Issues Of Corporate Social Responsibility: A Must To Nigeria Business Organization

The Issues Of Corporate Social Responsibility:  A Must To Nigerian Business Organization-(A Case Study Of Guinness Nigeria Plc)

The Issues Of Corporate Social Responsibility:  A Must To Nigeria Business Organization-(A Case Study Of Guinness Nigeria Plc)

L LITERATURE REVIEW

2.1 THE ORIGIN OF THE SUBJECT AREA

An organization cannot exist in isolation as an organisation provides goods and services for the community. They on the other hand use raw material and labour for production.

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No management can ignore the environment in which it operates and the success of the organization may depend to a large extent upon their public image. The attitude of the organization to its shareholders also forms part of their image.

The attitude of managers towards social responsibility as gone through three phases.

Phase 1 emphasized the belief that a business manager had but one objective to maximize profit.

Phase 11 stressed that managers were responsible not only for maximizing profit but also for maintaining an equitable balance among the competing claims of customers, employees, suppliers, creditors and the community.

Phase 111, which is still dominant today, contends that managers and organization should involve themselves in the solutions of the society’s major problems.

In contemporary society, all corporate responsibilities are so inter-related that they should not and cannot be separated.

Corporation responsibilities include how the business is conducted and its business activities must make social sense just as its business activities must make business sense.

According to Peter Drucker (1974),”The new demand is for business to make social values and beliefs create freedom for the individual and altogether produce the good society”. This is to say that business organization responsibility now goes beyond producing goods and services but encompasses public welfare.

According to Stainer (1990); the demand made on a firm can generally be categorized into two:-

Expectations regarding the firm’s economics operations eg. industrial pollution, hiring and promotion activities, inadequate product information and hasafe, unhealthy or technique working condition.

Expectations not related to a firm’s basic economic functions (eg) urban development, training, unemployment and contributions to charity cause.Stainer went further to state that managers have a number of issues he or she must address within the realm of social responsiveness or social responsibility which includes, how to.

A. Define social responsibility.

B. Philosophical justify social responsibility by his firm.

C. Identify the appropriate social responsibility of the firm and

D. Evaluating the company’s social performance.

According to Stainer (1980), many large business firm exhibit social responsiveness when they voluntarily contribute company’s funds, equipment and management talent to worthy cause such as the united fund Junior Achievement, art museum and community activities. Other socially responsiveness include sponsoring of employees, taking extra step to protect women and minority employees from the job discrimination.

In this case, business goes beyond society legal minimum requirements to societal responsive behaviour. They expand and enrich the idea of corate social responsiveness.

Having highlighted on the above, Drucker (1974:685), suggested two ways by which the demand for social responsibility arises. It arises form the social impart of business organization. In other word, the negative consequence of business activities like rigid urbanization rural-urban drainage, traffic jam environmental pollution, deceptive advertising defective products offered for sale, tax evasion and avoidance; all create disenchantment and demand, for more socially responsible behaviour.

Social responsibility arises from the problem of society itself including failing standard of living, illiteracy, poor infrastructural facilities and the growing disenchantment with government and its ability to solve major social problems; hence, society has come to expect business, with their successful operations to solve a major part of the these problems by development of effective social responsibility objective and strategies.

Furthermore, business cannot escape and neglect the problems of society for as Uzoaga (1988) rightly observed, “The needs of society, if unattended turns to social disease and no Institution whether business or university or government agency is likely to thrive in a disease society.

Business executives can no longer ignore with impunity the suffering of human society with the slogan that “the business of business is profit and nothing more” Therefore, any business organization that fails to regulate them selves should be made to face severe penalties.

2.2 SCHOOL OF THOUGHT WITHIN THE SUBJECT AREA

According to Odubanjor, it is quite unfortunate that in this twenty first century, most business in Nigeria still strictly acts in terms of profit and loss alone. This however, is not so strange since corporate organizations in Nigeria are hardly familiar with the concept of community relations nor are they aware of what their corporate social responsibility is all about. The few ones which can be said to be have come across the concept sees community relations as an affair for multinational corporations especially oil companies operating in rural area especially the Niger Delta region. This perception is wrong; therefore re-orientation of corporate organizatons in Nigeria towards the conduct of business is urgently needed.

