THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON THE PERFORMANCE OF MANUFACTURING COMPANIES IN NIGERIA - AZ Research Consult (MBA MSc Dissertation/thesis Project Writer) Nigeria

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THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON THE PERFORMANCE OF MANUFACTURING COMPANIES IN NIGERIA

OJINGIRI SOLOMON

(10AC1132)

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Corporations around the world are struggling with a new role, which is to meet the needs of the present generation without compromising the ability of the next generations to meet their own needs. Organizations are being called upon to take responsibility for the ways their operations impact societies and the natural environment. They are also being asked to demonstrate the inclusion of social and environmental concerns in business operations and in interactions with stakeholders (Van Marrewijk&Verre, 2003).

Little (2006) maintained that corporate social responsibility initiatives can lead to innovations through the use of social, environmental, or sustainability drivers to create new products and services. Just as a person needs to be a good citizen, contributing to the welfare of the society, corporations need to be good citizens as well. Corporate Social Responsibility (CSR) is the concern shown by business organisations for the welfare of the society.

This study is against the backdrop of the developments in certain parts of Nigeria particularly in the Niger–Delta area. It is obvious that the expectation of positive impact of industrial management on the community has now increased agitations for such concern in certain parts of the country e.g. the Niger river basin management, under strong pressure contribute to the social economic development of the communities bordering the river Niger area. The same applies to the Benue River.

This study serves as an added contribution to the existing work of other authors that has discussed issues on corporate social responsibility such as Friedman, (2008), McGuire, (1988), Van Marrewijk&Verre, (2003), Dacin, (1997); Larsen, (2000); Reign, (2001); McWilliams and Siegel (2001) as it goes further to examine the impact and how various factors that surrounding corporate social responsibility, how its affect firms’ performance and it is going to be useful for managers in making good decisions

STATEMENT OF THE PROBLEM

The increasing adoption of corporate social responsibility (CSR) in businesses (SourceWatch, 2008; Sagar and Singla, 2003; Hoffman, 2007) has grown with its corresponding challenges, which may include ethical violations (Aluko et al., 2004;Lantos, 2002), economic dishonesty (Amaeshiet al., 2007), commitment problem(Holmes, 1977), gender complications, controversies and agitations (Marshall, 2007), profit-making problems (Capaldi, 2005; Scott, 2007) and accountability mechanism weaknesses (Brennan, 2008).

According to Osuala (1982:26), the statement of research problem serves to elaborate upon the information implied in the title of the study. Hence in this rearch work, the researcher seeks to investigate the impact of corporate social responsibilities on the performance of some selected manufacturing company in Nigeria to its domain which can in tureen enhance the prospects of the business. Particularly because of the profit factor in business, a lot of organizations have not embraced corporate social responsibility as imperative but recent social developments have shown that this should not be so. Why this should not be so as the significance of the positive attitude of business organizations to corporate social responsibility is the bedrock of this study.

It is against the background that this study check to investigate the impact of CSR on the performance of the manufacturing companies in Nigeria in order to close the gap existing in the literature mentioned aboved

1.3 OBJECTIVE OF THE STUDY

The main objective of the study is to examine the positive impact of Corporate Social Responsibility practices on Manufacturing Companies’ performance in Nigeria. Specifically, this study attempts to:

To establish a relationship between corporate social responsibility and corporate financial performance of manufacturing companies.
To establish a line of relationship between CSR performance and Corporate Financial Performance i.e. growth, continuity and survival of the Business Corporation.
To establish a relationship between corporate social responsibility and the standard of living of the people
- RESEARCH QUESTION
Is there any relationship between CSR and performance of manufacturing companies?
Is there a relationship between CSR and growth, contribution and survival?
Is there any relationship between CSR andstandard of living of people
- HYPOTHESIS

Based on the research objectives, the hypotheses that have been subjected to test to validate this study include the following:

Hypothesis One

Ho: There is no significant relationship between Corporate Social Responsibility and corporate performance of Manufacturing Companies’ Performance.

H₁: There is significant relationship between Corporate Social Responsibility and corporate Performance of Manufacturing companies Performance.

Hypothesis Two

Ho: There is no significant relationship between Corporate Social Responsibility and growth, continuity and survival.

H₁: There is significant relationship between Corporate Social Responsibility and growth, continuity. And survival.

Hypothesis Three

Ho: There is no significant relationship between Corporate Social Responsibility and the standard living of the people

H₁: There is significant relationship between Corporate Social Responsibility and the standard living of the people

1.6 SIGNIFICANT OF THE STUDY

Campbell 2007, in synthesis, the benefits and advantages that corporations adopting CSR initiatives may obtain are the following: increased employee loyalty; gaining legitimacy and access to marketer; less litigation; increase quality of product and services; bolstering public image and reputation and enhanced brand value; less volatile stock value; avoiding state regulation; and increased customer loyalty.

The justification for carry out this research work cannot be over emphasized. This work will be beneficial to:

To the community/society

Through CSR, job, and better standard of living are provided for the community and changed habit

Capacity building creates wealth and employment

To corporations

Goodwill and community acceptance

Profit, growth, competitive edge and image

Genuine dialog with stakeholders

Spiritual and pride values to their families and employee

The world and environment

Balance ecosystems

Waste management

Clean and green environment

To researchers, Its serve as stepping stone to those who want to conduct research into this topic

Finally, this study has been carried out by the researcher on the premise that such is not common in the field of Accounting which is one important and core area from which the issue of CSR need be observed. At the end of the study, it will be well appreciated after taking into consideration the costs and benefits of the practice.

1.7 LIMITATION OF THE STUDY

The research of this nature is without no hitches or problem. The following are some of the limitation encountered in carries the research work:

Time factor: As the research work has limited duration to comply with, the researcher limit his research to some Manufacturing Companies of the State he reside
Limited finance on the part of the researcher is another limitation to the scope of the researcher which make the researcher focus on some manufacturing companies in Ilorin were he reside
Inadequate data on this topic in the library also serves as limitations of the study

1.8 DEFINITION OF TERMS

Some terms that are central to this research study context, to which clarification need be made to enhance better appreciation of the study and avoid confusion and misconception, have been included and explained as the following:

CSR – Corporate Social Responsibility

Corporate – A member of a large company

Corporation – A term used to describe a large business, company or organization or group of organisations that is recognized by law as a single unit e.g multinational corporation.

Responsibility – Has to do with a duty to help or take care of something or someone.

Ethical Code/Standard – This is connected with morally correct or acceptable beliefs and principles about what is right and wrong. The outlined behaviour expected of business corporations/enterprises.

Manufacturing Company – A business organisation or industry that engage in the production of goods in large quantities in factory for the purpose of making money through the sale of the produced goods (products).

Society – A business immediate and remote jurisdiction where people lives together in community, sharing the same ideas, customs, beliefs and laws.

Corporate Philanthropy – The practice of helping the poor and those in need by a business organisation. It may include charitable donations to non-profit groups of all kinds.

Self-Ombudsmanship – A practice of giving a self-evaluation as to activities performance or execution.

CHAPTER TWO

LITERATURE REVIEW

INTRODUCTION

Theinterrelationship between organisations and their environment has become increasingly important. There is no business organisation that can exist in isolation; it must have a community that it associates with in terms of location for its successful operations. Also in any society, the need for a remarkable growth and development cannot be easily attained if the principal actors, that is, the citizenry, the government and the corporate business organizations are not in harmony.

Thus, there must be some practical roles that the organisation must play for its impact to be felt by the community (society at large) where the business operates. For example, the installation of pollution control equipment might improve the quality of air and water in plants surrounding the area. This may also result in a change in production cost and possible increase in the price of goods produced. The society increasingly becomes aware of this interdependence, so also do the managers of organisations. As a result, organisations, especially in the business sector, are no longer viewed as totally private endeavours that are free to pursue their own ends as long as they do not break the laws. Instead, their actions are seen as having public consequences that go beyond serving customers and paying returns to their owners. Thus, social responsibility has become a significant issue for today’s managers.

Therefore, this section expressly and critically reviews literatures on corporate social responsibility as discussed by various scholars.

