Effect Of The Practice Of Social Responsibility On The Performance Of Small Medium Enterprises (SMEs) In Agege Local Government Area, Lagos
This project was carried out to the practice of social responsibility of the performance of SMES in Agege Local government Area of Lagos-State. The data for the study were collected through self administered questionnaire, 60 respondents were covered in this summary. Data was analyzed using Chi-square and the result shows that the consistent of social responsibility have an effect on organizational profitability.
The most obvious place to start with is the root of business (investment). The society especially prospective owners, investors, government and financial institutions can be of tremendous help in bringing ethical consideration to bear on financial investment. People should be careful of where money goes and what it is used for. Investors should think not only about financial return, but also about the social and economic result of their investment decision.
It was concluded that government regulation as it relate to business should be such, that will be efficient and at the same time suiting to all business. It is believed that if all activities involved in social responsibility are worth doing at all, it means they are worth doing well.
1.1 Background of the Study
This chapter distinguishes between socially responsible policies and policies that simply represent sound business practice. Attention to customer preferences is sound business practice and requires no justification other than the remuneration it provides. Similarly, creating a culture that builds mutual commitment between the firm and its employees requires no justification beyond the benefit it provides. In contrast, responding to a community need for low, income housing is beyond the normal scope of sound business practice. The strategic use of corporate social responsibility to increase profit thus should be distinguished from morally motivated actions.
The motives for taking action are also important for distinguishing between socially responsible actions and actions that are forced on the firm by its environment. Negotiating with an interest group to minimize the damage it could impose should be should be distinguished from an action taken voluntarily by a firm. Social responsibility is the management philosophy, policy, procedures and actions that have the advancement of society’s welfare as one of its primary objectives.
In dynamic society like ours, business organizations either in the private or public sector are being called upon to perform their social responsibilities to the society. The relationship between organization, society and participants is very complex yet dynamic. The notion of social responsibility has emerged out of dynamism of the relationship between these parties. Corporate organizations have grown in size, the level of education has significantly increased and people now ask a lot more questions about their rights and privileges. Related to this is the fact that the awareness of the social impact of business activities on the society as a whole is enormous both directly and indirectly. For as long as a business organization remains a sub-system of the society, the business manager is left with no other choice but to be concerned with social responsibility is a nebulous concept that has been described in a number of ways. Most writers on social responsibility see the concept as the disposition of an organization to exhibit “missionary rather than mercenary”. Attitudes towards the society social responsibility can be defined as “the intelligent and objective concern, which restrains individual or corporate behaviour from ultimately destructive activities no matter how immediately profitable, and leads to the direction of the positive contribution of human betterment” (Steiner, 2001).
Presumably, corporate executive as agents of the owners are to be responsible for conducting he business in accordance with the desire of the owners while confirming to the basic rules of the society. The responsibility has three broad facets (Edward, 2002):
- Contribution to charity.
- Elimination of social costs.
- The adoption and observance of ethical codes aimed at reducing business malpractice.
In summary, Nigerian business organization and other type of business must be seen in many actions domains can pursue social responsibility in areas such as: Concern for ecology and environment, Commitment to quality, Truth in advertisement, Customer’s satisfaction and education. Other concerns includes: Service to community needs, fair employment practices, progressive labour relations employment assistance and corporate philanthropy (Forters, 2002).
The strength of an organization’s commitment to corporate social responsibility ranges from low to high. At the low end of the range is an obstructionist approach (fight the social demands), which reflects mainly economic priorities. A defensive approach (“do the minimum legally required”) indicates the least commitment to ethical behaviour it seeks to protect the organization by doing the minimum legally required to satisfy expectation. Accommodative approach (“do the minimum ethical required”) is an acknowledgement of the need to support social responsibility. Organizations adopting such strategy accept their social responsibility role and try to satisfy criteria of economic, legal and ethical responsibility.
Finally, the proactive (assumed leadership in social initiatives) is designed to meet all the criteria of social performance. Managers taking a proactive approach activity embrace the need to behave in socially responsible and go out of their ways to learn about the needs of different stakeholders and are willing to utilize organizational resources to pursue the interest of the stakeholders (Friedman, 2009).
1.2 Research Questions
- Does consistent social responsibility have an affect in organizational profitability?
- To what extent does social responsibility affect organizational market share?
- Does intensive social responsibility have an impact on organization sales volume?
- To what extent does social responsibility reduces social crisis.
1.3 Research Hypotheses
- H0: There is no significant relationship between social responsibility and organizational profitability.
H1: There is significant relationship between social responsibility and organizational profitability.
- H0: There is no significant relationship between social responsibility and organizational market share.
H1: There is significant relationship between social responsibility and organizational market share.
- H0: There is no significant relationship between social responsibility and organizational sales volume.
H1: There is significant relationship between social responsibility and organizational sales volume.
1.4 Statement of Problems
Advocate of social responsibility observed that expectations of various groups in the society are not being met by organizations. These groups are creditors, current and retired employees, customers, suppliers, competitors, all levels of government community environment, the human right organization etc. Their expectation ranges from safe and meaningful jobs, clean air and water, good pay packages, charitable donations, safe products sponsoring of academic research, scholarship awards, sports development etc. The research study is therefore designed to identify: The responsibility a business organization owes the society and its effect on its productivity, the areas in which business organization can help the society and vice-versa as well as the implications vis-avis benefit to the two parties. Problems encountered by the business organization in Nigeria in the course of discharging their social responsibility: profitability market shares, sales volume.