The problem could be said to emanate from the fact that companies are ignorant to their social responsibility to their community in particular and the Nigeria society in general. In development societies, it is fashionable for business which hope to survive in today’s global economy to engage in socially responsible market, it is a different tale for Nigeria Businesses, they still operate under the sale philosophy where the ultimate goal is make profit through aggressive selling and promotion effort while their counterpart in developed economy are moving to strike a balance between the marketing philosophy and the societal marketing philosophy.

Most companies shy away from their social responsibility to the society because they see it as the act of charity. Therefore, a company’s civil responsibility includes participation as a good neighbour and the promotion of a healthy out look or public affairs by employees. The community environment can strongly influence business success when a community detritus, property, values go down, tax revenue declines, local markets shrinks, employment falls off and profit sag and at the same time, the cost of relief, welfare and other municipal services grounds. So far, purely economic reasons, there is ample justification for business to help the community.

Therefore, Nigeria business should develop the community relation’s programme as a guide to community development project in their host communities. Emphasis should be on education, health and infrastructural development.

Every business whether small, medium or large scale must now make up to its civic responsibilities. Business cannot continue to thrive while the community is neglected. A proportion of the company’s budget must be devoted to community development. Though the challenges are enormous, meeting those responsibilities is the way of gaining community good will towards the company thereby enhancing the environment for the continuous thriving of business.

2.3 THE SCHOOL OF THOUGHT REVELVANT TO THE PROBLEM OF STUDY

The demands on business organization have broadened, but the argument still rages on about how socially responsibly they should be. Arguments for social involvement relate to potential benefits for society and for business. One of these schools of argument is that social response will lead to consequences that, from the long run point of view should be farourable to business. Thus, social actions that discourage government regulation or that create a better community can be in the self-interest of business in the long run because of the benefits they bring.

Nader (1977:57) stated his belief by asserting that “Business should not only take responsibility for product quality and product safety which are legitimate business responsibility for performance and contribution but should assume responsibility in a multitude of areas beyond products and services”.

According to Dahh (1972:19),”Every large corporation should be thought of as a social enterprise; that is as an entity whose existence and decisions can be justified in so far as they serve public or social purposes.

Furthermore, some scholars in their attempt to argue in favour of social responsibility noted the following:

1. SOCIETY EXPECTS BUSINESS TO ASSUME SOCIAL RESPONSIBILITY:

The argument is that corporation should be responsible to the society’s needs, when the society’s expectations about their functioning change; so should corporate actions.

2. MORAL AND ETHICAL OBLIGATION:- Business have a social conscience and therefore it is right to be socially responsible for it’s own sake.

3. BETTER SOCIAL ENVIRONMENT: Business involvement can help solve difficult problems help create a better quality of life and more desirable community in which to attract and keep stunted workers .The ethnic crises in Warri environs in (1999) is a case in point.

4. DISCOURAGEMENT OF FURTHER GOVERNMENT REGULATIONS: If business is socially responsible, it will discourage regulation of the economic system by government as government regulation adds to economic costs and restricts management decision flexibility.

5. PREVENTION IS BETTER THAN CURE: Business should act before social problems become more serious and costly to correct. The restrictiveness of the youth of the Niger Delta is a case in point. If the oil companies had been socially responsible, the present problem would not have been perhaps a case of dialogue. Social responsibility brings above improvement in a firm’s public image. Firms enhance their public image to get increase sales, better employees, access to finance and other benefits. Pursuing social goals invariably result in a farourabe public image.

However, some business scholar opposes the above arguments. They see business organization as solely and economic institution which should not entangle itself in social affairs. The argument against social responsibility can be summarized as follows:

1. There is need for profit maximization as posited by the classical school of economist simply put, business function is economic, not social and economic value should be the criteria to measure success.

2. The pursuit of social goals dilute business’s main purpose, that is economic activity. The combination of house divided against itself that collapses from its own internal conflict and confusion of goal.

3. Costs: many social proposal do not pay their own way in an economic sense in new of the principle of” opportunity cost” which is the alternative forgone to obtain a want. Consequently, business must absurd cost or pass it on to consumers by way of higher prices.

4. Business already has enough power has enough power; if it pursues social goals, it would have enough more.

5. The business of business is business and not social issues. This, the outlook and abilities of business leaders are oriented primarily towards economics. Consequently, corporate leaders are poorly qualified to achieve social goals.

These scholars argue that business has no direct lines of social accountability to the people, so it is abnormal to allow business activities in area where business is not accountable. Adam Smith in his doctrine explains that business produces a public good when it reduces costs and improves efficiency in order to maximize profit.

