IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON ORGANIZATIONAL PERFORMANCE (A case of Nigeria Bottling Company Plc)

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CHAPTER ONE

INTRODUCTION

 1.1      BACKGROUNG OF THE STUDY

Since the institutions operate in an environment, produce and services for the environment and employ People to eradicate or resolve social problems posed to the society as a result of their operation.

Social responsibility whether of a business, governmental or non-governmental may arise in two ways, it may arise out of the social impact of the institutions or it may arise as problems of the society itself (Holmes, 1977). Both are of great concern to management. The first deals with what an institutions does to the society while the second is concerned with what an institutions can do for society, for instance the purpose of textile industry established in a area is not to cause water pollution but to provide clothing to people but in the process of its production, its bye product may cause water pollution.

Also the purpose of power generator is not to make or release noxious fame, it is to bring out light but in order to do this, it produces noise; create heat and releases heat fumes to the environment thereby causing air pollution. Nobody in his right senses will want to create traffic jam, but if a lot of people are employed in the place it end result will not be desirable to the society.

In the recent year, globalization, increased influence of companies, retrenchment and repositioning, war for talent, growth of global civil society activities and increased importance of intangible assets have led to an explosion of interest in corporate social responsibility and the phrase ‘’being a responsible corporate citizen” has became a managerial clinic (Boston college for CR 2002). Top management organizations were ultimately involved in drawing up a new chater of responsibility for its relations with stakeholders to demonstrate that the enlightened corporation is no longer prepared to tolerate long-run excessive external costs.

Most contemporary managers are looking for empathy with society rather than alienation. It is not surprising that many of them have decided that time is own ripe for a new interpretation of the duties and responsibilities of corporations. Professional managers have realized that profits are necessary but not sufficient condition for healthy corporate society. For instance, a large number of contemporary organizations have introduced employee ownership schemes. Such developments do not mean that these companies are becoming less profit Conscious. In facts, quite contrary, more and more companies are realizing that employees, who dedicate their lives to the company, deserve to benefit from the wealth crating potentials of the corporation.

To have a clearer picture of this study we will look at corporate social responsibility from two different perspectives. What does it mean for an organization to be socially responsible? Few concepts have been described in so many different ways. For instance, it is been called “ profit making only” going beyond profit making only “voluntary activities” “concern for the broader social system and social responsiveness” A great deal of attention has been focused on the extremes on one side, there is the classical or purely economic-view and on the other side is the social economic position.

The classical views are the opinion that managements only social responsibility is to maximize profit. The most outspoken advocate of this approach is economist and Nobel laureate Milton Friedman. He argues that manager’s primary responsibility is to operate the business in the set interest of the stockholders (the owners of the corporative).

What are those interests? Freidman contends that stockholders have a single concern. Financial return. He also argues that anytime managers decide to spend the organization’s resources for “social goods” they’re adding to the costs of doing business. These costs have to be passed on to customers either through higher prices or absorbed by stockholders through a smaller profit returned as divided.

The socio economic view on the other hand views that management’s social responsibility goes beyond making profit to include protecting and improving society’s welfare. This position is based on the belief that corporations are not independent entities responsible only to stockholders. They also have a responsibility to the large society that endorses their creation through various laws and regulations and supports them by purchasing their product and services. In addition proponents of this just merely economic institutions society expects and even encourages business to become involved in social, political and legal; issues. For example, proponent if socioeconomic view would say that Avon product inc. was being socially responsible when it initiated its breast Cancer Crusade to provide women with breast cancer education and early detection screening services and which after 10 years, has raised more than $250 million worldwide. And they would say that the educational program implemented by Brazilian cosmetics manufacturer of Natural cosmetics SA in public primary schools in Sao Paulo, to improve children’s literacy and decision making skills, were socially responsible. Why? Through this program, the managers were protecting and improving society’s welfare. More and more organizations around the world are taking their social responsibilities seriously especially in Europe, where the view that business need to focus on more than profits has stronger tradition than In the United States. The key differences between these two perspectives are easier to understand if we think in terms of the people to whom organizations are responsible. Classicists would say that the stockholders or owners are the only legitimate concern others would respond that managers are the responsible to any group affected by the organization’s decision and actions-that is the stakeholders shows a four stages model of progression of an organization’s social responsibility.

