Influence of-sustainability-management-systems-csr-on-firm-performance-of-sugarcane-processing-companies-in-kenya

International Journal of Research in Education and Social Sciences
(IJRESS) ISSN: 2617-4804 1 (2) 67-82, October, 2018
www.oircjournals.org
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Wekesa and Kimutai (2018) www.oircjournals.org
Corporate Social Responsibility and
Firm Performance; Effect of
Sustainability Management Systems in
Selected Kenyan Sugar Companies
Kelvin Mwibanda Wekesa and Geoffrey Kimutai
Jomo Kenyatta University of Agriculture and Technology, Kenya
Type of the Paper: Research Paper.
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Indexed in: worldwide web.
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How to Cite this Paper:
Wekesa, M. K. and Kimutai, G., (2018). Corporate Social Responsibility and
Firm Performance; Effect of Sustainability Management Systems in Selected
Kenyan Sugar Companies. International Journal of Research in Education and
Social Sciences (IJRESS), 1 (2), 67-82.

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Corporate Social Responsibility and Firm
Performance; Effect of Sustainability
Management Systems in Selected Kenyan Sugar
Companies
Kelvin Mwibanda Wekesa and Geoffrey Kimutai
Jomo Kenyatta University of Agriculture and Technology, Kenya
Abstract
Sugarcane Company’s performance has
remained to be one of the challenging facts in
the growing companies in Kenya today. The
delays in harvesting operations are attributed
to uncoordinated and unpredictable harvesting
and transport schedules; and inefficiencies in
mill operations. Therefore, the main aim of the
study is to determine the influence of
Sustainability Management Systems CSR on
firm performance of selected sugarcane companies in Kenya. The study is guided by Corporate Social
Performance Theory. This study used ex- post facto research design. Ex- post facto research design determines
and reports the way things are. The target population was 528 employees. This study therefore sampled 228
respondents. Purposive sampling technique was used to select 10 managers, 24 supervisors, 38 accountants and
156 clerks from the 7 sugarcane companies because they have specific information concerning the effects of
corporate social responsibility practice on firm performance of selected sugarcane companies in Kenya. Pilot
study was done in order to test for validity and reliability of the research tools. The pilot study was done in Trans-
Mara Sugar Company found in rift Valley region of Kenya. For inferential statistics, correlation and multiple
regression was used for comparative analysis between frequencies of corporate social responsibility practice on
firm performance. The study findings indicated that sustainability management systems have an effect on firm
performance. The government will use this study in establishing policies that would ensure improvement in firm
performance of sugarcane processing firms among other firms in Kenya. The study recommends that the
companies should encourage sustainability management systems since sustainable management systems is an
important mechanism for improving corporate sustainability performance. It can generate business value through
measurement and management of sustainability risks and opportunities. The study recommends further
researchers to study on corporate social responsibility strategy and financial performance of firms in Kenya
which the study didn’t cover.
1.0 Introduction
Firm Performance across the world could be
measured through productivity which is the ratio
between outputs and inputs (Montiel, 2014). Any
action of an entrepreneur should at every time aim at
enhancement of the firm’s value whether in long or
short term. Though arguments for corporate success
are unending, there are innumerable factors that
influence or drive the firm’s success without
consideration of how they are measured (Delgado-
Ceballos, 2014). Consequently, firm’s managers
ought to be aware the relationship of the key drivers
of the firm and how they affect the firm’s
performance (Ngari, 2016).
Firm performance is a broad term and in policy
literature of business, there are two main streams of
research about determinants of firm performance.
The first one is primarily based on economic
tradition while the second one is based on the
behavioral and sociological paradigm (Short, Snow
& Hult, 2016). The first one emphasizes on the
importance of the external factors of the market in
determination of firm’s success. The second one is
in support of firm factors and their fit to the
environment as the main determinants of firm’s
success (McKenny & Ketchen, 2016). Moreover, a
ARTICLE INFO
Received 20th September, 2018
Received in Revised Form 5th October, 2018
Accepted on 15th October, 2018
Published online 19th October, 2018
Key Words: Corporate Social Responsibility, firm
performance, Sustainability Management Systems.

