Full Project – THE IMPACT OF SOCIAL RESPONSIBILITY ON ORGANIZATIONAL PERFORMANCE. A STUDY OF CUSTODIAN LIFE INSURANCE LAGOS STATE NIGERIA.

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ABSTRACT

The study examined the impact of social responsibility on organizational performance. A study of Custodian Life Insurance Lagos State Nigeria. Four research objectives were used in the study, namely: to establish a relationship between Social responsibility and corporate financial organizational performance; to establish a line of relationship between CSR performance and Corporate Financial Performance i.e. growth, continuity and survival of the Business Corporation; and to establish a relationship between Social responsibility and the standard of living of the people. The population of this study comprises of staff of Custodian Life Insurance Lagos State Nigeria. Random sampling techniques were adopted in this study. Individuals were selected randomly for the purpose of equal presentation and unbiased of the sample. The descriptive statistic involves the use of simple percentage for easy description, analysis and interpretation of responses. The researcher recommends that the company should collaborate with allied organizations, which engage in voluntary social responsibility activities. The study concluded that there is significant relationship between Social responsibility and the standard living of the people.

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND TO THE STUDY

Social responsibility has become a significant focus for organizations in the 21st century. The concept of social responsibility refers to the obligation of an organization to act in ways that benefit society at large (Carroll, 1991). It encompasses a wide range of activities, from donating to charities to implementing environmentally friendly policies. The impact of social responsibility on organizational performance has been a topic of considerable debate among scholars and practitioners alike. Some argue that socially responsible practices can enhance an organization’s reputation, attract customers, and improve employee morale, thereby positively affecting performance (Brammer & Millington, 2008).

The concept of Social responsibility has generated interest among a large spectrum of people. Organisation is the creation of society whose survival depends on the very society. The society in turn apparently seems to impose certain responsibility on business organisation to discharge. Social responsibility is an important area of corporate policy formulation (Alawiye-Adams & Babatunde, 2012).

On the other hand, some studies suggest that the relationship between social responsibility and organizational performance is not always positive. For instance, Margolis and Walsh (2003) found that while some socially responsible activities can improve performance, others may have little or no impact. They argue that the effect of social responsibility on performance may depend on the specific activities undertaken and the context in which they are implemented. This suggests that organizations need to carefully consider their social responsibility strategies to ensure they are aligned with their overall objectives and capabilities.

A meta-analysis by Orlitzky, Schmidt, and Rynes (2003) provides further insight into this issue. They found a positive relationship between corporate social performance and corporate financial performance, suggesting that socially responsible activities can indeed enhance an organization’s bottom line. However, they also noted that the strength of this relationship can vary depending on the measures used to assess social and financial performance. This highlights the need for more rigorous and consistent measurement approaches in this area of research.

In a more recent study, Luo and Bhattacharya (2009) examined the impact of Social responsibility on customer satisfaction and financial performance. They found that social responsibility can enhance customer satisfaction, which in turn can improve financial performance. This suggests that the benefits of social responsibility may be mediated through its effects on other organizational outcomes.

The issue of Social responsibility (CSR) and sustainable development have attracted worldwide attention, especially in the media and in academia. Modern business organizations expectations is beyond making and maximizing profit towards being socially responsible to the society. Since business organizations do not exist in isolation but exist within a society, therefore business organizations need to contribute positively to the development of society in which they are operate (Alawiye-Adams & Babatunde,  (2012). Banking sector occupies important key position in the economy of a nation. In Nigeria virtually all the banks reports their expenses on social responsibility towards sustainable development in their annual reports. Most of them strive to meet the demand of charitable organizations, government agencies, religious organizations and tertiary institutions.

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 effect 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 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. 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 effect 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 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 effect and how various factors that surrounding 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 problem of understanding the impact of social responsibility on organizational performance has been a topic of interest for many researchers and business practitioners. Despite the growing interest, there is still a lack of consensus on how social responsibility directly influences organizational performance. Some studies suggest a positive correlation, while others argue that the relationship is more complex and may depend on various factors such as the industry, the size of the organization, and the specific social responsibility initiatives undertaken (Carroll & Shabana, 2010).

The first issue is the lack of a universally accepted definition of social responsibility. Different studies use different definitions, making it difficult to compare results and draw conclusions. Some define it as the obligation of organizations to act in ways that benefit society, while others view it as a voluntary commitment to ethical behavior (Dahlsrud, 2008). This lack of a clear definition complicates the understanding of its impact on organizational performance.

