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THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON PERFORMANCE OF SELECTED MANUFACTURING FIRM

THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON PERFORMANCE OF SELECTED MANUFACTURING FIRM

 

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND TO THE STUDY

There has been numerous academic research on whether Corporate Social Responsibility (CSR) is financially beneficial to firms, with mixed numerous findings. It should be a primary concern that firms should seek for the betterment of the environment or society in which they operate. In the olden days, businesses were mostly being operated with the idea of making profits and existing into the unforeseeable future. Gradually, it has changed dramatically and has shifted attention to responsibilities that firms have. Interestingly, high profile firms are implementing Corporate Social Responsibility (CSR) concepts such as public commitment to standards, community investment, continuous improvement, stakeholder engagement and corporate reporting on social and environmental performance. For many years, scholars have learnt firms’ public concerns (e.g., Berle, 1931; Bowen, 1953; Davis, 1960; Dodd, 1932; Frederick, 1960). Still, it is only currently that attraction in corporate social responsibility has become extensive (Serenko & Bontis, 2009; Wagner, Lutz, & Weitz, 2009).

Researchers and experts have been striving to establish and agreed upon definitions of the concept of corporate social responsibility for over 30 years.   social responsibility refers to businesses’ “decisions and actions taken for reasons at least partially beyond the firm’s direct economic or technical interest.”

According to   Walton (2011)   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 bodies 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 obligation 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 devotion recently given to corporate social responsibility (CSR) in Nigeria, an area of concern still remain organisations in the manufacturing sector. Most manufacturing organisations  such as Nigeria mill company calabar 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 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 niger mill 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 impact of   of corporate social responsibility in the Nigerian manufacturing industry, a case study of Niger Mill Plc. Specifically, the study is designed to:

  1. Investigate how corporate social responsibility influences organisational reputation 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 do not practice corporate social responsibility in the Niger mill PLC
  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.
    • 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 project there are four specific research questions coined after the statement of the problem and they are listed below.

  1. Are there differences between 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;

SCOPE   OF THE STUDY

The focus of this research would encompass the impact of corporate social responsibility on the performance of niger mill.  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 Niger Mill Plc. The perceptions of some key players of the industry shall be sought for the purpose of this research work.

 

LIMITATION OF THE STUDY

 

1.8     SIGNIFICANCE OF THE STUDY

The importance of this project 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 Cross river 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?

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