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number of implications can be drawn for scholars
with respect to firm’s performance measurement.
Also using multiple firm performance measures is
beneficial (Lindow, 2013).
Shareholders are more interested and willing to
tolerate nonprofit making activities which can
significantly reduce the market performance of the
stock because the factors that contribute to firms’
performance are diverse in terms of definition,
dimensionality and measurement. Despite this, as a
going on concern a firm should always sought to
increase its value in either the short or the long term.
On focus is the firm performance which is
operationalized by key indicators. These include
return of assets, return of investment, profitability,
loan uptake, cash flow and also liquidity (Lindow,
2013).
Globally, in the 21st
century larger firms have
experienced changes and challenges including the
corporate social responsibility. It is important to
understand CSR since it impacts the firm’s firm
performance (Kanwal, Khanam, Nasreen, &
Hameed, 2013). Managers believe that CSR has the
potential of improving the firm’s profits. They
believe that CSR can promote respect for the firm in
a market place. This is likely to enhance the firm’s
sales, attract more qualified personal to the firm and
subsequently improve firm performance of their
companies (Robins, 2015).
Firm performance as a concept on Corporate Social
Responsibility (CSR) has gained a substantive focus
in the global economy. The emphasis on the need for
more socially responsible firms has moved from
being the preserve of the developed economies to
being the concern of both the emerging and the
developing nations thanks to globalization. Over
nearly two decades, the relationship between
organizations performance and society has been
subject to much debate, often of a critical nature. The
decades have seen protests concerning the actions of
organizations, exposures of corporate exploitation
and unfolding accounting scandals for example
Lehman Brothers in 2010 which failed to disclose
transactions to investors (Valukas, 2010), Satyam
Computer Services in 2009 which falsified accounts
(Chen, 2009) and Benard Madoff Investment
Securities LLC in 2008 which defrauded investors
through a ponzi scheme (Reid, 2008) and the famous
Enron scandal in 2001 which committed irregular
Accounting procedures (Bryce, 2002). Meanwhile,
ethical behavior and a concern for the environment
have been shown to have a positive correlation with
corporate performance.
Corporate performance strategy is beyond gaining
economic profit, more and more organizations
respect social issues related to the surroundings
where they operate. Environmental protection and
human rights, customer relationship management,
developing the local environment and community,
supporting suppliers and increasing supplier
diversity, improving education and improving
healthcare conditions in developing countries are
among most addressed social issues. Proponents of
CSR claim that organizations need to respect interest
and contribute to social benefits of society while
sustaining operating activities. In contrast,
opponents claim that, organizations do not
necessarily need to consider the interest of wider
society, since the existence of organizations already
provides opportunities for society; organizations
need to focus on their main activities in order to
maximize profit. This is also depicted by Isaksson
and Steimle (2009) who view CSR as the company’s
commitment to behave socially and environmentally
responsible while striving for its economic goals.
Hence, CSR actions ought to be correlated with the
firm performance and outcomes of firms (Simon,
2014).
For better firm performance the company has to
engage in corporate social responsibility (CSR)
which therefore implies extra cost for the company,
the first objective of management is profit
maximization; companies need more certainties
about the increase in value that the introduction of
CSR brings (Ghelli, 2013). Friedman (1970) argues
that there is one and only one social responsibility of
business, which is to use its resources and engage in
activities designed to increase its profits so long as it
stays within the rules of the game, which means to,
engage in open and free competition without
deception or fraud. Reich (2007) contends that, as a
result of high competition in the market, instead of
engaging in CSR projects, which harm themselves,
corporations need to concentrate on activities that
have positive effects and gains. If the aim of
business is to maximize profits, what are the motives
that lead organizations to engage in social projects
yet they are not profit generating (Albus & Ro,
2017).
In Africa, particularly South African on the context
of firm performance has often been centered on
black economic empowerment (BEE). The idea
behind BEE is not a uniquely South African concept,
but one that has been adapted from similar
programmes in other countries (Kabir, 2016). In an
attempt to provide a more holistic view towards CSR
in South Africa, the Johannesburg Stock Exchange
(JSE) established the socially responsible
investment index (SRII) in May 2004. This index
incorporates both BEE and good CSR practices in
relation to the triple bottom line. The establishment
of this index was influenced by the greater role that

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the King reports played in the field of corporate
governance (Chikozho, 2016). The King reports
have evolved over the years and now place a greater
emphasis on not only corporate governance issues,
but also sustainability issues. For a company to be
listed on the local bourse, it must comply with the
King reports thus inadvertently complying with
some of the requirements of the SRII. The advantage
of the SRII is that it goes beyond just the King
reports and attempts to define a CSR culture for
South African businesses (Kloppers, 2018).
Firm performance in Johannesburg Stock Exchange
rating used an independent research organization to
undertake an assessment of the companies listed on
the exchange and determine if they satisfy the
criteria required to be included in the SRII. The
research organization used was the Ethical
Investment Research Service (EIRIS). This is a
global organization that specializes in the research
of environmental, social, governance and ethical
performance of companies. The criteria used to
establish the SRII is based on three categories,
namely: Environment, Society, Governance and
related sustainability concerns (Koffman-Xaba,
2014).
Even in the midst of the IFRS adoption controversies
in developing countries, there is a new move
towards integrated reporting, a more comprehensive
model that encompasses significant elements of
traditional reporting and environmental, social and
governance reporting within a single presentation
(KPMG, 2011); of course, and firms have been put
under increasing pressure from a variety of
stakeholders to integrate social and environmental
considerations into their operations and to ensure
higher standards of governance. Only few countries
have mandated the use of integrated reporting, but,
there have been evidence of voluntary participation
worldwide. The largest companies in Denmark are
now obliged to report on non-financial information
while South Africa has made significant progress in
addressing the challenges of IR by mandating all
listed entities to issue annual integrated reports
instead of annual financial and sustainability reports.
Companies in Kenya pursue CSR as a way of
improving the staff welfare, implementing
community development programmes such as
building schools, dispensaries, drilling bore holes,
funding sporting activities, the establishment of
scholarship funds for needy children rehabilitation
and maintenance of roundabouts within Central
Business District among others. These corporations
are under moral obligation to act in fair, transparent
and accountable manner. Corporate Social
Responsibility among Kenyan firms is a marketing
strategy where businesses ensure that their products
or services are visible and in the process rebrand in
such a way to reposition them in the market. Most
business firms in Kenya engage in CSR only if such
initiatives give them a competitive advantage in
marketing their products. They undertake CSR to
reduce pressure from trade unions, environmental
organizations, consumer watch groups and
positioning themselves as market leaders in the
irrespective fields (Wafula, 2012).
Measuring companies’ performance has been a
subject of discussion pointing out the problem of
measuring firm performance contributed by CSR
and also the unclear relationship between CSR and
firm performance. Wood (2010) measured firm
performance using social reports, environmental
reports, annual reports of social or environmental
disclosures and ethical practices adopted by the
companies. Mahoney and Roberts (2007) calculated
a composite measure of CSR, based on community
relations, diversity, employee relations,
environment, international, product safety, and other
ratings. Soana (2009) pointed out that social
performance is best measured by five different
methods: content analysis, surveys carried out using
questionnaires, reputational measures, one-
dimensional indicators and ethical ratings. While
these measures adopted may be good measures of
CSR, their ratings are subjective and hard to
measure. For this study, CSR was determined
quantitatively by the total amount spent per annum
on CSR.
1.2 Statement Problem
Sugarcane Company’s performance has remained to
be one of the challenging facts in the growing
companies in Kenya today. There has been low
performance in some of the firms in Kenya for
example Chemelil and Muhoroni are still recording
sugar recoveries below the industry standard of
10.1%. The industry’s long-term target is to achieve
recovery levels of 11.5% (Mgenyi, 2012). The
delays in harvesting operations are attributed to
uncoordinated and unpredictable harvesting and
transport schedules; and inefficiencies in mill
operations.
Therefore, performance of sugarcane companies in
Kenya has been declining over time. The decline of
these companies has been caused by problems
arising from the sugarcane processing which is not
limited to poor spending of cess remittance to the
local development programs, poor involvement of
farmers in decision making and regular varying
sugarcane tonnage pricing. Performance of the
sugarcane companies is therefore limited because
corporate management does not utilize the potential
farmers’ contribution in the production unit
(Bottazzi, Crespo, Bangura & Rist, 2017).

