The Impact Of Corporate Social Responsibility On Firms Performance

Project and Seminar Material for Business Administration and Management BAM

The Impact Of Corporate Social Responsibility On Firms Performance


Chapter One


Introduction

1.1 Background Of The Study

Within the world of business, the main “responsibility” for corporation has historically been to make money and increase shareholders value. In other worlds, corporate financial responsibility has been the sole bottom line driving force. However, in the last decade, a movement definining broader corporate responsibilities for the environment for local communities, for working conditions, and for ethical practises has gathered momentum and taken hold. This new driving force is known as CORPORATE SOCIAL RESPONSIBILITY (CSR).

It is often times described as the corporate “triple bottom line” the totality of the corporations financial, social and environmental performance in conducting business.

As the commercial sector increases its investments in corporate social responsibility in its three usual ventures (the work place, the market place and the community), USAID is presented with the unique opportunity to create corporate partnership that can help expand, enhance and sustain its health efforts in developing countries.

Reality shows that firms have recently been able to adapt to a changing world not only by developing economically but also socially and ethically. A firms aim remains based on a development strategy that non only favours its shareholders but also responds to all stake – holders to involved either directly or indirectly in the production process.

A firm is an open system and to carry out its main aim must be able to combine two large categories of interest. Profitability and its stakeholders interest. Given that a system of exchange and mutual influences is created between stakeholders and the firm, management must be able to analyse objectives, resources and the strategy of common groups of stakeholders that need to be considered as well as its own ability to mobilize other stakeholders.

Given their overriding priority compared with other stakeholders, the consumer has assumed a focal role, which has led firms to meet ethical value. A clear sign of this has been growing number of firms that have decided to take ‘Socially responsible’ action (see Masimo and Podd; 2008;Podd; and vegalli; 2008)

This is when the concept of corporate social responsibility (CSR) has developed and is beginning to enter into common lexical knowledge and is increasingly being used by academics and economist for the sustain ability of economic development. As often happens when new terms are coined, they tend to lose their conceptual precision leaving their evocative value which is however watered down by the multitude of different meanings and context in which it is used.

The concept of corporate Social responsibility (CSR) indeed, taken on different meanings depending on the organisation or group that uses it. Some tend to emphasize individual aspects that they believe to be more important than other especially ethnics, the environment, safety education or human right.

Definitions often vary as they represent historical and social difference between countries. Indeed, certain definitions underlying a particular theme because it is more relevant in that particular state, at other time the concept of corporate social responsibility reflects the level of economics and therefore social development of a country.

Du to the different weight given to the term by different countries, the world business council for sustainable development (WBCSD) has given the following definitions:

“Corporate Social Responsibility is the task of a business to contribute to sustainable economic development working together with workers, their families, the local communities and the society in general to improve quality of life.”

Lewis (2002) describes corporate Social Responsibility as the interaction between business and the social environment in which it exists.

Corporate Social Responsibility is also describes as a way of considering, managing and balancing the economic, social and environmental impacts of its activities (PJC 2006). The notion of Corporate Social Responsibility as a part of the core business operations of a company, rather than a separate “add on”, distinguishes it from corporate philanthropy which may be funded out of operations that are damaging to the communities in which company or business is conducted. The extent to which company directors and managers should consider social and environmental factors in waking decisions, rather than focusing exclusively on maximising short term accounting profits, has been the subject of such discussion in recent years.


1.2 Statement Of The Problem

The practical of Corporate Social Responsibility (CSR) is subject to much debate and criticism. Proponents argue that there is a strong business case for Corporate Social Responsibility (CSR) in that corporation benefits in multiple ways by operating with a perspective broader and longer than their own immediate short term profit.

Critics argue that Corporate Social Responsibility (CSR) distracts from the fundamental economic role of a business, others argue that it is nothing more than superficial widow dressing, others yet argue that it is attempt to pre-empt the role of government as a watchdog over powerful multinational corporations.

Attaining Sustainable development should not be the duty of the government in carry out activities that leads to the improvement in the quality of life in the society at large. This concept is however not yet fully embraced in Nigeria, some companies sees Social Responsibility as unnecessary burden. They are of the view that economic climate prevailing burden in the guise of social responsibility is unfair to their business.

