Organizational Ethics And Corporate Social Responsibility

Project and Seminar Material for Human Resource Management (HRM)

Chapter One

Introduction

1.1 Background to the Study

The role of organizational ethics in the performance of corporate social responsibility in our nation can never be under-estimated. This is simply because corporate social responsibility is practiced because customers as well as governments today are demanding more ethical behaviors from organizations.However, understanding the landscape of organizational ethics can be sometimes difficult due to the fact that the field is vast and often encompassing such concerns as corporate governance, reputation management, accurate accounting, good labor practices and environmental stewardship to name but a few, Sullivan (2009). In fact, the field addresses the entire scope of responsibilities that an organization has to each of its stakeholders: those who have a vested interest in the decisions and actions of an organization; like customers, clients, employees, shareholders, suppliers and the host communities.

According to Kashyapetal., (2006) organizations are volunteering themselves to incorporate corporate social responsibility as part of their business strategies and mission statement, while taking care of the contradictory interest of various stakeholders. Another justification in favor of organizations that perform corporate social responsibility actions today is to gain competitive advantage which may not be enjoyed by the peer corporations. Corporate social responsibility actions in this respect also help organizations to attract and retain not only customers but also motivate employees, which in turn ensure long-term survival of the organization. Drum wright (1996) opined that organizations with sound CSR actions develop positive social identity and enjoy increased loyalty from their customers, employees and host communities.

Corporate social responsibility actions are also often associated with better financial performance of the organizations. However this required long-term perspective but as in short-run, CSR actions may be viewed as expense but in the long-run it is viewed as investment which will yield additional cash flows for the organizations. Similarly, Margoliset al. (2001) averred that there is a positive relationship between CSR and corporate financial performance. Corporate social responsibility actions have potential to create additional value for organizations. Corporate social responsibility combines both the social and environmental aspects in doing business.Itis an approach whereby an organization considers the interests of all stake holders both within the organization and in society and applies those interests while developing its strategy and during execution.Nolan, Norton&Co. (2009) posited that organizations with efficient and effective management of corporate social responsibility would create value for both themselves and the society.

Apparently, an organization that is concerned about society as well as earning profits is likely to invest voluntarily in socially responsible activities thus ensuring its economic survival and that of the society. Organization ethics contribute toward the total well-being of the society within which they operate.They support local initiatives in an attempt to deepen their stakeholders’ role and to also show appreciation for the supports they have been enjoying in the host communities. For instance, it is believed that organizations such as banks should not only make profit but they should also consider the social implications of their activities to their stakeholders. This is because their unethical way of making profit can invariably affect the discharge of its corporate social responsibility. Therefore, based on this background, this study was designed to investigate the effect of organizational ethics on the performance of corporate social responsibility.

1.2 Statement Of The Problem

Organizations in Nigeria are facing a myriad of challenges in fulfilling their corporate social responsibilities to their communities and other stakeholders. These challenges range from lack of accurate accounting practices, good labor practices, environmental stewardship, corporate governance and reputation management, to mention but a few. However, corporate social responsibility demands a careful examination of costs and benefits. Some organizations, for instance, banks might have failed to recognize most of the stakeholders’ groups in their performance of corporate social responsibilities due to poor ethical values.

These poor ethical approaches may affect the way and manner banking organizations go about their corporate social responsibilities. This however, may impact negatively on the achievement of their objectives since the achievement of their objectives depends on the perception and patronage of their customers toward their services. Panic andconsequentialfinancialandeconomicwoescouldemanatefrom situation where there is loss of confidence in the financial institutions by the stakeholders. Such lack or loss of confidence could be attributed to unethical management practices of banks in carrying out their activities.Apparently, ethical issues in organization shave become more complicated and complex because of the complexity of economic,social and environmental issues.