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Majority of previous studies have research on
corporate social responsibility. For example a study
done by Eccles and Krzus (2010) indicated that
majority of firms have adopted firm performance
strategy through corporate social responsibility but
majority end up failing to keep up the system due to
internal pressures arising from mismanagement of
the firm resources. It is in this regard that has led
failing attempts by firms to successfully engage non-
profit making activities to the society (Waweru,
2016). Mwangi (2011) study on relationship
between corporate governance and firm
performance of companies quoted at NSE showed
that there was an upward trend in performance of
listed firms on the NSE. Jerotich & Le May, (2016)
studied the relationship between corporate social
responsibility practices and performance of firms in
the manufacturing, construction and allied sector of
the Nairobi Securities Exchange. The study found an
insignificant positive relationship between corporate
social responsibility practice and firm performance.
However, there is lack of enough studies that
investigate the effect of corporate governance in
sugarcane industries on firm performance, which
justifies the purpose of this study. This study
therefore sought to determine the influence of
Corporate Social Responsibility Practice on Firm
Performance of selected Sugarcane Companies in
Kenya.
Purpose of the Study
The study aimed to determine the influence of
Sustainability Management Systems CSR on Firm
Performance of selected Sugarcane Companies in
Kenya
Research Hypothesis
H01There is no significant influence of
Sustainability Management Systems CSR on
firm performance of Sugarcane Processing
companies in Kenya
2.0 Literature Review
Theoretical review
Corporate Social Performance Theory
Corporate Social Performance Theory was
developed by Bowen 1973. The theory states that
social responsibility of businessmen alludes to the
commitment of specialists to seek after those
approaches, to settle on choice or to take after those
lines of activity which are attractive to society.
Corporate Social Performance theory assumes that
private sector has a positive impact on communities,
employees and consumers. This is especially so in
geographies where basic governance, the rule of law
and accountability mechanisms are lacking or
limited. Stakeholder engagement team supports
companies to understand and interact with their
stakeholders, including civil society and
government. Managers apply cutting edge
methodologies in stakeholder mapping and
materiality assessments that are tailored to the
complex environments our clients work in.
Caroll (1979) introduced the concept of corporate
social performance, and later in 1985 Wartick and
Cochran extended Caroll’s approach suggesting
corporate social involvement rests on the principles
of social responsibility, proves of social
responsiveness and policy issues of management. In
1991 Wood gave the basic model of corporate social
performance which includes institutional,
organizational and individual CSR, the process of
corporate social responsiveness and outcomes of
corporate behavior. When it applies to the institution
it is known as the principle of legitimacy which
states that society grants legitimacy and power to
business and that those who don’t use it well tend to
lose it. Under the organization CSR, a business
should adhere to the standards of performance, law
and existing public policy. Individual CSR has to do
with the managers exercising discretion in their
decision making to ensure socially responsible
outcomes. Firms therefore need to be more proactive
in publishing reports on their economic, social and
environmental performance for their CSR activities
to be known.
The study is relevant to the study because it state that
the results of increased protests about capitalism and
business growing social concerns led to increased
government regulations, procedures and formal
requirements. One of the requirements was the
adaptation of corporate behavior to social needs and
demands including being proactive.
Conceptual Framework
The study was discussed based on the dependent and
the independent variables as indicated by the
conceptual framework figure illustrated bellow. The
dependent variables was the firm performance
which was measured by the impact on customers’
livelihoods, improved company reputation,
customer satisfaction level and increase level of
local employment. The independent variables of the
study are the Sustainability Management Systems
CSR measured by articulation of policies for CSR,
reputation of the company, rating of the company,
reliability of company’s services and reporting
accurate information. the economic CSR measured
by Government programs on economic
development, participation in community activities,
objectives of CSR, company‘s operations in
community and favorable economic activities and

