IMPACT OF SOCIAL RESPONSIBILITY ON ORGANIZATIONAL PERFORMANCE

CHAPTER ONE

INTRODUCTION

1.1    Background to the Study

An organization may be profit oriented or non-profit oriented. The fact remains that every organization is made up of four basic resources (i.e. man, material, money and machinery) and its environment.

According to Weirich and Koontz (1987) management is a process of designing and maintaining an environment in which individuals working together in groups, efficiently accomplish selected aims. The term ‘environment’ in this definition refers to both internal and external environment. All organization have a two point agenda to improve qualitative (the management of people and processes) and quantitatively (the impact on society). The second is as important as the first and stakeholders of every organization are increasingly taking an interest in “the other circle” – the activities of the organization and how these are impacting the environment and society.

Social responsibility is an ethical ideology or theory that an entity be it an organization or individual, has an obligation to act to benefit society at large. Social responsibility is a duty every individual or organization has to perform so as to maintain a balance between the economy and the ecosystem. The term “corporate social responsibility” (CSR) came into common use in the late 1960s and early 1970s after many multinational corporations formed the term stakeholder meaning those on whom an organization’s activities have an impact. It was used to describe corporate owners beyond shareholders as a result of an influential book by R. Edward Freeman, Strategic Management; a stakeholder approach in 1984. CSR is one of the newest management strategies where organization’s try to crate positive impact on society doing business.

Corporate social responsibility which is also known as corporate citizenship, corporate responsibility or corporate social performance is a form of corporate self-regulation which is integrated into a business model. Corporate social responsibility tends to operate as a built-in, self-regulating mechanism under which a business will monitor and ensure its compliance with law, international norms and ethical prescriptions (Institute of Chartered Accountants of Nigeria [ICAN], 2010). A business or organization assumes responsibility for the impact of its activities on the environment. Thus, CSR is a process with the aim to embrace responsibility for the organization’s actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all the members of the public sphere who may also be considered as stakeholders succinctly a business or organization ahs to proactively promote the interest of the public through voluntarily avoiding activities which are harmful, regardless of legality.

According to Business for Social Responsibility, Corporate Social Responsibility (CSR) is defined as operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business. On the other hand, the European commission hedges its bets with two definitions wrapped into one; CSR is a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. A concept whereby organizations integrate social and environmental concerns in their business operations and their interaction with their stakeholders on a voluntarily basis. Each of these definition when reviewed broadly agree that CSR now focuses on the impact of how you manage your core business. However some go further than others in prescribing how far organizations beyond managing their own impact into the terrain of acting specifically outside of that focus to make of contribution to the achievement of broader societal goals.

1.2    Statement of the Problem

It is quite unfortunate that there is no clear-cut definition of what corporate social responsibility (CSR) comprises. Every organization ahs different CSR objectives, though the motive is the same. But it becomes more complex and depicts a key difference, when many business managers (leaders) feel that their organizations are ill-equipped to pursue broader societal goals, and activists argue that organization have no democratic legitimacy to take such roles.

Critics have argued that corporate social responsibility distracts from the fundamental economic role of business, others argue that it is nothing more than superficial window-dressing; others argue that it is an attempt to pre-empt the role of government as a watching over powerful tricorp corporations. Therefore, a trade off always exists between economic development in the material sense, and the welfare of the society and environment. To sustain he equilibrium between the two, the researcher deem it necessary to assess the impact of social responsibility on organizational performance of Ecobank Plc, Kadpoly branch, Kaduna.

1.3    Objectives of the Study

i)            To assess the effect of social responsibility on organization’s productivity.

ii)          To help Ecobank Plc, Kadpoly – Kaduna sustain the equilibrium between corporate economic development and the welfare of its environment and society.

iii)        To enumerate the benefits of corporate social responsibility on organizational performance in the long run.

iv)         To identify the social responsibility efforts of individuals towards the success of collective group of corporate social responsibility.

v)           To ascertain the ethical involvement and commitment of Ecobank Plc Kaduna in social responsibility strategy and ideology.

vi)         To assist Ecobank with rational information on concept of responsibility to be imbibed in its corporate organization’s activities.

vii)       To bring to limelight the use of ethical decision making strategy in securing organization’s business/interest by making decisions that allow for government agencies to minimize their involvement with the corporation.

viii)     To also assist preventing and condemning the use of social responsibility as a tool for superficial window-dressing mechanism.

1.4    Statement of Hypotheses

According to ICAN (2006), hypothesis is a statement of logical guess, which reflects the possibility in the occurrence of an event under investigation. In an attempt to reach a rational inference on the research problems identified, the following hypotheses have been formulated:

H0:    Effective and efficient social responsibility strategy does not enhance the productivity level of an organization.

H1:    Effective and efficient social responsibility strategy enhanced the productivity level of an organization.

1.5    Significance of the Study

The research work will help in bridging the gap between corporate economic development of Ecobank Plc, Kaduna and the welfare of its environment and society at large.

This study when applied will contribute immensely to organizational performance of Ecobank Plc, Kaduna both in the short-run and long-run.

This research work when applied appropriately will promote and enhance the self-regulation strategy of social responsibility, thus reduce government regulations and involvement in the business of organizations.

This study when fully adopted will be of great importance to customers, society and environment in which Ecobank, Kadpoly Kaduna operates since its social responsibility impact will influence the lives of these customers and society positively.