2.1 HISTORICAL BACKGROUND AND DEVELOPMENT OF CORPORATE SOCIAL RESPONSIBILITY

Ali et al (2010) expressed that the inception point of corporate social responsibility (CSR) can be traced to 1953 when New Jersey Supreme court allowed standard oil company to donate money to PrincetonUniversity as a philanthropic action. This decision was given against the suit filed by one of the shareholders of standard oil, believing that it would reduce shareholder’s wealth. CSR notion was initially advocated by Beyer (1972) and Drucker (1974) while stating that corporations should do social activities for the welfare of the community and feel the sense of self-ombudsmanship. It was argued that corporations are earning huge amount of profits from community and deteriorating the natural resources. Therefore, they should contribute for the sustainability of the environment and other natural resources and work for the uplifting of the society. Freeman (1970) opposed the idea of CSR by stating that, “corporations are neither meant for social activities nor have they expertise in the regime”. Therefore, it is better that they produce quality products for consumers, obey legal rules and regulations and contribute to the economic development of the country. Many researchers, including Kashyap Mir and Iyer (2006) supported the concept of CSR by corporations when they endorsed the fact that such actions of corporations should also be reported as information to the owners, consumers, community, competitors and the government.

2.2 CONCEPTUAL AND THEORETICAL FRAMEWORK OF CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility focuses on what an organisation does that affects the society in which it exist (Stoner et al, 2006). Different organisations have framed different definitions, although there is considerable common ground among them. Baker (2006) argues that corporate social responsibility is about how companies manage the business processes to produce and overall positive impact on society. Holmes and Watts (2006) gives the following definitions; corporate social responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the work force and their families as well as the local community and society at large.

“Corporate Social Responsibility is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunities is building the skills of employees, the community and the government” (A publication of World Business Council for Sustainability Development, 2006).

The European Commission in 2010 as obtained in a free encyclopedia from wikipedia hedges its bets with two definitions wrapped into one; “A concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. A concept whereby companies integrate social and environmental concerns in their business operations, and in their interaction with their stakeholders on a voluntary basis”.

A free encyclopedia from Wikipedia (2010) viewed corporate social responsibility as “corporate conscience, corporate citizenship, responsible business, Sustainable Responsible Business (SRB), or corporate social performance and a form of corporate self regulation integrated into a business model”. Further emphasis on it include taking CSR as a concept or policy that would function as a built-in, self regulating mechanism whereby business would monitor and ensure its support to law, ethical standards and international norms.

Nickels, et al. (2008) express their definitions of CSR as “the concern businesses have for the welfare of society”. It is based on a company’s concern for the welfare of all its stakeholders, not just the owners. CSR goes well beyond merely being ethical. It is based on a commitment to such basic principles as integrity, fairness and respect.

According to Davies (2005), “a firm is not being socially responsible if it merely complies with the minimum requirement of law”. Social responsibility goes one step further; it is a firm’s acceptance of social obligation beyond the requirement of the law. In accordance with the view of Friedman (2002), a corporation or an enterprise engages in socially responsible behaviour when it pursues a profit within the constraint of law as imposed by the society”. He also believed that there is one and only one social responsibility of business to using its resources and engage in activities designed to increase its profit so long as it stays with the rule of the game.

Johnson and Scholes (2000) suggested that social responsibility and business can be analysed using a three level model: macro, corporate and the individual levels of analysis. The macro level is concerned with the behaviour, power and influence of business at a national and global level. Johnson and Scholes (2000) suggest four corporate categories into which organisations may fit.

The first corporate categories are those organizations which accept Milton Friedman’s claim that the business of business is business and that the only responsibility of business is to increase its profit. Secondly, there are those organizations, which despite tending towards the beliefs of the first group, also acknowledge the growing social pressure for business to recognize and meet its social responsibilities. The third corporate group comprised companies that are termed progressive organisation and are characterized by a belief that performance should be judged by more complex criteria than profit alone. Finally, these are corporate organizations which have core objective of meeting particular social needs; in this case, making a profit is, at best, secondary to meeting social need (Johnson and Scholes, 2000). The individual level concerns the behaviour of individual employees in a given organisation.

Gould (1992) opined that “corporate social performance is an important consideration for many investors in developed economies who believes that an organization’s good social performance is not only socially responsible but leads to good financial performance”. Companies operating in Nigeria should take cues from companies in developed economies to reduce clash of interest between communities and companies.

Gordon Brown, the British Prime Minister points that “corporate social responsibility goes for beyond the old philanthropy of the past- donating money to good cause at the end of the financial year and is instead on all year round responsibility that companies accept for the environment around them, for best working practices, for their engagement in the local communities and for their recognition that brand names depends not on quality, price and uniqueness but on how cumulatively, they interact with companies workforce, community environment…” (First Bank of Nigeria Plc., 2007).

According to Adi (2005), “good corporate responsibility in business should promote the long-term good of the company and not necessarily of the majority or minority stakeholders. It is well understood that neglecting or bypassing the interests of stakeholders like shareholders, employees, suppliers, customers, consumers, the government or the society at large is likely to adversely affect the long-term interests of the company. Good corporate social responsibility entails a strong performance ethic framework leading to a true meritocracy (Matama Rogers, 2006).

According to Wartick and Cochran (1985), “Corporate social responsibility incorporates the interaction between the principles of social responsibility, the process of social responsiveness, and the policies and programs designed by corporations to address social issues. CSR is considered to be comprised of factors that encapsulate a firms’ attention to social and environmental issues (Hillman and Keim, 2001).

Various other developments on the concept of CSR are examined as follows:

Arx and Ziegler (2008), have studied the relationship between CSR and corporate financial performance. The study expressed a positive relationship between these two variables. Likely, many studies have supported, positive effects of CSR on consumer behaviour including Brinkman and Peattie (2008) and Ali et al (2010). Heshin and Achoa (2008) also emphasized the strategic significance of corporate social responsibility for corporate succees.

Kashyap, et al (2006) supported the concept of CSR by corporation and endorsed that such actions of corporations should also be reported as information to the consumer, community, competitors and the government.

Kashyap, et al (2006); Gua, et al (2009) and Ali, et al (2010) emphasized on the significance of CSR for the satisfaction and retention of different stakeholders and sustainable corporate performance. These studies were conducted in different contexts including CSR and financial performance, consumer behaviour and employee behaviour.

Brammer, et al (2007) noted that CSR increased employee organizational commitment. Sharma, et al (2009) discussed the role of Human Resource Manager (HRM) as main contributor towards CSR performance and development. Stawiski, et al (2010) conducted a research where he stated that “Researches proved that CSR supports employee organizational commitment but not as much as employee job satisfaction, the good deeds of corporation motivates and feel a strong sense of belongingness with the organization. Stawiski, et al (2010) proposed that “in order to yield maximum benefits of CSR, employees should be involved in decision making regarding which actions should be undertaken relating to environment, community, employees themselves and the likes.

Trucker (2008) found CSR as the strongest positive predictor or employee organizational commitment. This has also been viewed in the case of Pakistan especially in 2005 earthquake, when many companies took their employees for rehabilitation of earthquake victims on voluntary basis. This action of corporations not only built positive rapport of corporation with society but also a strong sense of belongingness and pride among employees as well.

This motivates employees to remain committed to the organization and work harder for its progress. The positive association between CSR actions and corporate financial performance is also well supported by many studies including Stanwick and Stanwick (1998); Arx and Ziegler (2008) and Rettab, et al (2009).

VIEWS ON SOCIAL RESPONSIBILITY

According to Robbins and Coulter (2007) in their book, it was established that two different views dominated the thinking here. On one side, there is the classical or purely economic view and on the other side is the socio-economic view.

2.3.1 THE CLASSICAL VIEW

The classical view as expressed by Robbins and Coulter (2007) elicits that management’s only social responsibility is to maximize profits. The most outspoken advocate of this approach is economist and Nobel laureate, Milton Friedman. He argues that manager’s primary responsibility is to operate the business in the best interests of the stockholders (the owners of a corporation). Friedman contends that stockholders have a single concern: financial return. He also argues that anytime managers decide to spend the organization’s resources for “social good”, they are adding to the cost of doing business. These costs have to be passed on to consumers either through higher prices or be absorbed by stockholders through a smaller profit returned as dividends. Do understand that Friedman is not saying that organisations should not be socially responsible, he think they should. But the extent of that responsibility is to maximize profits for stockholders.