Another problem is the difficulty in measuring social responsibility and organizational performance. While financial performance can be measured using standard financial metrics, measuring social responsibility is more challenging due to its multifaceted nature. Similarly, organizational performance is not just about financial results but also includes aspects such as employee satisfaction, customer loyalty, and innovation (Epstein & Buhovac, 2024).

The third issue is the potential for short-term and long-term effects to differ. Some studies suggest that social responsibility initiatives may have a negative impact on financial performance in the short term due to the costs involved, but can lead to improved performance in the long term through enhanced reputation and customer loyalty (Barnett, 2007).

The fourth problem is the potential for industry-specific effects. The impact of social responsibility on organizational performance may vary depending on the industry. For example, in industries where customers are more sensitive to social issues, such as the food and beverage industry, social responsibility initiatives may have a more significant impact on performance (Lee, 2008).

Furthermore, there is a need for more empirical research to understand the mechanisms through which social responsibility impacts organizational performance. Most of the existing studies are theoretical or based on case studies, and there is a lack of large-scale empirical studies (Aguinis & Glavas, 2012). This makes it difficult to generalize the findings and understand the broader implications of social responsibility for organizational performance.

The increasing adoption of 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 effect 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 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 Social responsibility is the bedrock of this study.

It is against the background that this study check to investigate the effect 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 effect of Social responsibility practices on Organizational performance in Nigeria. Specifically, this study attempts to:

• To establish a relationship between Social responsibility and corporate financial organizational performance.
• 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 Social responsibility and the standard of living of the people

  • RESEARCH QUESTION

• Is there any relationship between CSR and organizational performance?
• 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 Social responsibility and corporate organizational performance’ Performance.

H₁:      There is significant relationship between Social responsibility and corporate Organizational performance Performance.

Hypothesis Two

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

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

Hypothesis Three

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

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

 1.6      SIGNIFICANT OF THE STUDY

The significance of studying the impact of social responsibility on organizational performance is multi-faceted and profound. In the current business environment, social responsibility is no longer an optional undertaking for organizations but a critical component of their operational strategy. It is a concept that transcends the traditional business model of profit maximization to incorporate ethical, environmental, and social considerations in decision-making processes. The study of this impact is crucial in understanding how organizations can leverage social responsibility to enhance their performance.

Firstly, the study helps to highlight the role of social responsibility in enhancing the reputation of an organization. A company that is socially responsible is likely to be viewed positively by its stakeholders, including customers, employees, and the community at large. This positive perception can translate into increased customer loyalty, employee commitment, and community support, all of which can significantly boost an organization’s performance.

Secondly, the study underscores the importance of social responsibility in risk management. Organizations that engage in socially responsible practices are less likely to face legal issues, boycotts, or protests that can disrupt their operations and negatively impact their performance. By understanding the relationship between social responsibility and risk management, organizations can make more informed decisions that balance their economic objectives with their social obligations.

Thirdly, the study illuminates the potential of social responsibility as a driver of innovation. When organizations commit to social responsibility, they often have to rethink their processes, products, or services to ensure they are environmentally friendly or socially beneficial. This can spur creativity and innovation, leading to the development of unique, competitive offerings that enhance organizational performance.

Fourthly, the study provides insights into the role of social responsibility in attracting and retaining top talent. Today’s workforce, particularly the younger generation, is increasingly seeking employers who are not just profitable, but also socially responsible. By demonstrating a commitment to social responsibility, organizations can attract high-quality employees who can contribute significantly to their performance.

Lastly, the study of the impact of social responsibility on organizational performance is significant in shaping public policy. Policymakers can use the findings of such studies to develop regulations that encourage or mandate socially responsible practices in the business sector. This can lead to a more sustainable and equitable economy, benefiting society as a whole.

The study of the impact of social responsibility on organizational performance is of great significance. It provides valuable insights that can help organizations to improve their performance, manage risks, drive innovation, attract talent, and enhance their reputation. Moreover, it can inform public policy, leading to a more sustainable and equitable economy.

1.7       SCOPE OF THE STUDY

The study examines the impact of social responsibility on organizational performance. A study of Custodian Life Insurance Lagos State Nigeria.

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 – 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.

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Full Project – THE IMPACT OF SOCIAL RESPONSIBILITY ON ORGANIZATIONAL PERFORMANCE. A STUDY OF CUSTODIAN LIFE INSURANCE LAGOS STATE NIGERIA.