EFFECT OF CORPORATE SOCIAL RESPONSIBILITY ON ORGANIZATIONAL PERFORMANCE
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EFFECT OF CORPORATE SOCIAL RESPONSIBILITY ON ORGANIZATIONAL PERFORMANCE
Chapter one
INTRODUCTION
1.1 Background of the Study
Companies (Business Organisations) have failed to fulfil their duties over time. They have not had a good impact on their immediate settings, let alone the country in which they operate.
They pay their employees unlivable wages, shareholders’ dividends are either accumulated or not paid at all, taxes are evaded, customers are duped through poor services,
inferior products, and high prices, unwholesome competition is engaged in, operational guidelines and institutional ethics are circumvented, and other heinous and covert activities are carried out.
They appear to be unaware of their responsibilities; some businesses operate and profit handsomely while the communities in which they operate are left in ruins and degradation, and the people have improvised, with traumatised and frustrated young people becoming hostage takers, social miscreants, and consummate criminals.
In another instance, some commercial organisations wish to demonstrate their generosity. They glorify themselves by constant media coverage and propaganda to promote their unnecessary charity efforts.
It is important to highlight that CSR is a constantly growing concept with no universally agreed definition. In general, CSR is defined as the transparent and accountable integration of social, environmental, and economic concerns into firms’ values, culture, decision making, strategy,
and operations, resulting in better practices within the firm, wealth creation, and societal improvement. As the importance of sustainable development grows, the question of how the corporate sector approaches it becomes a part of CSR.
According to the World Business Council for Sustainable Development, CSR is a company’s contribution to long-term economic development. Building on a base of compliance with legislation and regulations, CSR typically includes “beyond law” commitments and activities pertaining to:
corporate governance and ethics, health and safety; environmental stewardship; human rights (including core labour rights), sustainable development, working conditions (including safety and health, hours of work, wages), industrial relations; community involvement, development, and investment; involvement of and respect for divers.
Measures, accountability, transparency, and performance reporting; and supplier relationships for both domestic and foreign supply chains.
In general, CSR is defined as the transparent and accountable integration of social, environmental, and economic concerns into firms’ values, culture, decision-making, strategy, and operations, resulting in better practices within the firm, increased wealth, and improved society.
These parts of CSR are usually interrelated and interdependent, and they apply to businesses wherever in the world. It is also vital to remember that there are two distinct drivers for CSR. One pertains to public policy.
Because the business sector has such far-reaching consequences, both positive and negative, it is reasonable for governments and the general public to be concerned about what it does.
This means that expectations of businesses are increasing; governments will look for measures to improve the beneficial contribution of business. The second driver is a commercial driver.
CSR considerations can be viewed as both costs (e.g., implementing new approaches) and benefits (e.g., increasing brand value or offering products that fulfil sustainability needs). The remainder of this guide focuses on the second of these drivers.
CSR is a core management concern since businesses play an important role in creating jobs and wealth in society, as well as making optimal use of natural capital.
It enables businesses to manage risks proactively while also capitalising on opportunities, particularly in terms of corporate reputation and stakeholder engagement.
The latter can include shareholders, employees, consumers, communities, suppliers, governments, non-governmental organisations, international organisations, and others impacted by a company’s operations.
Above all, CSR is about being aware of the context—both societal and environmental—and its implications for performance. It is about transitioning from announced objectives to practical and observable activities with measured societal consequences. Performance reporting is an integral aspect of transparent, responsible, and hence trustworthy business behaviour.
There is a high risk of complications if stakeholders believe a company is participating in public relations but cannot demonstrate actual activities that result in real social and environmental advantages.
CSR can engage a diverse set of stakeholders:Stakeholders in a corporation may include shareholders, non-governmental organisations, commercial partners, lenders, insurers, communities, regulators, intergovernmental bodies, consumers, employees, and investors.
Furthermore, corporate social responsibility refers to an organization’s obligation to evaluate the influence of its operations and business practices on not only stakeholders but also customers and communities in which it works.
In other words, corporate social responsibility is a way to convey gratitude and appreciation to all business stakeholders. This guarantees or improves the performance of any organisation.
The ethics of corporate enterprises, the social role that firms must perform, and the extent of responsibility that corporations bear to society have all received increased attention.
In the 1980s, it became evident that far-reaching reforms in this century were, for the most part, required. As a new relationship between business and society emerged.
The traditional ethic of “caves emptor” (let the buyer beware) has gradually eroded into a new concept of corporate social responsibility.
In the meantime, many individuals, including many managers, believe that, in addition to their responsibility to the organisations they serve, they have a personal responsibility to society.
Essentially, the profit motive is at the root of every business’s success, and the profit motive is what drives shareholders to buy shares and private capital owners to spend their cash.
The profit motive drives the production of goods and services, and the profits earned secure the business’s survival and expansion. This does not imply that quick profit should be the only consideration.
