The Effectiveness Of Regulations Of Corporate Social Responsibility

Project and Seminar Material for Business Administration and Management BAM

The Effectiveness Of Regulations Of Corporate Social Responsibility

Chapter One

1.0 Introduction

This introductory chapter discusses the background to the study, statement of the problem, aim and objectives of the study, research questions, scope, limitation of the study and the significance of the study.

1.1 Background to the Study

Globally, organizations are concerned with value re-investment to the society in appreciation of the contributions of the society to their growth, survival and continuity. Our attention is further directed to the potential consumers as well as non-consumers of corporate offers (products) as marketing concept and philosophies are integrated into societal marketing which is explained as a means of achieving desired level of social responsibility (Oko and Agbonifoh, 2014).

Public relation is the management function that identifies, establishes and maintains mutually beneficial relations between an organization and the various publics on whom its success or failure depends (Broom, et al, 1994). The British Institute of Public Opinions says that “public relations are a deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its publics.’ Public relation is a distinctive function of management that helps create a communication bridge, a mutual acceptance and cooperation between an organization and its external environment, a convergence between own structure and own image, as well as maintaining theses relations(Harlow, 1976). One major way to identify, establish and maintain a mutually beneficial relations is through corporate social responsibility.

Given this as the thrust of operations, corporate attention is increasingly being given to issues like equal employment opportunity, thus it is easier for corporation to be re-oriented to corporate social responsibility philosophies. In Nigeria, consumers are unwilling to sacrifice convenience and pay higher prices for products in order to protect the environment as they either lack the knowledge or have no access to information which will enable them make informed decisions in dealing with their purchase, use and disposal of these products; pollution control; energy, natural resources conservation; consumers’ and workers’ protection. Businesses thus operate on the philosophy of maximization of positive effects of their activities on the society as the negative impacts of these activities are minimized. The core principle of corporate social responsibility is considered as an obligation among businesses in the advanced societies around the globe (Oko and Agbonifoh, 2014).

Since the advent of mobile telecommunication into Nigeria arising from deregulation and liberalization of the economy in 2001, the Global System for Mobile Communication (GSM) industry have been responsible for the employment of millions of Nigerians, either as distributors or retailers of phones, recharge card vendors or phone repairers. This sector has in no small way boost the country’s economy and engaged a huge number of the previously unemployed folks. As the most active sector in the Nigerian economy, the corporate social responsibility role expected from the operators cannot be over-emphasized. According to Altschuller and Smith (2011), stakeholders expect companies to manage the social and environmental impacts of their operations. Given the impact of the GSM advent into Nigeria, the wide acceptability of this mode of communication, the role it plays in the Nigerian economy, CSR ought to be taken seriously by the mobile communication service providers. CSR should be willingly dispensed by these organisations instead of it being enforced on them by the law, governments, civil rights groups or the communities. Onwuegbuzie (2009) argued that CSR is the deliberate inclusion of public interest into corporate decision making and the honouring of a triple bottom line of people, planet and profit. In other words, CSR policy entails self-regulation, adherence to rules and regulations, ethical standards, environmental responsibility and sustainability, consumers’ satisfaction, employee welfare, communities and stakeholders’ benefits.

Some years back, the concept of Corporate Social Responsibility (CSR) has been a very good strategy for most business organization to escape in a highly competitive market environment. In a situation where there is a variation and unstable scales of preference from the consumers, the Corporate Social Responsibility is therefore the most applicable tool in order to survive. In the event of Corporate Social Responsibility, most company tends to reduce their operating cost for been socially and environmentally responsible. A company being socially responsible tends to gain the attention of more customers and increase its market share. CSR makes the company more visible while it also serves as a medium by which the company communicates to the public (Lawrence and Webber, 2008).

