The Role of Entrepreneurial Finance in Corporate Social Responsibility and New Venture Performance in an Emerging Market

Abstract

Corporate social responsibility (CSR) has over the past decades transformed from a philanthropic attribute to something compulsory. It has become the imperative duty of organisations, irrespective of their size, nature of business and age. However, because of poor financial capabilities and lack of support, newly established ventures too often fail to voluntarily participate in social and environmental activities. This is one reason why national governments have initiated various programs and policies to encourage CSR and environmental activities in new ventures. However, previous studies have yet to fully reveal the effects of entrepreneurial finance on CSR and the environmental, financial and innovative performance of newly established ventures. To fill this gap, we used a survey to gather empirical evidence from 255 newly established ventures. The results indicate that entrepreneurial finance directly contributes to financial performance, while indirectly contributing to environmental and innovative performance through CSR. Our research recommends that new ventures efficiently utilise entrepreneurial finance to configure CSR activities that achieve high profitability, and environmental and innovative performance. Moreover, our research encourages governments to make financial loans to ventures engaged in social and environmental activities to help them reach their sustainable development goals.

Business Development Services and Government Regulations: Prospects and Challenges of Youth-Owned Enterprises in Kigali Rwanda

“…The findings are similar to the results by (Aterido et al, 2012) that monetary services are vital to the economic progress and the growth of Small and medium enterprises, and their availability is linked to productivity and performance. The results are reliable to those of Khattak et al (2021) who found that access to financial services improves business performance. The results revealed that training services (β =0.236, p=0.004<.05) had a positive and significant effect on the performance of a youthowned enterprise.…”

“…The study used basic descriptive data to demonstrate how microfinance helped young people acquire microloans, develop their wealth by opening or expanding enterprises, and ultimately find employment. Khattak et al (2021), the government should support financial institutions that extend credit, especially to budding enterprises, the research suggests. The poll did not, however, ask young business owners if they are aware of readily available financial services or whether they are aware of the restrictions that banks have before giving loans.…”

Supportive tactics for innovative and sustainability performance in emerging SMEs

“…Our research confirmed that both types of finance-domestic and international-are necessary for high sustainability performance. Similarly, a recent study conducted by Khattak et al (2021) indicates that entrepreneurial finance is the key to CSR and environmental activities in newly established ventures.…”

“…Finance is a key to sustainability activities and sustainable reporting (Naidoo 2020); subsequently, SMEs with sufficient financial resources easily practice green activities and environmental initiatives (Khan et al 2021a). When enterprises have sufficient finances, they easily perform CSR activities (Khattak et al 2021). However, SMEs sometimes have lack adequate financing which hinders them from investing in social activities.…”

Influence of financial resources on sustainability performance of SMEs in emerging economy: The role of managerial and firm level attributes

“…Regarding firm level attributes, there have been heterogeneous results. For instance, some studies have found that large enterprises and mature enterprises have formal strategies for social responsibility (Jin et al, 2019; Withisuphakorn & Jiraporn, 2016), while others Khattak et al (2021), Ullah et al (2022) state that newly established ventures are more likely to actively emphasize environmental practices.…”