The Effect Of Corporate Social Responsibility On Organisational Performance

Project and Seminar Material for Business Administration and Management BAM

The Effect Of Corporate Social Responsibility On Organisational Performance


Abstract


The aim of the study is to examine the effect of corporate social responsibility on organizational performance. The population comprises of two thousand seven hundred (2700) workforces. The questionnaires were issued to one hundred and fifty (150) respondents which formed the sample size. The samples were drawn using stratified and simple random sampling technique. Data were analyzed using frequency tables and percentages method. The formulated hypotheses were tested using chi­-square (x2) analysis based on 0.05 levels of significance.

It was revealed that effective corporate social responsibility enhances organizational performance. It was discovered in the study that corporate social responsibility breeds cordial relationship between the organisation and members of the community. The study also shows that corporate social responsibility helps in retaining customers’ patronage toward company’s products.lt was also revealed in the study that the organization assists in enhancing health services in the host community. The company does not engage in awarding scholarship to members of the community. Corporate social responsibility creates a good image and reputation for the organization. Members of the community were satisfied with the services rendered by the company.

It was recommended that management should try to be effective in the rendering of social responsibility. The organization should be a good corporate citizen in the discharge of duties. This would go a long way to create a good cordial relationship with members of the community. Management of organizations should be strategic when it comes to corporate social responsibility. They should involve in activities that will enriched the lives of the people in the community. Organization operating in an environment should try as much as possible to give something tangible to the community for it to survive. Management of business organization should endeavour to make provision for members of the community to avoid conflicting issues from occurring.


Chapter One


Introduction

1.1 Background to the Study

In the last twenty years, there has been a sea of change in the nature of the triangular relationship between companies, the state and the society. No longer can firms continue to act as independent entities regardless of the interest of the general public (Crane et al, 2009). The evolution of the relationship between companies and society has been one of slow transformation from a philanthropic coexistence to one where the mutual interest of all the stakeholders is gaining paramount importance (Anao, 2009).

Companies are beginning to realize the fact that in order to gain strategic initiative and to ensure continued existence, business practices may have to be moulded from the normal practice of solely focusing on profits to factor in public goodwill and responsible business etiquettes (Oghojafor, 2001). An examination of some of the factors which have led to the development of the concept of corporate social responsibility (CSR) would be ideal starting ground for the conceptual development of suitable corporate business practices for emerging markets.
Corporate social responsibility (CSR) also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business is a form of corporate self­-regulation integrated into a business model. Corporate social responsibility policy functions as a built-in, self-regulating mechanism whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms (Blowfield and Murray, 2008).

According to Montiel (2006), the goal of corporate social responsibility is to embrace responsibility for the company’s actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, corporate social responsibility-focused businesses would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. Corporate social responsibility is the deliberate inclusion of public interest into corporate decision-making that is the core business of the company or firm, and the honouring of a triple bottom line: people, planet, profit.

Business organizations taking responsibility for its impact on society means first and foremost that a company must account for its actions. Social accounting, a concept describing the communication of social and environmental effects of a company’s economic actions to particular interest groups within society and to society at large, is thus an important element of CSR.


1.2 Statement of the Problem

The role corporate social responsibility play in business organization growth needs not be over-emphasized. Acceptably, for business organization to achieve optimum profit and growth in the economy, the need for continuous corporate social responsibility is essential.

However, most organizations have extreme difficulty and in most cases impossible to conveniently exercise its corporate responsibility to the society in which they operate. The minimal level of customers’ satisfaction and frequent winding up of some telecommunication organizations are testimonies of this, precisely, many of these fold-ups happen because some telecommunication companies disregard corporate social responsibility.

Some telecommunication organizations experience sales decline, slow growth and changing buying pattern. These problems are generated as a result of not embarking on corporate social responsibility. Many organizations are unable to operate effectively due to the fact that they have not being able to play their role as a corporate responsible body.

This has generated the following problems:

  1. Low market shares resulting from low customers and employees commitment;
  2. Frequent complaints from member of the society can lead to the winding up of the company;
  3. Members of the community would not patronize the company products/services thereby leading to low performance and profitability levels.
  4. Inability of the company to achieve sustainable competitive advantage over its rivals.

Thus, in order for telecommunication companies to be able to achieve sustainable competitive advantage, they have to embark on corporate social responsibility.


1.3 Objectives of the Study

The main objective of the study is to examine effects of corporate social responsibility on organizational performance.

Other specific objectives of the study are:

  1. To examine involvement in Corporate Social Responsibility breeds cordial relationship between organization and members of the community.
  2. To examine whether continuous corporate social responsibility promote organizational performance in the society.
  3. To assess various ways management of MTN Nigeria Communications Limited carry out corporate social responsibility.

1.4 Research Questions

The following research questions are generated for the study:-

  1. Does involvement in Corporate Social Responsibility breeds cordial relationship between organization and members of the community?
  2. Does continuous corporate social responsibility improve organizational performance in the society?
  3. In what ways do management of MTN Nigeria Communications Limited carried out corporate social responsibility?

1.5 Research Hypotheses

The following hypotheses were formulated for the study:

Hypothesis 1
  • HO: Corporate Social Responsibility does not breeds cordial relationship between organization and members of the community.
  • HI: Corporate Social Responsibility breeds cordial relationship between organization and members of the community.
Hypothesis 2
  • HO: Effective Corporate Social Responsibility does not enhance organizational effectiveness.
  • HI: Effective Corporate Social Responsibility enhances organizational effectiveness.

1.6 Significance of the Study

The research study is of great importance to individuals, firms and government. The study would be of benefit to management of communication organizations, for it would enable them to know the importance of corporate social responsibility to organizational effectiveness.

