EFFECT OF CORPORATE SOCIAL RESPONSIBILITY ON ORGANIZATIONAL PERFORMANCE

(A CASE STUDY OF NESTLE NIGERIA PLC)

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Over the years companies (Business Organizations) as corporate bodies have not exercised their obligations. They have failed to impact positively on their immediate environments let alone the nation in which they operate. They pay an unliving wages to their employees, shareholders dividend are either accumulated or not paid at all, evade taxes cheat customers through poor services, unqualitative product and high prices, engage in unwholesome  competition, circumvent operational guidelines and institutional ethics and are involved in other odious and undercover activities. They seem not to understand what their responsibilities are, some companies operate and make a lot of profit while the communities they operate in are left in squander and degradation and the people improvised, and traumatized and frustrated young people become hostage takers social miscreants and consummate criminals. In some other instance, some business organizations want to show their benevolence. They engage in self glorification through incessant media and propaganda to promote their superfluous philanthropic gestures.

A key point to note is that CSR is an evolving concept that currently does not have a universally accepted definition. Generally, CSR is understood to be the way firms integrate social, environmental and economic concerns into their values, culture, decision making, strategy and operations in a transparent and accountable manner and thereby establish better practices within the firm, create wealth and improve society. As issues of sustainable development become more important, the question of how the business sector addresses them is also becoming an element of CSR.

The World Business Council for Sustainable Development has described CSR as the business contribution to sustainable economic development. Building on a base of compliance with legislation and regulations, CSR typically includes “beyond law” commitments and activities pertaining to: corporate governance and ethics health and safety; environmental stewardship; human rights (including core labour rights), sustainable development ,conditions of work (including safety and health, hours of work, wages),industrial relations;  community involvement, development and investment; involvement of and respect for diverse cultures and disadvantaged peoples; corporate philanthropy and employee volunteering, customer satisfaction and adherence to principles of fair competition, anti-bribery and anti-corruption

measures, accountability, transparency and performance reporting; and supplier relations, for both domestic and international supply chains.

Generally, CSR is understood to be the way firms integrate social, environmentaland economic concerns into their values, culture, decision making, strategy and operations in a transparent and accountable manner, and thereby establish better practices within the firm, create wealth and improve society. These elements of CSR are frequently interconnected and interdependent, and apply tofirms wherever they operate in the world. It is also important to bear in mind that there are two separate drivers for CSR. One relates to public policy. Because the impacts of the business sector are so large, and with a potential to be either positive or negative, it is natural that governments and wider society take a close interest in what business does. This means that the expectations on businesses are rising; governments will be looking for ways to increase the positive contribution of business. The second driver is the business driver. Here, CSR considerations can be seen as both costs (e.g., of introducing new approaches) or benefits (e.g., of improving brand value, or introducing products that meet sustainability demands). The remainder of this guide addresses the second of these drivers.

Since businesses play a pivotal role both in job and wealth creation in society and in the efficient use of natural capital, CSR is a central management concern. It positions companies to both proactively manage risks and take advantage of opportunities, especially with respect to their corporate reputation and the broad engagement of stakeholders.

The latter can include shareholders, employees, customers, communities, suppliers governments, non-governmental organizations, international organizations and others affected by a company’s activities.

Above all, CSR is about sensitivity to context—both societal and environmental—and related performance. It is about moving beyond declared intentions to effective and observable actions and measurable societal impacts. Performance reporting is all part of  transparent, accountable—and, hence, credible—corporate behaviour. There is considerable potential for problems if stakeholders perceive that a firm is engaging in a public relations exercise and cannot demonstrate concrete actions that lead to real social and environmental benefits.

CSR can involve a wide range of stakeholders :A corporation’s stakeholders can include: shareholders, non-governmental organizations,business partners, lenders, insurers, communities, regulators, intergovernmentalbodies, consumers, employees and investors.

In addition, Corporate social responsibility is the concept that an organization needs to consider the impact of their operations and business practices on not just the stakeholders, but also the customers and communities it operates in. In other words, corporate social responsibility is a way of saying thank you and expressing appreciation to all stakeholders in the business. This will guarantee or boost the performance of any organization.

Increased attention has been focused on the ethics of corporate ventures, the social role to be played by corporations and the level of responsibility that corporation have to the society.In the 1980s, it became quite clear that far reaching changes of this century were, for the most part, necessary. As and new contract between business and society evolved. We have seen the Traditional ethic of “caves emptor” (let the buyer beware) gradually erode into a new concept of corporate social responsibility meanwhile, many individuals, including many managers believe that beside their responsibility to the organizations they serve, they  have a personal responsibility to society.

