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CORPORATE SOCIAL RESPONSIBILITY AND ITS IMPACT IN OPERATIONAL ENVIRONMENT AND BUSINESS PROFITABILITY

CORPORATE SOCIAL RESPONSIBILITY AND ITS IMPACT IN OPERATIONAL ENVIRONMENT AND BUSINESS PROFITABILITY

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CORPORATE SOCIAL RESPONSIBILITY AND ITS IMPACT IN OPERATIONAL ENVIRONMENT AND BUSINESS PROFITABILITY

Chapter one

1.1 Background of Study

Businesses exist primarily to generate profit. The profit motive has frequently been interpreted as indicating a disregard for the other goals of an organisation. However, today’s corporations recognise that in order to remain successful in a fast changing world, they must become socially responsible.

As a result, the conviction that, in addition to producing a profit for shareholders, businesses should serve the interests of all other stakeholders has given rise to the concept of Corporate Social Responsibility (CSR).

Businesses are currently under constant pressure from various stakeholders, such as employee pressures to recognise certain employee rights in the workplace, consumer pressures for the business to withhold price increases and produce safe products

and community and environmental pressures to ensure that the business operation does not jeopardise the safety of the local community (McWilliams and Siegel, 2001). As a result, all of these factors have helped to popularise the concept of CSR among the international business community.

It is worth noting that, despite the fact that the concept of CSR has been around for almost 50 years, there is still no agreement on how to define it. CSR generally refers to company practices based on ethical ideals, legal compliance, and respect for people and the environment (Dahlsrud, 2006).

The World Bank defines CSR as a company’s commitment to contributing to long-term economic development by collaborating with employees, the local community, and society as a whole to enhance their lives in ways that benefit both business and development (Lantos 2001).

CSR is defined as corporate citizenship, which indicates that a corporation should be a good neighbour in its host community (Freeman et al 2010). Carroll (2000) presented a common four-part definition of CSR, arguing that firms have four responsibilities (economic, legal, ethical, and philanthropic) to meet before being deemed good corporate citizens.

CSR, also known as sustainability development, requires an organisation to consider the economic, environmental, and social implications of its actions (Grey, Owen, and Adams, 1996).

Sustainability development can be defined as the process of holding stakeholders accountable for the goals of saving the earth and people while profiting from it (GRI, 2010).

The triple bottom line, coined by John Elkington of Sustainability UK, refers to the environmental, social, and economic aims of CSR (Sustainability development).

However, in accordance with the preceding exposition, the purpose of this paper is to conduct an in-depth study on Corporate Social Responsibility (CSR) to determine the rate of its implementation and actualisation by companies (both domestic and foreign) that use the country’s resources to achieve their set objectives.

1.2 Statement of Problems

CSR has been a source of contention in Nigeria’s Niger Delta region, particularly in Akwa Ibom State, where oil is produced and refined. The relationship between oil companies and some of their host communities has been strained due to differing perceptions of the role that oil companies are expected to play in their host communities’ development, as well as the extent of environmental degradation that they have caused.

On the one hand, the host communities argue that oil firms aren’t doing enough given the quantity of oil riches taken from their territory. On the other hand, oil firms believe they are doing enough and have even gone beyond the scope of typical corporate social responsibility.

Oil firms, such as Chevron, claimed to have conducted various projects in host communities as part of their Corporate Social Responsibility. The claims include the construction of hospitals, roads, and schools, the provision of portable water and power, sponsorship, scholarships, and supportive health promotion activities, among others.

However, the host communities in the Niger Delta appear to have rejected these praised community development efforts by oil firms, since they maintain their hostility towards the companies (Alabi, 2012).

The CSR policy was therefore intended to calm the host communities and alleviate their sufferings while also creating a tranquil and conducive operational environment for oil firms to continue their activities and expand their profits.

1.3 PURPOSES OF THE STUDY

The overarching goal of this study is to investigate the influence of CSR on Exxon Mobil’s profitability in Nigeria. Specifically, the study aims to:

Determine the impact of CSR on the financial performance of Exxon Mobil Nigeria, specifically, and other oil and gas firms operating in Nigeria in general.

To identify the reasons preventing cooperative social responsibility in Exxon Mobil.

Examine the extent to which corporate operations mitigate the impact of CSR on the financial performance of Exxon Mobile Nigeria, in particular, and other Nigerian oil and gas firms in general.

To determine how Exxon Mobil can be more socially responsible to its host communities.

1.4 RESEARCH QUESTIONS.

The study aimed to answer the following questions:

What impact does CSR have on the financial success of Exxon Mobil Nigeria, in particular, and other Nigerian oil and gas firms in general?

To what extent can the government create mechanisms to promote Exxon Mobil’s corporate social responsibility in Nigeria?

How does the size of Exxon Mobil’s operations effect its CSR and financial performance?

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