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PROBLEMS AND PROSPECTS OF CORPORATE SOCIAL RESPONSIBILITY OF NIGERIAN MANUFACTURING INDUSTRY
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”.
In today’s dynamic business environment, corporate organisations are faced with the needs to impact positively on the host communities, by taking upon themselves certain responsibilities in order to increase their societal and environment influence. Organisations also included social and environmental concerns in business operations rather than focusing on profit making only. Organisations have developed a variety of strategies for dealing with this intersection of societal needs, the natural environment, and corresponding business imperatives with respect to how deeply and how well they are integrating social responsibility approaches into both strategy and daily operations worldwide.
Many organisations such as banks and some manufacturing companies in Nigeria are driven by the need to make more and more profits and that is the sole aim of every business. In a bid to meet this target, some companies do not adequately respond to the needs of host communities, employees’ welfare (cheap labour often preferred), environmental protection and community development. Research has shown that corporate social responsibility can increase profitability, sustainability, integrity and reputation of any business that includes it in its policy.
Nkanga (2007) posited that corporate social responsibility involves the commitment shown by companies to contribute to the economic development of a local community and the society at large. The adoption of corporate social responsibility policy should not be driven or motivated by increased profit. Rather, giving back to the society that gave to the business first should be the motivating factor. It is a common practice by Nigerian organisations to put as one of their mission statements the provision of corporate social responsibility. The organisations must have realised that stating corporate social responsibility as one of their mission statements hold special appeal to the stakeholders. Hence, there is an increasing awareness and recognition accorded corporate social responsibility by corporations.
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.Manufacturing companies 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 manufacturing firms reported that most manufacturing companies in Nigeria embarked on corporate social responsibility programme for the purpose philanthropic gesture and for government and public appraisal. He further stated that some manufacturing companies applied environmental and labour standards that suit them to satisfy basic requirements of the laws of the country.
The Nigerian government should ensure that manufacturing companies’ 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, anarea of concernstill remainorganisations in the manufacturing sector. Most manufacturing organisations still do not see any reason for corporate social responsibilitypolicy 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 manufacturing industry 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 the Nigerian manufacturing industry. Specifically, the study is designed to:
1. Investigate how corporate social responsibility (corporate social responsibility) influences organisationalreputation in the Nigerian manufacturing industry.
2. Cross-examine the difference between level of perceived customers’ patronage and brand loyalty among companies that practices corporate social responsibility and organisations that donot practice corporate social responsibilityin the Nigerian manufacturing industry.
3. Analyse how corporate social responsibility adoption influences organisational performance and profitability.
4. Assess the economic, social and environmental factors influencing corporate social responsibility (corporate social responsibility) adoption among manufacturing companies in Nigeria.
1.4 RESEARCH QUESTIONS
The manufacturing industry 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 manufacturing companies. 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 specific research questions coined after the statement of the problem and they are listed below.
1. Are there differencesbetween level of perceived customers’ patronage and loyalty among companies that practices corporate social responsibility and those that do not practice corporate social responsibility in the Nigerian manufacturing industry?
2. What extent would corporate social responsibility adoption influence organisational performance and profitability?
3. What are the economic, social and environmental factors responsible for the poor performance of corporate social responsibility (corporate social responsibility) adoption among manufacturing companies 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;
H0: Corporate social responsibility (corporate social responsibility) does not influence organisational reputation in the Nigerian manufacturing industry.
H1: Corporate social responsibility (corporate social responsibility) influencesorganisational reputation in the Nigerian manufacturing industry.
H0: There is no significant difference between level of perceived customers’ patronage and loyalty among companies that practices corporate social responsibility and those that doesn’t in the Nigerian manufacturing industry.
H1: There is a significant difference between level of perceived customers’ patronage and loyalty among companies that practices corporate social responsibility and those that doesn’t in the Nigerian manufacturing industry.
H0: Corporate social responsibility adoption does not influence organisational performance and profitability.
H1: Corporate social responsibility adoption influences organisational performance and profitability.
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 (manufacturing companies 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 manufacturing companies in Lagos State, but due to large number of manufacturing companies 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 manufacturing industry. The perceptions of some key players of the industry 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 manufacturing industry, 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 manufacturing 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 manufacturing industry. It looks at different authors’ definitions of corporate social responsibility and its activities affects organizations’ reputation, customers’ patronage and brand loyalty. Chapter two examines corporate social responsibility adoption influences organisational performance 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.
Carpenter, T. Andrew,A.D., Da-silva, B. (2010): Corporate Social Responsibility in India- An Empirical Research.
Davis, T. (1960). Corporate Social Responsibility and organizational Profitability. J. Econ. Soc. Res.3(1):113-124.
Eells, S and Walton, T (1961). The path to corporate responsibility, HBR, December 2004, pp. 125-132.
Onwuegbuchi, D.K. (2004). “The relationship Between Perceptions of corporate citizenship and Organizational Commitment.” Business and society, Vol. 43 no. 3: pp 296-319, Sage Publications.
Nkanga, E. (2007). Nigeria: Telecom Operators and Corporate Social Responsibility. This Day, 31st Jan, 2007.
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