IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON COMMUNITY DEVELOPMENT

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CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND TO THE STUDY

Academics and practitioners have been striving to establish and agreed upon definitions of the concept of corporate social responsibility for over 30 years. Davis (1960) suggested that social responsibility refers to businesses’ “decisions and actions taken for reasons at least partially beyond the firm’s direct economic or technical interest.”

Eells and Walton (1961) also argued that corporate social responsibility refers to the “problems that arise when corporate enterprise casts its shadow on the social scene, and the ethical principles that ought to govern the relationship between the corporation and the society” (p.5).

Corporate Social Responsibility (CSR), a concept that has been around for well over 50 years, has become prominent again recently. Peter Utting (2005) notes that an increasing number of transactional corporations (TNCs) and large domestic companies, supported by business and community associations, are adopting a variety of so-called voluntary CSR initiatives that incorporate, for example, ‘codes of conduct; measures to improve environmental management systems and occupational health and safety; company ‘triple bottom line’ reporting on financial, social, and environmental aspects; participation in certification and labelling schemes; dialogue with stakeholders and partnerships with NGOs and UN agencies; and increased support for community development projects and programmes’.

Corporate social and environmental performance have recently been placed under scrutiny by firm stakeholders; thus, CSR has become a widely-applied concept and is an increasingly central concern in business decision-making. CSR can be defined as “situations where the firm goes beyond compliance and engages in actions that appear to further some social good, beyond the interests of the firm and that which is required by law”. The academic construct of CSR was first developed in the 1950s, but came to prominence in the 1970s and 1980s in conjunction with increased public scrutiny and focus upon the image of the corporation. Increased scrutiny has also resulted in rapid growth of the number of instruments used to manage, measure, communicate, and reward corporate social responsibility.

The scope of activities included in CSR programmes is wide and subject to debate; however, most definitions include three key pillars of economic growth, ecological balance, and social progress. Elements within the framework of CSR include the adaptation of products and public sector processes to address social values (such as eliminating excess packaging), valuing human resources (such as personal development training and Occupational Health & Safety programmes), improving environmental performance through recycling and pollution abatement (such as emission reductions), and supporting community organisations (such as by sponsoring a local sporting club).

The impact and validity of CSR has been the subject of ongoing discourse and development. While most theories focus upon economics, politics, social integration, or ethics, the perspectives within these areas vary widely. These perspectives include:

Ø solely focusing on profit-making, because “few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of social responsibility other than to make as much money for their stockholders as possible”

Ø going beyond profit making by examining the impact of business activities upon the social system

Ø going beyond economic and legal requirements, resulting in an early conceptualisation of business ethics and corporate citizenship

Ø voluntary activities, where the marginal return on business expenditure on CSR is less than the returns available from alternative expenditure

Ø economic, legal, and voluntary activities

Ø concern for the broader social system and

Ø giving way to social responsiveness, the adaptation of corporate behaviour to social needs, and corporate behaviour in congruence with prevailing social norms, values, and expectations of performance.

Some critics according to Carpenter, et al. (2010) have argued that corporate social responsibility as implemented by some organisations is mere facade. It is widely believed by many that corporate social responsibility efforts are mere campaigns by organisations to promote corporate brands. Many Nigerians are ignorant of corporate social responsibility; hence, whenever an organisation does something ‘supposedly big’ for the society, such a company and its management are eulogized for being caring and philanthropic. Public sector in Nigeria are expected to manage the impacts of their operations by adopting corporate social responsibility (corporate social responsibility) programme.  Onwuegbuchi (2009) in his studies on corporate social responsibility among public sector firms reported that most public sector in Nigeria embarked on corporate social responsibility programme for the purpose philanthropic gesture and for government and public appraisal. He further stated that some public sector applied environmental and labour standards that suit them to satisfy basic requirements of the laws of the country.

The Nigerian government should ensure that public sector’ corporate social responsibility policy entails self-regulation, adherence to rules and regulations, ethical standards, environmental responsibility and sustainability, consumers’ satisfaction, employee welfare, communities and stakeholders benefits.