2.3.2 THE SOCIO-ECONOMIC VIEW

The socio-economic view is the view that management’s social responsibility goes beyond making profits to include protecting and improving society’s welfare. The expression above was as given by Robbins and coulter (2007). They were of the opinion that “this position is based on the belief that corporations are not independent entities responsible only to stockholders”. They went further by saying that they (i.e. management of businesses) also have a responsibility to the larger society that allows their formation through various laws and regulations and supports them by purchasing their products and services. In addition, proponents of this view believe that business organizations are not just merely economic institutions. Society expects and even encourages businesses to become involved in social, political and legal issues.

2.4.0 ARGUMENTS FOR AND AGAINST CORPORATE SOCIAL RESPONSIBILITY

Robbins and Coulter (2007) devised another way to decide whether organizations should be socially responsible. This is to look at the arguments for and against corporate social responsibility as follows:

2.4.1 ARGUMENTS FOR

– Public expectations: Public opinion now supports businesses pursuing economic and social goals.

– Long-run profits: Socially responsible companies tend to have more secured long-term profits.

– Ethical obligation: Businesses should be socially responsible because responsible actions are the right thing to do.

– Public image: Business can create a favourable public image by pursuing corporate social goals.

– Better environment: Business involvement can help solve difficult social problems.

– Discouragement of further governmental regulation: By becoming socially responsible, businesses can expect less government regulation.

– Balance of responsibility and power: Businesses have a lot of power and an equally large amount of responsibility is needed to balance against that power.

– Stockholder interests: Social responsibility will improve a business’ stock price in the long-run.

– Possession of resources: Businesses have the resources to support public and charitable projects that need assistance.

– Superiority of prevention over cures: Businesses should address social problems before they become serious and costly to correct.

2.4.2 ARGUMENT AGAINST

– Violation of profit maximization objective: Businesses is being socially responsible only when it pursues its economic interest.

– Dilution of purpose: Pursuing social goals dilutes business’ primary purpose – economic productivity.

– Costs: Many socially responsible actions do not cover their costs and someone must pay those costs.

– Too much power: Businesses have a lot of power already and if they pursue social goals they will have even more.

– Lack of skills: Business leaders lack the necessary skills to address social issues.

– Lack of accountability: There are no direct line of accountability for social actions.

2.5 SOCIALLY RESPONSIBLE BUSINESS ACTIVITIES

An outline given by Nickels et al (2008) in respect of some of socially responsible business activities are given as follows:

Community-related activities such as participating in local fund raising campaigns, donating executive time to various non-profit organizations (including local government) and participating in urban planning and development.
Employee-related activities such as establishing equal opportunity programmes, offering flex time and other benefits, promoting job enrichment, ensuring job safety and conducting employee development programmes.
Political activities such as taking a position on nuclear safety, gun control, pollution control, consumer protection, and other social issues and working more closely with local, state and federal government officials.
Support for higher education, the arts, and other non-profit social agencies.
Consumer activities such as ensuring product safety, creating truthful advertising, handling complaints promptly, setting fair prices and conducting extensive consumer education programmes.

2.6 UNETHICAL/ANTI-SOCIAL BUSINESS ACTIVITIES

Robbins and Coulter (2007) in their observation of the fact that the report of stories of irresponsible and unethical questionable practices in large public companies is increasing daily, came up with some among these practices, from the point view of a survey carried out in the US and are listed thus; cutting corners on quality control, covering up incidents, abusing or lying about sick days, lying to/or deceiving customers, putting inappropriate pressure on others, falsifying numbers or reports, lying to or deceiving superiors on serious matters, withholding important information, misusing or stealing company property and engaging in copyright or software infringement.

APPROACHES TO MEETING SOCIAL RESPONSIBILITY NEEDS

Social responsibility as earlier pointed out, is an important phenomenon and management in the manufacturing companies should carefully map out viable and reliable activities. By this, various managerial approaches through which social responsibility programmes can be met as itemized in a free encyclopedia from Wikipedia (2010), is defined below:

COMMUNITY-BASED DEVELOPMENT APPROACH:

This is an approach involving the working of the corporation, in collaboration with the local communities to better themselves. Often activities companies participate in are establishing education facilities for adults and HIV/AIDS education programmes (a common CSR project in Africa).

PHILANTHROPICAL APPROACH:

An approach, which include monetary donations and aid given local organizations and impoverished communities in developing countries. Some organisations do not like this approach as it does not help build on the skills of the local people, whereas community-based development approach generally leads to more suitable development.

DIRECT INCORPORATION APPROACH:

From Wikipedia Free encyclopedia (2010), another approach to the concept of CSR is to incorporate the CSR strategy directly into the business strategy of an organisation. For example, procurement of fair trade tea and coffee has been adopted by various businesses including KPMG. Its CSR manager commented, “fair trade fits very strongly into our commitment to our communities.

CREATING SHARED VALUE (CSV) APPROACH:

This approach deals with obtaining increasing corporate responsibility interest. The shared value model is based on the idea that corporate success and social welfare are interdependent. A business needs a healthy, educated workforce, sustainable resources and adept government to compete effectively.

STAKEHOLDERS’ APPROACH:

This approach according to Lipsey (2007), cited also by Tomisin (2009) in his study stated that, “stakeholders approach presumed corporate executives as agents of the owner and need to be responsible for conducting the business in accordance with the desire of the owners while still conforming to the basic rules of the society.

2.8 DIMENSIONS OF SOCIAL RESPONSIBILITY INVOLVEMENT

Three different authorities like Adrian and Bob (2002), Nickels et al (2008) and Segun (2008) recognized the dimensions to which business organizations must take their social responsibility to. They viewed it through the stakeholders’ perspective (those to whom businesses are responsible). These dimensions are: responsibility to its owners/investors/shareholders; responsibility to its customers; responsibility to its employees; responsibility to its suppliers; responsibility to local community; responsibility to subsidiaries; responsibility to the financial community and ultimately, responsibility to government.

RESPONSIBILITY TO OWNERS/INVESTORS/SHAREHOLDERS:

Nickels, et al. (2008) opined that those cheated by corporate wrongdoings are the shareholders themselves. They expressed that unethical behaviour may seem to work for the short-term, but it guarantees eventual failure. Some people believe that before you can do good you must do well (i.e. make a lot of money); others believe that by doing good, you can also do well. Many people according to Nickels, et al. (2008), believe that it makes financial as well as moral sense to invest in companies that are planning ahead to create a better environment. By choosing to put their money into companies whose goods and services benefit the community and the environment, investors can improve their own financial health while improving society’s health.

RESPONSIBILITY TO CUSTOMERS

Adrian and Bob (2002) identified the need for managers to direct the corporate social responsibility towards organization’s customers. They were of the perspective that companies should have a duty to provide goods and services which satisfy their (companies) long-term and broad needs rather than their immediate felt needs. In their own view, Nickels, et al. (2008) stated that “one responsibility of business is to satisfy customers by offering them goods and services of real value”.

RESPONSIBILITY TO EMPLOYEES

Nickels, et al. (2008) put the responsibility to employees by corporation forward this way – “Businesses have several responsibilities to employees. Firstly, they have a responsibility to create job if they want to grow. It’s been said that the best social programme in the world is a job. Once a company creates jobs, it has an obligation to see to it that hard work and talent are fairly rewarded. Employees need realistic hope of better future, which comes only through a chance for upward mobility. People need to see that integrity, hard work, goodwill, ingenuity and talent pay off. Studies have shown that the factors that most influences a company’s effectiveness and financial performance is human resource management….”

RESPONSIBILITY TO SUPPLIERS

Taking into account the needs of suppliers is a combination of shrewd business sense and good ethical practice. Adrian and Bob (2002).

Segun (2008) posits that suppliers can sometimes be critical to business success. This often occur, according to him, where vital inputs are in scarce supply or it is critical that supplier are delivered to a company on time and in good condition.

RESPONSIBILITY TO LOCAL COMMUNITIES

Adrian and Bob (2002) considered her that market-led companies often try to be seen as a ‘good neighbour’ in their local community. Such companies can enhance their image through the use of charitable cotirbtions, sponsorship of local events and being seen to support the local environment. They confirmed that, this may be interpreted either as part of a firm’s genuine concern for its local community or as a more cynical and pragmatic attempt to buy favour where its own interests are at sake.

