Corporate Social Responsibility and Financial Performance of SME Suppliers and Contractors in the Mining Industry in Zambia: Direct and Mediating Effects of Entrepreneurial Leadership

Abstract

This study examines the influence of corporate social responsibility (CSR) on financial performance of SME suppliers and contractors in the mining industry in Zambia and tests the direct and mediating effects of entrepreneurial leadership on this relationship. Using primary data from 254 SMEs in the Copperbelt Province of Zambia, we conducted a regression analysis to evaluate the effect of CSR on financial performance and the mediating role of entrepreneurial leadership. The results indicate a positive relationship between CSR and financial performance and that this relationship was partially mediated by entrepreneurial leadership. This suggests that SMEs who embrace entrepreneurial leadership along with CSR initiatives are more likely to see improvements in their financial performance. Therefore, the study recommends that owner-managers of SMEs should embrace entrepreneurial leadership and integrate CSR activities to improve their financial performance. This study makes contribution to the literature in the domain of sustainable performance of SMEs. The study also contributes to our knowledge on how CSR practices can improve the financial performance of SMEs in developing countries. In addition, this study is different from others because it introduces entrepreneurial leadership as a mediating factor in the CSR–financial performance relationship.