IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON ORGANIZATIONAL PERFORMANCE

(A CASE STUDY OF MTN NIGERIA LIMITED)

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND OF THE STUDY

The practice of corporate social responsibility (CSR) is much debated and criticized. Proponents argue that there is a strong business case for corporate social responsibility in that corporations benefit in multiple ways by operating with a perspective broader and longer than their own immediate short term profit.

The Nigerian business environment has not really had a strong support for CSR. The massive rate of improper waste disposal, land degradation, poverty, pollution, lack of basic infrastructures etc especially in the Niger Delta region overtime has created intense agitation from all stakeholders in ensuring that organization such as multinational corporations (MNC) do not only concentrate on profit making but also make conscious effort to better their surrounding environment both economically and socially.

Multinational corporation (MNC) like Shell" Texaco, Chevron etc have made billions of dollars of oil revenue in the last '40 years of oil production in the Niger ­Delta. Despite this huge amount of money, the local people remain in abject poverty and deprivation as they lack basic things of life like water and electricity. The social and environmental cost of oil production have been very expensive. They include destruction of wildlife and biodiversity, loss of fertile soil, pollution of air and drinking water, degradation of farmland and damage to aquatic ecosystems, all of which have caused serious health problems for the inhabitants of areas around oil production. The indigenes and the environment suffer from oil spillage and lack of coordinated efforts by the oil companies and the federal government to clean up as soon as oil spillage takes place.

In June 2003, a spillage from a pipeline owned by Shell Petroleum Development Company (SPDC) in the Karama community of Okordia/Zarama Local government area of Bayelsa state caused enormous economic and environmental damage and hardship to the area. They are also wrecking the fragile ecosystem of the region through uncontrollable gas flaring which takes place 24 hours, and some have been burning for over 30 years, thereby resulting in the release of hydrogen sulphide (sour gas) into the environment which produces acid rain.

Unemployment is very high among the people of the Niger Delta as the oil companies do not hire their employees from the region that produce oil, but from the non-oil producing region of Nigeria. Less than five per cent of the people from Niger Delta work in these companies with massive distortions in the social and economic fabric of the local societies, where oil executives live quite lavishly in comparison to the impoverished conditions of the local communities.

The region is underdeveloped in its entire ramification, despite the fact that it is the bread basket of Nigeria. Away from the main towns, there is no real development, no road, no electricity, no running water, no comfortable shelter. The underdevelopment is so severe; the youths of the region have resulted to militancy in an effort to focus national and international attention to their plight. Organization (MNC) must therefore realize that the quality of life not only means quality and quantity of consumer goods and services but also enriched quality of the life in the society and the environment even when business decisions may be economically unattractive. Thus, CSR emerged after a realization that there is need for an economies of responsibility embedded in the business ethics of corporations which restrain individual and organizations from destructive activities on humanity and help redress societal problems. Hence, the impact of CSR on organizational performance will be focused on a multinational corporation like MTN Nigeria which will be used as a case study.         

1.2       STATEMENT OF THE PROBLEM

 Corporations have long been criticized for their negative effect on the natural environment in terms of wasting natural resources and contributing to environmental problems such as pollution and global warming. The use of fossil fuel is thought to contribute to global warming and there is both governmental and societal pressure on corporations to adhere to stricter environment standards and to voluntarily change production processes in order to do les harm to the environment. Other issues related to the natural environment include waste disposal, deforestation, acid rain and land degradation.

Moreso, corporations increasingly operate in a global environment. The globalization of business appears to be an irreversible trend, but there are many opponents to it. Critics suggest that globalization leads to the exploitation of developing nations 'and workers, destruction of the environment and increased  human rights abuses. They also argue that globalization primarily benefits the wealthy and widens the gap between the rich and poor. Perhaps the most pressing issue is that of labour standards in the different countries around the world. Many corporations have been stung by revelations that their plants on branches around the world were “sweatshops” and employed minors. CSR also requires that organizations carefully consider the role that they are playing and could play in terms of social welfare. Some organizations such as the fast food industry that do an excellent job of satisfying consumer wants are not necessarily acting in the best long-run interest of consumers and society because they offer tasty but unhealthy food. The hamburgers have a high fat content and the restaurant promote fries and pies, two products high in starch and fat. The products are wrapped in convenient packaging which leads to waste accumulation. Therefore in satisfying consumer wants these restaurants may be hurting consumer's health and causing environmental problems. In the increasingly conscience-focused market place of the 21st century, the demand for more ethical business process and actions (known as ethicism) is increasing. Thus, for many corporations it is difficult to know where their responsibilities began and end in relation to building infrastructure, creating economic opportunities education and poverty alleviation. Therefore, this study is an attempt to investigate the impact of corporate social responsibility on organizational performance by multinational corporations.

