CHAPTER
TWO
LITERATURE REVIEW
2.1
CONCEPTUAL
FRAMEWORK
Matten & Moon (2004) presents a conceptual framework for
understanding Corporate Social Responsibility (CSR), the `implicit´ versus the
`explicit´ CSR.
`Explicit´ Corporate Social Responsibility is about corporate policies
with the objective of being responsible for what interest society. `Explicit´ Corporate
Social Responsibility can for example be voluntary, self-interest driven Corporate
Social Responsibility policies and strategies.
`Implicit´ Corporate Social Responsibility is a country´s formal and
informal foundation that gives organizations or business an agreed share of
responsibility for society´s interests and concerns. `Implicit´ Corporate Social
Responsibility are values, norms and rules which result in requirements for
corporations to address areas that stakeholders consider important. Business
associations or individual organizations are often directly involved in the
definition and legitimization of these corporate social responsibility
requirements.
The issue of business corporate social responsibility has become a
subject of wide discussion and growing concern to many organizations especially
in the construction and telecommunication industries. Consequently, it is not
easy to proffer a comprehensive definition of the concept. So many definitions
have been put forward by many scholars but none has gained universal acceptance.
In fact, many writers shy away from attempting a definition, because it
connotes different things to different people especially in the developing
world. The stage and extent of corporate
social responsibility varies as much as the various definitions social
responsibility covers can be seen to reflect the society in which the writer is
at the time of writing as well as the period of time. This can be seen from
analysis of the various definitions of the concept put forward by different
authors.
According
to Renon (1986), it is the obligation of businessmen to pursue these policies
and make those decisions which are desirable in terms of the objectives and
value of society, but analysis of the definition shows that it has some short
falls.
Nwachukwu (2011) defined Corporate Social Responsibility as a concern
for the welfare of the society which restrains individual and corporate bodies
from ultimate destructive activities no matter how immediately profitable and
which leads in the direction of positive contribution definition stressed the
relevance of being socially responsible both by individual and corporate
organization. Thus, social responsibility is not limited to business
organization but extends to individuals.
Nwachukwu further stated that an organization is made up of people and a
typical executive is a member of the society. In his capacity, as the owner of
the organization and a member of the society, the individual should realize
that whatever type of society he helps to create, he will participate in.
Onuoha (2012)
viewed that the concept of corporate social responsibility can be taken to
involve all the activities of the business, in which their limited resources
are expanded, appear less economically attractive and viable, but are socially
desirable by members of the society.
In the broadest sense therefore, the net
effect of social responsibility practice is to improve the quality of life in
the communities where these organizations operate.
2.2 THEORIES
OF CORPORATE SOCIAL RESPONSIBILITY
The aim of this section is to provide theories of Corporate Social
Responsibility. The theories for this
study can be seen in the light of the following;
Business has power and power requires
responsibility:
Society allows companies to operate and in return they must serve society not
only by creating wealth, but also by contributing to social needs and
satisfying social expectations towards business.
In a positive sense, corporate reputation is related to the acceptance
by the community in which a company or a business is operating.
However, this model has several weaknesses. Most notably, the greater
attention given to social demands than to corporate social responsibility
becomes merely a social control of business, giving a human face to capitalism.
Shareholder Value; here, a company’s sole responsibility is to
generate profit and increase the value of its stock. Social activities are only
carried out if stipulated by law or if the activity contributes to increasing share value. The compliance with the law is limited
- companies can follow the letter of the law yet still exploit workers,
consumers and resources. Thus, to achieve sustainable economic success,
executive need to take account of the interests of their employees, customers,
distributors, and other stakeholders.
Stakeholder Theory: This theory recognizes that a firm has
interdependent interest groups-employees, customers, suppliers, the local
community, and it is the satisfaction of all these legitimate interests that
leads to long-term success.
Corporate citizenship: with corporate citizens, the key concept is
participation in society, going beyond fulfilling legal duties as occurs with
citizenship, to actively contributing to the good of society.
This theory recovers the position of the company in society and suggests
that the company stands shoulder to shoulder with citizens who together form a
community.
2.2.1
THE PUBLICS THAT CORPORATE ORGANIZATION EXIST
TO SERVE
A corporation exists to serve some segments
of the society in order to survive. Over
and again, several authors have attempted to list the groups
which a given business must serve but none is
exhaustive. In his own attempt, Drucker (1963) outlined them to include the
stockholders, the employees and the customers. Also writing on the groups a
business must serve, Osagemi (2012) listed the group to include the owners,
employee, consumers, customers, government and the general public;
i.
Responsibility to
the stockholders:
Every
business has a duty to achieve the objectives of its owners –the stockholders.
An organization must maintain high degree of efficient performance to achieve
this purpose.
ii.
Responsibility to
the employees:-
This group
comprises of all the individuals who in one way or the other, contribute to the
realization of the objectives of the business. They render services in the
organization.
Some other
categories of employees do the management of the company’s affair (Nwabuzor, 2003).
