The Effect of Corporate Social Responsibility on the Performance of Business Organisation

The Effect of Corporate Social Responsibility on the Performance of Business Organisation (A Study of Globacom)

CHAPTER ONE

INTRODUCTION

1.1 Background To The Study

Academics and practitioners have been striving to establish an agreed-upon definition 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).

In today’s dynamic business environment, corporate organizations are faced with the need to impact positively on the host communities, by taking upon themselves certain responsibilities to increase their societal and environmental influence. Organizations also included social and environmental concerns in business operations rather than focusing on profit-making only. Organizations have developed a variety of strategies for dealing with this intersection of societal needs, the natural environment, and corresponding business imperatives concerning how deeply and how well they are integrating social responsibility approaches into both strategy and daily operations worldwide.

Many organizations 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 labor 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 organizations to put as one of their mission statements the provision of corporate social responsibility. The organizations must have realized 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 organizations is a mere facade. It is widely believed by many that corporate social responsibility efforts are mere campaigns by organizations to promote corporate brands. Many Nigerians are ignorant of corporate social responsibility; hence, whenever an organization does something ‘supposedly big’ for 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) program. Onwuegbuchi (2009) in his studies on corporate social responsibility among manufacturing firms reported that most manufacturing companies in Nigeria embarked on corporate social responsibility programs for philanthropic gestures and government and public appraisal. He further stated that some manufacturing companies applied environmental and labor 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, community and stakeholders benefits.

The problems of the environment in which an organization 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 must consider the interests of customers, employees, shareholders, and 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 remain organizations in the telecommunication sector. Most telecommunication organizations 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 purposes.

Another lacking area on corporate social responsibility is that most of the studies on corporate social responsibility were conducted in nations with developed economies and their findings were found not to apply to some developing nation’s economies like Nigeria. Therefore, this study will examine the problems and prospects of corporate social responsibilities in Nigeria using the telecommunication industry case study Globacom. Ironically, these organizations 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 theses such as this, publication, media publicity, campaigns, and awareness emphasizing 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 telecommunication industry. Specifically, the study is designed to:

1. Investigate how corporate social responsibility (corporate social responsibility) influences organizational reputation in the Nigerian telecommunication industry.

2. Cross-examine the difference between the level of perceived customers’ patronage and brand loyalty among companies that practices corporate social responsibility and organizations that do not practice corporate social responsibility in the Nigerian telecommunication industry.

3. Analyse how corporate social responsibility adoption influences organizational performance and profitability.

4. Assess the economic, social, and environmental factors influencing corporate social responsibility (corporate social responsibility) adoption among telecommunication companies in Nigeria.

1.4 Research Questions

The telecommunication 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 telecommunication companies. It should not have to be forced on organizations 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 honoring of a triple bottom line of people and profit-making.

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

1. Are there differences between the level of perceived customers’ patronage and loyalty among companies that practice corporate social responsibility and those that do not practice corporate social responsibility in the Nigerian telecommunicating industry?

2. To What extent would corporate social responsibility adoption influence organizational 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 telecommunicating companies in Nigeria?

1.5 Research Hypotheses

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

Hypothesis I

H0: Corporate social responsibility (corporate social responsibility) does not influence organizational reputation in the Nigerian telecommunication industry.

H1: Corporate social responsibility (corporate social responsibility) influences organizational reputation in the Nigerian telecommunication industry.

Hypothesis II

H0: There is no significant difference between the level of perceived customers’ patronage and loyalty among companies that practices corporate social responsibility and those that don’t in the Nigerian telecommunication industry.

H1: There is a significant difference between the level of perceived customers’ patronage and loyalty among companies that practices corporate social responsibility and those that don’t in the Nigerian telecommunication industry.

Hypothesis III

H0: Corporate social responsibility adoption does not influence organizational performance and profitability.

H1: Corporate social responsibility adoption influences organizational performance and profitability.

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 a descriptive survey method. Therefore, a cross-sectional research design is used to design the methodology. The premise for this research method is that 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 (telecommunicating companies in Lagos state) that make up the population of study there are similarities and therefore a study of a 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 a 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 is the telecommunicating companies in Lagos State, but due to the large number of telecommunicating companies located in the State, The selected organization that will be considered for this study is Globacom. Primary data will be gathered through a questionnaire administered among randomly selected employees of the selected companies. The data will be analyzed using frequency and percentage tables and a descriptive analysis will be carried out using a software package for statistical analysis tool.

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 corporations shall be examined in financial performance, employee commitment, and community development. The study shall focus on the Nigerian telecommunication industry case study of Globacom. The perceptions of some key players in the industry shall be sought for this research work.

Due to the limited time of the study and the choice of using the questionnaire method, this research does not include an extensive benchmark of corporate social responsibility practices in the Nigerian telecommunication industry but is restricted to a few organizations situated in Lagos, Nigeria. Though the study uses vital insider information from these organizations, confidentiality of names, data, facts, and figures was 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 project is not just to analyze the practice of corporate social responsibility but to understand the current practice, and the level of understanding of corporate social responsibility by telecommunication organizations in Lagos state about 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 organization. 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 a 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 the scope of the study.

Chapter two reviews related literature on problems and prospects of corporate social responsibility in the Nigerian telecommunication industry. It looks at different authors’ definitions of corporate social responsibility and its activities that affect organizations’ reputation, customers’ patronage, and brand loyalty. Chapter two examines corporate social responsibility adoption influences organizational 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 analyzed and research hypotheses will be tested with a chi-square statistical test.

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

1.10 Definition Of Terms

Commitment: Commitment as defined in this study means when an employee pledges his loyalty to an organization. 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 organization operates. They are a group of people having a religion, race, profession, or another particular characteristic in common.

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

Performance: Performance is how an organization functions, operates,s or behaves in society.

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

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

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