According to Friedman, social responsibility has implications for groups, which business interact with and this is expressed in his own words as follows: In a free enterprise, private property system a corporate executives is an employee of owners of business. He has direct responsibility to his employees.

The responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society. In so far as his actions are accord with his social responsibility, reduces returns to stockholders, he is spending their money. In so far as his actions lower, the wages of employees, he is spending their money.

This implies that corporate executive will be imposing taxes as well as deciding how such taxes are to be spent if they make use of the avoidable resources for social responsibility.

While the philosophy debates over social responsibility continues, the actual pressure on business to respond to social demands increases. For this reasons, the emphasis has shifted towards corporate social responsiveness. The new social responsibility contract that is being forged seeks to place both business and society in a cooperative relationship that builds a better long-run quality life.

2.4 DIFFERENT METHOD OF STUDYING THE PROBLEM

THE POWER RESPONSIBILITY EQUATION:

Most workers have coupled corporate social responsibility with the problem of controlling corporate, what is power? Power is the force or strength to act raging from coercion at one extreme to weak influence on the other. While this is so, business power is therefore the force or strength behind business actions that charge society. Business is one of the most powerful institutions in the society. Its influence is felt throughout the society-in education, in government, in our homes, even in the market places. It moulds many values. The large global companies exert enormous economical, well as technologic, political, environmental and cultural power on the business.

Therefore, it is generally agreed that business organization today have considerable social power, their counsel is sought by government and community what business do or say influence their community. This type of influence is referred to as “social power” for social power to be exercised there must be a social responsibility rendered to the public, this calls for balancing of the power responsibility equation Business power is regarded as legitimate when it is exercised to improve the common goal, therefore, legitimacy is the rightful use of power. Business organization therefore must equate their power with responsibility in order to legitimate their power.

According to Daris an Bloomstrom (1975), they stated the iron law of responsibility “In the long run, those who do not use power in a manner which society considers responsible will tend to loose it”

This is because the source of business power is a grant of authority from society to convert resources efficiently into needed goods and services. In return for doing this, society gives corporation the authority to take necessary and proper actions and permits a return on investment, expecting that their right and property would be protected. The agreement between business and society is a social contract. Thus in algebraic term, the law states that for a long period of time, if

Power

Responsibility

Social forces eventually will arise to reduce power until there is an approximation.

Power

Responsibility

On the long run, society ultimately acts to reduce power when it is not use responsibly.

2. BUSINESS HAZARDS ON ENVIRONMENT

(Elbert 1990) noted that no one social issue has raised so much controversy and attention as to issue of pollution and its impact upon the environment. Business has been identified as responsible for the significant deterioration of our nation’s kind air and water resources.

While auto-emission have been feeding tones of pollutant into our air, even our lakes and rivers are not left out.

Elbert further noted that; for the sake of emphasis the following are areas in which business perform most of its social responsibility to the society.

1. Pollution Problems: This pollution includes Air pollution, water pollution and land pollution. Air pollution results when a combination of factors coverage to lower air quality. Large amount of chemicals like carbon monoxide emoted by automobiles contribute, to air pollution. Smokes and other chemicals emitted by pollution. Burning fossil fuel such as coal and oil for energy introduces carbon dioxide with sulphur into the earth’s atmosphere. Both of these chemical cause environmental problems. Many scientist fear that this could result in global warning with disastrous results.

Water pollution can also become polluted by dumping chemicals and toxic waste into it.

At times, there are cases, of burst pipes and spill into the water, thereby causing disturbance to acquatic life.

In the case of land pollution two key issues are associated with it. The first issue is how to restore the quality of land damaged and abused in the past. This is particularly important issue in safety of nearby residents. The second issue is how to present such problems in the future.

Another controversial problem centres on toxic waste disposal. Toxic waste are being dispose indiscriminately on land.

1. CONSUMERISM:- Consumerism centres on product safety, misleading advertising, consumer complaints, smuggling etc the steady increase in the importance of consumerism in our society in recent years is based on the Judgement that business has not done well in protecting the public when it designs, promotes and advertise its product. It is ethical for the majority to be denied.