The research study would be of relevance to management of business organizations by revealing some of the likely problems communication organizations may encounter if they do not embark on corporate social responsibility. Furthermore, it would contribute to knowledge by serving as a guide for further research work.

Finally, the study would also aid scholars, professionals and individuals that would be researching into a similar area of study in the nearest future.


1.7 Scope of the Study

The research study focuses on the impact of corporate social responsibility on organizational performance. The concept of corporate social responsibility, importance of corporate social responsibility, effect of corporate social responsibility on firms’ performance would be reviewed. The study is narrowed to MTN Nigeria Communications Limited at Apapa area of Lagos.


1.8 Profile of MTN Nigeria

MTN Nigeria is part of the MTN Group, Africa’s leading cellular telecommunications company. On May 16, 2001, MTN became the first GSM network to make a call following the globally lauded Nigerian GSM auction conducted by the Nigerian Communications Commission earlier in the year. Thereafter the company launched full commercial operations beginning with Lagos, Abuja and Port Harcourt.

MTN paid $285m for one of four GSM licenses in Nigeria in January 2001. To date, in excess of US$1.8 billion has been invested building mobile telecommunications infrastructure in Nigeria. Since launch in August 2001, MTN has steadily deployed its services across Nigeria. It now provides services in 223 cities and towns, more than 10,000 villages and communities and a growing number of highways across the country, spanning the 36 states of the Nigeria and the Federal Capital Territory, Abuja. Many of these villages and communities are being connected to the world of telecommunications for the first time ever.

The company’s digital microwave transmission backbone, the 3,400 Kilometer Y’elloBahn was commissioned by President Olusegun Obasanjo in January 2003 and is reputed to be the most extensive digital microwave transmission infrastructure in all of Africa. The Y’elloBahn has significantly helped to enhance call quality on MTN network.

The company subsists on the core brand values of leadership, relationship, integrity, innovation and “can-do”. It prides itself on its ability to make the impossible possible, connecting people with friends, family and opportunities. MTN is the first GSM network in Nigeria to have adopted more numbering system, having exhausted its initial subscriber numbering range – 0803. its network capacity includes numbering range with the prefixes 0806,0703,0706,0813,0816.


1.9 Definition of Terms

The following concepts are used in the study:

Management:

This is the process of planning, organizing, coordinating and controlling organizational resources towards the realization of set goals and objectives.

Corporate Social Responsibility:

This has to do with business organization promoting the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality.

Organizational Performance:

This IS the ability of the organization to achieve its goals being effective and efficient in the discharge of its responsibility in the society in which it’s operate.


Chapter Five


Summary, Conclusion and Recommendations

5.1 Summary

This study was undertaken to assess the effect of corporate social responsibility on both the business organizations and the societies where they operate. Specifically, it has been able to assess the commitment MTN Telecommunication Nig. Plc towards Corporate Social Responsibility as well as analyzing the relationship between Corporate Social Responsibility and organizational performance. It also considered the impact of the Corporate Social Responsibility on the Goodwill value of MTN Telecommunication Nig. Plc.

The study looked into the cost effects of the Corporate Social Responsibility on the MTN Telecommunication Nig. Plc. The importance of Corporate Social Responsibility to the National economy was also brought into view and in conclusion the significant role of Corporate Social Responsibility in sustainable development program.

In all these conclusion and recommendations were made through the findings.


5.2 Conclusion

In this study data was obtained through the administration of questionnaires and oral interview conducted on various managers and employees of MTN Nig. Plc. The following conclusions were derived from the respondents questionnaires being administered.

It is observed that the MTN Nig. Plc is fully committed to the implementation of Corporate Social Responsibility such as in education, sport and health sectors as 87.5% (in table 4.2) testified to it that it has been implemented as well as 90% agreed that it has been incorporated into their corporate governance. Likewise the report obtained revealed that CSR has contributed to the organizational performance for the fact that it has promoted the organizational success, integrity and reputation.

Again from the analysis, it is seen that CSR has contributed to the economic development of the nation. The proof of this is seen in the area of enhancement of job opportunities being created by the organization through CSR. Not only that, it has contributed to the educational development of the nation.

However, the study revealed through the responses that the company has been having problem in financing their CSR. This is the evidence of 55% of the respondents concurred to it in table 4.2.7 of the presentation table. Another area to be considered is the response of the MTN Nig. Plc towards the effectiveness of CSR to business performance.

This responses shows that 38.33% of the entire respondents disagreed to the fact CSR contributes to the business performance.


5.3 Recommendations

Since the public outcry for increased social responsibilities will not disappear if business organization fail to respond to the challenges of the society; and some companies will still behave in an unsociably responsible manner, there is need for regulatory bodies and government to carry out some measures and the telecommunication industry too should do something about it since the global market is now changing.

It is therefore recommended as follows:

  1. Corporate entities should voluntarily integrate both social and environmental upliftment in their business philosophy and operations.
  2. Corporate social responsibilities should be seen by the firm as social obligations business concerns owe their shareholders, the local (host) community, general public, customers, employees and the government in the course of operating their legitimate businesses, such that CSR should be included in the law and enforced on the firms accordingly.
  3. Government should fix a minimum percentage of profit corporate firm should expend on corporate social responsibility activities.
  4. The MTN telecommunication Plc should see all the problems in our society as a business opportunity and try to find solution to it and in the process they will discover that the problems are just opportunity in disguise.
  5. It is recommended that while improvement in the participation volumes by MTN telecommunication Plc is desirable, they should close ranks and forge common attention to address certain corporate social responsibility factors, especially those bothering on security or on account of their requiring high capital outlay as in roads mending and construction.

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