Some companies are not even aware of the concept of social responsibility. They think that as long as they are operating within the confines of their legal status and are fulfilling their entire legal obligations, they are in order.

The concept of Social responsibility is so in precise that it may not be easy to determine what social responsibility a company should embark upon. Many companies maintain that employing and training staff for better performance, contributing to the public revenue through payment of taxes, boosting the countries Gross Domestic Product (GDP) by being productive and maintaining cordial relationship with its close stakeholders, suppliers, consumers and employee are enough social responsibilities to contend with.


1.3 Objectives Of The Study

The light of this research is to evaluate the impact of corporate social responsibility on firms performance most especially First Bank Nigeria PLC, Ijebu Ode Brach.

The specific objectives are as follows

  1. To find out the limitations posed by governmental fiscal polices such as taxes and other levies on social responsibility
  2. To determine an appropriate level of social responsibility for organization
  3. To establish relationship between profitability and social responsibility in the Banking sector
  4. To determine the level of awareness for socially responsibility accounting and the degree of responsiveness of business to their immediate environment.

1.4 Scope Of The Study

With the increase in the activities in the field of banking new areas has seen added to the transitional list of services rendered by banks which has led to increase to their operation, and enactment of new rules and regulations.

The scope of the study is to enhance the effect of Corporate Social Responsibility (CSR) on the performance on Nigerian banks most especially First Bank of Nigeria PLC, Ijebu Ode branch.


1.5 Research Questions

The following are the research questions that emanate in the course of this study

  1. Is there any relationship between maximization of shareholders wealth and corporate Social Responsibility?
  2. Is there any relationship between corporate social responsibility and customer patronage?
  3. Do government fiscal policies encourage or discourage companies from being responsible?
  4. Would the introduction of legislation and professional standard and social responsibility and reporting improve the level and quantity of corporate social responsibility?

1.6 Research Hypothesis

The research hypothesis is been tested for this research

Ho: (null hypothesis)
Hi: (alternative hypothesis)

This test will highlight the relationship between corporate social responsibility and firms performance.

Ho: There is no significant relationship between social responsibility and firms performance
Hi: There is a significant relationship between social responsibility and firms performance


1.7 Significance And Justification Of The Study

Corporate Social Responsibility (CSR) has been identified and acknowledge as a powerful tool to generate trust and confidence in an institution. In this context, good corporate social responsibility is essentially important for bank because such institutions deals with funds raised from the general public.

Findings would serves as a guide for the establishment of statutory laws and standard to regulate social responsibility accounting and reporting and also educate the corporate firm in the promotion of corporation rate Social responsibility (CSR)

To show the commitment of Social responsibility to Profitability, it would also embrace the knowledge of students to social responsibility accounting.


1.8 Definition Of Terms

Corporate Social Responsibility (CSR)

According to Business for Social Responsibility (BSR), Corporate Social Responsibility (CSR) has achieving commercial success in ways that honours ethical values and respect people, communities and the neutral enhancement.

Organizational Performance

This refers to the effectiveness of an organization or a firm in fulfilling its purpose for a particular target audience.

Stakeholder

The term stakeholder means those that are affected by firms or organisations performance or activities.

Bench Marking

This involves reviewing competitors corporate social responsibility (CSR) initiatives as well as measuring and evaluating the impact that those policies have on society and the environment and how customers perceive competitors corporate social responsibility.


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Frequently Asked Questions


Why is corporate social responsibility important to a business?

Corporate social responsibility engages customers to your brand, provides a better working environment for the employees, and even attracts more investors. Companies that are ethically and socially responsible successfully cultivate brand awareness, enhance customer loyalty, have a competitive edge, and attract the best talent.

Why is social responsibility important to some businesses?

Why is social responsibility important to some businesses? When social responsibility is recognized as part of a company’s business model, it can attract positive publicity, help attract and retain top talent, and improve relationships with customers and their communities. The benefits can be far and wide, including client retention, improved … 

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