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Firm Performance
 Impact on customers
livelihoods
 Improved company
reputation
 Customers satisfaction level
 Increase locals employment
the Philanthropic CSR measured by response rate,
profitability of the company, environment
conservation, new opportunities to locals and
education of community.
Independent Variables Dependent Variables
Figure 2.1: Conceptual Framework
2.4 Empirical Review
Sustainability Management Systems CSR
Robert, Lyria and Mbogo (2016) covered a study on
the influence of corporate social responsibility on
firm performance of industries listed at Nairobi
securities exchange, Kenya. The study sought to
establish the effect offs practices on firm
performance of listed firms in the Nairobi Securities
Exchange. Firm performance was measured using
the return of assets. Investment in CSR was
measured using articulation of CSR policies and
monetary spending on social activity. Data was
obtained from audited financial statement, websites
publications and annual report. Secondary data was
obtained from the year 2010 to 2014. The study
adopted a descriptive research design to test, for the
linear relationship between firm performance and
CSR. The study applied multiple regression analysis
models to assess the influence of CSR on firm
performance. Firm performance was the dependent
variable while corporate social responsibility,
capital intensity and efficiency were used as the
explanatory variables in the study. Target population
comprised of 66 publicly listed companies of which,
complete and necessary data available was for 14
companies. This data was collected for 5 years for
each firm giving 70 observations. Most companies
analyzed, engaged in CSR but failed to disclose the
actual cost incurred on CSR activities. The study
established that CSR policies had a positive but
insignificant effect on firm performance. The study
concluded further that a positive but insignificant
relation existed between CSR policies and firm
performances. The study recommended that firms
should have policies which encourage socially
responsible so as to enhance the value of the firm for
the shareholders. The study also recommends CSR
not to be viewed as a voluntary undertaking but a
compulsory practice for the firms. Lastly, policies
among firms to ensure that the firm acts in ethical
and socially responsible manner to all stakeholders
should be formulated and implemented.
According to Mio, Venturelli and Leopizzi (2015)
on their title Management by objectives and
corporate social responsibility disclosure found that
different methods have mainly been used by prior
studies for the measurement of CSR (McGuire et al.,
1988). The first method is the expert evaluation of
corporate policies. The accuracy of this method
depends on the access of the investigator to the full
scope of activities of the firm and the expertise of
the investigator (Abbott and Monsen, 1979).Another
method of CSR measurement is content analysis of
annual reports and other corporate documents.
Weber (1990) defines content analysis as “a set of
procedures to make valid inferences from text. This
consists of the evaluation of the area dedicated to
social responsibility in documents published
regarding companies (Cheruiyot, 2010).
Bernal-Conesa, Briones-Penalver, and De Nieves-
Nieto, (2016) did a study on the integration of CSR
management systems and their influence on the
performance of technology companies. The study
found that standardized management systems
facilitate the implementation and integration of CSR
within the technology company, studying which is
the influence of CSR in reputation and improvement
of these companies and whether it has a positive
impact on the economic performance of the
company. The study was conducted in companies
located in Spanish Science and Technology Parks.
On the one hand, model results shows that there is a
positive, direct and statistically significant
relationship between the integration of CSR and
reputation; on the other hand, performance and
internal improvement has also this relationship.
Likewise, the model shows also some indirect
relations between management system before the
implementation of CSR and reputation and internal
improvement.
Sustainability Management Systems
CSR
 Articulation of policies for CSR
 Reputation of the company
 Rating of the company
 Reliability of companies services
 Reporting accurate information

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Dawkins, Jamali, Karam, Lin and Zhao, (2016) did
a study on corporate social responsibility and job
choice intentions. The study found that the use of
content analysis presupposes the acceptance of the
Hypotheses that social disclosure is a good proxy of
corporate social performance. Another measure of
CSR is the use of reputational measures. These are
ratios worked out by researchers or specialized
journals based on their judgment and definition of
Social performance. Using the information they
calculate a score on the goodwill associated with the
reputation of the company, this is called the fortune
measure (Cheruiyot, 2010).
Ackers and van Heerden (2015) investigated on the
title Can a conceptual framework for corporate
social responsibility (CSR) assurance and reliability
be developed? The study found that in America there
is an annual classification of American companies
based on the corporate reputational index (CRI).
This is not yet the case in Kenya. The use of the CRI
to measure corporate social responsibility
performance assumes that reputation as perceived by
third parties is a good proxy of responsible behavior
by companies. It also assumes that reputational
measures are not influenced by a company’s good
firm performance. Were this not to be the case then
this would not be a good measure of the relationship
between CSR and Firm performance (Cheruiyot,
2010).All of these different measurement methods
and approaches produce different results. The last
important point related to CSR and firm
performance measurement concerns data collection
and reliability of the sample. Mostly CSR data relies
on company reporting activity that can be
manipulated and/or misreported (Aras et al, 2010)
For the purpose of this study content analysis was
used where the rating for the CSR was based on the
number of sentences dedicated to each component of
CSR in the company’s annual report and other
publications including the website.
3.0 Research Methodology
Research Design
This study used ex- post facto research design. Ex-
post facto research design determines and reports the
way things are. The design Ex-post facto research
design is a system of empirical inquiry in which, the
researcher does not have direct control of begins
with notable differences between groups in this case
corporate social responsibility practice adopted by
each sugar company. There are three types of ex-
post facto research design; first type explores the
effects caused by membership in a given group the
second type explores consequences of intervention
and the third type explores causes of group
membership (Fraenkel & Wallen, 2000). For this
study the researcher sought to determine the
influence of corporate social responsibility practice
on firm performance in sugarcane companies of
Kenya.
Target Population
Target population is the entire group a researcher is
wishes to draw conclusions from it (Cooper and
Schindler, 2011). The target population for the study
was all the employees of Sugarcane Companies in
Kenya. The target population was 528 employees
and 512 customers of Sugarcane Companies.
Table 3.1 Target Population
Sugar Companies Managers supervisors Accountants Clerks Customers
Nzoia Sugar Company 4 8 13 53 75
Chemelil Sugar Company 4 8 13 53 73
Mumias Sugar Company 4 8 13 51 73
South Nyanza Sugar Company 3 8 12 51 73
Sony Sugar Company 3 8 12 51 73
Western Kenya Sugar Company 3 8 12 51 73
Kibos Sugar Company 3 8 13 50 72
Total 24 56 88 360 512
Sampling Frame
Sampling frame is a list of all the items in the
population. It’s a complete list of everyone or
everything the researcher wants to study (Mason,
2017). The study focused on 1040 respondents from
all the seven sugarcane companies selected in
western region of Kenya since all the respondents
have the same characteristics and the probability of
being chosen is equal. The study selected a total of
528 employees; managers, supervisors, accountants
and clerks and 512 customers from all sugarcane
companies because they have specific information
concerning the effects of Corporate Social
Responsibility Practice on firm performance in
sugarcane companies of Kenya.