1.5 Purpose of the Study
The general objectives of the study is to examine the effect of practicing social responsibility on the performance of small and medium scale enterprise (SMES) in Agege Local Government area of Lagos State.
Thus, in order to achieve the above objective, the following specific objectives shall serve our guide.
- To examine the impact of social responsibility on organizational profitability.
- To determine the extent to which social responsibility affect organizational market share.
- To ascertain the extent to which social responsibility affect organizational market share.
- To examine the effect of social responsibility on social crisis.
1.6 Significance of the Study
At the end of the research work, it is hoped that the research would describe the method, techniques and means by which the practice social responsibility enhanced the performance of SMES. Thus, becoming a useful source of material for teaching and future research purpose.
It will exhibit the benefit enjoyed by both organizations and communities that inculcate corporate social responsibility.
1.7 Scope of the Study
This study would focus extensively on the social responsibility on the performance of SMES in Agege Local Government Area of Lagos State.
This study will cover and examine the effect of social responsibility on social crisis.
This scope will examine the impact of social responsibility on organizational profitability.
1.8 Definition of Terms
It is the management philosophy, policy, procedures and actions that have the advancement of society’s welfare as one of its primary objectives.
Is an acknowledgement of the need to support social responsibility.
Is designed to meet all the criteria of social performance.
1.9 Organisation of the Study
This study contains five chapters which are as follows:
- The first chapter shall contain the background, the objectives, statement of the study, research question of the study, significance of the study, scope of the study and definition of terms.
- The second chapter shall contain the literature review of the study.
- The third chapter shall contain the research methodology of the study, the research hypothesis of the study.
- The fourth chapter shall contain the data presentation and interpretation of regression results.
- The fifth chapter shall contain the summary of findings, conclusion and appropriate recommendation.
Summary of Finding, Conclusion and Recommendation
5.1 Summary of Finding
From the literary work reviewed and interviews conducted, it was found that present economic down turn in the country is having a negative effect on the exercise of social responsibilities. The study shows that in times of economic boom, business organisations tends to discharge their social responsibility faithfully, but whenever the state of the economy is bad, they tend to either avoid social responsibility entirely or cut down their “corporate philanthropy”.
When an organisation is unable and unwilling to assume social responsibility, it still owes society all efforts to make itself able. When an organization is able and willing the scope of its responsibility is determined by:
- The social forces (owners, employee competitors) etc. which the organization is striving to impress or satisfy. This shows that the whole concept of social responsibility varies from industry to industry.
- The organization competence and its conception of socially desirable behaviour.
- The long-term benefit (profit potentials, goodwill etc.) to the organization.
- The co-operation of the society. A healthy organization practicing social responsibility is sure that it will benefit from it economically because a business cannot operate in an unhealthy society.
The business sector is a sub-set of the society. Therefore, mutual understanding is a pre-requisite for effective discharge of social responsibility. The organization that practices social responsibility will be helping themselves not necessarily economically, but by working towards achieving their goals and objectives, effectively discharging social responsibility and generation if invaluable goodwill for the business. Social problems can be tuned into business opportunities through new technologies, new products and new services. Managers have now accepted a rather broad concept of social responsibility but much still remains to be done to practicalize it.
Finally, for reasons varying from government lackadaisical attitude to widespread ignorance of the people, social responsibilities are being evaded by business organization.
The rationale behind carrying out this research is to find practical suggestions which are implemented with strengthening the relationship between business and society. The most obvious place to start with is the root of business (investment). The society especially prospective owners, investors, government and financial institutions can be of tremendous help in bringing ethical consideration to bear on financial investment. People should be careful of where money goes and what it is used for. Investors should think not only about financial return, but also about the social and economic result of their investment decision. Concern should be with the nature of commodity services that is under production.
Investors should also be concerned with management staff relationship in the company, majority groups and provision for employments should be made for disabled person. Elsewhere and on a wider front, a business organization should be concerned with its relationship to the environment. Ultimate business growth may be constrained by the inability to manage its interest to do what it can do to assist in managing these resources. For this reason, small medium enterprise in Agege Local Government Area and indeed all other organizations should support the effort of the Nigeria conservation.
Mutual co-operation and understanding between business organisation and the society is the surest way to strengthening their relationship with people in the society should live in peace and harmony with one so as to provide a conducive atmosphere for business to operate. Business organization in Nigeria should spend given percentage of their after tax profit as social contribution to education and charitable organization as a means of helping the society to alleviate its suffering. Business organization should also be more into new areas like strengthening employee’s relationship through workers participation in management and employment of disabled persons. It is true that social responsibility add to the organization’s cost but in the long run, it is profitable. It is recommended that a business organization should specialize in a particular responsibility to the society. It should involve itself in activities where it feels it can make a greater impact at a comparative advantage (minimal cost) with maximum benefit to the exact relationship that exist between business and political relationship will remain undefined. Government regulation as it relate to business should be such, that will be efficient and at the same time suiting to all business. It is believed that if all activities involved in social responsibility are worth doing at all, it means they are worth doing well.
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