AN APPRAISAL OF THE EFFECT OF CORPORATE SOCIAL RESPONSIBILITY ON ORGANISATIONS PERFORMANCE

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.