Basically, behind the take off of every business is the profit motive, and behind its continuity is profit motive that derives shareholders into buying shares and private capital owners into investing their capital. It is the profit motive that leads into goods and services being produced and it is the profit earned that ensure the existence and growth of the business. This is not to say that immediate profit should be the only consideration.

Business organizations are closely and generally identified as an economic institution, a collection of human and material resources, for the purpose of economic production at a profit. In a more general sense the word “business” is used to mean trade or commerce, the art of buying and selling. These conception of business were more adequate in the 19th century before industrial revolution with technological innovation and the consequent emergence of high industrial and commercial establishment, the impact of business transcend the economic society become more and more dependent on the business institution, as employer, innovation neighbor and catalyst social change and advancement of culture. Thus, business becomes a social environment i.e religious, economic, political, legal and cultural.

Koontz et al (1983) “noted” that no question has received more attention by business, government, politician and people in general in the past few years than the question of what the social responsibility of business is. The same question originally aimed at business, is now being addressed with in increasing frequency to government agencies and their leaders universities, non-profit foundation, charitable organization and even churches.

It is in view of this that business are today much more socially responsible than before. Business are interested not just in the quality of goods and service they produce/image and acceptance from the public could mean substantial enhancement of a long run profit. A loss in image could have the opposite effect. 

At this point, it is pertinent to note that some managements decision that become engaged in area of social responsibility can be the result of greater influence and pressure from groups of like labour union, government legislation or interest group of voluntary response to social needs or a combination of all. For example quality control by standard organization of Nigeria (SON) protection of society as a risk from industrial pollution been monitored by Federal environmental protection Agency (FEPA) and quality of petroleum and gasoline monitored by the Department of Petroleum Resources (DPR),all these are social responsibilities as a result of government legislations.

It is vital to mention here that not all business have profit motive. Some business, particularly the statutory corporations before privatization decree emerged were merely concerned with rendering some services to the public.

Ibekwe  (1984) “emphasized” that a Corporate  social responsibility neglected by a business at a particular time, a poor quality good delivered in an alluring package or a right denied the customer on the course of seeking immediate profit could result in loss and corporate image of the business.

However, corporate social responsibility is an aspect of management that is very vital and need to be approached theoretically and empirically in relation to organizational success.

1.2     STATEMENT OF THE PROBLEM

Nigeria business firm conceive and yield to corporate social responsibility at varying degrees. Taking a wider look at firms in different industries, one can easily conclude that many going concerns (Organizations) are not socially  responsible and its impact on business activities, the area of corporate image and profitability, level of a firm. Issues such as corporate social responsibility employed by the organization, also in response to organizational products by the society the effect of such in community development and to wider organizational productivity and competiveness are all encompassed in the formulation of the statement of the problem.

This study is  particularly out to offer recommendations to certain problems which an organization may encounter in future in relation to their environment.

1.3     OBJECTIVES OF THE STUDY

The main objective of the study is to find out the Effect of Corporate Social Responsibility on Organisational performance. Specific objectives were as follows:

1.                 To examine different aspects of Corporate Social Responsibility employed by Organisation.

2.                 To determine the influence of Corporate Social Responsibility on customer responses to Organisational product.

3.                 To find out the effect of Corporate Social Responsibility on community development

4.                 To determine the effect of Corporate Social Responsibility on organisational profitability and competitiveness.

5.                  To make plausible recommendations on how Corporate Social Responsibility could be employed for improved Organisational and Community/National  poverty.

1.4     RESEARCH QUESTIONS

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

i.                   Are Nigerian businesses/ organizations socially responsible?

ii.                 What are the major implications of the methods of production of these Organisations in relation to the Corporate Social Responsibility agenda?

iii.              Are Customers/Stakeholders fully benefited from the Organisations practicing Corporate Social Responsibility? 

iv.              Does Corporate Social Responsibility have a place in the organizational performance and effectiveness?

v.                 What role do  Corporate Social Responsibility of organisation  impact on the workforce/employees?

1.5      RESEARCHHYPOTHESES

This study will be geared towards testing the following theses.

Hypothesis One

1.       Ho:    There is no significant relationship between Corporate Social Responsibility and method of production of an Organisation.

H1: There is significant relationship between Corporate Social Responsibility and method of production of an Organisation.