RESPONSIBILITY TO SUBSIDIARIES / INTERMEDIARIES

Adrian and Bob (2002) expressed that; “companies must not ignore the wholesalers, retailers and agents who may be crucial interfaces between themselves and their final consumers. This intermediaries may share many of the same concerns as customers and need reassurance about the company’s capabilities as a supplier who is capable of working with intermediaries to supply goods and services in an ethical manner.

RESPONSIBILITY TO FINANCIAL COMMUNITY

This includes financial institutions that have supported, are currently supporting or who may support the organization in the future shareholders – both private and institutional – form an important element of this community and must be re-assured that the organization is going to achieve its stated objectives. Many company expansion schemes have failed because the company did not adequately consider the needs and expectations of potential investors… Adrian and Bob (2002).

RESPONSIBILITY TO GOVERNMENT

According to Segun (2008), business organisations need to perform their role towards the government by prompt payment of taxes levied on them and behaving ethically. Such as proper care being provided for government acquired infrastructural facilities.

2.9 WATCHDOGS TO CSR PRACTICES – SOCIAL AUDITING

It is nice to talk about having organisations become more socially responsible. It is also encouraging to see some efforts made toward creating safer products, cleaning of the environment, designing more honest advertising and treating women and minorities fairly. But is there any way to measure whether organisations are making social responsibility on integral part of top management’s decision making? The answer is Yes, and the term that represents that measurement is social auditing.

Nickels, et al, (2008) defined social auditing as “a systematic process of evaluating an organization’s progress towards implementing programmes that are socially responsible and responsive”.

In addition to the social audits conducted by companies themselves, Nickel, et al. (2008) recognized four types of groups that serve as watchdogs regarding how well companies enforce their ethical and social responsibility policies:

Socially conscious investors who insist that a company extend its own high standards to all its suppliers.
Environmentalists who apply pressure by naming names of companies that do not abide by the environmentalists’ standards.
Union officials who hunt down violations and force companies to comply to avoid negative publicity.
Customers who take their business elsewhere if a company demonstrates what they consider unethical or socially irresponsible practices.

2.10 DECISIONS HAVING DIMENSION OF SOCIAL RESPONSIBILITY

Robbins and Coulter (2007) identified the following decisions as having dimension of social responsibility. They include:

employee relation;
philanthropy;
pricing;
resource conservation;
product quality and safety; and
doing business in countries that devalue human rights.

2.11 SOCIAL INVOLVEMENT AND ECONOMIC PERFORMANCE

The way to look at the issue of corporate social responsibility and economic performance, identified by Robbins and Coulter (2007) is by evaluating socially responsible mutual stock funds. These mutual funds according to them, provides a way for individual investors to support socially responsible companies. Typically, these funds use some type of social screening or applying social criteria to investment decisions. For instance, these funds usually will not invest in companies that are involved in liquor, gambling, tobacco, nuclear power, weapons, price fixing, fraud, or in companies that have poor product safety, employee relations and environmental track records. Although, some people may think that these social funds are firm (for people more interested in saving spotted owls than saving for retirement”, that just is not the case.

In a study carried out by Robbins and Coulter (2007), it was observed that majority of them (the studies) showed a positive relationship between social involvement and economic performance. The studies were conducted through the analysis of the content of annual reports, news articles, or “reputation” indexes in determining the company’s social action, and measuring its economic performance under he study of its net income, return on equity or per share stock prices.

2.12 SOCIAL IMPACT MANAGEMENT

Management is the process undertaken by one or more individuals to coordinate the activities of others, to achieve results only achievable by one individuals acting alone. According to Prussia (2007), explanation of management reflects on the activities of any organization’s management team. A organization’s management team according to him is socially responsible if it effectively play, organizes, influence and control social programmes.

As stakeholders continue to pressure organisations to respond to societal issues, managers are expected to be responsible in the way they do business. Some experts and writers like Robbins and Coulter (2007) have suggested that managers address their social responsibilities from the perspective of the impacts they have on society. This they referred to as Social Impact Management, which they have defined as an approach to managing in which managers examine the social impacts of their decisions and actions. This concept attempts to get business people to understand the interdependency between business needs and wider societal concerns. For instance, in the marketing area, social impact management would address the cultural impacts of advertising messages or the impacts of product development, design and pricing on customers; in the human resource management area, it would address issues such as employee rights and participation, work/life balance, and workplace equity and diversity; in the finance area, it would involve issues such as differential access to capital, the changing nature and role of shareholders, or the impacts of money flows across international borders. Thus, as managers plan, organize, lead and control, they would ask, “How does this work when we think about the social context within which business operations?” At the least, if managers think about managing social impacts, just as they manager risk or strategy, they will be more aware of whether they are being responsible in their decisions and actions.

Robbins and Coulter (2007) assert that doing the right thing that is, managing responsibly and ethically, is not always easy. However, because society’s expectations of its institutions are regularly changing, managers must continually monitor those expectations. What is acceptable today may be a poor guide for the future.

According to Prussia (2007), he argued that management should;

Never make assumptions
Consult outside (expertise) opinion
Be careful to ensure that such outside influence is not too sympathetic or too critical
Ensure that there is direct top management involvement in such social assignment.

2.13 SOCIETAL ROLE IN SOCIAL RESPONSIBILITY

Societal responsibility is not a one-sided affair. Just as business organisations are expected of social services in the society, the society has to take certain steps in order to aid the implementation of enterprises’ social responsibility programmes/objectives.

Society, as we have earlier seen in this chapter, has a cardinal role to make rules, where necessary, make the private sector socially responsible. If society sets such rules reasonably well, it will only need to assist business in living up to its (business) responsibilities.

According to McAfee (2004), he pointed out that the society is expected to perform the following roles:

Set clear and consistent rules through government. Since business enterprises need an appropriate measure of regulation, the society is expected, in collaboration with the government to formulate consistent rules by government to social activities. In other words, it should be what it means.
Keeping the rule technically. This emphasizes on the work apathy of rules made, taking into consideration the nature of environmental variables.
The rule must be economically feasible because whatever rules were made, society ultimately has to pay, especially as total cost of government regulation of business is enormous, even though it cannot be easily computed.
Ensure that productive rules are formulated.
The members of society can make the rules result-oriented and not procedure-pre-describing.

This will be achieved with the support of government in which case, emphasis will have to shift from means to ends.

2.14 THE BUSINESS CASE FOR CORPORATE SOCIAL RESPONSIBILITY

The business case for corporate social responsibility within a company will likely rest on one or more of these arguments:

HUMAN RESOURCES:

A CSR programme can be an aid to recruitment and retention, particularly within the competitive graduate student market. Potential recruits often ask about a firm’s CSR policy during an interview, and having a comprehensive policy can give an advantage. CSR can also help improve the perception of a company among its staff, particularly when staff can become involved through payroll giving, fund raising activities or community volunteering.

RISK MANAGEMENT

Managing risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. These can also draw unwanted attention from regulators, courts, government and media. Building a genuine culture of ‘doing the right thing’ within a corporation can offset these risks.

BRAND DIFFERENTIATION

In crowded marketplaces, companies strive for a unique selling proposition that can separate them from the competition in the mind of consumers. CSR can play a role in building customer loyalty based on distinctive ethical values.

LICENSE TO OPERATE

Corporations are keen to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps, they can persuade governments and the wider public that they are taking issues such as health and safety, diversity or the environment seriously as good corporate citizens with respect to labour standards and impacts on the environment.

CRITICISMS AND CONCERNS

Critics of CSR, as well as proponents debate a number of concerns related to it. These include CSR’s relationship to the fundamental purpose and nature of business and questionable motives for engaging in CSR, including concerns about insincerity and hypocrisy.

SOCIAL AWARENESS AND EDUCATION

The role among corporate stakeholders is to work collectively to pressure corporations that are changing. Shareholders and investors themselves, through socially responsible investing are exerting pressure on corporations to behave responsibly. Non-governmental organisations are also taking an increasing role, leveraging the power of the media and the internet to increase their scrutiny and collective activism around corporate behaviour. Through education and dialogue, the development of community in holding businesses responsible for their actions is growing (Roux, 2007).