Conclusively, C. C. Nwachukwu (1988:274) commented on this issue by saying that Nigeria businessmen have been relatively incentive or have isolated themselves from the problem peculiar to the area into which they live and a mass their wealth despits the fact that most environmental problems are as a result of business activities, for our society to survive, these hazardous effect of business must be compensated through social responsibility. No lip service but practical importance must be attached to business social responsibility. Unless the same importance that is attached to profit by organization is attached to social responsibility, the society is in danger.

2. ETHICS AND MORALITY IN RELATIVE TO SOCIAL RESPONSIBILITY

Ethnics commonly refers to the rules or principles that define right or wrong. It is also known as set of rules and standard governing the conduct of members of a profession.

One major aspects of the social responsibility is the concept of business ethics. Business ethics therefore is the study of good and evil, right and wrong, just and unjust actions in business.

In the other hand, morality is the value or behaviour which is accepted by the society. Since being socially responsible is an accepted act, then it is morally good in the eyes of the society.

For society is a whole, ethnical standards and morality deal with rules of conduct that are thought to view essential for the preservation and continuation of the organized life. Ethical rules of conduct attempt to provide guidelines for human behaviour that will preserve society’s groups or individual personal notion of morality.

EFFECT OF FAILURE TO BE SOCIALLY RESPONSIBLE

In the pursuit of the objectives of profit maximization, business consciously or unconsciously forget that they operate in an environment that gives them succour without which they will not exist in the first place.

Consequently, they pursue these objective and in the process either forget to put something back into society that give them nourishment or in the extreme, engage in activities that eventually destroy the society itself, and as well destroy themselves.

According to Jacoby (1983),”when consumers raise their voice in protest against unsafe, faulty and mis-represented products, when employee complain of routinized job, bureaucratic paralyses or inhuman e working environment …, all are complaining in one way or the other that business is not discharging its social responsibility”

When a business organization fails to be socially responsive to the yearning of the local operation, two types of intervention may arise:

a. Civil intervention

b. Government intervention

According to Hammer (1986) under civil intervention, community play a direct role in the process of converting voluntary programme of business organization into mandatory regulations through moral persuasion churches, labour, boycotts of products, support of restrictive legislation etc.

In addition to the above, it has been found that in Nigeria, business organization which fail to be socially responsive to the communities they operate on suffers a lot of setbacks which include the destruction of sites and equipment by the local, obstrumetion of operation and even abduction of survival of people (mosop) with respect to the exploration by shell petroleum development, corporation (SPDC) is a good example to the rising awareness of people and the proper articulation of their position from a public relations point of view.

Government intervention may arise by her participation, regulation, and control of business firm’s operation. In the recent years, governments have with establishment of NAFDAC, responded affirmatively to a wide range of public concerns on such matters as product safety, product quality, product labeling, standardization, pollution and workers safety, also government regulations can be through statues or decree to prohibit certain business behaviour or through agencies such as Federal Environmental protection (FEPA) or the standard organization of Nigeria (SON). The agencies usually set standards of operations, grant incentives and supervise operations.

Furthermore, businesses that fail to be socially responsible are bound to face negative reactions by both the public and government. Therefore, it is right for business, for it’s own sake to be socially responsible.

2.5 SUMMARY

From the outset the philosopher of social responsibility is rather important for the existence of an organization. Because remove the society from the organizational framework, l doubt where they would exercise their business functions.

The mis-belief of social responsibility of an organization has spelt many untold problems in the state in question; some school of thought abhors the concept of social responsibilities in their area of operation. This singular act has castled undesirable actions of the youths (eg) the Ogoni: Delta state case

However, social responsiveness resuscitates social disease. Busines should inter-march action with the provision of public goods, By this the societal-ill is addressed by some organisational public incentives that alerviate some societal vices. As in provision of employment opportunities, campaigning against discriminated gender etc.

Finally, the business of business is business should be relatively defined to accommodate some breathing space for the organization to refurbish the society of what the, undirected are in the actualization their organizational objective.

3.1 DATA PRESENTATION

The findings are based mainly on the information supplied by those interviewed, both orally and from research questionnaires.

The findings have also given a background to the issue of corporate social responsibility as regards to Guinness Nigeria plc Benin City.

Community members perceptional opinion of Guinness Nigeria plc social performance, problems encountered by the communities and the company while carrying out its activities and the amenities contributed by Guinness Nigeria plc to the communities in its areas of operations have been discussed.

The final chapter attempts to present an overview of findings of the study and then suggested policy recommendations for future participation in corporate social responsibility activities of Guinness Nigeria Plc and Nigeria business organization at large.