Moreover, in spite of the acclaimed sound corporate governance in many organizations which ought to promote good ethical practices towards their stakeholders, some organizations for instance,banks are still lagging behind in providing satisfactory services to their stakeholders.On the basis of the aforementioned, this study seeks to investigate if organizational ethics could enhance performance of corporate social responsibility in United Bank for Africa Plc. Uyo, Akwa-Ibom State.

1.5 Objectives of the Study

The main objective of this study is to investigate the relationship between organizational ethics and corporate social responsibility in in United Bank for Africa Plc. Uyo, AkwaIbom State. Specific objectives include to:

Determine the relationship between bank accurate accounting practices and performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State.
Examine the relationship between good labor practices and performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State.
Examine the relationship between bank environmental stewardship and the performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State.

1.4 Research Questions

What is the relationship between bank accurate accounting practices and performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State?
What is the relationship between good labor practices and the performance of corporate social responsibility United Bank for Africa Plc. Uyo, AkwaIbom State?
What is the relationship between bank environmental stewardship and the performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State?

1.5 Research Hypotheses

From the objectives of the study, the following hypotheses were formulated for this study:

There is no significant relationship between bank accurate accounting practices and performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State.
There is no significant relationship between good labor practices and the performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State.
There is no significant relationship between bank environmental stewardship and the performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State.

1.6 Significance of the Study

This study is significant in several ways since it highlights on those benefits and challenges faced by Banking Industry as regards organizational ethics. Thus, it would serve as a source of instrument to Banking Industry particularly, United Bank for Africa Plc. Uyo, AkwaIbom State. The study would be of immense benefit as the findings and recommendations of the study would serve as a guide for policy makers in the financial institutions when formulating policies on organizational ethics.

The study will also assist Banking Industry to identify the various factors militating against organizational ethics and highlight the gap and lapse that exists between organizational ethics and the performance of corporate social responsibility in the banking industry. Finally, the information which this study provides would serve as reference materials for the public and researchers, particularly students of high institutions for further research in related areas.

1.7 Scope and Limitations of the Study

The study was limited to United Bank for Africa Plc. Uyo, Akwa Ibom State.

The indices covered include to; determine the relationship between bank accurate accounting practices and the performance of corporate social responsibility, examine the relationship between good labor practices and performance of corporate social responsibility and examine the relationship between bank environmental stewardship and performance of corporate social responsibility.

Apparently, all the resources and vital information needed for this research work were unreservedly provided by those concerned. But it would have been more honorable if the researcher was opportune to meet one on one with the CEO of this Bank. However, this does not in any way affect the validity of the study as the researcher adopted a friendly approach in gathering data/information.

1.8 Definition of Key Terms as Used in this Study

Organizational Ethics: Refers to principles and standards that determine acceptable conduct in business organizations.

CSR (Corporate Social Responsibility):

Accurate Accounting Practice: Is an efficient, accurate, and timely financial practice that can create a foundation for evaluating business performance, supporting organisational decisions, and satisfying external reporting requirements.

Good Labour Practice:

Is a comprehensive organisational programme that combines the establishment of industry labour guidelines with a supportive good labour practices training programme.
Environmental Stewardship: Refers to responsible use and protection of the natural environment by organisations through conservation and sustainable practices.

1.9 Organization of the Study

The study is organized into five chapters. Chapter one consists of background of the study, statement of the problem, objectives of the study, research questions, research hypotheses, significance of the study, scope and limitations of the study, definition of key terms as used in this study and organization of the study. Chapter two deals with the review of related literature. Conceptual and theoretical reviews were discussed. Others include; empirical review and summary of the review of related literature. Chapter three focuses on research methodology, which consists of research design, study area, population of the study, sample size, sampling procedures, method of data collection, instrument for data collection, validity of research instrument, reliability of the instrument, administration of the instrument, method of data analysis and decision rule.

Chapter four deals with data presentation, analysis and interpretation. Chapter five sum-up the study with summary, conclusion and recommendations.

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