IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON ORGANIZATIONAL PERFORMANCE
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IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON ORGANIZATIONAL PERFORMANCE
Chapter one
INTRODUCTION
1.1 Background of the Study
Corporate social responsibility (CSR) is often debated and criticised. Proponents claim that there is a strong business case for corporate social responsibility because firms benefit in a variety of ways by functioning with a larger and longer view than their own immediate short-term profit.
The Nigerian business environment has not provided strong support for CSR. The massive rate of improper waste disposal, land degradation, poverty, pollution, a lack of basic infrastructure, and so on, particularly in the Niger Delta region,
has sparked intense agitation among all stakeholders to ensure that organisations such as multinational corporations (MNC) not only focus on profit but also make conscious efforts to improve their surrounding environment both economically and socially.
Multinational corporations (MNCs) such as Shell, Texaco, and Chevron have generated billions of dollars in oil revenue in the Niger Delta over the previous 40 years. Despite the large sum of money, the locals continue to live in extreme poverty and hardship due to a lack of basic necessities such as water and power.
The socioeconomic and environmental costs of oil production have been quite high. They include the destruction of animals and biodiversity, the loss of rich soil, the pollution of air and drinking water, the degradation of cropland, and the harm to aquatic ecosystems,
all of which have resulted in major health issues for residents of oil-producing areas. Indigenous peoples and the environment suffer as a result of oil spills and a lack of coordinated efforts by oil firms and the federal government to clean up as soon as they occur.
In June 2003, a spill from a pipeline owned by Shell Petroleum Development Company (SPDC) in the Karama community of Okordia/Zarama Local Government Area of Bayelsa State caused massive economic and environmental damage and hardship.
They are also destroying the region’s fragile ecosystem through unrestrained gas flaring that occurs 24 hours a day, seven days a week, with some burning for more than 30 years, leading in the release of hydrogen sulphide (sour gas) into the environment, causing acid rain.
Unemployment is significant in the Niger Delta because oil corporations hire staff from Nigeria’s non-oil producing regions rather than the region where oil is produced.
Less than 5% of Niger Delta residents work for these businesses, which cause huge distortions in the social and economic structure of local societies, with oil executives living lavishly in compared to destitute local populations.
Despite being Nigeria’s breadbasket, the region remains underdeveloped in all aspects. Away from the big towns, there is no real development, no road, no electricity, no running water, and no adequate shelter. Because of the region’s extreme underdevelopment, its youth have turned to militancy in order to draw national and international attention to their situation.
Organisations (MNCs) must recognise that quality of life encompasses not only the quality and quantity of consumer goods and services, but also the improved quality of life in society and the environment, even when business actions are economically undesirable.
Thus, CSR evolved as a result of the realisation that there is a need for economics of responsibility built in corporate business ethics that restrict individuals and organisations from causing harm to mankind and aid in the resolution of societal issues.
As a result, the influence of CSR on organisational performance will be examined via the lens of a multinational firm, such as MTN Nigeria.
1.2 Statement of the Problem
Corporations have long been chastised for their harmful impact on the natural environment, which includes wasting natural resources and contributing to environmental issues such as pollution and global warming.
The use of fossil fuels is assumed to contribute to global warming, and there is both governmental and community pressure on firms to follow tougher environmental standards and voluntarily adjust manufacturing practices in order to cause less environmental damage. Other environmental challenges include trash disposal, deforestation, acid rain, and land degradation.
Furthermore, firms increasingly function in a global setting. The globalisation of business looks to be an irreversible trend, but it is opposed by many. Critics argue that globalisation leads to the exploitation of developing countries and labour, environmental degradation, and increased human rights violations.
They also contend that globalisation largely helps the wealthiest while widening the divide between the rich and poor. Perhaps the most important issue is that of employment standards in many countries around the world. Many firms have been hurt by disclosures that their operations in various locations across the world were “sweatshops” that employed children.
CSR also demands organisations to thoroughly assess their current and potential social welfare roles. Some organisations, such as the fast food business, which excel at meeting customer demands, may not be functioning in the best long-term interests of consumers and society since they provide appealing but unhealthy food.
The hamburgers are high in fat, and the restaurant promotes fries and pies, which are both high in carbohydrate and fat. The products are wrapped in convenient packaging, resulting in trash accumulation.
