Corporations And Society In Small Scale Enterprise In Nigeria

Project and Seminar Material for Accountancy / Accounting

Abstract

Corporate social responsibility (CSR) is the promise by business organizations to behave in a way that is ethically
acceptable and at the same time contributing to the economic development and improvement of the living
conditions of the employees, the catchment community and the larger society. Small and medium scale enterprises
(SMEs) can serve as the engine room for corporate social responsibility in developing countries, like Nigeria, since
a high proportion of economic activity is generated through them. Hotel industry, belonging to this group has
expanded rapidly since the return to democratic rule in 1999 primarily due to government’s interest in tourism development. Such expansion of the hotel industry calls for an enquiry into how socially responsible its activities
are.

Hence, this study explored the corporate social responsibility of the hotel industry in Nigeria. Primarily, the
study made use of quantitative data obtained though questionnaire administered on the management officers in
these hotels. It was found out that corporate social responsibility practices are minimal and at an informal level. It
is recommended that corporate social responsibility should be embraced by the small and medium scale enterprises
in order to fast track the country’s overall development.

Keywords: corporate social responsibility, small and medium scale enterprises, tourism, hotel industry, Nigeria

Chapter One

1.0 Introduction

Corporate social responsibility (CSR) is the promise by business organizations to behave in a way that is ethically acceptable and at the same time contributing to the economic development and improvement of the living conditions of the employees, the catchment community and the larger society (Azende, n.d). It is the set of conditions to which a company relates its impact on society with. The major advantages of corporate social responsibility are its potentials to bring about sustainable development and contribute to poverty reduction in any given society. Corporate social responsibility is the contributions of the organization to the development of the community in which such organizations is found in term of the social, economic, political, educational involvements. However, the company is not compelled to do by any law to do it (Adebayo, 1998).

Corporate social responsibility (CSR), relates to the role and obligations expected of business as a creation of
modern society. Two opposing schools of thought emerged during the early birth of CSR. While one school argues
that businesses should assume some responsibilities in the society beyond their primary economic role, the other
stands against. In the later case, CSR is based on purely its economic role of profit. This is regarded as the “classical view”, based on the neoclassical economic theory while the former which is the “stakeholder view”, is based on stakeholder theory (Branco and Rodriques, 2007). However, businesses of different sizes and concerns are competing to be seen as socially responsible (Crowther, 2004). Social responsibility has now become the art of every business, whether small and medium enterprises or large corporations.

There is now an increased level of awareness of the important functions of small and medium scale enterprises in
most developing countries, including Nigeria, particularly in the informal sector of the economy in terms of supply
and creation of employment. In Africa, for instance, the informal sector is so large that it is more like a parallel
economy. On the average the informal economy in Africa is estimated to have been 42 per cent in 1999/2000. At
the country level, Nigeria’s informal sector is at a high end with 59.4 per cent of GDP (http://rru.worldbank.org). It
is generally believed that the small and medium scale enterprises (SMEs) can serve as the engine room for
corporate social responsibility (CSR) in developing countries, because a high proportion of economic activity is generated by them.

Small and Medium-Scale Enterprises (SMEs) is one key area which can help in the development of the Nigerian
economy. According to NCI (2003), a small-scale industry is an enterprise with total cost above N1.5m but less
than N50m with a workforce of between 11 and 100 workers. Similarly, a medium-scale industry has a total cost of
50m and above but less than 200 million, with a work force of between 101 and 300 workers.

However, according to Operational Guidelines of Small and Medium Enterprises Equity Investment scheme SMEEIS (2005) a small and medium enterprise has been defined as an enterprise with a maximum assets base 500m and with no limits with regards to the size of the work force. Ariyo (2005) has noted the important roles played by SMEs in the growth and sustainable development of any economy as they serve as the strong support of any nation that has been industrialised. This is also the view of Kpelai (2009) as SMEs form the bulk of business enterprises in developed and developing economies like Nigeria.

Nigeria gained its independence from Britain in 1960 and became a republic in 1963. Nigeria presently consists of
thirty-six (36) states and the Federal Capital Territory (FCT), Abuja. Cross River is one of the States of Nigeria.
The country has more than 250 ethnic groups with varying languages and customs. There are over 500 languages
spoken in Nigeria. According to the National Planning Commission (2004), over two-thirds of the Nigerian human
population is poor. In 1980 an estimated 27 per cent of Nigerians lived in poverty, but by 1990, 70 per cent of the
population lived with an income of less than one dollar a day. However, Nigeria has a strong potential for poverty-reduction currently. While progress has been made in this direction, much still remain to be done, particularly through the small and medium scale enterprises.

Hotel industry, belonging to this group (SMEs) has expanded rapidly since the return to democratic rule in 1999
primarily due to government’s interest in tourism development. Such expansion of the hotel industry calls for an
enquiry into how socially responsible its activities are. Hence, this study therefore explored the CSR of the hotel
industry in Nigeria, and particularly in Cross River State.

Chapter One

2.0 Conceptual Framework and Review of Literature

2.1 Conceptual Framework

The concept of corporate social responsibility was originally coined in the 1930’s, but its first appearance in
academic work is found in Bowen (1953) in his book, ‘Corporate Responsibility of the Businessman’. The concept
of Corporate Social Responsibility One of the key indicators that determines the true worth and value of modern
organizations is their ability to give back to the society part of their income through some mutually beneficial
initiatives. These initiatives are encapsulated in the concept of CSR. The management literature is replete with
various definitions of CSR, yet no single definition has been agreed upon as representing the concept (Obalola,
2010). Corroborating this view, Crowther and Jatana (2005) argued that, social responsibility is in vogue at the
moment and means different things to different people. According to Adebayo (1998) CSR is what an organization
does to contribute to the social, economic, political or educational development of the community where it is
located, but which it is not compelled to do by any law. The first books on CSR were published in the 1930´s
(Windell, 2006). However, the real idea of corporate social responsibilty in the West has its beginning in 1948,
after World War 2, when the United Nations created the Human Rights Declaration. This concept was followed by
the ILO Declaration on Fundamental Principals and Rights at Work in 1972.

Davies (2003) as quoted by Helg (2007) describes how the concept of CSR emerged first in the 1960´s among
internationalizing companies from America and those involved in former colonial states in Africa and Asia. A
number of authors in the final quarter of the last century observed that the activities of organisations have impacts
on the external environment. The writers opined that companies should not only be accountable to their
shareholders but also to other stakeholders. These concerns first appeared in the 1970s. For instance, “Ackerman in
1975 argued that companies were realizing the need to adapt to a new social climate of community responsibilities” (Helg, 2007). However, the right of all stakeholders is a relatively new phenomenon (Crowther & Rayman-Bacchus, 2004). Nevertheless, there are also arguments against the concept of corporate social responsibility. Milton Friedman debated against corporate social responsibility in New York Times Magazine in 1970, where he was quoted: “there is only one and only one social responsibility of business – to use it’s resources and engage in activities designed to increase its profits so long as its stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud” (Windell, 2006). In spite of that, corporate social responsibility is central to the corporate survival, there exists deepening controversy on how much resources
a corporate organization should commit to social causes.

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