Project – The Effects of Corporate Social Responsibility on Organizational Profitability (A Study of Nigeria Breweries Plc.)

ABSTRACT

The study aimed at examining Corporate Social Responsibility in relation to manufacturing firms in Nigeria with Nigeria Breweries Plc in focus.S urvey research design was employed for the study, using purposive sampling method forty-seven(47) respondent who are staff in Nigeria Breweries Ikeja branch was selected. Questionnaire was issued to them and thirty-nine (39) was retrieved and validated fro the study. Data was analyzed using frequency and tables which provided answers for the research questions. Findings from the study reveals that CRS impacts the profitability of the manufacturing industry by enhancing their reputation, gives them better brand recognition, enhance recruitment and retaining of high quality workers  increases their organizational performance and productivity. However in the manufacturing industry only few does engage in CSR due to challenges such as pressure from stakeholders and influence of investors. The study therefore recommends that Listed deposit money manufacturing firms should leverage on their social responsibility expenditures by ensuring that they are linked or connected to profitable operations. Also Top management should understand the strategic financial benefits of CSR activities.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Corporate Social Responsibility (CSR) as a concept entails the practice whereby corporate entities voluntarily integrate both social and environment upliftment in their business philosophy and operations. A business enterprise is primarily established to create value by producing goods and services which society demands. The notion of Corporate Society Responsibility (CSR) is one of ethical and moral issues surrounding corporate decision making and behaviour, thus weather a company should undertake cer¬tain activities or refrain from doing so because they are beneficial or harmful to society is a central question. Social issues deserve moral consideration of their own and should lead managers to consider the social impacts of corporate activities in decision making regardless of any stake¬holders’ pressures. However, some argument that the contri¬bution of concepts such as Corporate Society Responsibility (CSR) is just a reminder that the search for profit should be constrained by social considerations (Manuel and Lúcia, 2007) and increasingly Corporate Society Responsibility (CSR) is analysed as a source of competitive ad¬vantage and not as an end in itself (Bran¬co and Rodrigues, 2006).

Today, managers of Nigerian manufacturing firms have found a need that the environment in which they operate should be provided for because their intermediate and macro environments have a direct impact on the attainment of the corporate goals, objectives and mission statement. The purpose of all profit-making organizations, and even the non-profit making organizations, is to maximize profit and in turn minimize cost, through optimal utilization of available resources to achieve the best results they are capable of. Profitability is an important factor to all manufacturing firms, because it is one of the major purpose for which the manufacturing firms are established.

Corporate Society Responsibility (CSR) involves a business identifying its stakeholder groups and incorporating their needs and values within the strategic and day-to-day decision-making process, thus a means of analyzing the inter-dependent relationships that exist between businesses the economic systems and the communities within which they are operating. Corporate Society Responsibility (CSR) is a means of discussing the extent of obligations a business has to its immediate society; a way of proposing policy ideas on how those obligations can be met; as well as a tool by which the benefits to a business for meeting those obligations can be identified (Corporate Society Responsibility Guide). Corporate Society Responsibility (CSR) is also referred to as ‘corporate’ or ‘business responsibility’, ‘corporate’ or ‘business citizenship’, ‘community relations’, ‘social responsibility’.

The Nigerian manufacturing firms seek to conduct Corporate Society Responsibility (CSR) so that they meet there financial, social and environmental responsibilities in an aligned way, their financial, social and environment responsibilities in an aligned way. At its core, it is simply about having a set of values and behaviours that underpin its everyday activities, its transparency, its desire for fair dealings, its treatment of people, its attitudes towards and treatment of its customers and its links into the Community. As a result, the environmental aspect of Corporate Society Responsibility (CSR) is seen as the duty to cover the environmental implications of the company’s operations, products and facilities, eliminate waste and emissions, maximize the efficiency and productivity of its resources, reward for externalities and minimize unethical practices that might adversely affect the enjoyment of the country’s resources by future generations. In the emerging global economy, where the Internet, the news media and the information revolution shed light on business practices around the world, companies are more frequently judged on the basis of their environmental stewardship (CIBN). Partners in business and consumers want to know what is inside a company. This transparency of business practices means that for Nigerian manufacturing firms, Corporate Society Responsibility (CSR) is no longer a luxury but a requirement.