ETHICS TRAINING

The rise ofethics training inside corporations is another driver credited with changing the behaviour and culture of corporations. The aim of such training is to help employees make ethical decisions when the answers are nuclear. The most direct benefit is reducing the likelihood of “dirty hands” (Grace and Cohen, 2005), fines and damaged reputations for breaching laws or moral norms. Organisations also see secondary benefit in increasing employee loyalty and pride in the organisation. Caterpillar and Best Buy are examples of organisations that have taken such steps (Thilmany, 2007).

Other business case for CSR within a company, taken from the same source as those already discussed above are given thus:

Nature of business;
Motives;
Ethical consumerism;
Globalization and market forces;
Laws and regulation;
Crises and their consequences; and
Stakeholders’ priorities.

Source: The Free Encyclopedia from Wikipedia

2.15 COST OF SOCIAL RESPONSIBILITY: SHORT-TERM AND LONG-TERM BENEFITS

Obviously, social responsibility is translated to mean profitable investment by corporate business in the social lives of members of its host society. Social investment should however be supportive of market objectives and business directions. In addition to these, organizations which invest in social development programmes tend to device benefits which are reaped and enjoyed on long-term basis. It is thus a clear fact that for an organisation to absolutely reap and enjoy such benefits after fully investing in social development programmes, there is need for the introduction of a viable true perspective.

Most scholars who argue that businesses have a stake in the social responsibilities of their host communities view social investment from two perspective. Over the short-term and over the long-term. Prussia (2007), for example, notes that often times, organisation lay strict emphasis on profit maximization in the short term and allocate their resources essentially to gain immediate returns from such investment. He further argues that this type of business objective is myopic since the success or failure of the operations of an organization can be more easily determined by raising the social investment prospect over the long-term.

In the same vein, if social investment is well focused and channeled, it will strengthen the society’s infrastructural base thereby, assisting government in the duties of rendering social service (Tomisin, 2009).

Furthermore, social investment will help make develop, over the long-term, vital markets for business.

In a developing economy, such as Nigeria, innovative ways may be developed to finance highly capital intensive schemes like the building of a dam for irrigation and hydroelectric power. When this is done, subsequent schemes which are closely related, such as Agricultural productions and supply of pipe borne water can be provided (Tomisin, 2009).

Though, the yield may be difficult to be accurately quantified in a conventional sense, they will at least, create a more attractive market for investors, while also creating and giving the country’s economy a boost.

By way of summary, social responsibility helps to build and assist businesses in the long-run to expand its market frontiers. In spite of the argument against business performing social responsibility, social responsibility in modern time has become inevitable as the only evident system that can deal effectively with the new condition found in our society. How far the manufacturing companies of the study has fared in the area of social responsibility to members of the society will be discussed and analyzed under chapter four.

2.16 FACTORS RESPONSIBLE FOR THE NEGLECT OF SOCIAL RESPONSIBILITY

There are so many factors, identified by Segun (2008), militating against engaging in CSR and which have caused the neglect of social development in the society. Some according to him are listed as follows:

Lack of management concerns for CSR: Many managers do not perceive social responsibility as one of the key functions of management; their training and experience do not arouse such consciousness in them.
Total reliance on publicly owned enterprises in the provision of services in health, water, rail, electricity, etc. Since these large enterprises are financed by tax payer, it is assume that they are socially responsible since their preoccupation is in social welfare redistribution.

Societal little expectation of social responsibility: The various bodies to play dominant role were non-functional. Generally, there is no well established department of public affairs, scarcely any group of individual bodies that scrutinize corporate responsibility or welfare in any Nigerian business organisation.

Unethical business practices such as fraud and forgeries, dishonesty and over inflation of invoices, embezzlement, etc. do not provide a conducive environment for organization to perform their social obligation.
Profit-oriented concern or pursuit by enterprises owned by foreign firms to the detriment of caring less for social responsibility.
Relative small size of Nigeria business in terms of size and financial strength of many enterprises. This precludes the consideration of many social responsibilities as a task that is serious to be considered.

2.17 CASES IN FAVOUR OF CORPORATE SOCIAL RESPONSIBILITY

CASE ONE:

“A busload of Samsung employees and managers are transported each month to a city pack, where they spread out to pick up garbage, pull weeds, and plant saplings. Managers even volunteer to help spruce up employee homes. Local employees feel such loyalty to the company that in the height of an unrest that destroyed many businesses in Indonesia, local employees and their neighbours pulled together to protect Samsung’s refrigerator factory” (Nickel, et al. 2008)

CASE TWO:

“… Avon products Inc. was being socially responsible when it started its Breast Cancer Crusade to provide women with breast cancer education and early detection screening services and which after 14 years, has raised more than $400 million in 50 countries worldwide” (Robbins and Coulter, 2007).

CASE THREE:

“During March 2006, Wal-Mart Stores – recognizing that hunger is a serious issue that has a lasting impact on not only children and our elderly, but on our entire nation, sponsored a programme to help the course. Customers donated money to Second Harvest Network by purchasing pieces and Wal-Mart and Sam’s Club matched the first $5 million raised. As part of this programme, Wal-Mart ran advertisements in large newspapers showing the word H_NGER and the tag line, “The problem cannot be solved without You” (Robbins and Coulter, 2007).

CASE FOUR:

This case has to do with responsibility towards employees when considering salaries and benefits. “… the wage and benefit packages offered by Castro are among the best in hourly retail. Even part-time workers are covered by Castro’s health plan, and the workers pay less for their coverage than at other retailers such as Wal-Mart. The increased benefits reduce employee turnover. Employee turnover at Castro is less than a third of the industry average. Given that the U.S. Department of labour estimates that replacing employees costs between 150 and 250 percent of their annual salaries, retaining workers is good for business as well as for morale” (Nickels, et al. 2008).

CHAPTER THREE

RESEARCH METHODOLOGY

3.0 INTRODUCTION

This is a blue-print of the entire research work. Therefore, the research design used in this study is the survey research design. This allowed for a detailed analysis of how corporate social responsibility influence the performance of manufacturing companies in Nigeria, taking some manufacturing companies in Ilorin, Kwara State as a case study.

Research survey is believed to be the most appropriate design to get a critical analysis of the issue of CSR of these sample companies upon which the research have been conducted. The design is also seen as a complimentary effect to the primary data which the researcher has obtained.

3.1 POPULATION OF THE STUDY

The population of this study comprises of all 36770 staff of Tuyil Pharmaceutical Limited , Dangote Flour Mill (Ilorin branch/plant), The Coca-Cola Company, Butterfield Bakery obtained from the the researcher survey and the questionnaire distributed as at 30^th May, 2013

SAMPLE SIZE AND SAMPLING TECHNIQUE

The sample size of this study is 400 using Yaro Yamane’s formula:

n= N

1+N(e)²

Were n= sample size

N= population size

E= level of significance (0.05)

400 questionnaires were given strictly to the top managers of the manufacturing company. Top management officers are referred to here because, they are the set of people that take decision and perform the function of social responsibility.

Random sampling techniques were adopted in this study. Individuals were selected randomly for the purpose of equal presentation and unbiased of the sample.

TYPE AND SOURCES OF DATA

Data have been expressed as unorganized information that need undergo processing before it can give reasonable and meaningful information for informed decision.

For the purpose of this study, the primary sources of data have been adopted because of the nature of the work, in order that adequate research objectives can be treated and be met.

INSTRUMENT OF THE STUDY

The research instrument that has been adopted for this study is questionnaire administration. It was resolved with the researcher’s discretion, that it gives the needed and relevant information without any undue influence.

The questionnaire designed has two sections; section A dealt with the bio-data of the respondents, while section B dealt with the closed-ended questionnaire with multiple choices.

Questionnaire is of two types, i.e. a closed ended and open ended questionnaire. Closed ended questionnaire is where question offers the respondents the choice of answers. The respondent is restricted to make a choice without expressing detailed view, such results are easy to code and collate by the researcher.

Open ended questionnaire on the other hand allows the respondents to express their view to a given issues/questions without limit to the responses.