Hypothesis Two

2.       Ho:    There is no significant relationship between Corporate Social Responsibility and Community Development

H1:    There is significant relationship between Corporate Social Responsibility and Community Development

Hypothesis Three

3.       Ho: There is no significant relationship between Corporate Social Responsibility and Customer retention.

          H1:    There is significant relationship between Corporate Social Responsibility and Customer retention.

          Hypothesis Four

4.       Ho: There is no significant relationship between Corporate Social Responsibility and Organizational competitiveness.

          H1:    There is significant relationship between Corporate Social Responsibility and Organizational competitiveness

1.6     SCOPE / LIMITATION OF STUDY

The study is restricted in scope to the Nestle Nigeria Plc. The study cannot be extended to other organization due to time frame and other relevant data. Also all questions relating to importance and effectiveness of social responsibility cannot be asked all in the questionnaire due to the constraints which will not permit their analysis.

1.7     SIGNIFICANCE OF THE STUDY

The intention of this study is to identify and analyze managerial corporate social responsibility and its impact on organization focus of this study will assist the management of an organization to appreciate importance of being socially to the environment where the business operates. Descriptively, study will review different literature on social and this will be useful to scholars, especially ones in the field of social sciences. 

Empirically, the study will be useful to government, firms and individuals, more so, it can also be a foundation upon which other researchers could emerge. It is within the scope of this study to appreciate that an organization that is already participating in the area of social responsibility has made in the improvement of standard of living of its public.

In addition, it is certain that this study on completion will benefit not only the organization under the study but to all other organization both big and small and the larger society.

          In conclusion, for organizations, not only to seek for profit maximization but also maintaining equitable working balances among some interest group. Hence, understanding that the contribution of a business to the betterment of the society will make it easier for the business to grow, survive and make everlasting profit.

1.8     DEFINITION OF TERMS

Corporate Social responsibility: This can be defined as the way of saying thank you and expressing appreciation to all stakeholders and giving back to the society in the corporate has benefited immensely. Corporate social responsibility (CSR) is also known by a number of other names. These include corporate responsibility, corporate accountability, corporate ethics, corporate citizenship or stewardship, responsible entrepreneurship, and “triple bottom line,” to name just a few. As CSR issues become increasingly integrated into modern business practices, there is a trend towards referring to it as “responsible competitiveness” or “corporate sustainability.”

Organizational Performance: This can be referred to as the function of profitability, growth and the achievement of set goals and objectives by an organization. 

Organization:  Organization can simply be defined as a co- operative social system, involving coordinated efforts two or more people, pursuing a shared purpose. In other words, when people gather and formally agree to combine effort for a common purpose.

Ethics : Is a discipline  that involves rules, regulation, guideline and code of conduct for members of a particular organization so as to ensure healthy practices in such corporation.

Business ethics: Involves what is good and bad, with moral duty and obligation in business.

Stakeholders:  They are group of individual who are affected directly or indirectly by organizations action and decision in the course of operation and they include owners, customers, employees, competitors, suppliers and community.

Consumer affairs: This is the area where majority of participant, respondents indicate high level of involvement.

Marketing: This can be defined as the management process of anticipating, indentifying and supplying customer requirement efficiently and profitably.

Efficiency: The ability to minimize the use of resources in achieving organization objectives “doing things right”

Profit: Organization unit where performance is measured by numerical differences between revenue and expenditure.

Competition: The; situation in which two or more parties are striving towards mutually compatible goals but cannot interfere with each other.

Management: Theprocess of planning, organization, leading and controlling the work of organization members and of using all available organization resources to reach stated organizational goals.  

Customer: Customers are the target market of all corporations who consumes the goods or service rendered by an organization.

Environment: This is an area where the business firm operates.

Corporate Citizenship: Citizenship is membership of a defined territory, city, state or nation. This status demands allegiance and loyalty. It also confers some rights privilege duties and obligations. It is reciprocal relationship. In the same vein, a business organization is a corporate citizen; it is registered by the Corporate

Affairs Commission (CAC) and protected through patent laws and statutory business policies, legal and infrastructural facilities its operation.

1.9     ORGANISATION OF STUDY.

Chapter one focuses on the background of the study where general descriptions of the area of study were discussed. Statement of the problem, Objective of the study, research questions and statement of hypotheses were discussed. The scope and the limitation of the study alongside with the significance of the study were also discussed. Finally, the definition of terms relating to the study also featured.

Chapter two focuses on the review of literature and theoretical framework. Chapter three deals with structural composition where various analysis will be made. Chapter four deals with data presentation, analysis and interpretation and chapter five examines discussion, conclusions, recommendations and suggestions for further studies on the research project executed.

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