Mazurkiewicz (2004) recognizes that concept has been developing since the early 1970s. There is no single, commonly accepted definition of “Corporate Social Responsibility” (CSR); there are different perceptions of the concept among the private sector, governments and civil society organizations. Depending on the perspective, Corporate Society Responsibility (CSR) may cover:

1. a) A company running its business responsibly in relation to internal stakeholders

(shareholders, employees, customers and suppliers);

1. b) The role of business in relationship to the state, the nationa, as well as to global

institutions or standards; and

1. c) Business performance as a responsible member of the society in which it operates and the

global community.

The first perspective includes ensuring good corporate governance, product responsibility, employment conditions, workers rights, training and education. The second includes corporate compliance with relevant legislation, and the company’s responsibility as a taxpayer, ensuring that the state can function effectively. The third perspective is multi-layered and may involve the company’s relations with the people and environment in the communities in which it operates, and those to which it transacts business. Too often, attaining Corporate Society Responsibility (CSR) is understood from the perspective of business generosity to community projects and charitable donations, but this fails to capture the most valuable contributions that a company has to make (Reyes 2002).

Simply, many companies have found that Corporate Society Responsibility (CSR) has often had a positive impact on corporate profits. Of all the topics related to corporate social responsibility, it is environmental initiatives that have produced, so far, the greatest amount of quantifiable data linking proactive companies with positive financial results. Business for Social Responsibility (BSR), for example, emphasizes that investment in Corporate Society Responsibility (CSR) has promoted product differentiation at the product and firm levels. Some firms now produce goods and services with attributes or characteristics that signal to the consumer that this particular company is concerned about certain social and environmental issues.

Corporate Social Responsibility in Nigeria Manufacturing Sector would be aimed at addressing the peculiarity of the socio-economic development challenges of the country (e.g. poverty alleviation, health care provision, infrastructural development, education, etc) and would be informed by socio-cultural influences (e.g. communalism and charity). They might not necessarily reflect the popular western standard or expectations of Corporate Society Responsibility (CSR) (e.g. consumer protection, fair practice, green marketing, climate change concerns, socially responsible investments, etc). There is no doubt that Corporate Society Responsibility (CSR) is becoming indispensable, though involuntary, in the contemporary business world as societal needs are making it imperative for the corporate organisations to be sensitive to happenings in their environments, which ensure more understanding and good relationship between the organisation and the society where they exist, since Corporate Society Responsibility (CSR) contributes to the wellbeing of the citizenry (Osho 2008).

1.2 Statement of the Problem

The problem of understanding the effects of Corporate Social Responsibility (CSR) on organizational profitability is a complex one. CSR refers to the initiatives taken by a company to assess and take responsibility for its effects on environmental and social wellbeing. These initiatives range from investments in community development to improvements in working conditions. However, the impact of these initiatives on a company’s profitability remains a subject of debate. While some argue that CSR leads to increased profitability, others contend that it results in unnecessary costs.

One side of the argument posits that CSR initiatives can lead to increased profitability. This perspective is based on the idea that socially responsible companies are more likely to attract and retain customers, employees, and investors. Customers today are more conscious of the social and environmental impacts of the products they purchase, and they are more likely to support companies that align with their values. Similarly, employees are more likely to work for, and investors are more likely to invest in, companies that demonstrate a commitment to CSR.

On the other hand, critics argue that CSR initiatives can detract from a company’s profitability. They contend that the costs associated with implementing and maintaining CSR initiatives can outweigh the potential benefits. These costs can include everything from the direct costs of implementing CSR initiatives to the indirect costs of diverting resources away from core business activities. Critics also argue that the focus on CSR can distract from the primary goal of a business, which is to generate profits.

The problem is further complicated by the fact that the effects of CSR on profitability can vary depending on a variety of factors. These factors can include the specific industry in which a company operates, the size of the company, and the specific CSR initiatives that the company undertakes. For example, a large multinational corporation in the oil and gas industry may experience different effects from its CSR initiatives than a small local business in the retail industry.

There is also a lack of consensus on how to measure the effects of CSR on profitability. Some studies use financial performance indicators such as return on assets or return on equity, while others use non-financial indicators such as customer satisfaction or employee engagement. The use of different measures can lead to different conclusions about the effects of CSR on profitability.

The problem of understanding the effects of CSR on organizational profitability is a complex and multifaceted one. It involves balancing the potential benefits of CSR initiatives against their potential costs, taking into account a variety of factors that can influence these effects, and navigating the challenges of measuring these effects. Further research is needed to provide a more comprehensive understanding of this problem.