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Sample and Sampling Technique
Sample size refers to the number of observations or
replicates to include in a statistical sample Orodho
(2015). The sample size is an important feature of
any empirical study in which the goal is to make
inferences about a population from a sample.
Sampling technique refers to a procedure of
selecting a part of population on which research can
be conducted, which ensures that conclusions from
the study can be generalized to the entire population.
The researcher obtained sample size using Yamane
formulae (1967).
Where n is the sample size required
N is the population size = 1040
e is the level of precision =0.05
n =
1040
1+1040(0.05)2
n =288
This study therefore sampled 288 respondents
The sample size was represented in table 3.2 below:
Table 3.2 Sample Procedure
Strata Sampling Sample Size
Managers 24/1040*288 7
Supervisors 56/1040*288 16
Accountants 88/1040*288 24
Clerks 360/1040*288 100
customers 512/1040*288 141
Total 288
Table 3.3 Sample Size from Each Company
Nzoia Sugar Company Sample Size
Managers 1
Supervisors 3
Accountants 6
Clerks 23
Chemelil Sugar Company Sample Size
Managers 1
Supervisors 3
Accountants 5
Clerks 23
Mumias Sugar Company Sample Size
Managers 1
Supervisors 2
Accountants 6
Clerks 22
South Nyanza Sugar Company Sample Size
Managers 1
Supervisors 2
Accountants 5
Clerks 20
Sony Sugar Company Sample Size
Managers 1

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Supervisors 2
Accountants 5
Clerks 22
Western Kenya Sugar Company Sample Size
Managers 1
Supervisors 2
Accountants 5
Clerks 22
Kibos Sugar Company Sample Size
Managers 1
Supervisors 2
Accountants 5
Clerks 22
This study employed stratified random sampling
method as a technique of probability method. First
the researcher stratified sugar companies to get
seven strata; in each stratum researcher further did
stratification to get four stratums (Managers,
Supervisors, Accountants, and Clerks). The first
stratum is made up of the managers. After
stratification purposive sampling technique was
used to select 7 managers, 16 supervisors, 24
accountants and 100 clerks from the 7 sugarcane
companies because they have specific information
concerning the effects of corporate social
responsibility practice on firm performance in
sugarcane companies of Kenya. 141 customers was
selected using simple random sampling technique.
Research Instruments
The study used questionnaires with items in a likert
type with a scale of 1 to 5. The highest degree was
marched with the most positive choice from the
alternatives while the least score was awarded to the
most negative choice. Likert scale for which 5-
Strongly Agree, 4-Agree, 3-Undecided, 2-Disagree
and 1-Strongly Disagree.
Data Collection Procedure
The researcher notified the managers of the sampled
sugarcane companies in advance. The respondents
was issued with the instruments and be given time to
complete answering the items of the instrument
which are immediately collected when the time
frame allocated elapses. The researcher got the
opportunity to explain the goals of the study and
answer the questions that the respondents may have
before they complete filling the instrument.
Pilot Study
Pilot study was done in order to test for validity and
reliability of the research tools. The pilot study was
done among 29 employees of Trans-Mara Sugar
Company found in rift Valley region of Kenya.
These piloted respondents represented 10% of
sample size but was not part of the targeted
population for this study.
Validity
Validity is defined as the degree to which an
instrument measures what it purports to measure
(Borg & Gall, 1989). The construct and face validity
of research instruments’ a team of experts from the
JKUAT went through the tools and gave their views
and advice on the questions on research tools. The
recommendations of the experts were used to
improve the instruments before they are used in the
field.
Reliability
Reliability is the level of internal consistency or the
stability of the measuring instrument (Borg & Gall,
1989). The research tools were piloted using Trans-
Mara Sugar Company which didn’t take part in the
actual study. The study used internal consistency
type of reliability to assess the consistency of results
across items within a test. The reliability coefficients
of the data tools were estimated using the Cronbach
Alpha coefficient. The instruments were considered
reliable if they yield reliability coefficients greater
than 0.7 (Fraenkel &Wallen, 2000).
Data Processing and Analysis
Data collected were cleaned and subsequently
entered into a computer data base using double entry
to ensure accuracy. All companies’ details were kept
confidential and non-coded data were only available
to the researcher. Collected data were tabulated and
processed using SPSS (23) for windows software.
Quantitative data were expressed as frequency,
percentages, mean and standard deviation. In
inferential statistics, correlation and regression
models were used to determine the influence of
corporate social responsibility practice on firm
performance. The study tested the normality,