In order to grow the Nigerian economy, the telecommunication industry, was deregulated thereby appropriating the private-sector a dominant role in the economy. Private sector participation is preferred because it offers operational efficiency in the delivery of products/services and possesses workable ideas for sustainable development (Hassan, 2011). Government realized it cannot grow the economy alone; it therefore provided the enabling environment for deregulation policy in Nigeria. For deregulation exercise to achieve its policy objectives, the government put in place a sound legal and regulatory framework to safeguard and strengthen the Nigerian Business Environment (NBE). Analysts stated that quality regulations are necessary in business environment to compel corporations to act responsibly within the ambit of the extant laws as well as protect property rights, guarantee citizens’ wellbeing and create an enabling investment environment in line with international best practices (Braithwaite and Drahos, 2000). Several of these laws/regulations prescribe minimum obligations for corporations as corporate citizens; and as well demands for social/environmental reporting for the purposes of averting corporate excesses, executive abuse and other widely reported corporate misbehaviours in the literature (Campbell, 2007).

To some scholars, CSR regulations could elicit positive compliance and effective social, financial and environmental reporting from corporations (Hart, 2012). In support of more regulation, McBarnet (2009) reports that In the European Union, Socialists and Green Members of Parliament (MEPs) have argued against a purely voluntary policy on CSR and urged the European Commission to impose binding rules on corporations as opposed to voluntary compliance. However, the view of CSR regulations is considered needful, but its effectiveness is in doubt; to imagine that regulations might make business responsible for corporate social responsibility is paradoxical and elusive. Osuji (2011) adds that the weakness of regulations in eliciting compliance in the face of growing gross misconducts and corporate corruption of multinational corporations (MNCs) question the fluidity of the regulation of CSR relationship.

With regards to regulations, there are three domains of CSR regulations, namely self-regulation, government regulations and international regulations (UN Global Compact, 2014). Self-regulation expects voluntary compliance by corporations on social involvements and reporting. When self-regulation failed, government regulations emerged to compel corporations to comply with binding laws on business operations, environmental reporting and disclosures, as well as engaging in dialogue with all stakeholders across board. Government regulations take the form of intervention by the states by formulating laws on health and safety, labour standards, consumer protection, host community rights, sustainable business operations, environmental reporting and stakeholder management etc. The third level of regulation called International Regulations emerged to complement the two previous domains of regulation (Raimi, Adeleke, Aljadani and Fadipe, 2014).

The International Regulations are typically policies, protocols, conventions and at times laws made by institutions like International Labour Organization (ILO), United Nations (UN), Organization for Economic Co-operation and Development (OECD) etc, to provoke compliance from multinational corporations and large indigenous corporations on international standards and best practice on business. The United Nations for instance developed minimum ethical standards for corporations called 10 Principles of UN Global Compact which strengthens UN goals (UN Global Compact, 2014), while ILO and United Nations Children’s Fund (UNICEF) have developed conventions on Child Labour, Forced Labour and Enslavement for employment purposes. However, with reference to Nigeria, the Environmental Law Research Institute (2011) identifies at least twenty-seven (27) extant regulations providing direct and indirect support for CSR and SR. Attention to CSR compliance from viewpoint of regulations is described as ‘theory of responsive regulation’ (Shamir, 2010).

Many organizations in Nigeria are driven by the greedy need to make more profits even at the detriment of the stakeholders. Some do not adequately respond to the needs of host communities, employees’ welfare (cheap labour often preferred), environmental protection and community development. Research has shown that CSR can increase profitability, sustainability, integrity and reputation of any business that includes it in its policy. Nkanga (2007) posited that CSR involves the commitment shown by companies to contribute to the economic development of a local community and the society at large. It is a common practice by Nigerian organizations to put as one of their mission statements the provision of corporate social responsibility. The organizations must have realized that stating CSR as one of their mission statements hold special appeal to the stakeholders. Hence, there is an increasing awareness and recognition accorded CSR by corporations.

MTN Nigeria is a leading mobile telecommunications company in Nigeria. The vision of MTN is “to be the leading provider of telecommunications services in Nigeria with a mission to provide first class network quality, customer service and value” (MTN, 2012). The company’s CSR programmes as published on its website and publications cover: health, economic empowerment, education and environmental sustainability. The performance of MTN with respect to CSR has earned it a good reputation and appellation of “The No .1 CSR telecommunication company” in the Nigerian telecommunication landscape.