Business organisations are commonly referred to as economic institutions, which are collections of human and material resources used for profit-making economic production. In a broader sense, the term “business” refers to trade or commerce, which is the practice of buying and selling.
These conceptions of business were more appropriate in the nineteenth century prior to the industrial revolution. With technological innovation and the subsequent emergence of high industrial and commercial establishments, the impact of business transcended economic society and became increasingly dependent on the business institution as an employer,
innovation neighbour, and catalyst for social change and cultural advancement. As a result, business becomes a social environment in terms of religion, economics, politics, law, and culture.
Koontz et al. (1983) “noted” that no topic has gotten greater attention from business, government, politicians, and the general public in recent years than the question of what business’s social duty is.
The same question, which was originally aimed at business, is now being addressed more frequently by government agencies and their leaders, as well as colleges, non-profit foundations, charity organisations, and churches.
As a result, businesses are far more socially responsible than they were in the past. Businesses are interested not just in the quality of the goods and services they produce/provide, but also in public approval, which can represent a significant increase in long-term profits. A loss of image may have the opposite impact.
At this point, it is important to note that some management decisions that become involved in the area of social responsibility can be the result of greater influence and pressure from groups such as labour unions, government legislation, interest groups of voluntary response to social needs, or a combination of all.
For example, quality control by the Standard Organisation of Nigeria (SON), protection of society as a risk from industrial pollution monitored by the Federal Environmental Protection Agency (FEPA),
and petroleum and petrol quality monitored by the Department of Petroleum Resources (DPR) are all social responsibilities resulting from government legislation.
It is important to note that not all businesses are profit-driven. Some businesses, particularly statutory organisations before to the privatisation decree, were only concerned with providing some services to the public.
Ibekwe (1984) “emphasised” that a business’s neglect of corporate social responsibility at a certain time, a poor quality good given in an attractive package, or a right denied to a customer in the pursuit of quick profit could result in loss and damage to the company’s corporate image.
However, corporate social responsibility is an important part of management that must be tackled both conceptually and empirically in order to achieve organisational success.
1.2 Statement of the Problem
Nigerian business firms see and respond to corporate social responsibility in varied degrees. Taking a broader look at enterprises in many industries, one can readily infer that many going concerns (organisations) are not socially responsible, which has an impact on commercial operations, corporate image, and profitability, as well as a firm’s level.
The formulation of the problem statement includes issues such as the organization’s corporate social responsibility, as well as the impact of organisational products on community development and overall organisational productivity and competitiveness.
This study aims to provide recommendations for specific challenges that an organisation may face in the future in relation to its surroundings.
1.3 Objectives of the Study
The primary goal of the study is to determine the impact of corporate social responsibility on organisational performance. The specific objectives were as follows:
1. To investigate the many aspects of corporate social responsibility used by organisations.
2. Determine the impact of Corporate Social Responsibility on customer responses to organisational products.
3. To determine the impact of Corporate Social Responsibility on community development.
4. Determine the impact of Corporate Social Responsibility on organisational profitability and competitiveness.
5. Make credible proposals on how Corporate Social Responsibility might be used to alleviate organisational and community/national poverty.
1.4 RESEARCH QUESTIONS.
To assess the impact of corporate social responsibility on organisational performance, the following preliminary question will be tested.
I. Are Nigerian corporations and organisations socially responsible?
ii. What are the key consequences of these organisations’ production techniques in terms of the Corporate Social Responsibility agenda?
iii. Have customers/stakeholders benefited completely from the organization’s Corporate Social Responsibility practices?
IV. Does Corporate Social Responsibility have a role in organisational success and effectiveness?
v. What influence does an organization’s corporate social responsibility have on its workforce/employees?
1.5 Research Hypotheses
This study will be designed to evaluate the following hypotheses.
Hypothesis One.
1. Ho: There is no significant association between Corporate Social Responsibility and an organisation’s manner of production.
H1: There is a substantial relationship between Corporate Social Responsibility and an organisation’s manner of production.
Hypothesis Two
2. Hypothesis: There is no substantial association between Corporate Social Responsibility and Community Development.
H1: A considerable association exists between corporate social responsibility and community development.
Hypothesis Three
3. Ho: There is no substantial correlation between Corporate Social Responsibility and Customer Retention.
H1: There is a considerable link between corporate social responsibility and customer retention.
Hypothesis Four
4. Ho: Corporate Social Responsibility has no substantial association with organisational competitiveness.
H1: Corporate Social Responsibility has a substantial association with organisational competitiveness.
1.6 SCOPE AND LIMITATION OF THE STUDY
The scope of the study is restricted to Nestle Nigeria Plc. The study cannot be expanded to include other organisations due to time constraints and other relevant data.
Furthermore, all questions about the importance and effectiveness of social responsibility cannot be included in the questionnaire due to constraints that prevent their analysis.
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