EFFECT OF THE PRACTICE OF SOCIAL RESPONSIBILITY ON THE PERFORMANCE OF SMALL MEDIUM ENTERPRISES
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EFFECT OF THE PRACTICE OF SOCIAL RESPONSIBILITY ON THE PERFORMANCE OF SMALL MEDIUM ENTERPRISES
Chapter one
INTRODUCTION
1.1 Background of the Study
This chapter distinguishes between socially responsible policies and those that merely represent good corporate practices. Attention to consumer preferences is good business practice that needs no reason other than the reward it offers.
Similarly, developing a culture that fosters reciprocal commitment between the company and its employees has no rationale other than the advantage it offers.
Responding to a community’s need for low-income housing, on the other hand, goes beyond the bounds of good business practice. Corporate social responsibility should be used strategically to increase profit, as opposed to morally motivated initiatives.
The reasons for taking action are also crucial in distinguishing between socially responsible acts and actions imposed on the corporation by its surroundings.
Negotiating with an interest group to reduce the damage it may cause should be separated from an action made willingly by a corporation. Social responsibility refers to management philosophy, policies, processes, and activities that prioritise the improvement of society’s wellbeing.
In a dynamic society like ours, businesses, whether private or public, are being called upon to fulfil their social duties. The interaction between the organisation, society, and participants is complicated and dynamic. The concept of social responsibility arose from the dynamic nature of these parties’ relationships.
Corporate organisations have risen in size, education levels have increased dramatically, and people are asking more concerns about their rights and privileges. This is related to the fact that there is a great deal of awareness about the social influence of economic activities on society as a whole, both directly and indirectly.
For as long as a business organisation exists as a subsystem of society, the business manager has no choice but to be concerned with social responsibility,
which is a nebulous term that has been characterised in a variety of ways. Most social responsibility writers define the term as an organization’s willingness to be “missionary rather than mercenary”.
Attitudes towards social responsibility can be defined as “the intelligent and objective concern, which restrains individual or corporate behaviour from ultimately destructive activities, no matter how immediately profitable, and leads to the direction of the positive contribution of human betterment” (Steiner, 2001).
Presumably, corporate executives, as agents of the owners, are accountable for managing the business in accordance with the owners’ wishes while adhering to the basic rules of society. The obligation has three major aspects (Edward, 2002):
1. Donate to charity.
2. Eliminating social expenses.
3. Adoption and observance of ethical norms designed to reduce corporate malfeasance.
In conclusion, Nigerian commercial organisations and other types of businesses must be considered in many domains as pursuing social responsibility in areas such as concern for ecology and the environment, commitment to quality,
truth in advertising, customer happiness, and education. Other considerations include community service, fair work practices, progressive labour relations, job help, and business philanthropy (Forters, 2002).
The level of an organization’s commitment to corporate social responsibility varies from minimal to high. At the low end of the spectrum is an obstructionist stance (against social demands), which reflects only economic concerns.
A defensive strategy (“do the minimum legally required”) demonstrates the least commitment to ethical behaviour; it aims to safeguard the organisation by doing the minimum legally required to meet expectations. The accommodating approach (“do the minimum ethically required”) recognises the importance of promoting social responsibility.
Organisations that implement such a plan acknowledge their social responsibility role and strive to meet economic, legal, and ethical responsibility standards.
Finally, the proactive approach (assuming leadership in social projects) is intended to achieve all of the social performance requirements. Managers that adopt a proactive attitude to activities recognise the importance of social responsibility and go out of their way to learn about the demands of various stakeholders. They are also prepared to use organisational resources to advance the interests of the stakeholders (Friedman, 2009).
1.2 RESEARCH QUESTIONS.
û Does consistent social responsibility impact organisational profitability?
û To what extent does social responsibility influence organisational market share?
û Does intense social responsibility have an impact on an organization’s sales volume?
û To what extent can social responsibility alleviate societal crises?
1.3 Research Hypotheses
û H0: There is no substantial correlation between social responsibility and organisational profitability.
H1: There is a considerable correlation between social responsibility and organisational profitability.
û H0: There is no substantial correlation between social responsibility and organisational market share.
H1: There is a considerable correlation between social responsibility and organisational market share.
û H0: There is no substantial correlation between social responsibility and organisational sales volume.
H1: There is a considerable correlation between social responsibility and organisational sales volume.
1.4 Statement of Problems
Advocates for social responsibility have observed that organisations fail to meet the aspirations of diverse groups in society. These groups include creditors, current and former employees, consumers, suppliers, competitors, all levels of government, the community environment, and human rights organisations, among others.
Their expectations include safe and fulfilling jobs, clean air and water, good pay packages, charitable donations, safe products, funding for academic research, scholarship awards, sports development, and so on. The research study is thus intended to identify:
the obligation a business organisation owes society and its impact on its productivity, the areas in which a business organisation can assist society and vice versa, and the implications in terms of benefit to both parties.
Problems encountered by Nigerian commercial organisations when carrying out their social responsibilities include profitability, market share, and sales volume.
1.5 PURPOSE OF STUDY
The study’s overarching goal is to look into the impact of social responsibility on the performance of small and medium-sized enterprises (SMEs) in Lagos State’s Agege Local Government Area.
Thus, in order to attain the aforementioned goal, we will use the precise objectives listed below as a guide.
û To investigate the effect of social responsibility on organisational profitability.
û Determine the extent to which social responsibility influences organisational market share.
û Determine the extent to which social responsibility influences organisational market share.
To investigate the impact of social responsibility on the social crises.
1.6 Significance of the Study
At the conclusion of the research, it is envisaged that the study will describe the method, strategies, and means by which social responsibility practice improved the performance of SMES. As a result, it becomes a valuable source of material for both education and future research.
It will demonstrate the advantages obtained by both organisations and communities that promote corporate social responsibility.
1.7 Scope of the Study
This study would concentrate heavily on the impact of social responsibility on the performance of small and medium-sized enterprises (SMEs) in Lagos’ Agege Local Government Area.
This study will investigate the impact of social responsibility on social crisis.
This scope will look at the effect of social responsibility on organisational profitability.
1.8 Definition of Terms
û Social responsibility is a management philosophy, strategy, procedures, and activities that prioritise the growth of society’s wellbeing.
û The Accommodative Approach acknowledges the need of promoting social responsibility.
û Proactive Approach: Designed to meet all social performance standards.
1.9 Organisation of the Study
This study includes five chapters, which are as follows:
û The first chapter must include the background, aims, study statement, research question, study significance, study scope, and word definitions.
û The second chapter will provide a literature review of the study.
û The third chapter will detail the study’s research methods and hypothesis.
û The fourth chapter will feature the data presentation and evaluation of regression results.
û The fifth chapter shall include a summary of findings, a conclusion, and suitable recommendations.
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