When the financial crisis and recession hit Cyprus, the island came across hard times because of its large exposure to Greek debt. The Cypriot financial crisis burst out in 2012-2013 and involved among others the exposure of Cypriot banks to overleveraged local property companies, the Greek government-debt crisis and the downgrading of the Cypriot government's bond credit rating to junk status by international credit rating agencies. The country was forced to ask the European Union for a bailout thus on 25 March 2013, a €10 billion international bailout by the Eurogroup was announced, in return for Cyprus agreeing to close Laiki Bank, imposing a one-time bank deposit levy on deposits of more than 100,000 euro there, and possibly around 48% of uninsured deposits in the Bank of Cyprus. The financial haircut in Cyprus had many negative effects for the island such as the increase of the unemployment, the rise of poverty level, the lack of liquidity in the Cypriot market and a number of austerity measures imposed on the Cypriots. The current financial crisis has made companies to think about their business strategy and the need for social responsibility. For these reasons many companies in Cyprus engaged in various CSR activities after the financial haircut in order to provide help to people in need in Cyprus. The research aim of this dissertation is mainly to examine the Corporate Social Responsibility activities and evaluate the impact of these activities on the companies that have implemented them. The objectives that have been developed in order to accomplish the research aim of the dissertation include the explanation of the CSR concept and its relation to the financial crisis, the analysis of the CSR activities of companies in Cyprus and the reasons that led the companies implementing them, the analysis of the return and the impacts companies had due to these CSR programs and the provision of recommendations for companies in Cyprus in the context of CSR.
In order to execute the current study, both primary and secondary researches were conducted. Regarding the secondary research, previous studies concerning the topic have been examined while regarding the primary research, qualitative data were collected. More specifically, the researcher conducted one to one semi-structure interviews with the Responsible of CSR of four companies in Cyprus that have engaged in CSR activities after the financial haircut. This study has proved that the CSR activities implemented following the financial haircut influenced positively the company’s public image and reputation as well as the customers’ satisfaction and trust. These aspects have also led to higher customer retention and brand loyalty as well. It was also indicated from the study that these CSR activities have also brought about benefits in terms of the companies’ employees such as enhancing employees’ retention and engagement and improving the relationships between employer and employees. Furthermore, it should be noted that through the research it was proved that CSR constitutes an opportunity of providing long–term survival and sustainability to the businesses despite any financial crisis and it can be used as a competitive advantage over others as well. As far as the profitability of the companies under study is concerned, it was indicated that CSR strategies have contributed to the increase in sales and profits of the companies.