It was established in the course of this study that business organization serve several and varied interest groups which have implications for the decision which management must make in an attempt to strike a balance between profit maximization and the issue of corporate social responsibility. Each of the interest groups has a stake in the business organization since the business organization cannot exist without their input. However, they have conflicting objectives because each of them deserves the maximum compensation for its contribution.

It has further discovered in the course of this study that Guinness plc has tried to resolve this conflict of objective in the following ways:

A. With respect to its customers, the following facts were discovered.

1. The company’s quality goods are produced and sold to customers.

2. If the products are found to be defective, customers are entitled to refund or replacement.

B. With respects to the public, that is the communities in its areas of operations the following facts were found out:

1. Members of the Benin community believed that the activities of the company have contributed to the improvement in their living standard and welfare of the people of the community. In fact, they believed that the presence of the company has help out in the general well being of the people.

2. Member of the Benin community also believed that the activities of the company have led to the improvement in the living standard and welfare of the people in the community.

3. The development charges paid by Guinness Nigeria plc workers and the heavy rate paid by the company go towards swelling the treasury of Benin community.

It therefore provides job for the employees, trade for the market women, business for the contractors and support for the traditional community.

C. With respect to the government, it was discovered that Guinness Nigeria plc pays its corporate tax as when due and ensure that employees pay their income tax through PAYE method.

Generally, it was discovered that 1% of Guinness Nigeria plc annual turnover is put aside for the purpose of public relations which takes care of its corporate social responsibilities. Guinness Nigeria plc adopts the discretionary approach in providing amenities for the communities in which it operates. Presently, no clear-cut basis exists for determining the most socially restorable decision in a given situation. The company engages in activities which result in the environmental degradation of the areas in which it operates, where there is positive social contributions it was done not only because they are responsible for the problem but also because they stand to derive some benefits from such activity.

3.3 Since Guinness Nigeria plc cannot exist without interacting with members of the communities in which it operates, the following cause of action are recommended.

1. The government should promulgate and enforce a law or degree which makes it compulsory for all business organization to be socially responsible for the development of the communities in which they operate. This need becomes important when one considers the fact that some business organizations are not even aware of the subject matter.

2. A Community Development Trust Fund should be set up by the government for annual or morality financial contribution by business organizations. This will be used as an index for measuring the social responsibility of business organizations. In addition to this business organization should be made to provide a social audit section in addition to their balance sheet and profit and loss accountants, where they will outline all social responsibility projects undertaken by them doing the year under review.

3. Rewards should be given to companies which engage operating. Rewards can be informed of tax relief or tax reduction for a short period of time.

4. Guinness Nigeria plc should increase the percentage of their annual turnover put aside for public relations from 1% to 2 1/2%.

For our society to survive, the same importance that is attached to profit by business organization should be attached to social responsibility, other than society will decay.

3.3 CONCLUSION

Being socially responsible implies playing more than just an economic role in society.

Increasingly, firms are being expected by society to play direct roles in meeting community needs in areas such as arts and education, in health and environmental matters, in social welfare in addition to their roles as employers and producers.

The first responsibility which management owes to the enterprise in respect to public opinion, policy and law is to consider such demands made by society on the enterprise in respect to public opinion, policy and law is to consider such demand made by society on the enterprise or likely to be made within the near future as many affect attainment of its business objectives. It is management’s job to find a way to convert these demands from threats to action into opportunists for sound growth or at damage to the enterprise.

It is parturient to conclude that in the future, to effectively discharge its social responsibilities to the society which in turn would serve as a source of resources inputs, Guinness Nigeria plc and every other business organization must achieve the following objective:

i. Survival, growth and profitability.

ii. Constant research and development to improve on production processes, products and services.

iii. Pollution control, financial benefit to sports, conservation of arts, worthy charitable cause.

iv. Engage in ethical conduct in all business activities.

Bilateral cooperation with government through the prompt payment of correct corporate taxes needed to solve societal problems.

It should however be noted that, business organizations should not engage in social responsibility tasks for which they lack competence otherwise society would blame them for aggravating an already bad situation.

Finally, business organization must resist responsibility for social problems that would compromise or in pair corporate performance.

Issues Of Corporate Social Responsibility:  A Must To Nigeria Business Organization-(A Case Study Of Guinness Nigeria Plc)

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