1.3       SIGNIFICANCE OF THE STUDY   

The rise of modern  corporation created and continues to create many social problems, hence the importance of this study cannot be overemphasized became it will highlight reasons why the corporate world should assume responsibility of addressing these problems, increase  the chances that they will have a future and reduce the chances of increased governmental regulations. This research study will contribute significantly to the unresolved problems of corporate social responsibility in Nigeria as well as provide added knowledge or insight in the areas of community development for all concerned stakeholders i.e government, corporations (MNC), non governmental organizations, public etc.

This study is important because it will highlight the role CSR from the perspective of being an indispensable necessity and an important variable considered in the growth of an organization. It will also expand the various researches’ that has been conducted in the areas of community development and the result would also enable us to understand the relationship between CSR and organizational performance.               

The study will most notably enable us understand the relationship between corporate social responsibility and organizational performance.

1.4       OBJECTIVES OF THE STUDY 

The primary objective of this study is to examine the impact of corporate social responsibility on organizational performance. Other objectives are:   

1.           To understand how a company’s CSR initiatives are perceived  by their stakeholder groups and others

2.           To determine the extent to which corporate social responsibility has promoted economic and social development in communities.          

3.           To examine the level of awareness of communities on the need for multinational corporation to be socially responsible.

4.           To ascertain if there is any relationship between corporate social responsibility and organizational performance.

5.           To asses how other significant groups such as general pubic, opinion formers, city analysts, the media, experts from the financial and community affairs sector view CSR.

1.5       SCOPE AND LIMITATION OF THE STUDY 

This study will look at a GSM operator (MTN Nigeria Ltd) within the Ikeja, Apapa, and Amuwo/Odofin local government area of Lagos.  This research work will examine their CSR programmes form 2003 till date to know the effect of CSR on their organizational performance.

The nature of this study is such that the entire nation should be covered but because of the constraints of time, finance, 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 MTN Nigeria center is located.          

1.6       RESEARCH QUESTIONS

1.   What is the impact of corporate social responsibility on organizational performance?

2.   How is a company’s CSR initiative perceived by  their stakeholder groups and others

3.   To what extent does corporate social responsibility promote economic and social development in communities?

4.   Are the communities aware of the need for multinational corporations to be socially responsible?

5.   Is there any relationship between corporate social responsibility and organizational performance?                  

1.7       RESEARCH HYPOTHESIS 

The research hypotheses are stated as follows:

1       Ho:    Corporate social responsibility does not contribute to organizational performance,        

H1:    Corporate social responsibility contribute to organizational performance,        

2.         Ho:    Corporate social responsibility does not promote social and economic development  in communities.

H1:    Corporate social responsibility promotes social and economic development  in communities.

1.8   DEFINITION OF TERMS  

CBN:          The CBN (Central Bank of Nigeria) is the apex financial institution or government owned bank which is responsible for controlling and supervising the entire monetary and financial system of the country.            

NGO:          NGO (Non-government Organization) are non-profit making organization that are often established with the motive of achieving a particular objective or fostering  a cause e.g orphanages, museums, churches, political parties etc.    

SON:         SON (Standard Organization of Nigeria) is that government agency that is in charged with the responsibility of ensuring strict adherence to internationally accepted standard for all manufactured goods.

NAFDAC:   NAFDAC (National Agency for Food and Drug Administration and Control) is a government agency or body responsible for regulating the effectiveness of quality control in goods (food and drugs) in Nigeria                    

NCC:          NCC (Nigeria Communication Commission) is a government body that is charged with the responsibility of regulating telecommunication operations or operators in Nigeria i.e. ensuring strict adherence to set rules and regulations as well as protect right  of consumers.

MAN:        MAN (Manufacturers Association of Nigeria) is a non-government organization or an association of producers or manufacturers established for the purpose of promoting the protecting the rights of manufactures as well as ensuring favourable government support for manufacturers.