MTN Nigeria is a part of the MTN Group, a South Africa based company which was licensed on February 9, 2001 as a GSM operator in Nigeria and on May 16, 2001, it became the first GSM network to make a call in Nigeria. As of February 10, 2003 MTN became the first mobile company to record one million active subscribers on its network and by June 30 2010, the subscribers’ base of MTN had risen to 35 million. National Bureau of Statistics quarterly report for the first quarter of 2016 indicates MTN accounts for 38% (57.04 million subscribers) of active mobile subscribers in Nigeria. MTN is a major operator in the Nigerian telecommunications industry that provides network coverage to 85.24% of Nigeria’s land mass. MTN has been a catalyst for Nigeria’s economic growth and development especially through the MTN Foundation, through which it has been executing projects spanning the education, health and economic empowerment sectors in Nigeria (Bolajoko and Jagun, 2013).

1.2 Statement of the Problem

The mobile telecommunication industry in Nigeria is currently going through intense competition as several communication companies (MTN, Globacom, Airtel, 9mobile, Visafone, Starcomms amongst others) jockey for fair share of market space. Consequently, it would not be out of place for communication firms to device strategies and programmes capable not only to contend with the forces of competition, but also to achieve and sustain competitive advantage. Beside the well-known generic strategies dominating the literature, telecoms companies globally are currently considering socially responsible behaviours as a viable strategy with a view to winning and sustaining customers’ patronage.

In Nigeria, interest and research on CSR have recently been (upbeat) following the aftermath of the Niger Delta crises involving multinational oil firms. Most of these studies have focused on multinational oil and gas companies. They have ignored multinational and indigenous communication companies. This study explores the current meaning and practice of CSR in Nigeria with emphasis on health and education strategies of MTN Nigeria. This study examines the effectiveness of regulations of corporate social responsibility in MTN Nigeria and whether MTN Nigeria is concerned about improved staff working conditions, improved work environment and community wellbeing through CSR.

1.3 Aim and Objectives of the study

The main aim of this study is to examine the extent of MTN Nigeria involvement in corporate social responsibility activities. Other specific objectives are to:

  1. Identify the factors that influence MTN Nigeria involvement in CSR activities;
  2. Appraise the corporate social responsibility programmes on education by MTN Nigeria;
  3. Investigate the effect of health focused CSR activities of MTN Nigeria;
  4. Examine the effect of government policy and priority on MTN Nigeria; and
  5. Scrutinize the impact of CSR activities on MTN Nigeria performance.

1.4 Research Questions

The following research questions shall be considered in this study:

  1. What are the factors influencing MTN Nigeria involvements in CSR activities?
  2. What are the effects of corporate social responsibility programmes on education by MTN Nigeria?
  3. To what extent does MTN Nigeria contribute to CSR on health?
  4. What are the effects of government policy and priority on MTN Nigeria?
  5. What benefits does MTN Nigeria get from performing its corporate social responsibility?

1.5 Scope and Limitation of the Study

The study focuses on two aspects of corporate social responsibility in MTN Nigeria. Specifically; on health and education.

The researcher’s intended to investigate the practice of CSR in MTN Nigeria as a whole but due to time, availability of materials and information as well as their adequacies, the researcher is limited to study only the MTM corporate social responsibility on health and education. Getting information from the staff of MTN Nigeria may pose a great limitation to this study due to various privacy policies and non-disclosure of vital information. However, despite these limitations, efforts will be made to provide a detailed research work on the subject.

1.6 Significance of the Study

There has been debate over the benefits of social service of organizations; writers argue that corporate social responsibility is for community development while others are of the opinion that it is a profit-making gimmick by organizations. The current study exposes the various strategies with which MTN should respond to social issues to its stakeholders. It helps to explore the impact of corporate social responsibility on stakeholders, if indeed, there is a relationship between MTN and these stakeholders. The study also reveals the perception of the beneficiaries of the corporate social responsibility of MTN towards the company.