1.3 The Purpose of the Study

The main aim of this study to examine the impact Corporate Social Responsibility of Nigeria Breweries PLC vis-à-vis its profitability. The study is essentially geared towards achieving the following objectives:

1. To examine Corporate Social Responsibility in relation to manufacturing in Nigeria with Nigeria Breweries Plc in focus.
2.  To evaluate the impact of Corporate Social Responsibility on the profitability of the Nigerian manufacturing firm sector.
3. To examine the challenges of Corporate Social Responsibility in the Nigerian manufacturing firm sector.
4. To investigate whether Corporate Social Responsibility guarantee customers’ confidence and security of depositor’s fund.

1.4 Research Question

The following questions would be examined during the course of this study:

1. How does Corporate Social Responsibility (CSR) manifest within the context of manufacturing in Nigeria?
2. What is the measurable impact of Corporate Social Responsibility on the profitability of manufacturing firms in Nigeria?
3. What are the specific challenges faced by the Nigerian manufacturing sector in implementing and maintaining Corporate Social Responsibility initiatives?
4. Does the implementation of Corporate Social Responsibility initiatives within the Nigerian manufacturing sector guarantee increased customer confidence and security of depositor’s funds?

1.5. Research Hypothesis

The hypothetical statement of the study is buttressed below

Ho: Corporate Social Responsibility has no significant effect on the Nigerian Manufacturing Firm

H1: Corporate Social Responsibility has significant effect on the Nigerian Manufacturing Firm

1.6 Scope of the Study

The study is focused on the headquarters of Nigeria Breweries PLC. It critically examines what Effects of Corporate Social Responsibility on Organizational Profitability. A study of Nigeria Breweries PLC.

1.7 Limitation of the Study

The major limiting factor of this research work is time constant, the staff who is to give the necessary information as to the impact of Corporate Social Responsibility in Nigeria Manufacturing Industry is not always available.

1.8 The Significance of the Study

The study is expected to make contribution to knowledge in the following areas:

The study of the effects of Corporate Social Responsibility (CSR) on organizational profitability, particularly in the context of Nigeria Breweries Plc, holds significant value for various stakeholders. It provides an in-depth understanding of how CSR initiatives can influence a company’s financial performance. This is crucial as it can guide decision-making processes within the organization and help to optimize the allocation of resources towards CSR activities.

For Nigeria Breweries Plc, this study can offer valuable insights into the effectiveness of their current CSR strategies. It can help identify areas where CSR initiatives are contributing positively to profitability and areas where improvements may be needed. This can lead to more effective CSR strategies that not only benefit the company but also the communities they operate in.

The study also holds significance for investors and shareholders. Understanding the relationship between CSR and profitability can help them make informed decisions about their investments. If CSR initiatives are found to positively impact profitability, it could encourage more investors to support companies with strong CSR programs, like Nigeria Breweries Plc.

For policy makers and regulators, this study can provide empirical evidence on the role of CSR in the profitability of companies. This can inform the development of policies and regulations that encourage companies to adopt CSR initiatives, thereby promoting sustainable business practices and contributing to economic development.

The study is also significant for the academic community. It contributes to the existing body of knowledge on CSR and profitability, particularly in the context of the Nigerian manufacturing sector. This can stimulate further research in this area and provide a foundation for future studies.

Lastly, the study is significant for the wider society. If CSR initiatives are found to enhance profitability, it could encourage more companies to adopt such initiatives, leading to broader societal benefits. These can include improved environmental management, better working conditions, and increased support for community development projects.

1.9 Definition of Terms

In this study it will be significant to clarify conceptually the keyword used in the study, for better understanding of the research work.

Corporate Social Responsibility: –It entails the practice whereby corporate entities voluntarily integrate both social and environment upliftment in their business philosophy and operations.

Stakeholders: –They are group of individuals who are affected or indirectly by organization pursuit of goals. There are two categories of stakeholders, internal stakeholders which owners, employees and stockholders and external stakeholders such as suppliers, competitors, public interest association, protest group and government agencies.

Profit – making organization: Is an organization setup with a view of transitory businesses with the government or non-government organization mainly to make profit.

Non- profit making organization: This is an organization that is charitable in order to better the lots of masses.

Project – The Effects of Corporate Social Responsibility on Organizational Profitability (A Study of Nigeria Breweries Plc.)