Therefore, for the purpose of this study, the researcher has adopted the use of closed-ended form of questionnaire. A total of four hundred (400) copies of questionnaires were distributed to the selected officers of the sampled manufacturing companies. Out Of the four hundred (400) questionnaires distributed,two hundred and seventy (270) were returned, completely filled by the respondents. This represents 67.5% of success.

METHOD OF DATA ANALYSIS

In this study, data collected through the use of questionnaire are analyzed using statistical technique of both descriptive and inferential statistics.

The descriptive statistic involves the use of simple percentage for easy description, analysis and interpretation of responses. On the other hand, inferential statistic involves the use Rank Order Correlation Coefficient to test the research hypothesis at 0.05 level of significance.

Rank Order Correlation Coefficient is calculated using;

Where d = difference between the Rx and Ry; and

N = Number of respondents

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.0 INTRODUCTION

The fieldwork for this research study had been carried out and the need arise to analyze the data collected through the use of questionnaire, which serves as the research instrument. This chapter therefore, gives the detailed analysis and interpretation of the results. The responses obtained from the result of the questionnaire were analyzed to test the impact of corporate social responsibility on Nigerian Manufacturing companys’ performance, using four selected manufacturing companies in Ilorin metropolis as case study.

This chapter is divided into three (3) sections, which include the analysis and interpretation of the demographic data; analysis and interpretation of the questionnaire results; and the testing of research hypothesis.

4.1 QUESTIONNAIRE ADMINISTRATION RESULTS

The questionnaire designed on the impact of corporate social responsibility on Nigerian manufacturing Industries’ performance were administered to four hundred (400) staff of the four sampled companies purposely considered for this study.

In order to ensure quick responses and avoid losses, copies of the questionnaires were administered personally by the researcher to respondents (Top and Middle level Management) in their respective companies. They were administered one day and the collection was done personally. Of the entire four hundred (400) questionnaires administered, the researcher was able to obtain back two hundred and seventy (270), representing sixty-seven point five percent (67.5%) success rate; while the remaining one hundred and thirty (130) constituting thirty-two point five percent (32.5%) were not able to be gathered due to some logistics and busy schedule on the part of the respondent involved.

The data have been analyzed by means of descriptive statistics. All results have been expressed using percentage and emphases were laid on those analyses that will enhance the summary of the result.

4.2 ANALYSIS OF DEMOGRAPHIC DATA

Table 4.2.1: Industry Distribution of Respondents

Attribute

Frequency

Percentage (%)

Cumulative Percentage (%)

Butterfield Bakery

Coca-Cola Plc.

Dangote Flour Mill

Tuyil Pharmaceutical Industry

100

Total

270

100

Source: Filed Survey, 2014.

From table 4.2.1 above, the sampled respondents from Butterfield Bakery represent twenty-two percent (22%) of the entire sample of respondents; Coca-cola Plc. had twenty-six percent (26%). Dangote Flour Mill command the highest with thirty percent (30%) of the respondents and finally, Tuyil Pharmaceutical Industry had twenty-two percent (22%) of the total respondents.

Table 4.2.2: Age Distribution of Respondents

Attribute

Frequency

Percentage (%)

Cumulative Percentage (%)

35 yrs – 40 yrs

41 yrs – 50 yrs

51 yrs – 60 yrs

61 yrs and above

151

–

100

Total

270

100

Source: Field Survey, 2014.

From table 4.2.2 above, it will be observed that fifty-six percent (56%) of the total respondents are within the age range of 35 to 40 years of age; thirty-three percent (33%) of the respondents are between 41 – 50 years of age; eleven percent (11%) falls between 51 and 60 years of age; and finally none of the respondents were above 60 years of age.

The implication here is that the greater portion of the respondents falls within the age of 35 and 50 years of age (89%). This implied the level of high reliance that can be placed on the responses because of the belief in their understanding of the variable under study.

Table 4.2.3: Marital Stats Distribution of Respondents

Attribute

Frequency

Percentage (%)

Cumulative Percentage (%)

Married

Single

270

–

100

–

100

Total

270

100

Source: Field Survey, 2014.

Table 4.2.3 indicates that the entire respondents are married. Therefore, one hundred percent (100%) responses gotten have been taken from the married class. This invariably shows the respondents are quite responsible and their opinion could be very reliable.

Table 4.2.4: Managerial Level Distribution of Respondents

Attribute

Frequency

Percentage (%)

Cumulative Percentage (%)

Top Level

Middle Level

Lower Level

181

100

Total

270

100

Source: Field Survey, 2014.

Table 4.2.4 above shows that sixty-seven percent (67%) of the respondents are top level management employee; twenty-nine percent (29%) were from the middle level management; while four percent (4%) of the respondents are on lower level managerial scale.

From the above results, the researcher was able to attach more reliability and validity to the data generated because the major concept of corporate social responsibility performance is a function of the top level managers.

Table 4.2.5: Educational Qualification Distribution of Respondents

Attribute

Frequency

Percentage (%)

Cumulative Percentage (%)

WAEC / NECO

NCE / ND

HND / B.Sc.

M.Sc. / MBA .

–

311

–

100

Total

100

Source: Field Survey, 2014.

From the table above, it will be observed that no respondent has their highest qualification to be WAEC/NECO or NCE/ND. Seventy-eight percent (78%) of the respondents qualified through HND/B.Sc.; while twenty-two percent (22%) possess M.Sc. / MBA. qualification.

In view of the above statistics, virtually all the respondents have full knowledge of the concept of corporate social responsibility.

Table 4.2.6: Distribution of Respondents by Year of Experience

Attribute

Frequency

Percentage (%)

Cumulative Percentage (%)

1 yr – 2 yrs

3 yrs – 5 yrs

6 yrs and above

170

100

Total

270

100

Source: Field Survey, 2014.

From tale 4.2.6 above, fifteen percent (15%) respondents have had a working experience of between a year and two within the industries considered together; sixty-three percent (63%) of the total respondents had three (3) to five (5) years working experience within the industries; twenty-two percent (22%) of the respondents had 6 years and above working experience.

The larger percentage of sixty-three (63%) and twenty-two (22%) combined invariably mean that the information gathered had been highly reliable due to the fact that the respondents have long years of experience in the industryand were quite aware of the corporate social responsibility policy of their respective companies.

4.3 HYPOTHESES TESTING

RELATIONSHIP TESTING USING SPEARMAN RANK ORDER CORRELATION COEFFICIENT

The formula which was earlier stated in chapter three of this research report is stated thus:

Where r = rank order correlation coefficient

D = different between the rank of X and rank of Y

X = “YES” responses obtained from field survey

Y = “NO” and “UNCERTAIN” responses obtained combined

to form “NO”

N = Number of questionnaire items responded to

DECISION RULE

A positive (+ve) result (i.e., 1 > (6åD² / N (N² – 1))) implies that there is a positive correlation between the YES responses which have been represented with X and NO responses that have been represented with Y. But a negative (-ve) result (i.e., 1 < (6åD² / N (N² – 1))) implies that there is a negative correlation between YES responses and NO responses.

Simply put, the “YES” responses denote that corporate social responsibility practices/performance should be encouraged while “NO” responses that have been obtained by adding NO and UNCERTAIN opinion, indicate a negative attitude towards the performance of corporate social responsibility. These categories of people do not see any significant relationship between CSR and Nigerian Manufacturing Industries’ performance.

4.3.1: RESEARCH HYPOTHESIS I

Ho₁: There is no significant relationship between Corporate Social Responsibility Performance and Manufacturing Companies’ Performance.

Therefore, the relationship between corporate social responsibility performance and manufacturing companies’ performance is presented and tested considering the table below:

RANK TABLE

YES (X)

NO (Y)

D = (Rx – Ry)

D² = (Rx – Ry)²

240

180

160

250

270

110

-2

-4

Total

=1–6 x 40

—————

5 (5^{2 –}1)

= 1– 240

——————

5x (25-1)

= 1 – 240

———

120

= 1 – 2 => r = – 1

After arriving at a negative result i.e., -1, conclusion is drawn that there is no positive correlation between the different opinion (represented with Yes (x) and No (y)) of respondents as to the subject matter of this research objective, that corporate social responsibility has a great impact on the performances of manufacturing corporations. It could be seen from the table above that majority of the respondents favour corporate social responsibility as against the small number of responses obtained as No.