76 | P a g e
multicollinearity and autocorrelation test
assumptions of multiple regression models.
Analyzed data was presented in form of percentages,
frequencies, table and charts.
4.0 Research Findings and Discussion
Response Rate
A total of 288 research questioners were sent out for
data collection and only 280, were returned for
analysis when completely filled. The 280
questionnaires represent a response rate of 97.2%.
According to Mugenda and Mugenda (1999) a
response rate of 70% and above is valid and
therefore, a response rate of 97.2% was valid for data
analysis. Table 4.1 shows the response rate.
Table 4.1 Response Rate
Category Frequency Percentage (%)
Administered 288 100.0
Returned 280 97.2
Validity and Reliability
Data collected from pilot study were used to
ascertain for validity and reliability of research
instruments. The validity of the research instruments
was determined through the content validity and
face validity. The recommendations of the experts
were used to improve the instruments before they
were used in the field. Cronbach’s Alpha was used
to test for reliability where value above 0.7 was
considered acceptable. The internal consistency
method provides a unique estimate of reliability for
the given test administration. The results of the
reliability tests were as shown in the Table 4.2.
The study findings indicated that values of
Cronbach’s Alpha for Sustainability Management
Systems CSR was 0.823, implying research
instruments used for data collection were reliable.
Table 4.2 Reliability Test
Items Cronbach's Alpha N of Items
Sustainability Management Systems CSR .823 5
Firm performance .804 4
Demographic Characteristics of the Respondents
The demographic information were; gender, age,
level of education and service time. Table 4.3 shows
the gender of the respondents.
Table 4.3 shows that majority 143 (51.1%) of the
respondents were female while 137 (48.9%) were
male. An implication that there was no bias since
both gender we were well represented.
Table 4.3 Gender of the Respondents
Gender Frequency Percent
Valid Female 143 51.1
Male 137 48.9
Total 280 100.0
Table 4.4 shows that majority 156 (55.7%) of the
respondents were degree holders, 50 (17.9%) were
diploma holders, 45 (16.1%) of respondents were of
certificate, 17(6.1%) were of secondary level and 12
(4.3%) were of masters level. This implies that most
of the respondents are diploma and degree holders.
Therefore, they were knowledgeable hence it was
easy for them to answer the research questions.
Table 4.4 Level of Education of the Respondents
Level of education Frequency Percent
Valid Secondary 17 6.1
Certificate 45 16.1
Diploma 50 17.9
Graduate 156 55.7
Masters 12 4.3
Total 280 100.0

77 | P a g e
Table 4.5 shows that 58(20.7%) of the respondents
were below 30 years, majority 189(67.5%) 31-40
years, 24(8.6%) 41-50 years and 9(3.2%) above 50
years. This implies that majority of respondents are
old enough to give the accurate information.
Table 4.5 Age of the Respondents
Age Frequency Percent
Valid Below 30 years 58 20.7
31-40 years 189 67.5
41-50 years 24 8.6
Above 50 years 9 3.2
Total 280 100.0
Table 4.6 shows that majority 115(41.1%) of the
respondents had worked in the organization for a
period of 6 - 10 years, 82(29.3%) of respondents has
worked for 10 and above years and 45(16.1%) of
respondents had worked for a period of less than 1
year and 38(13.6%) of respondents had worked for
a period of 1 – 5 years. This implies that most of the
respondents had worked for a period of 6-10 years
implying they understood the milestone of the
organization.
Table 4.6 Service Time of the Respondents
Service time Frequency Percent
Valid Below 1 year 45 16.1
1- 5 years 38 13.6
6-10years 115 41.1
Above 10 years 82 29.3
Total 280 100.0
Findings of Descriptive Statistics
The study established the influence of sustainability
management systems CSR, on firm performance of
Sugarcane Processing companies in Kenya.
Therefore, study started with the descriptive
statistics (N, mean, standard deviation, minimum
and maximum). The study determined the
respondents’ level of agreement on a five point
Likert scale. The Likert scale used ranged from
strongly disagree (1) to strongly agree (5).
Effects of Sustainability Management Systems
CSR on Firm Performance
The study established the influence of sustainability
management systems CSR on firm performance.
The study determined the respondents’ level of
agreement on a five point Likert scale of
sustainability management systems CSR on firm
performance as shown in Table 4.7.
The research findings in table 4.7 shows that
respondents agreed (M=3.9429 and Std. Dev.
=1.13764) that the sugarcane company policies
articulate for corporate social responsibility.
Research findings also showed that respondents
agreed (M=4.2357 and Std. Dev. =1.12074) that the
corporate social responsibility adopted by
companies has built good reputation. Respondents
also appeared to agree (M=3.8821 and Std. Dev
=1.23438) that the company rating on its
performance is indicated by the level of
responsibility they offer to the community,
respondents agreed (M=3.9750 and Std. Dev
=0.83564) that the policies within the governing
framework are reliable in enhancing performance of
the company, respondents agreed (M=4.1036 and
Std. Dev =0.92747) that the annual reports of the
company show great participation of the company
on community development projects.
The study findings indicated that sustainability
management systems have an effect on firm
performance. Since majority of respondents agreed
that the sugarcane company policies articulate for
corporate social responsibility. Some indicated that