The
general public represents another vital group that business must serve. A good
number of social problems such as erosion, diseases of all kinds, employment,
educational needs of some poor students, lack of infrastructural facilities and
what have you, affects the society to which business should respond to. It is
therefore, the responsibility of businesses to involve themselves to eradicate
such social problems.
iv.
Responsibility to
customers:-
Every business enterprise has the obligation
to serve its customers. Give them first
hand information, quality services they deserve because, without the customer,
there is not business.
v.
Responsibility to
the Government:-
The relationship
between business and government can better be described as that of give and
take. While government controls and aids businesses, business entities
reciprocate by payment of taxes, license fees, excise duties, tariffs duties
among others.
2.3. IMPERATIVE
OF CORPORATE SOCIAL RESPONSIBILITY
To be able to understand importance of Corporate Social Responsibility
from a Nigerian perspective, it is of value to explore the drivers, the history
and development of Corporate Social Responsibility in Nigeria.
The World Business Council for Sustainable Development has discussed Corporate
Social Responsibility with business and non-business stakeholders in a number
of countries in the world with the objective of understanding local
perspectives better and to get different perceptions of what Corporate Social Responsibility
should mean from a number of different societies (http://www.cecodes.org.co).
One important finding in this research study was that people were
talking about the role of business in relation to a social agenda and they saw
that role as increasingly linked to the overall well-being of society. Therefore, the chosen priorities differed
according to the perception of local needs.
The key importance of CSR are:
•
Human rights
•
Employee rights
•
Environmental protection
•
Community involvement
•
Supplier relations
Even though stakeholders across the world agreed on the importance of
these issues, there were regional differences with regard to priorities and
understanding.
For example, the understanding and definition of human rights varied
between the regions.
Company relations with suppliers and contractors were not always viewed
as priority. In Asia and Africa, although recognizing the importance, many felt
that other issues are more important.
The book “Corporate Citizenship in Developing Countries” (Pedersen &
Huniche, 2006) contains a chapter about revisiting Carroll´s Business Corporate
Social Responsibility Pyramid from an African perspective. Most of the research
on Carroll´s Business Corporate Social Responsibility Pyramid has been in an
American context and in this research an attempt is made to look on how Business
Corporate Social Responsibility manifests itself in an African context and to
give the relevance support to communities where organizations operate.
In Africa, economic responsibilities still get the most emphasis while
philanthropy is given second highest priority, followed by legal and then
ethical responsibilities.
Philanthropy gets a high priority in Africa. According to a report,
there are many reasons for this. Firstly, the socio-economic needs of the
African societies in which companies operate are so huge that philanthropy has
become an expected norm.
Companies also understand that they cannot succeed in societies that
fail. Secondly, many African societies have become dependent on foreign aid and
there is an ingrained culture of philanthropy in Africa.
A third reason, according to the report, is that Business Corporate Social
Responsibility is still at an early stage in Africa.
It is important to
stress that in Africa, philanthropy is more than charitable giving. HIV/AIDS is an example where the
response by business is essentially philanthropic.
The low priority for legal responsibilities is not due to the fact that
African companies ignore the law but the pressure for governance and Corporate Social
Responsibility is not so immense.
Ethics seems to have the least influence on
the CSR agenda. This is not to say that African businesses are unethical. For
example, the King Report in 2003 (http://www.corporatecompliance.org) was the
first global corporate governance code to talk about `stakeholders´ and to
stress the importance of business accountability beyond the interests of
shareholders.
2.4. ARGUMENT FOR
AND AGAINST CORPORATE SOCIAL RESPONSIBILITY
The debate over Africa´s future has been on the agenda recently with the
publications of “Our Common Interest” (http://www.commissionforafrica.org). The
report calls for “improved governance and capacity building, the pursuit of
peace and security, investment in people, economic growth and poverty
reduction, and increased and fairer trade”. Businesses obviously have
an important role in this transformation process, where a lot of efforts can be
embedded within the framework of Corporate Social Responsibility.
Since the views across the world of the understanding of Corporate Social
Responsibility differ considerably, it is of value to argue for and against to
understand how CSR is perceived in Nigeria and what the specific driving forces
are.
A study on Corporate
Social Responsibility in Nigeria (Amaeshi, Adi, Ogbechie & Amao, 2006)
found that indigenous Nigerian
companies perceive and practice Corporate Social Responsibility as corporate
philanthropy aimed at addressing socio-economic development challenges in
Nigeria. Corporate Social Responsibility was mainly seen from a philanthropic
perspective as a way of “giving back” to the society.
All respondents agreed that Corporate Social Responsibility is necessary
in the Nigerian business society.
The reasons for this response included for example the need for private
companies to complement the government in providing for the people. Some also
argued that many of the companies in Nigeria make huge profits and ought to
give back to society to gain legitimacy.