A Stage 1: Managers are following the classical view of social responsibility and pursue stakeholder’s interest while following all laws and regulations.

At stage 2: Managers expand their responsibilities to another important stakeholder’s group-employee. Because they’ll want to attract, keep and motivate good employees. At this stage managers will improve working conditions, expand employee rights, increase job security and focus on human resources concern.

At stage three, managers expand their responsibilities to other stakeholders in the specific environment. Primarily customers and suppliers. Social responsibility goals for these stakeholders might include fair prices, high-quality products and services, safe products, good supplier relationship, and similar actions. Their philosophy is that they can meet their responsibilities to stockholders only by meeting the needs of these other stakeholders.

Finally, stage 4 characterized the highest socio-economic commitment. At this stage, managers feel a responsibility to society as a whole. They view their business as a public entity and feel a responsibility to advance the public good. The acceptance of such responsibility means that managers actively promote social justice, preserve the environment and support social and cultural activities. They do these things even if such actions may negatively affect profits.

The Nigeria business environment has become complex and dynamic, hence contemporary business organizations operating in Nigeria are witnessing greater influence and enormous pressure from interest groups and increase government regulation have been put to socially responsible.

Indeed, the business organizations of today are much more socially responsible than before. In fact a comparative study of organization effectiveness in Nigeria industries shows that public limited liability companies are performing better than public enterprises.

Hence these papers seeks to evaluate the impact of corporate social responsibility of one of the public limited liability companies with sole objective of determining whether the concept has impacts on modern business organization performance.

 1.2      STATEMNET OF PROBLEM

Many researches and literatures has been conducted and studies in the area of social responsibility but no particular reference effect organizational performance. It was noted that some organizations considered social responsibility as a waste and drain on business resources and believe that organizational and rather ignore the outcome of social responsiveness to organizational performance. The problem of this study is to determine the impact of social responsibilities on organizational performance.

The study shall discuss how Nigeria business organizations are socially responses and how it is a benefit to the society and also how social responsibilities affect the performance of an organization.

 1.3      PURPOSE OF THE STUDY

The main purpose of this is to examine empirically the relationship between corporate social responsibility and organizational performance. Social responsibility has been neglected overtime, organization have forgotten that they operate in an environment and the environment also expect the organization to assist in tacking its socio-economic problem.

This study seeks to:

• Determine the effect of social responsibility on organization
• Discuss why some organizations are socially responsible than others
• Identify and evaluate the various forms of social responsibility companies will achieve their set objectives and attain their goals.
• Above all, the purpose of this study is to partially fulfill the requirement for the award of higher national Diploma in Business Administration.

  1.4      RESEARCH QUESTION AND HYPOTHESIS

To evaluate the impact of corporate social responsibility on organizational performance, the following statement and question shall be tested.

1. Are Nigerian business enterprises socially responsible?
2. Does the impact of social responsibility favourable or is a wasteful spending?

iii.        Does social responsibility has relevant to organization profitability?

1. In what areas is your organization socially responsible?
2. What are the aims of social responsibility?
3. Does social responsibility of an enterprise have impact on its performance?

From the above research questions, the thesis of this project shall focus on the stated hypothesis relationship. The test of the hypothesis is formulated below:

Null Hypothesis     (Ho): There is no relationship between social responsibility and organizational performance.

Alternative Hypothesis (Hi): There is a relationship between social responsibility and organizational performance.