The study generates ideas which could lead to improvement in the level of corporate social responsibility. The findings could also stimulate further studies on corporate social responsibility in Nigeria most especially for MTN Nigeria. The importance of this study also lies in the fact that it throws more light on the types of corporate social responsibility in MTN Nigeria. The study however, increases the volume and the quality of the available studies on CSR in the telecommunication sector in Nigeria.

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Frequently Asked Questions

Is CSR a façade of corporate social responsibility?

The CSR initiatives of many corporations have the potential to make a significant positive impact on our environment, our community, and our financial markets. However, without more stringent rulings, regulations, or laws, CSR policies will remain a façade behind which corporations hide their organization’s harmful impacts.

What is Corporate Social Responsibility and why does it matter?

In recent years, companies have been engaging in social good programs to reduce and compensate for the negative impact they have on the larger community. These efforts are often called Corporate Social Responsibility (“CSR”) initiatives, and they can range from reducing carbon emissions to engaging in fairer and more open employment practices.

What are the pros and cons of corporate social responsibility?

First con is that CSR lowers economic efficiency and profit. Second con is that it imposes unequal costs among competitors and hidden costs passes on to stakeholders. Another negative aspect is that CSR requires social skills which sometimes businesses may lack. Last disadvantage is that it places responsibility on business rather than individuals.

What does CSR stand for?

Corporate Social Responsibility – Global Environmental Health in the 21st Century – NCBI Bookshelf Corporate social responsibility (CSR) has gained more interest in the past decade, however it is not a new idea; it dates back to the 1930s, said Eric Orts of the University of Pennsylvania.

Are CSR policies a façade or reality?

However, without more stringent rulings, regulations, or laws, CSR policies will remain a façade behind which corporations hide their organization’s harmful impacts. [1] SeegenerallyJason Brandenberger, Best-Laid Plans: Corporate Social Responsibility Often Goes Awry, 3 Ariz. J. Envtl. L.

What is the meaning of CSR?

Definition: Corporate social responsibility Corporate social responsibility (CSR) refers to the self-imposed responsibility of companies to society in areas such as the environment, the economy, employee well-being, and competition ethics.

What is Corporate Social Responsibility and why is it important?

Corporate social responsibility (CSR) refers to the self-imposed responsibility of companies to society in areas such as the environment, the economy, employee well-being, and competition ethics. Many companies use internal CSR regulation as a form of moral compass to positively influence the ethical development of their business.

What is the difference between CSR and economic responsibility?

Economic responsibility initiatives involve improving the firm’s business operation while participating in sustainable practices – for example, using a new manufacturing process to minimize wastage. Business Benefits of CSR In a way, corporate social responsibility can be seen as a public relations effort.

Why corporate social responsibility is so important?

Why Corporate Social Responsibility is So Important. CSR started out as a goodwill face-saver in the 1800s. Now it’s a profit-booster no successful business can survive without. Most communities now demand that businesses practice good corporate citizenship. That’s why corporate social responsibility is so important today.

What does the term CSR refer to?

Why are such practices important for any business? CSR stands for Corporate Social Responsibility, i.e., the business’s responsibility to do something great and beyond themselves [CITATION Tho 181/1 1033]. It is the company’s obligation; it has to think of society and give back to it as a part of the community.

What does CSR mean for nonprofits?

Corporate social responsibility (also known as CSR) is a term used to describe a company’s efforts to improve society in some way. These efforts can range from donating money to nonprofits to implementing environmentally friendly policies in the workplace. Who does CSR impact? CSR impacts companies, nonprofits, and employees alike.

What is the rationale for CSR?

Arguments for CSR: Rational Argument. CSR is a rational argument that focuses on the benefits to performance of avoiding external constraints. Adopting the path of least resistance with regard to issues of concern makes common and business sense.

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