CORPORATE SOCIAL RESPONSIBILITY AND PROFITABILITY LEVEL OF SMES IN AKOKO SOUTH-WEST LOCAL GOVERNMENT AREA, ONDO STATE, NIGERIA

This study examined the relationship between Corporate Social Responsibility (CSR) engagement and the profitability of Small and Medium Enterprises (SMEs) in Akoko SouthWest Local Government Area, Ondo State, Nigeria. The independent variables considered were CSR dimensions such as environmental responsibility, community involvement, and employee welfare, while the dependent variable was SME profitability. CSR implementation challenges, including limited financial resources, lack of government support, and inadequate awareness, were also analyzed. The study adopted a descriptive survey research design, and data were obtained from 168 respondents using structured questionnaires. The respondents were selected across diverse sociodemographic backgrounds, with female participants (54.2%) slightly outnumbering males (45.8%). Most respondents were young (58.3% aged 20–29 years), single (81%), and had 1–5 years of sales experience (42.9%), with varying levels of educational attainment. The data were analyzed using descriptive statistics, mean ranking, standard deviations, and inferential techniques, including correlation and regression analysis. Findings revealed that SMEs in Akoko South-West actively engage in CSR practices such as community development, environmental sustainability, and employee welfare, though fewer firms have formal CSR policies. CSR was found to have both internal and external benefits: it improved cost savings, market visibility, efficiency, employee retention, and competitiveness. Regression results showed a significant relationship between CSR engagement and SME profitability (R = 0.548, R² = 0.300, p < 0.05). Further analysis indicated that environmental responsibility (β = 0.32, p < 0.05), community involvement (β = 0.28, p < 0.05), and employee welfare (β = 0.35, p < 0.05) significantly influenced profitability. However, major challenges to CSR implementation included financial constraints, lack of government support, and inadequate CSR awareness, with CSR challenges negatively affecting profitability (β = -0.58, p < 0.05). The study concludes that CSR is not only a philanthropic initiative but a strategic tool that enhances SME growth, profitability, and competitiveness. It recommends that SMEs integrate CSR into their core business strategies, while government and relevant agencies provide supportive policies, incentives, and awareness campaigns to encourage wider CSR adoption. Strengthening regulatory frameworks and establishing measurable CSR impact assessment tools are also crucial for sustainability.