78 | P a g e
companies has built good reputation and that the
company rating on its performance is indicated by
the level of responsibility they offer to the
community. Majority also were of the opinion that
the policies within the governing framework are
reliable in enhancing performance of the company
and finally most of them were in agreement with the
statement that the annual reports of the company
show great participation of the company on
community development projects. This implies that
sustainable management systems are an important
mechanism for improving corporate sustainability
performance. It can generate business value through
measurement and management of sustainability
risks and opportunities.
The study findings comes into agreement with
Schaltegger and Synnestvedt (2002) who argued
that not only the level of sustainability performance,
but also the kind of sustainability management with
which a certain level is achieved, influences the
financial outcome of the organizations.
The study findings also concurs with Figge et al.,
(2002) who found out that sustainability
management with balanced scorecard helps in
integrating the three pillars of sustainability into a
single and overarching strategic management tool
that significantly impact the economic success of a
business.
Table 4.7 Sustainability Management Systems CSR on Firm Performance
SD D UD A SA Total Mean Std.
Dev
Min Ma
x
The sugarcane company policies
articulate for corporate social
responsibility
F 9 37 24 101 109 280 3.942 1.13
7
1 5
% 3.2 13.2 8.6 36.1 38.9 100
Corporate social responsibility adopted
by companies has built good reputation
F 12 19 21 67 161 280 4.235 1.12
1
1 5
% 4.3 6.8 7.5 23.9 57.5 100
The company rating on its performance
is indicated by the level of responsibility
they offer to the community
F 5 55 36 56 128 280 3.882 1.23
4
1 5
% 1.8 19.6 12.9 20.0 45.7 100
The policies within the governing
framework are reliable in enhancing
performance of the company
F 5 19 14 182 60 280 3.975 0.83
6
1 5
% 1.8 6.8 5.0 65.0 21.4 100
The annual reports of the company
show great participation of the company
on community development projects
F 6 19 14 142 99 280 4.103 0.92
7
1 5
% 2.1 6.8 5.0 50.7 35.4 100
Firm Performance
The study determined firm performance. The study
determined the respondents’ level of agreement on
a five point Likert scale of the effects of corporate
social responsibility practice on firm performance
(Table 4.9).Where; 1=strongly disagree,
2=Disagree, 3=Undecided, 4= Agree and 5=
Strongly Agree.).
The research findings in table 4.10 shows that
=0.92554) that the Sugarcane Processing companies
takes part in raising money for local charities in the
communities. Research findings also showed that
sponsors local events which add to the reputation
and good will of the company. Respondents also
appeared to agree (M=4.2893 and Std. Dev
employs local employees to benefit the community
around them and improve firm performance,
respondents agreed (M=4.093 and Std. Dev =1.099)
that the Sugarcane Processing companies supports
local economic growth through involvement in
various local projects.
The study findings imply that corporate social
responsibility practice has an effect on the overall
performance of the company. This is because the
Sugarcane Processing companies takes part in
raising money for local charities in the communities,
Sponsors local events which add to the reputation
and goodwill of the company, Employs local
employees which benefits the community around
them and improve firm performance and also
supports local economic growth through
involvement in various local projects. This implies
that CSR is a determinant of firm’s profitability.
The study findings are in support with the study of
Wafula (2012) who studied corporate social
responsibility from a Kenyan firm’s perspective.
The study analyzed the activities of selected
companies in Kenya to help understanding the
impact of CSR on their performance. The study
found out that many organizations are recording
both tangible and intangible benefits as a result of
incorporating social responsibilities in their business
strategies.

79 | P a g e
The study findings also concur with Okwoma (2012)
who studied the effects of corporate social
responsibility on the financial performance of
commercial banks in Kenya. This study used
longitudinal research design and covered the year
2007 to 2011 both years inclusive. Financial
performance was measured by use of accounting
ratios that included ROA, ROE and data obtained
from supervisory reports compiled by central bank
of Kenya. CSR was measured using financial
spending on CSR activities. The study found out that
CSR had a positive and significant effect on ROA
and ROE. The study further found out that CSR
contributed significantly to the financial
performance of large and medium size commercial
banks but did not have any significant effect on the
ROA of small commercial banks.
Table 4.8 Firm Performance
D UD A SA Total Mean Std.
Dev
Mi
n
M
ax
The Sugarcane Processing
companies takes part in raising
money for local charities in the
communities
F 0 26 8 75 171 280 4.396 0.925 2 5
% 0 9.3 2.9 26.8 61.1 100
companies sponsors local events
which add to the reputation and
good will of the company
F 3 35 34 41 167 280 4.192 1.132 1 5
% 1.1 12.5 12.1 14.6 59.6 100
companies employs local
employees to benefit the
community around them and
improve firm performance
F 1 30 25 55 169 280 4.289 1.036 1 5
% .4 10.7 8.9 19.6 60.4 100
companies supports local economic
growth through involvement in
various local projects
F 9 21 40 75 135 280 4.092 1.099 1 5
% 3.2 7.5 14.3 26.8 48.2 100
Findings of Inferential Statistics
Correlation analysis and multiple regressions were
done to check the influence of independent variables
(Sustainability Management Systems CSR,
Economic CSR and Philanthropic CSR) and
dependent variable (Firm Performance). The study
started with correlation analysis followed by
regression analysis.
Correlation Analysis
Pearson’s product –moment correlation (r) was used
to establish the influence of independent variables
and dependent variable in order to know their
direction and strength. The study findings were
presented in table 4.9.
The study findings established that there was a
weak, positive and statistically significant influence
of Sustainability Management Systems CSR on
Firm Performance (r =0 .156; p .009< 0.05). This
gave an implication that corporate social
responsibility practice variables Sustainability
Management Systems CSR, has a positive influence
on firm performance of selected sugarcane
companies in Kenya.
The study findings agreed with findings of Barnett,
(2016) that firms which engages in CSR activities
has better access to valuable resources, creating
financial returns, corporate citizenship, to increase
trust and reputation, strategic philanthropy, to satisfy
stakeholder expectations, potential to charge a
premium price for products as well as the enhanced
attractiveness to recruit and to retain high-quality
employees.
Table 4.9 Correlation Analysis
Sustainability Management
Systems CSR
Firm Performance
Sustainability Management
Systems CSR
Pearson Correlation 1 .156**
Sig. (2-tailed) .009
Firm Performance Pearson Correlation .156*
1

