The Impact of Financial Performance on CSR Investments: Evaluating the Mediating Role of Corporate Governance through Stakeholder Relations and Operational Efficiency in Pharmaceutical Companies in Kigali.

Abstract

This research investigates the impact of companies' financial performance on their investment in Corporate Social Responsibility (CSR) practices, focusing specifically on pharmaceutical companies in Kigali. Utilizing Ordinary Least Squares (OLS) regression analysis, the study examines the relationships between firm performance indicators (operational efficiency, stakeholder relation) and various dimensions of CSR, including economic, social, and environmental responsibilities. The analysis is based on a sample of 205 pharmacies in Kigali. The findings reveal strong positive correlations among corporate services, economic responsibilities, social responsibility, and environmental responsibility, emphasizing the interconnected nature of these aspects within organizations. Moreover, Return on Equity (stakeholder relation) and corporate governance emerge as significant predictors of CSR practices, highlighting their pivotal roles in driving responsible behaviors. The results underscore the importance of aligning financial success with social and environmental stewardship and advocate for integrating CSR principles into core business strategies. Practical recommendations are provided for pharmaceutical companies, including strengthening governance mechanisms, investing in sustainable practices, and collaborating with stakeholders to address societal needs and environmental challenges. This study contributes to the understanding of the complex dynamics shaping corporate responsibility initiatives and offers insights for fostering sustainable business practices within the pharmaceutical sector. Further research is recommended to explore regulatory frameworks, industry-specific challenges, and the role of emerging technologies in driving sustainable innovation within the pharmaceutical industry.