Ajadi (2006), in a concept paper on Corporate Social Responsibility in
Nigeria delivered to British Council Conference on Corporate Social Responsibility
in Nigeria 2006, specifies some additional specific drivers for Corporate Social
Responsibility in Nigeria as follows;
•
The
failure of centralized government controlled economy to develop the country
•
The
extraordinary transaction cost to business of corruption and other failures of
social capital
•
The
potential benefit of a commercially active and productive country of over 120
million potential consumers
Jackson (2003) writes that despite the success of many international
companies, it does not seem as if the companies have managed to transfer this
success to the communities where they are operating due to lack of stakeholder
participation and insight in interests.
With regard to Nigeria and the development of Corporate Social Responsibility,
Nigeria has been party to several international human rights treaties.
The government of Nigeria is one of the governments together with Azerbaijan and
Ghana, Kyrgyzstan who have committed to the UK-led Extractive Industries
Transparency Initiative, where they have committed to making public all their
revenues for oil, gas and mining (http://www.thecommmonwealth.org).
The Nigerian government has also through its NEEDS strategy (Nigerian
National Planning Commission 2004) set the context by defining the
private sector role as by stating that “the private sector will be
expected to become more proactive in creating productive jobs, enhancing
productivity, and improving the quality of life. It is also expected to be
socially responsible, by investing in the corporate and social development of
Nigeria…”
Furthermore, a Global Compact network was officially launched in Nigeria
during the 12th Annual Nigerian Economic Summit in Abuja in 2006.
Several Nigerian construction,
telecommunication and other companies have already signed the Global Compact.
The Nigerian telecommunication sector is dominated by multinational
companies.
To compensate for the government´s governance failures and to protect
their own business interests, the companies often engage in Corporate Social Responsibility.
The history of formalized Corporate Social Responsibility in Nigeria can
be traced back to the Corporate Social Responsibility practices in the oil and
gas multinationals. The CSR activities in this sector are mainly focused on
remedying the effects of their extraction activities on the local communities.
The companies provide pipe-borne waters, hospitals and schools. Many times,
these initiatives are ad hoc and not always sustained (Amaeshi, Adi, Ogbechie
& Amao, 2006).
According to a study on CSR in Nigeria (Amaeshi, Adi, Ogbechie &
Amao, 2006) it appears that Nigerian companies are engaged in one CSR activity
or the other.
In spite of all the argument and controversies about the concept of
business social responsibility, many businesses in Nigeria do not show concern
about the negative image and impact of their business activities. As a result,
the Federal Government of Nigeria has enacted several pieces of legislation
aimed at compelling businesses in different sector of the economy to be
socially responsible. These includes:-
a.
The
price control legislation of 1970 which was aimed at eliminating hording and
arbitrary price increases by manufactures and sellers in general.
b.
The
National Agency for food and Drug Administration and control (NAFDAAC) Decree,
1993 which gave the agency the mandate to control and regulate food, Drugs,
cosmetics, medical devices, chemicals, detergents and packaged water.
c.
The
weights and measures Act of 1962 was put in place to provide for
standardization of measurement in Nigeria so that consumers will not be
exploited.
d.
The Standard
Organization of Nigeria (SON) Decree 1971 was promulgated to ensure that
manufacturers produce and sell goods of
of
substandard goods.
e.
The
company and Allied matter Decree 1990 made provision for the incorporation,
regulation and winding up of companies. The CAMD, 1990 also made provision for
the protection of the society and general public. The Decree provided for the
disclosure of as much information as is reasonably required to the
shareholders, the creditors of the company and the general public.
f.
Nigerian
Communication Commission (NCC): The Nigerian
Communications Commission is the independent National Regulatory Authority for
the telecommunications industry in Nigeria. The Commission is responsible for
creating an enabling environment for competition among operators in the
industry as well as ensuring the provision of qualitative and efficient
telecommunications services throughout the country.
2.5 SUMMARY OF REVIEW
In this section the researcher tries to summarize the empirical findings
with regard to how organizations in Nigeria implement Corporate Social Responsibility.
The theoretical
findings reveal a CSR concept that has developed without the concept being framed within a common and
agreed upon definition. Some argue that this has imposed a problem since organizations
do not share the same understanding or have reached consensus with regard to
CSR definition.
We can also observe that the development of CSR in Nigeria has taken
place through initiatives from a variety of stakeholders, such as researchers,
consultants, media, NGOs and governments.
Telecommunication, Oil and construction companies operating in Nigeria
together with foreign governments and international NGOs have been the primary
drivers.
Little research exists on the CSR development in Nigeria apart from some
research studies on multinational companies operating in Nigeria. It seems as
if the main driver for businesses in Nigeria is the philanthropic motive,
namely to solve existing societal problems.
Much of the criticism of today, where people consider Nigeria as a
corrupt and unethical society with a short term focused management derives to a
large extent from managerial and organizational systems imposed during
colonialisation. Much of cultural and managerial traits from pre-colonial times
rather support the CSR concept and its ideas.
Important traditional values such as sharing, consensus and harmony with
nature strongly support the ideas of CSR. In Africa today, there seems to be an increased awareness of
the need for management and institutional systems that are more in balance with
cultural roots and traditions. A number of new approaches have, and are being
developed in Africa.
These management approaches search for new and innovative approaches to
facilitate the development of Africa.
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