The problems of the environment in which an organisation operates cannot be ignored. Therefore, there is a need to examine the problems and prospects of corporate social responsibility in Nigeria. In its stronger form, the concept of Corporate Social Responsibility (corporate social responsibility) asserts that corporations have an obligation to consider the interests of customers, employees, shareholders, communities, as well as the ecological ”footprint” in all aspects of their operations.

1.2       STATEMENT OF THE PROBLEM

Despite the huge attention recently given to corporate social responsibility (CSR) in Nigeria, an area of concern still remain organisations in the public sector. Most public sector organisations still do not see any reason for corporate social responsibility policy acceptability. Companies that reluctantly accepted and adopted the corporate social responsibility policy, do so for profit-making purpose.

Another lacking area on corporate social responsibility is that most of the studies on corporate social responsibility were conducted on nations with developed economies and their findings were found out not to be applicable to some developing nation’s economy like the Nigeria. Therefore, this study will examine the problems and prospects of corporate social responsibilities in Nigeria using the public sector as a case study. It is ironic that these organisations take resources from the external environment and it is only natural to give back what has been exploited. Unfortunately, this anomaly is a norm in this part of the globe and this cankerworm can only be ameliorated through research thesis such as this, publication, media publicity, campaigns and awareness emphasising the importance of corporate social responsibility in our society.

1.3       OBJECTIVES OF THE STUDY

The broad objective of this study is to examine the problems and prospects of corporate social responsibility in Local Government area. Specifically, the study is designed to:

1. Investigate how corporate social responsibility (corporate social responsibility) influences community reputation in the Nigerian public sector.
2. Cross-examine the difference between level of perceived staffs patronage and brand loyalty among companies that practices corporate social responsibility and organisations that do not practice corporate social responsibility in the Nigerian public sector.
3. Analyse how corporate social responsibility adoption influences community development and profitability.
4. Assess the economic, social and environmental factors influencing corporate social responsibility (corporate social responsibility) adoption among public sector in Nigeria.

1.5              RESEARCH QUESTIONS

The public sector plays a significant role in the growth and development of the Nigerian economy, and corporate social responsibility ought to be a voluntary act by the public sector. It should not have to be forced on organisations by the law, government, and civil rights groups or by the communities. Social responsibility should be a deliberate inclusion of public interest into corporate decision-making and the honouring of a triple bottom line of people and profit making.

In this dissertation there are four specific research questions coined after the statement of the problem and they are listed below.

1. Are there differences between level of perceived staffs patronage and loyalty among companies that practices corporate social responsibility and those that do not practice corporate social responsibility in the Nigerian public sector
2. What extent would corporate social responsibility adoption influence community development?
3. What are the economic, social and environmental factors responsible for the poor performance of corporate social responsibility (corporate social responsibility) adoption among public sector in Nigeria?

1.5       RESEARCH HYPOTHESES

To provide empirical answers to the research questions above, the following research hypothesis were developed. They are as stated below;

Hypothesis I

H₀:       Corporate social responsibility (corporate social responsibility) does not influence community reputation in the Nigerian public sector.

H₁:       Corporate social responsibility (corporate social responsibility) influences community reputation in the Nigerian public sector.

Hypothesis II

H₀:       There is no significant difference between level of perceived staffs patronage and loyalty among companies that practices corporate social responsibility and those that doesn’t in the Nigerian public sector.

H₁:       There is a significant difference between level of perceived staffs patronage and loyalty among companies that practices corporate social responsibility and those that doesn’t in the Nigerian public sector.

Hypothesis III

H₀:       Corporate social responsibility adoption does not influence community development.

H₁:       Corporate social responsibility adoption influences community development.

Hypothesis IV

H₀:       Economical, social and environmental factors do not influence the performance of corporate social responsibility.

H₁:       Economical, social and environmental factors influence the performance of corporate social responsibility.

1.6       RESEARCH METHODS

 This study adopts descriptive survey method. Therefore, a cross-sectional research design is used to design the methodology. The premise for this research method is because data are collected from the population for intensive study and analysis.