4.3.2: RESEARCH HYPOTHESIS II

Ho₂: There is no significant relationship between Corporate Social Responsibility Performance and Corporate Financial Performance.

Therefore, the relationship between the two variables consisted in the hypothesis above are presented in the table below:

YES (X)

NO (Y)

D = (Rx – Ry)

D² = (Rx – Ry)²

200

210

190

270

-3

Total

=1– 6 x 38

—————

5 (5^{2 –} 1)

= 1– 228

——————

5x (25-1)

= 1 – 228

———

120

= 1 – 1.9 => r = – 0.9

Table 4.3.2 result shows that After arriving at a negative result i.e., -0.9, conclusion is drawn that there is no positive correlation between the different opinion (represented with Yes (x) and No (y)) of respondents as to the second of this research objective, that there is a significant relationship between corporate social responsibility performance and corporate financial performancei.e. growth, continuity and survival of any manufacturing industry in Nigeria. It could be seen from the table above that majority of the respondents favour corporate social responsibility performance as against the small number of responses obtained as No.

4.3.3 RESEARCH HYPOTHESIS III

Ho₃: there is no significant relationship between corporate social responsibility and the standard of living of the people.

The table presented below shows the test for the inclusion of corporate social responsibilities and it relationship to standard of living of the people in the manufacturing company’s in Nigeria.

YES (X)

NO (Y)

D = (Rx – Ry)

D² = (Rx – Ry)²

260

240

250

260

-2

Total

=1– 6 x 32

—————

15 (5^{2 –} 1)

= 1– 196

——————

5x (25-1)

= 1 – 196

———

120

= 1 –1.63 => r = – 0.63

After arriving at a negative result i.e., -0.63, conclusion is drawn that there is no positive correlation between the different opinion (represented with Yes (x) and No (y)) of respondents as to the third of this research objective, that there is a significant relationship between corporate social responsibility and standard of living of the people of any manufacturing industry in Nigeria. It could be seen from the table above that majority of the respondents favour corporate social responsibility as against the small number of responses obtained as No.

4.4 TESTING THE RELATIONSHIP OF THE THREE HYPOTHESIS USING SPEARMAN RANK ORDER CORRELATION COEFFICIENT

The formula which was earlier stated in chapter three of this research report is stated thus:

Where r = rank order correlation coefficient

D = different between the rank of X and rank of Y

X = “YES” responses obtained from field survey

Y = “NO” and “UNCERTAIN” responses obtained combined

to form “NO”

N = Number of questionnaire items responded to

DECISION RULE

YES (X)

NO (Y)

D = (Rx – Ry)

D² = (Rx – Ry)²

240

180

160

250

270

200

210

190

270

260

240

250

260

110

-1

-10

-6

-1

-6

144

196

100

Total

968

6 x 968 5,808

= 1 – = 1 –

15 (15² – 1) 15 (225 – 1)

5,808

= 1 –

3,360

= 1 – 1.7286 => r = – 0.7286

After arriving at a negative result i.e., -0.7286, conclusion is drawn that there is no positive correlation between the different opinion (represented with Yes (x) and No (y)) of respondents as to the subject matter of this research objectives, that corporate social responsibility has a great impact on the performances of manufacturing corporations in Nigeria. It could be seen from the table above that majority of the respondents favour corporate social responsibility as against the small number of responses obtained as No.

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 SUMMARY OF FINDINGS

The data obtained from the field indicated that all responses were given by married category of staff working in this study’s four manufacturing industries under consideration (i.e. Butterfield Bakery, Coca-Cola Plc., Dangote Flour Mill and Tuyil Pharmaceutical Industry). Most of the respondents who majorly constituted both the top level and middle level management staff falls between the age distribution of thirty-five (35) and fifty (50) years.

It was also observed that most of the respondents have spent more than three (3) years in the industry. This it is believed would have made them gained experience and understanding of the companies’ policy relating to the key issue being investigated – Corporate Social Responsibility impact on their performances.

As earlier pointed out, the data gathered were majorly directed and gotten from both top level and middle level management constituting ninety-seven percent (97%) of the entire respondents by managerial level distribution. The harvest of the instrument after administered resulted in an almost even distribution from the four sample industries.

Furthermore, the educational qualification criterion for distribution showed that a high percentage of the respondents have had their highest qualification within HND/B.Sc. and M.Sc. / MBA, making the level of validity and reliability placed on the data so high.

The year of establishment of the industries that have been considered also characterized the benchmark for measuring the relevancy of the data to the research work.

Finally, responses to items in the operational section of the questionnaire was presented and interpreted and the three formulated research hypothesis were tested. The use Rank Order Correlation Coefficient were adopted for the test of these hypotheses.

5.2 CONCLUSION

There is no doubt given the findings of this study, that corporate social responsibility performance plays significant role in improving the performance of manufacturing companies as a whole. After subjecting the data collected to thorough test, the results showed that corporate social responsibility performance should be incorporated into every organization’s long-term goal/plan which invariably helps in ensuring growth, survival and continuity.

Also, from the findings of the study, conclusion can be reached that corporate financial performance, in greater dimension, will rest on a company’s perspective and attitude towards social responsibility programmes it intended and have been embarking upon. Data gathered suggested that manufacturing firms will enjoy good and healthy relationship with financial institutions and creditors given that they prioritize and implement, in the environment, worth-while social responsibility projects. Consequently, investment portfolio of manufacturing corporations will witness an upward movement as a result of the benefit that would be accruable to them when corporate social responsibility is observed. Growth and development would seem inevitable as constituting the long-term impact of the phenomenon studied. Summarily here, corporate social responsibility expenditure impact positively on the performance of manufacturing firms.

The manufacturing industries / companies, through their voluntary performance of social responsibility over the years, has proved that investment in social responsibility activities do not cause the demise of the business since it would make it to establish that social responsibility may not conflict with other business operations, neither does it impoverish the provider of fund. Instead, it is found to be supportive to business interest.

It should however be noted that for the company to be more responsive in assisting the society in the provision of viable social services, management must step up its more basic mission of maximizing profits. With social responsibility obligation in view, management team will step up their drive towards making better profit day-in-day-out with which other objectives can be met conveniently.

Finally, it can be concluded that since the greater portion of the populace, together with the government, places more importance and expectation on businesses to be responsible towards their immediate environment, corporations have no choice than to incorporate its exercise as a core programme of theirs in order to keep on existing; ensure customers’ retention; improve the industry image; create goodwill; and to attract potential investors.

5.3 RECOMMENDATIONS

Despite all efforts that may have been given by manufacturing industries in the performance or discharge of social responsible activities, certain steps still need to be taken to improve socially responsibility programmes and improving the operational performance of the manufacturing corporations indirectly. Some suggestions are therefore offered which, if followed, would improve the implementation of the programmes and enhance both the status and profitability of the company.

Since manufacturing industries considers investment in social responsibility as beneficial to the society and its own business operation, it will be necessary for the company/industry to earmark more funds as social responsibility investment fund so as to meet the increasing demands from members of the public for its social assistance. To meet these increasing public demands, the company should maintain a fixed percentage of its after tax profit which would be spent each year. For instance, the company should invest more in Education and Training centre in order to ensure a qualitative manpower base from which it can recruit its qualified employees.
To effectively and efficiently meet the companies’ social responsibility objectives, the determination of social needs should not be concentrated exclusively in the hands of management staff. Rather, this study suggests the inclusion of other employee in planning process of the company’s social responsibility programmes with probably an outside consultant.

The outside consultant, who should be an expert in social relations, will introduce valuable and workable ideas which together would help ensure a more objective analysis of social needs of its environment and at the same time, benefiting the industry.

Manufacturing industries all across the nation should be compelled to include among their long-term objectives, if not in the short-term, corporate social responsibility programmes. This will go a long way in guiding their decisions almost every time their objectives are examined. It should be documented with proper control put in place to ensure their attainment.
Government can and should also help at making social responsibility exercise competitive. This will be achieved by public commendation spelt out in recognition of any project executed by any manufacturing corporation. This will invariably improve the image of the organization and indirectly promote its product, metamorphosizing into increased productivity and improved profitability.

Additionally, other firm would be moved to discharge social responsive programme, hence ensuring continued growth and development of the community at large.

