@ IJSIM 2013 International Journal of Service Industry Management, 10(3):271-282. CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE PERFORMANCE James Nazir Sovereign University of Egypt, Cairo, Egypt Gregory Al-zawahiri Islamic University of Science and Technology, Cairo, Egypt Abstract This research examined the effect of corporate social responsibility on corporate performance in Egypt. The study was conducted in order to provide empirical evidence on the effect of corporate social responsibility on corporate performance in Egypt in order to assist commercial banks in Cairo boost their performance in the industry. The research methodology adopted was the survey and descriptive research design, the population included all customers of Equity Bank of Egypt Plc and Pinnacle Bank Plc in Cairo. The study elicited primary data from 320 respondents using structured questionnaire. Pearson product moment correlation coefficient was employed in analyzing the data, and the findings reveal that participation in corporate responsibility initiatives (such as community development, employee relations, and customer relations) enhanced customer patronage and long-term sales performance of the firms under study. The study concludes that corporate social responsibility has a significant effect on corporate performance. The study therefore recommended that firms should engage more in corporate social responsibility initiatives in order to enhance their corporate performance in the long-run. Keywords: Corporate social responsibility, Corporate performance, Community development, Employee relations, Customer relations, Egypt, Cairo Introduction In the recent times, it has increasingly been noted that corporate social responsibility (CSR) has become a mainstream business activity. Many firms have incorporated CSR as part of their strategy. More than half of Fortune Global 250 firms now provide regular public statements exclusively discussing CSR, and approximately 10 percent of S&P 100 companies report in detail on CSR activities (Kotler and Lee 2004: Baskin and Gordon 2005). The term corporate social responsibility (CSR) has its origins dating back in the 1930 – 40‟s. During this time, the fundamental question regarding whether or not organizations owed to stakeholders and others arose (Carroll, 1999). Most research that has been previously carried out has shown how CSR activities can be beneficial to an organization, and drawn favorable responses from their stakeholders. These CSR initiatives have also acted as a source of competitive advantage. According to Sen and Bhattacharya (2001), customers view an organization that carries out CSR activities positively and identify with it. These positive customer discernments have been shown to lead to customer loyalty and satisfaction. According to Oloko (2012), banks in Egypt rely on customer loyalty and satisfaction as key forecasters of overall performance and success. Greening and Turban (2000) also show that organizations with good CSR policies attracted high quality employees. Investors are attracted to make investments in public companies with CSR Policies (Domini, 1992; Sen et al, 2006). Such investments can ensure long-term survival of the organization and also act as a source of competitive advantage. CSR has become a high profile issue generating great public interest. An extensive global survey found that two-thirds of people said they would like firms to contribute towards social goals beyond shareholders wealth. Another found that 52 percent of respondents ask to see information on the companies’ CSR activities (Fleishman-Hillard 2007). Scherer and Palazzo (2008) in a nutshell summarize the changing public view, paradoxically, today, business firms are not just considered the bad guys, causing environmental disasters, financial scandals and social ills. They are at the same time considered the solution of global regulation and public goods problems. 271