More often than not, the research cannot possibly study all subjects or items in the population. Hence, a selective random sample from or a subset of, the population was taken. The reasons for random sampling are;

• Among the elements (public sector in Lagos state) that make up the population of study there are similarities and therefore a study of few of these elements will give the researcher sufficient knowledge of what is obtainable in the entire population study.
• It is cheaper to engage in the random study
• It allowed for quicker results and more thorough research conduct.
• It is practically impossible to consider all elements in this research considering the limited time frame.

The target population for this study arethe public sector in Lagos State, but due to large number of public sector located in the State, some selected organisations will be considered for this study. Primary data will be gathered through questionnaire administered among randomly selected employees of the selected companies. The data will be analysed using frequency and percentage tables and a descriptive analysis will be carried out using a software package for statistical analysistool.

 1.7       SCOPE AND LIMITATION OF THE STUDY

The focus of this research would encompass the problems and problems of corporate social responsibility and its impacts. The impacts of social services by corporation shall be examined in relations to financial performance, employee commitment, and community development. The study shall focus on the Nigerian public sector. The perceptions of some key players of the community shall be sought for the purpose of this research work.

Due to limited time of the study and the choice of using questionnaire method, this research does not include an extensive benchmark of corporate social responsibility practices in the Nigerian public sector, but is restricted to a few organisations situated in Lagos, Nigeria. Though the study uses vital insider information from these organisations, confidentiality of names, data, facts and figures were treated with utmost secrecy and with a caveat. The reliability and validity of the data can also be verified and contested, but of course that will not be necessary.

 1.8       SIGNIFICANCE OF THE STUDY

The importance of this dissertation is not just to analyse the practice of corporate social responsibility but to understand the current practice, the level of understanding of corporate social responsibility by public sector organisations in Lagos state in relation to how it should be. It will explain how corporate social responsibilities affect the performance of these firms.

The research would also help to explore the impact of corporate social responsibility on employees’ commitment to the organisation.What part does the employee play in corporate social responsibility? Can he influence the decision making process?  What is their level of understanding of the concept?

1.9       ORGANISATION OF THE STUDY

Chapter one of the study provides background of the study, stating the problem of the study and the research questions and hypotheses to be tested in the study. It also highlights the significance of the study and scope of the study.

Chapter two reviews related literature on problems and prospects of corporate social responsibility of Nigerian public sector. It looks at different authors’ definitions of corporate social responsibility and its activities affects organizations’ reputation, staffs patronage and brand loyalty. Chapter two examines corporate social responsibility adoption influences community development and profitability. How economic, social and environmental factors are responsible for the poor performance of corporate social responsibility (corporate social responsibility) adoption will also be extensively reviewed.

Chapter three discussed the research methods to be used in designing the study which will include research design, population, sample size and sampling technique, data collection and data analysis methods.

Chapter four presents the data gathered in frequency and percentage tables. The data will also be analysed and research hypotheses will be tested with chi-square statistical test.

Chapter five summarises the outcome of the study, draw conclusions based on the findings of the study and make necessary recommendations.

1.10     DEFINITION OF TERMS

Commitment: Commitment as defined in this study means when an employee pledges his loyalty to an organisation. It is an application, dedication or pledge to an engagement or obligation that restricts freedom of action.

Community: Community as used in this study means a group of people who live in an area where an organisation operates. They are a group of people having a religion, race, profession, or other particular characteristic in common.

Social Responsibility: Social responsibility as described in this study is a demonstration of certain responsible behaviour on the part of public and the private (government and business) sectors toward society and the environment.

Performance: Performance is the manner in which an organisation functions, operates, or behaves in the society.

Stakeholder: This study describes a stakeholder as a person or group with a direct interest, involvement, or investment in a business organisation e.g. the employees, stockholders, and customers of a business organisation.

Hypothesis:A hypothesis is a tentative statement about relationships that exist between two or among many variables. It is a conjectural statement about relationships and need to be tested and subsequently accepted or rejected.

Theories and laws: A hypothesis, if it is true, state a law. Therefore, the hypothesis is a law like statement. Law is defined as a statement of invariant relationship among observable or measurable properties.

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