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EFFECTS OF CORPORATE SOCIAL RESPONSIBILITY ON PROFITABILITY AND CORPORATE IMAGE OF A PRIVATE ORGANIZATION

CHAPTER ONE

INTRODUCTION

1.1       BACGROUND TO THE STUDY

All organizations exists in complex relationship witah elements in their external environments. Corporate social performance is therefore an obligation of organization to act in ways that serve both its own interest and that of its many external public. These publics are considered stakeholder persons, and groups who are affected in one way or the other by the activities of an organization. They are people affected in one way or the other by its commitment to social responsibilities (Ogbuechi, 1998)

Corporations have grown larger and more powerful that their influence have become more pervasive thus creating an imbalance which is likely to have been instrumental in generating a movement to promote more socially conscious business performances. (Holmes 1977).

Andrew (1977) described social responsibilities as the intelligent and objective concern which restrains individuals or corporate behavior from destructive activities no matter how immediately profitable but rather direct their positive contribution to human betterment.

Ogbuechi (1998) submitted that an organization is meeting its economic responsibility when it earns profit through the provision of goods and services desired by customers. Legal responsibilities are fulfilled when an organization operates within the law and according to the requirements of various external regulations. Ideally, economic responsibility is met in a legal responsible manner.

Luttan and Hodget (1976) submitted that a classis discussion of corporate social performance is the obligation of a businessman to pursue those policies, to make decisions or to follow those lines of action which are desirable in terms of objectives and values of the society.

Imosili (1985)said that the major limitations of these conceptions about corporate social performances are the failure to make into account organizations ability to become ‘missionaries’. There is a wide spread acceptance of the idea that corporations should exhibit socially responsible behavior, there is however a wide disagreement about how they should go about it.

Lawal (1993) therefore concluded that social responsibility is a nebulous concept that has been described in a number of ways. He said that most writers on social responsibility see the concept as the disposition of organizations to exhibit ‘missionary’ rather that ‘mercenary’ attitudes towards the society.

1.2      PROBLEM STATEMENT

Question regarding ethnics and social responsibility have always surfaced in the discussions pertaining to the activities of corporations in emerging market such as Nigerian. Giving the size of the Nigerian economy as well as the enormous potentials it offers, it has become increasingly necessary to promote higher ethnical standards among leaders of major Nigeria corporations as the global awareness of ethnical and corporate responsibilities issues is continually increasing the conduct of business transaction, efficiency and effectiveness in technocratic terms is no longer sufficient to preserve the accept ability of the Nigerian mangers in the global market place, but may have to include issues of ethnical and corporate social integrity considerations. Though there is yet no universal morality standard, ethical and social must become and integral part of decision making process of Nigeria managers. This decisions making must include every aspect of managing the business including production, marketing, financial, legal and human resource.

1.3      PURPOSE OF STUDY

The study seeks to evaluate corporate social performance by identifying those areas of commitment of business organizations in Nigeria with particular reference to manufacturing firms.

The study will also examine the relationship between social responsibility practice and organization performance. It is to analyze and discuss the result of findings with a view to giving useful suggestion on how organizations can better put their social awareness programmes into profitable practice.

The study will also examine the impact of organizations involvement in social responsibility practice as it affects their profitability level and corporate image.

1.4      RESEARCH QUESTIONS & HYPOTHESES

RESEARCH QUESTIONS: The following research question and hypothesis shall be examined so as to provide the foundation for the study.

QUESTIONS:

1.     Is there any significant relationship between organizations to social performance and profitability?

2.     Is there any significant relationship between organizations to social performance and corporate image?

3.     Is there any significant relationship between organization to social performance and organizational effectiveness?

RESEARCH HYPOTHESIS

1.     Null Hypothesis (Ho): There is no significant relationship between corporate social performance and organizational effectiveness.

Alternative Hypothesis (Hi): There is significant relationship between corporate social performance and organizational effectiveness.

2.     Null Hypothesis (Ho): There is no significant relationship between corporate social performance and organizational profitability.

Alternative hypothesis (Hi): There is significant relationship between corporate social performance and organizational profitability.

3.     Null Hypothesis (Ho): There is no significant relationship between social performances and organizational profitability.

Alternative Hypothesis (Hi):There is significant relationship between corporate social performances and organization corporate image.

1.5      SCOPE AND LIMITATIONS OF THE STUDY

The scope of this study is restricted to a select few manufacturing firms in Lagos and Jos where the respondents shall be randomly selected. This can be attributable to the major constraints of the study such as inability to go round all the manufacturing firms, time constraints as well as financial implications. Hence the generalization of the study will be restricted. The study will however provide the required foundation for further studies.

1.6      SIGNIFICANCE OF THE STUDY

The result of the findings and recommendations would benefit and guide organizations by highlighting different areas where they can be socially responsible; and measuring the impact of social responsibility. In addition it will demonstrate how social responsibility can be converted to opportunity thereby improving on corporate image and ensuring long-run profitability for the organization.

1.7      DEFINITION OF TERMS

The following terms may be understood thus, as used by me in the study.

CORPORATE IMAGE: This is an intangible possession that distinguishes and enable a business organization to continually earn profit in excess of the normal profit earned by business of similar type.

BUSINESS ETHICS: This is a system of moral principles and behavior and their application to particular problems or conduct as it relates to business.

ORGANIZATION: A firms physical structure or a structural system of rules, regulations and functional relationship designed to carry out a firm’s policies and programs.

ORGANIZATIONAL PERFORMANCES: This is defined as a function of profitability, survival and growth. It could also be defined as the achievement of a particular goal or objective.

ORGANIZATIONAL SURVIVAL: This is a situation where a business firm would always keep its head above the water i.e. it will continue to earn profit through the provision of goods and services irrespective of the economic conditions.

SOCIAL RESPONSIBILITY: This is an intelligent and objective concern for the welfare of the society.

ORGANIZATIONAL PROFITABILITY: This is the rate at which organization revenue generated from sales exceed production cost, overhead and prime cost.

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