw accurate and legitimate conclusions 

about the population under study. Polite and Beck (2017) last but not least; it offers data that can be 

incorporated into decision-making procedures and insights that can guide practice and policy (Cohen 

& Crabtree, 2008). From these facts the study used quantitative research strategy. 

3.4. Target Population 

The particular, conceptually limited set of possible participants that the researcher may access and 

who embodies the characteristics of the population of interest is known as the target population 

(Casteel & Bridier, 2021). Thus, all the 1773 workers at the eighteen manufacturing companies 

operating in Gurage zone comprised the study's population. 

3.5. Sample design and sampling technique 

3.5.1. Sample frame and sampling unit 

In Gurage zone there are eighteen (18) manufacturing companies currently operating in nine (9) 

different business areas, as shown in table 3.1 below. Among these manufacturing companies seven 

(7) are resided in urban area and the remaining 11 are in rural area.  

In the research sampling units were manufacturing companies operating in each business area in the 

study area. The researcher selected samples in companies operating in both rural and urban areas. 



37 
 

Table 3.1: Target populations and sampling units 

S.N Name of company Business area Place of 

residence 

Number of 

workers and  

1 EDEN business group plc Water Packaging Factory Rural 150 

2 OK bottling and beverage plc Water Packaging Factory Rural 158 

3 YEKBDI agro processing plc Water Packaging Factory Rural 84 

4 Mr. MEKSUD RESHAD water 

bottling plc 

Water Packaging Factory Rural 72 

5 KIER natural water bottling plc Water Packaging Factory Rural 124 

6 GIRAR natural water bottling plc Water Packaging Factory Rural 74 

7 HONG timber manufacturing plc Timber Manufacturing Plant Rural 76 

8 EMENAW trading plc Timber Manufacturing Plant Rural 34 

9 RAMU plywood manufacturing plc Timber Manufacturing Plant Rural 92 

10 ABIJ SAHLE flour factory plc Flour factory Urban 58 

11 Mr JAFAR TAJU flour factory plc Flour factory Urban 63 

12 SHEBEGNE general trading plc Flour factory Rural 78 

13 ADMAS FARMERS union plc Coffee Processing Factory Rural 47 

14 ADMAS FARMERS union plc Cooking Oil Factory Urban 40 

15 ADMAS FARMERS union plc Plastic factory Urban 56 

16 ZEBIDR brewery factory Brewery factory Urban 450 

17 ATIRF ALTERNATIVE plc Biodiesel Energy Plant Urban 85 

18 GP TRADING plc Bread and cake making factory Urban 32 

Source: Gurage zone investment office report (2015 E.C) 



38 
 

3.5.2. Sample size 

According to Gurage zone investment office report (2023), there are 1773 employees working in 

the 18 manufacturing companies operating in the study area. In order to determine the sample 

respondents for the above population size, the following formula from Yamane (1967) was used. 

n =
𝑁

1 + (𝑁 ∗ 𝑒2)
 

Where n is the sample size, N is the population size, and e is the level of precision. By using this 

formula at 95% confidence level and 5% level of precision the sample size is obtained as follows: 

n =
1773

1+(1773∗0.052)
  = 326 

Table 3.2: Result of pilot survey that show manufacturing companies that practice CSR currently 

 

S.N 

 

Name of company 

 

Business area 

Currently 

practice CSR 

1 Eden business group plc Water Packaging Factory yes 

2 Ok bottling and beverage plc Water Packaging Factory yes 

3 Yekbdi agro processing plc Water Packaging Factory no 

4 Mr. Meksud reshad water bottling plc Water Packaging Factory yes 

5 Kier natural water bottling plc Water Packaging Factory yes 

6 Girar natural water bottling plc Water Packaging Factory no 

7 Hong timber manufacturing plc Timber Manufacturing Plant no 

8 Emenaw trading plc Timber Manufacturing Plant no 

9 Ramu plywood manufacturing plc Timber Manufacturing Plant yes 

10 Abij sahle flour factory plc Flour factory yes 

11 Mr jafar taju flour factory plc Flour factory yes 

12 Shebegne general trading plc Flour factory yes 

13 Admas farmers union plc Coffee Processing Factory yes 

14 Admas farmers union plc Cooking Oil Factory yes 

15 Admas farmers union plc Plastic factory yes 

16 Zebidr brewery factory Brewery factory yes 

17 Atirf alternative plc Biodiesel Energy Plant yes 

18 Gp trading plc Bread and cake making factory no 

Source: result of pilot survey (2025) 



39 
 

The researcher conducted pilot study to test the reliability and validity of the questionnaire and to 

check whether the manufacturing companies currently practice CSR or not. Pilot test was 

conducted by 45 workers of the participants and the result (table 3.2) above showed that from 18 

manufacturing compa