As a result, in order to meet consumer demands, these restaurants may endanger their customers’ health and cause environmental issues. In the increasingly conscience-focused market of the twenty-first century, there is a growing desire for more ethical business processes and behaviours (known as ethicism).
As a result, many firms struggle to define their duties in terms of infrastructure development, economic opportunity creation, education, and poverty alleviation. As a result, this study seeks to explore the impact of corporate social responsibility on the organisational performance of multinational firms.
1.3 Significance of the Study
The rise of modern corporations created and continues to create many social problems; thus, the significance of this study cannot be overstated because it will highlight reasons why the corporate world should take responsibility for addressing these problems, increasing the chances that they will have a future, and reducing the chances of increased governmental regulations.
This research study will significantly contribute to the unresolved issues of corporate social responsibility in Nigeria, as well as provide additional knowledge or insight in the areas of community development for all stakeholders, including the government, corporations (MNC), non-governmental organisations, and the general public.
This study is crucial because it will emphasise the function of CSR as an indispensable necessity and an important aspect to consider in an organization’s growth.
It will also extend on previous studies in the field of community development, allowing us to better understand the relationship between CSR and organisational performance.
The study will primarily help us understand the relationship between corporate social responsibility and organisational performance.
1.4 Objectives of the Study
The primary goal of this research is to investigate the effect of corporate social responsibility on organisational performance. Other objectives include:
1. Understanding how a company’s CSR actions are regarded by its stakeholders and outsiders.
2. Determine the extent to which corporate social responsibility has facilitated economic and social development in communities.
3. Examine community understanding of the need for multinational corporations to be socially responsible.
4. Determine whether there is a relationship between corporate social responsibility and organisational performance.
5. To assess how other major groups, such as the general public, opinion leaders, city analysts, the media, and financial and community affairs professionals, see CSR.
1.5 Scope and Limitations of the Study
This study will focus on MTN Nigeria Ltd, a GSM operator in Lagos’ Ikeja, Apapa, and Amuwo/Odofin local government areas. This study will look at their CSR programmes from 2003 to the present to see how CSR affects their organisational performance.
The nature of this study requires that the entire country be covered; however, due to time, financial constraints, and the strictness of relevant respondents to relevant information and manpower,
the scope of this study is limited to the three local government areas mentioned earlier within the Lagos metropolis where the MTN Nigeria centre is located.
1.6 Research Questions
1. What impact does corporate social responsibility have on organisational performance?
2. How is a company’s CSR activity perceived by its stakeholders and others?
3. To what extent does corporate social responsibility help communities flourish economically and socially?
4. Are communities aware that multinational firms must be socially responsible?
5. Is there a relationship between corporate social responsibility and organisational performance?
1.7 Research Hypothesis
The research hypotheses are presented as follows:
1. Ho: Corporate social responsibility does not improve organisational performance.
H1: Corporate social responsibility enhances organisational effectiveness.
2. Ho: Corporate social responsibility does not encourage social and economic growth in communities.
H1: Corporate social responsibility fosters social and economic growth in communities.
1.8 Definition of Terms
CBN: The CBN (Central Bank of Nigeria) is the country’s apex financial institution, or government-owned bank, in charge of overseeing and supervising the whole monetary and financial system.
NGO: Non-governmental organisations (NGOs) are non-profit organisations that are often founded with the goal of achieving a certain objective or nurturing a cause, such as orphanages, museums, churches, political parties, and so on.
SON: The Standard Organisation of Nigeria (SON) is a government organisation responsible with guaranteeing strict adherence to internationally accepted standards for all manufactured items.
NAFDAC (National Agency for Food and Drug Administration and Control) is a government agency or body that regulates the effectiveness of quality control in goods (food and medicines) in Nigeria.
NCC: The Nigeria Communication Commission (NCC) is a government organisation tasked with regulating telecommunications operations or operators in Nigeria, guaranteeing strict adherence to defined rules and regulations while also protecting customers’ rights.
MAN: MAN (Manufacturers Association of Nigeria) is a non-governmental organisation or an association of producers or manufacturers founded to promote the protection of manufacturers’ rights while also assuring positive government support for manufacturers.
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