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THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITIES ON PROFITABILITY IN NIGERIA BANKING INDUSTRY

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND TO THE STUDY

Corporations around the world are struggling with a new role, which is to meet the needs of the present generation without compromising the ability of the next generations to meet their own needs. Organizations are being called upon to take responsibility for the ways their operations impact societies and the natural environment. They are also being asked to demonstrate the inclusion of social and environmental concerns in business operations and in interactions with stakeholders (Van Marrewijk & Verre, 2003).

Little (2006) maintained that corporate social responsibility initiatives can lead to innovations through the use of social, environmental, or sustainability drivers to create new products and services. Just as a person needs to be a good citizen, contributing to the welfare of the society, corporations need to be good citizens as well. Corporate Social Responsibility (CSR) is the concern shown by business organisations for the welfare of the society.

This study is against the backdrop of the developments in certain parts of Nigeria particularly in the Niger–Delta area. It is obvious that the expectation of positive impact of industrial management on the community has now increased agitations for such concern in certain parts of the country e.g.  the Niger river basin management, under strong pressure contribute to the social economic development of the communities bordering the river Niger area. The same applies to the Benue River.

This study serves as an added contribution to the existing work of other authors that has discussed issues on corporate social responsibility such as Friedman, (2008), McGuire, (1988), Van Marrewijk & Verre, (2003), Dacin, (1997); Larsen, (2000); Reign, (2001); McWilliams and Siegel (2001) as it goes further to examine the impact and how various factors that surrounding corporate social responsibility, how its affect firms’ performance and it is going to be useful for managers in making good decisions

1.2            STATEMENT OF THE PROBLEM

The increasing adoption of corporate social responsibility (CSR) in businesses (SourceWatch, 2008; Sagar and Singla, 2003; Hoffman, 2007) has grown with its corresponding challenges, which may include ethical violations (Aluko et al., 2004;Lantos, 2002), economic dishonesty (Amaeshiet al., 2007), commitment problem(Holmes, 1977), gender complications, controversies and agitations (Marshall, 2007), profit-making problems (Capaldi, 2005; Scott, 2007) and accountability mechanism weaknesses (Brennan, 2008).

According to Osuala (1982:26), the statement of research problem serves to elaborate upon the information implied in the title of the study. Hence in this rearch work, the researcher seeks to investigate the impact of corporate social responsibilities on the performance of some selected manufacturing company in Nigeria to its domain which can in tureen enhance the prospects of the business. Particularly because of the profit factor in business, a lot of organizations have not embraced corporate social responsibility as imperative but recent social developments have shown that this should not be so. Why this should not be so as the significance of the positive attitude of business organizations to corporate social responsibility is the bedrock of this study. It is against the background that this study check to investigate the impact of CSR on the performance of the manufacturing companies in Nigeria in order to close the gap existing in the literature mentioned above.

1.3       OBJECTIVES OF THE STUDY

The main objective of the study is to examine the positive effect of Corporate Social Responsibility on organizational performance in Nigeria. Specifically, this study attempts to:

Ø  To establish a relationship between corporate social responsibility and corporate financial performance of Nestle Nigeria Plc.

Ø  To establish a line of relationship between CSR performance and Corporate Financial Performance i.e. growth, continuity and survival of the Business Corporation.

Ø  To establish a relationship between corporate social responsibility and the standard of living of the people

1.4            RESEARCH QUESTIONS

Ø Is there any relationship between CSR and performance of Nestle Nigeria Plc?

Ø Is there a relationship between CSR and growth, contribution and survival?

Ø  Is there any relationship between CSR and standard of living of people?

1.5        HYPOTHESIS

Based on the research objectives, the hypotheses that have been subjected to test to validate this study include the following:

Hypothesis One

Ho:      There is no significant relationship between Corporate Social Responsibility and organizational performance.

H1:      There is significant relationship between Corporate Social Responsibility and organizational performance.  

Hypothesis Two

Ho:      There is no significant relationship between Corporate Social Responsibility and growth, continuity and survival.

H1:      There is significant relationship between Corporate Social Responsibility and growth, continuity and survival.

Hypothesis Three

Ho:      There is no significant relationship between Corporate Social Responsibility and the standard living of the people

H1:      There is significant relationship between Corporate Social Responsibility and the standard living of the people

 1.6      SIGNIFICANT OF THE STUDY

Campbell 2007, in synthesis, the benefits and advantages that corporations adopting CSR initiatives may obtain are the following: increased employee loyalty; gaining legitimacy and access to marketer; less litigation; increase quality of product and services; bolstering public image and reputation and enhanced brand value; less volatile stock value; avoiding state regulation; and increased customer loyalty.

The justification for carry out this research work cannot be over emphasized. This work will be beneficial to:

To the community/society

Through CSR, job, and better standard of living are provided for the community and changed habit

Capacity building creates wealth and employment

To corporations

Goodwill and community acceptance

Profit, growth, competitive edge and image

Genuine dialog with stakeholders

Spiritual and pride values to their families and employee

The world and environment

Balance ecosystems

Waste management

Clean and green environment

To researchers, Its serve as stepping stone to those who want to conduct research into this topic

Finally, this study has been carried out by the researcher on the premise that such is not common in the field of Accounting which is one important and core area from which the issue of CSR need be observed. At the end of the study, it will be well appreciated after taking into consideration the costs and benefits of the practice.

1.7       LIMITATION OF THE STUDY

The research of this nature is without no hitches or problem. The following are some of the limitation encountered in carries the research work:

Ø  Time factor: As the research work has limited duration to comply with, the researcher limit his research to some Manufacturing Companies of the State he reside

Ø  Limited finance on the part of the researcher is another limitation to the scope of the researcher which make the researcher focus on some manufacturing companies in Ilorin were he reside

Ø  Inadequate data on this topic in the library also serves as limitations of the study

1.8       DEFINITION OF TERMS

Some terms that are central to this research study context, to which clarification need be made to enhance better appreciation of the study and avoid confusion and misconception, have been included and explained as the following:

CSR – Corporate Social Responsibility

Corporate – A member of a large company

Corporation – A term used to describe a large business, company or organization or group of organisations that is recognized by law as a single unit e.g multinational corporation.

Responsibility – Has to do with a duty to help or take care of something or someone.

Ethical Code/Standard – This is connected with morally correct or acceptable beliefs and principles about what is right and wrong. The outlined behaviour expected of business corporations/enterprises.

Manufacturing Company – A business organisation or industry that engage in the production of goods in large quantities in factory for the purpose of making money through the sale of the produced goods (products).

Society – A business immediate and remote jurisdiction where people lives together in community, sharing the same ideas, customs, beliefs and laws.

Corporate Philanthropy – The practice of helping the poor and those in need by a business organisation. It may include charitable donations to non-profit groups of all kinds.

Self-Ombudsmanship – A practice of giving a self-evaluation as to activities performance or execution.

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