80 | P a g e
Sig. (2-tailed) .009
Multiple Regression Analysis
Inferentially the study used multiple regression
model to regress dependent and independent
variables for the study. The relevant results of
analysis were presented in tables 4.10, 4.11 and
4.12.
From table 4.10 R value was 0.380 indicating low
degree of correlation. The R2
value was 0.145
indicating that 14.5% variation in the dependent
variable (firm performance) can be explained by the
independent variables; sustainability management
systems CSR, economic CSR and philanthropic
CSR. However, the typical error when the model is
used to predict research success is 0.57769.
Table 4.10 Multiple Regression Model Summary
Model R R Square Adjusted R Square Std. Error of the
Estimate
Durbin-Watson
1 .380a
.145 .135 .5777 .786
From table 4.11 F-statistics produced (F = 15.547)
and p<0.05 indicating that the model was significant
thus confirming the fitness of the model. This
implies that there was statistically significant
relationship between corporate social responsibility
practices on firm performance. The regression
model statistically significantly predicts the
outcome variable; it was a good fit for the data.
Table 4.11 Testing the Multiple Regression Model
Model Sum of Squares df Mean Square F Sig.
1 Regression 15.566 3 5.189 15.547 .000b
Residual 92.108 276 .334
Total 107.674 279
The results in table 4.12 indicated that sustainability
management systems CSR (β=0.149, p<0.05),
coefficients were all significant to be used for
multiple regression. This give an implication that a
unit increase in sustainability management systems
CSR causes a 0.149 unit increase in firm
performance. Therefore, the multiple regression
model equation was developed as follows;
Y= 1.070 + 0.149 X1 + …………………… Equ.4.1
When the model is translated it forms the following
model;
Firm performance = 1.070 + 0.149 sustainability
management systems …………………….Equ. 4.2
Table 4.12 Evaluating individual Regression Analysis Coefficients
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1 (Constant) 1.070 .511 2.093 .037
Sustainability
Management Systems
CSR
.189 .071 .149 2.656 .008
Hypothesis Testing
Hypotheses were tested at 5% alpha level of
significance. The decision rule in hypotheses testing
was that if the p –value was less than conventional
0.05 the null Hypotheses was rejected and when it
was above 0.05 the study fails to reject the null
Hypotheses. The study results were presented in
table 4.12.
The null Hypotheses H01 stated that there is no
significant influence of sustainability management
systems CSR on firm performance of sugarcane
processing companies in Kenya. Hoverer, there was
a statistical significant influence of sustainability
management systems CSR on firm performance of
sugarcane processing companies (t= 2.656;
p=0.008<0.05). Thus, the study findings rejected the
null Hypotheses. This gives an implication that
sustainable management systems adopted by sugar
companies can improve corporate sustainability
performance of the company. This is because
sustainable management systems can generate
business value through measurement and
management of sustainability risks and
opportunities.
The study results concur with study findings by
Schaltegger and Synnestvedt (2002) that the kind of
sustainability management influences the output
performance of the organizations.

81 | P a g e
The study findings also concurs with Figge et al.,
(2002) who found out that sustainability
management with balanced scorecard helps in
integrating the three pillars of sustainability into a
single and overarching strategic management tool
that significantly impact the economic success of a
business.
Summary, Conclusion and Recommendations
Summary of the Findings
The findings are summarized based on the specific
objectives as follows;
Effects of sustainability management systems on
firm performance
The study findings indicated that sustainability
management systems have an effect on firm
performance. Since majority of respondents agreed
that the sugarcane company policies articulate for
corporate social responsibility. Some indicated that
companies has built good reputation. Also some of
them indicated that the company rating on its
performance is indicated by the level of
responsibility they offer to the community. Majority
also were of the opinion that the policies within the
governing framework are reliable in enhancing
performance of the company and finally most of
them were in agreement with the statement that The
annual reports of the company show great
participation of the company on community
development projects. This implies that sustainable
management systems are an important mechanism
for improving corporate sustainability performance.
It can generate business value through measurement
and management of sustainability risks and
opportunities.
Conclusions
The study concluded that the sugarcane company
policies articulate for corporate social responsibility.
Some indicated that corporate social responsibility
adopted by companies has built good reputation.
Also some of them indicated that the company rating
on its performance is indicated by the level of
responsibility they offer to the community.
The study concluded that that the sugarcane
company supports the development projects that
benefits the local citizens. It also supports most of
the community activities through funding as one of
its objective to economically empower the
community and ensure that its operations and
processing management are environmentally
friendly. Finally the company has initiated programs
that support the local vulnerable communities.
Recommendations
The study recommends the following;
The study recommends that the companies should
encourage sustainability management systems since
sustainable management systems is an important
mechanism for improving corporate sustainability
performance. It can generate business value through
measurement and management of sustainability
risks and opportunities.
Recommendation of Further Research
The study recommends further researchers to study
on corporate social responsibility strategy and
financial performance of firms in Kenya which the
study didn’t cover.
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