This research project when fully implemented will find the interstices of win/win solutions among organization’s stakeholders in a mutually beneficial manner.

It is the researcher’s believe that at the end of this research work, the findings, conclusion and recommendations arrived at will be instrumental in the social responsibility policy of Ecobank Plc, Kaduna.

This study will also add to existing body of knowledge on the subject matter, thus serve as a reference material or future studies on the topic of discussion.

1.6    Scope of the Study

This study encompasses the impact of social responsibility on organizational performance with special reference to Ecobank Plc, Kadpoly branch, Kaduna.

1.7    Limitation of the Study

In the course of this research work, the researcher is faced with the challenge of time-limit and financial inadequacy as major constraint factor. But, to God almighty as his timely intervention provides a suitable panacea and succor arrested the situation.

1.8    Historical Background of Ecobank Plc, Kaduna

Ecobank Transnational Incorporated (ETI) a public limited liability company was established as a bank holding company in 1985 under a private sector initiative spearheaded by Federation of West African Chambers of Commerce and Industry with the support of ECOWAS. In the early 1980s, the banking industry in West Africa was dominated by foreign and state-owned banks. There were hardly any commercial banks in West Africa owned and managed by the African private sector. ETI was founded with the objective of filling this vacuum.

The Federation of West African Chambers of Commerce promoted and initiated a project for the creation of a private regional banking institution in West Africa. In 1984, Ecorpromotions S.A. was incorporated. Its founding shareholder raised the seed capital for feasibility studies and the promotional activities leading to the creation of ETI.

In October 1985, ETI was incorporated with an authorized capital of US$100 million. The initial paid up capital of US$32 million was raised from over 1,500 individuals and institutions from West African countries. The largest shareholder was the ECOWAS fund for Cooperation, Compensation and Development (ECOWAS Fund), the development finance arm of ECOWAS. A headquarters agreement was signed with the government of Togo in 1985 which granted ETI the status of an international organization with the rights and privileges necessary for it to operate as a regional institution, including the status of a non-resident financial institution. ETI commenced operations with tis first subsidiary in Togo in March, 1988.

Mission and Vision

The dual objective of Ecobank Transnational Incorporated (ETI) is to build a world-class pan-African bank and to contribute to the economic and financial integration and development of the African continent.

The Ground Story

Today, Ecobank is the leading pan-African bank with operations in 32 countries across the continent, more than any other bank in the world, it currently operates in countries in West, Central, East and Southern Africa namely Angola, Benin, Burkina Faso, Burundi, Cape verse, Cameroon, Central African Republic, Chad, Congo Brazzaville, Democratic Republic of Congo, Cote d’Ivoire, Equatorial Guinea, Gabon, Ghana, The Gambia, Guinea, Guinea Bissau, Kenya, Liberia, Malawi, Mali, Niger, Nigeria, Rwanda, Sao Tome & Principe, Senegal, Sierra Leone, Tanzania, Togo, Uganda, Zambia and Zimbabwe. The Group also has a licensed operation in Paris and representative offices in Johannesburg, Dubai and London.

Ecobank Today

Ecobank is the leading pan African banking group in Africa with a presence in more African countries than any other bank. In all the markets in which we operate, we are recognized as one of the leading banks, providing a full range of wholesale, retail, commercial, investment and transaction banking services and products. To achieve thus, we have implemented an international technology and Shared Services Centre in Accra to provide standardized and automated transaction processing on a 24/7 basis to all affiliates of the Ecobank Group. The centre also has an integrated telecoms network which provides 24/7 connectivity, thus ensuring reliability of its products and services. Our range of banking products and services to individuals and corporate includes:

* Current Account * Personal loan * LCs and Bills for Collections * Savings Account * Car and motor loan ** Transfer and payments * Cards * Mortgages (Home Loan) * Foreign Exchange *Deposit Account * Business Loan * Western Union

Our customers include governments and government agencies, multinational, regional, multilateral and financial institutions, local companies and medium, small and micro enterprises and consumers.

As a group, our strategy is to build scale through organic growth and acquisitions; grow our businesses in existing markets and expand into new markets, product and customer segments and, deliver improved efficiency through operational and product excellence and superior customer service. To achieve thus, we have established “One bank everywhere you go” Ecobank operates as “One bank” with common brand, standards, policies and processes, which means you get a consistent and reliable service across its network of over 600 branches, offices and over 600 alliances locations.

Our objective is to create superior shareholder value in 2014. Above all, Ecobank enforces management standards and policies in the areas of ethics, anti-money laundering, conflict of interest and corporate governance. These policies and standards are periodically reviewed to reflect local requirements and changes in international practices. Ecobank, today is considered by customers and investors as the leading pan-African bank.

1.9    Definition of Terms

Corporate Governance: Is defined as “the set of mechanisms through which outside investors are protected from expropriation by insiders (including management, family interests and/or governments)” (Nganga, Jain & Artivor, 2003).

Corporate Social Responsibility: “Is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large” (Home & Watts, n.d).

Ethics: Are morale that delineates expectation for social behaviour according to contemporary conventional norms within a society, social class, group or organization.

Strategy: Is the act of mapping out best way of achieving an objectives through calculated and systematic programme.

Window-Dressing: Also known as creative accounting or cosmetic financial reporting is the situation/act of deliberately or intentionally falsifying accounts with the views of overstating performance of a business.