Appraisal of the practice of social responsibility by business organisations in Nigeria
| Author | Olu Ojo |
| Position | Covenant University, Ota, Nigeria |
| Pages | 155-165 |
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Business organizations operate in a given environment characterized by dynamism, complexity and uncertainty. Thus, managers must take into consideration the interests of many external public (stakeholders and society) in the performance of their organizations duties. More than ever before, stakeholders demand that business functions in a responsible way. Business responsibility and its relationship to the community in which it operates and seeks to serve are more important than ever.
The concept "corporate social responsibility" (CSR) has a philosophical orientation (Wartick and Cochran, 1985). CSR was described by Jones (1996) as an 'ideology', was advanced during the past 50 years with the business and society research tradition. CSR refers to corporate performance that is normatively correct with respect to all constituents of the firm (Epstein, 1987). Such normative correctness implies a correspondence between corporate action and societal expectations (Zanisek, 1979). CSR is concerned with the different segments of the society to which corporations have obligations. According to Carroll, 1991, social expectations can be translated into four characteristics of corporate social responsibility, viz: economic, legal, ethical, and discretionary. This means that companies are expected to generate profit, to obey the law, to operate in harmony with the unwritten social rules, and to voluntarily support societal programmes even if society does not expect such support.
A number of empirical studies have been conducted to explore managerial response to social demands and the impact on organizational performance. Alexander and Bucholz (1978) noted that the relationship between the market performance of a firm's common stock and its social responsibility has been a subject of contradiction. One view according to these researchers is that social responsibility will make a firm an attractive investment (Stanwick and Stanwick, 1988; Arlow and Gannon, 1983; Wokutch and Spencer, 1987).
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Research on this subject shows that most of the studies were conducted in industrialized countries such as United State, the United Kingdom, and Japan. This implies that there is dearth of relevant literature on Third World countries, including Nigeria which has to be covered by research. Equally important is the fact that most of the studies done so far on the subject of corporate social responsibility have produced some conflicting results. In view of the conflicting findings obtained from past investigations on corporate social responsibility and performance, there is need for further empirical research to examine social responsibility practices of Nigerian firms.
It is against this background that this paper tries to discuss and to clarify the role of business in our modern society with special emphasis on corporate social responsibility of limited liability companies. The paper examines the relationship between corporate social responsibility and organizational performance. However, the empirical study of the investment of selected companies in corporate social responsibility is limited to quoted companies by the Nigerian Stock Exchange Market.
Social responsibility as a concept has been described in a number of ways by different writers. Most of theses descriptions are inescapably guided by educational background, exposure, interest, as well as values embodied in the writer's frame of reference. The concept of social responsibility proposes that business organizations have responsibilities to society that extend beyond profit maximization. There are as many definitions of CSR as there are writer, leaving the concept fuzzy (van Marrewijk, 2003; Gobbels, 2002; Henderson, 2001) and open to conflicting interpretations (Windersor, 2001). Some writers have equated CSR to morality (Freeman, 1994; Bowie, 1998; Phillips 2003), environmental responsibility (Des Jardins, 1998) stakeholders engagement (Andriof and Waddock, 2002), corporate citizenship (Carroll, 2004; Matten and Crane, 2005), social responsible investment (Warhurst, 2001; McLaren, 2004), sustainability (Bansal, 2005) amongst others. All these render CSR a multipurpose concept.
Despite this surge in definitions, Luttans and Hodget (1976) noted that a classic discussion of social responsibility is the obligation of the businessmen to pursue these policies, to make decisions or to follow those lines of actions, which are desirable in terms of objectives and values of the society. In the words of Jones and George (2003) the term social responsibility refers to a manager's duty or obligation to make decisions that nurture, protect, enhance, and promote the welfare and well-being of stakeholders and society as a whole. The European Union (EU) defines CSR as 'a concept whereby a company integrates social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis' as they are increasingly aware that responsible behavior leads to sustainable business success. At the heart of this definition are McWilliams and Siegel's (2001) explanation of CSR as "....actions that appear to further some social good, beyond the interests of the firm...."
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As straight forward as these definitions seem, social responsibility can be a difficult concept to...
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