Abstract:
Purpose – This paper aims to examine the influence of corporate social responsibility on financial
performance of small and medium-sized enterprises (SMEs) in Ghana by using access to capital and firm
reputation as mediating variables.
Design/methodology/approach – The authors collected primary data from 423 SMEs within the Accra
Metropolis. Partial least squares estimation technique was used to analyze the data.
Findings – The authors documented evidence for a mechanism through which corporate social
responsibility results in financial performance of firms: SMEs with improved corporate social responsibility
practices are better positioned to achieve enhanced reputation, which translates into improved financial
performance. Even though this study did not document a significant relationship between corporate social
responsibility and access to finance by Ghanaian SMEs, the authors contend that looking at the positive
relationship between them, SMEs can minimize their capital constraints by embarking on CSR practices,
which can eventually translate into financial performance.
Practical implications – The authors recommend that for SMEs to enhance their reputation and increase
their access to capital, which will eventually result in enhanced financial performance, corporate social
responsibility practices should be a major part of their operations.
Originality/value – It contributes to our knowledge on how CSR practices lead to financial performance of
SMEs in developing countries. In addition, this is the first of its kind to establish the relationship between CSR
practices and financial performance of SMEs in Ghana by using access to capital and firm reputation as
mediating factors