In term of embarking on project that requires huge capital investment and of which the funds earmarked are inadequate. The researcher recommends here that the company should collaborate with allied organizations, which engage in voluntary social responsibility activities. This will enable the company and one or two related organizations, to pool their capital and manpower resources together to embark on, say a Dam construction project which is highly capital intensive. When the dam is built, energy may be generated to solve part of acute energy shortage problem experienced by some communities in Nigeria, aside from using it for irrigation purposes.
In a bid to also create an enabling and secured environment for the industries to operate, so that they can carryout the social responsibility, financial institution, headed by the Central Bank of Nigeria, should initiate financial support to the manufacturing industries in form of soft loans with low interest. This will enable manufacturing companies to be able to carry out some social responsibility projects in their host communities.
Finally, business organizations should make periodic assessment of their performance in social responsibility functions. This entails the conduct of regular social audits. Some audit will help the company to know what it needs to do to help the society, and also to appraise performance in selected social responsibility areas. This will also help the organization to set its priorities right, to enable it to concentrate efforts and scarce resources on worthwhile projects that are of benefit to society and consequently beneficial to it.

5.4 RECOMMENDATION FOR FURTHER RESEARCH

The researcher recommend further investigation into the concept of Corporate Social Responsibility (CSR) that, further research could focus on the impact or role of Corporate Social Responsibility Audit on the effectiveness of CSR performance/practice among corporations.

This study has excluded this area because it was discovered to be enough to constitute a whole problem for investigation and the time frame for this exercise have not allowed for its incorporation into this just concluded study. Doing this could help reveal organization’s policy and attitude towards social responsibility projects.

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QUESTIONNAIRE

Department of Accounting,

Faculty of Management Sciences,

Kogi State University,

P.M.B. 1008, Anyigba,

Kogi State.

Nigeria.

Dear Sir

QUESTIONNAIRE ON THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON THE PERFORMANCE OF MANUFACTURING COMPANY IN NIGERIA

This is to solicit your assistance in collecting the necessary data required for the investigation into the “Impact of Corporate Social Responsibility on the performance of Manufacturing company in Nigeria – a Case study of some selected manufacturing Industries in Ilorin metropolis”, among which your industry constitute the study sample.

This is purely an in academic exercise and all information acquired through this questionnaire from you will be treated with utmost confidentiality. The information received shall not be used for any other purpose other than this research work.

Thank you.

Yours faithfully,

Ojingiri Solomon

SECTION A: BIO DATA

Please, kindly tick (ü) inside the boxes provided as the information below applies to you;

Age:

25 yrs. – 40 yrs. [ ]

41 yrs. – 50 yrs. [ ]

51 yrs – 60 yrs [ ]

61 yrs. > [ ]

Marital Status:

Single [ ]

Married [ ]

Status of Respondent/Level of Management:

Top Level Management [ ]

Middle Level Management [ ]

Lower level Management [ ]

Educational Qualification

Primary school cert. /Waec/Neco [ ]

NCE/ND [ ]

HND/B.Sc. [ ]

M.Sc./MBA [ ]

Year of Experience in the Industry:

1yr – 2yrs [ ]

3 yrs – 5 yrs [ ]

6 yrs> [ ]

SECTION B

Please, kindly tick (ü) from among the options available for the following statements in the table below:

S/N	Statements	Yes	No	Uncertain
On whether there exist a significant relationship between Corporate Social Responsibility and Manufacturing company’ Performance		Yes	No	Uncertain
1	Has Corporate social responsibility performance boosted our business operational performance over the years.
2	Are we rank among the best and most successful manufacturing industry due to our discharge of social responsibility activity.
3	Customers’ patronage is influenced by our company’s performance of corporate social responsibility.
4	Corporate social responsibility towards our staff/employees improves the industry production level.
5	Our performance of corporate social responsibility to various stakeholders has positive impact on product turnover.
On whether there is a significant relationship between Corporate Social Responsibility and growth, contribution and survival
6	There is upward movement of contributions whenever we discharge our duty of social responsibility.
7	Do we enjoy a good relationship with financial institutions and creditors from our practice of social responsibility.
8	As the practice of social responsibility contributed to our various growth and survival.
9	Our incorporation of corporate social responsibility into the industry’s objective contribute to our continued existence in the society (Ilorin)
10	We have enjoyed growth and development over the years as a result of corporate social responsibility performance.
On whether there is significant relation between Corporate Social Responsibility and the standard of living of the people
11	Is there any relationship between corporate social responsibility and the standard living of the people.
12	As Corporate social responsibilities improved the standard of living of the people.
13	Does the company embark on the role of Corporate social responsibility
14	There is demand placed by the populace (consumers) on us to discharge social responsibilities towards societal growth.
15	As Corporate social responsibility assists in achieving our organizational goal

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

STATEMENT OF THE PROBLEM

1.3 OBJECTIVE OF THE STUDY

To establish a relationship between corporate social responsibility and corporate financial performance of manufacturing companies.
To establish a line of relationship between CSR performance and Corporate Financial Performance i.e. growth, continuity and survival of the Business Corporation.
To establish a relationship between corporate social responsibility and the standard of living of the people
- RESEARCH QUESTION
Is there any relationship between CSR and performance of manufacturing companies?
Is there a relationship between CSR and growth, contribution and survival?
Is there any relationship between CSR andstandard of living of people
- HYPOTHESIS

Based on the research objectives, the hypotheses that have been subjected to test to validate this study include the following:

Hypothesis One

Ho: There is no significant relationship between Corporate Social Responsibility and corporate performance of Manufacturing Companies’ Performance.

H₁: There is significant relationship between Corporate Social Responsibility and corporate Performance of Manufacturing companies Performance.

Hypothesis Two

Ho: There is no significant relationship between Corporate Social Responsibility and growth, continuity and survival.

H₁: There is significant relationship between Corporate Social Responsibility and growth, continuity. And survival.

Hypothesis Three

Ho: There is no significant relationship between Corporate Social Responsibility and the standard living of the people

H₁: There is significant relationship between Corporate Social Responsibility and the standard living of the people

1.6 SIGNIFICANT OF THE STUDY

The justification for carry out this research work cannot be over emphasized. This work will be beneficial to:

To the community/society

Through CSR, job, and better standard of living are provided for the community and changed habit

Capacity building creates wealth and employment

To corporations

Goodwill and community acceptance

Profit, growth, competitive edge and image

Genuine dialog with stakeholders

Spiritual and pride values to their families and employee

The world and environment

Balance ecosystems

Waste management

Clean and green environment

To researchers, Its serve as stepping stone to those who want to conduct research into this topic

1.7 LIMITATION OF THE STUDY

The research of this nature is without no hitches or problem. The following are some of the limitation encountered in carries the research work:

Time factor: As the research work has limited duration to comply with, the researcher limit his research to some Manufacturing Companies of the State he reside
Limited finance on the part of the researcher is another limitation to the scope of the researcher which make the researcher focus on some manufacturing companies in Ilorin were he reside
Inadequate data on this topic in the library also serves as limitations of the study

1.8 DEFINITION OF TERMS

CSR – Corporate Social Responsibility

Corporate – A member of a large company

Corporation – A term used to describe a large business, company or organization or group of organisations that is recognized by law as a single unit e.g multinational corporation.

Responsibility – Has to do with a duty to help or take care of something or someone.

Society – A business immediate and remote jurisdiction where people lives together in community, sharing the same ideas, customs, beliefs and laws.

Corporate Philanthropy – The practice of helping the poor and those in need by a business organisation. It may include charitable donations to non-profit groups of all kinds.

Self-Ombudsmanship – A practice of giving a self-evaluation as to activities performance or execution.

CHAPTER TWO

LITERATURE REVIEW

INTRODUCTION

Therefore, this section expressly and critically reviews literatures on corporate social responsibility as discussed by various scholars.

2.1 HISTORICAL BACKGROUND AND DEVELOPMENT OF CORPORATE SOCIAL RESPONSIBILITY

2.2 CONCEPTUAL AND THEORETICAL FRAMEWORK OF CORPORATE SOCIAL RESPONSIBILITY

Various other developments on the concept of CSR are examined as follows:

VIEWS ON SOCIAL RESPONSIBILITY