1.5      SIGNIFICANCE OF THE STUDY

Their study on corporate social responsibility is significant to organization in particular and the society in general. The organization would benefit by knowing the different areas where they be socially responsible, measure their impact on the society, thus improving their corporate image and on the long run to make more profit. The research work also intend to assist immensely other corporate organization and general public to know the significance of social responsibilities and to relate their roles as a stakeholder in the wheel of progress, if adequate studied. More so, the general public will became aware and informed about the various kinds of social performances which corporate bodies can extend them. It will create awareness that environmental degradation.

It also enable corporate bodies to benefit greatly as various form of social responsibilities and area they can readily assist the public and other stakeholders. This will be of tremendous significant to them, as it will increase their goodwill.

Finally, the researchers are not to be left out of the benefits, as the research project will allow them to discover more about this crucial and ever controversial concept of our time.

1.6      SCOPES AND LIMITATION OF THE STUDY

The scope of this study is in the areas of social responsibility and involvement of soft drinks industry. The scope covers soft drinks industry in Lagos using Nigeria Bottling Company Plc as a case study.

The limitation of the study arises from the fact that most business organization hardily gives out their information to outsiders for fear of competitors however the little information gathered will be used as a generalization of the performance of others. This study is also limited by the time coupled with cost involved in conducting this research.

1.7      DEFINITION OF TECHNICAL TERMS

In a study like this, it’s important to clarify some technical words used in the study, so that better understanding of the topic shall be achieved.

Some of the key words used and their definitions are given below.

Social Responsibility: It is the intelligent and objective concern, which restrains individual or corporate behavior from ultimately destructive activities no matter how immediately, profitable and leads to the direction of the contributing to human betterment. (Andrew, 1977). It also means not only fulfilling legal expectations but also going beyond compliance and investing more into human capital, the environment and relations with stakeholders (the European economic commission, 2011).

Corporate Image: The intangible possession that distinguishes and enables a business organization of similar type and capability.

Organization: It can be define as any structured system of rules and functional relationship designed to carry out a firm’s policies.

Performance: operationally, it can be defined as a function of profitability, survival, market share and efficiency and growth achievement of the organizations.

 1.8      BRIEF HISTORY OF THE COMPANY

Nigeria Bottling Company Plc, a single largest bottling company in the world renewed for its top product such as (Coca-Cola, Sprite, Fanta, Orange Fanta Lemon, Fanta Giger-ale, Eva water and Diet Coke) to mention few, out of all these product coca-cola was first produced in Atlanta Georgia USA on 8^th May, 1886 by Dr. John Styth Pemberton, a Pharmacist.

Coca-cola came into Nigeria in 1963, when Nigeria Bottling Company opened its first plant in Lagos and has today grown to twenty plants nationwide. It was publicly quoted company listed since 1978 on the Nigerian stock exchange with 235,037,889 Nigeria citizen shareholders participating in approximately 48.595, south Africa 199,347, 341 of 41.21% other foreign shareholders 49,355,210 of 10%.

The major objectives are to satisfy the requirement of customers with high quality product and to reach everybody that is why special considerations are made. Other objectives are to maintain the leading production soft drink, and to reach every individual both urban and rural areas. That is why they have plants and depots almost in every state and capital in Nigeria and mini depots in every local area.

To improve the social and economic life people living within the areas of its operation in particular and generally of the people of Nigeria through the provision of employment and infrastructural facilities when necessary. To ensure a reasonable return on investment of the shareholders. Concerning the raw material sourcing, most of the Nigeria Bottling Company raw materials are ordered from abroad, through coca-cola international, this is another separate company that supervises all the activities of Nigeria Bottling Company.

It serves as intermediary between Nigerian Bottling Company and the entire bottling company in the world. Such raw materials include concentrate and sugar; other materials are locally produced by other sisters company such as better industries, this comprises of Delta Glass Plc, producing bottles of different sizes, Benin Plastics produces plastic tray for the bottles while perfumes and cap for eva water, crown products Limited at Ijebu Ode manufactures Bottle Crowns.

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