BUS 221(NIGERIAN BUSINESS ENVIRONMENT)

WEEK 9: Corporate Social Responsibility: Dr. Olufayo

i. Meaning and Definition:
ii. Need for social responsibility of business,
iii. Social responsibility of business towards different groups,
iv. Barriers to social responsibility,
v. Social responsibility of businesses in Nigeria

MEANING AND DEFINITION OF CSR

Corporate social responsibility (CSR) has gained an increasingly high profile in recent years.
CSR can be defined as the ways in which a business seeks to align its values and behaviour with
those of its various stakeholders. The stakeholders of the business include the employees,
customers, suppliers, government, interest groups (such as environmental groups) and wider
societal interests on whom the operations of the business may have an impact. Often it can be a
difficult balancing act for a business to try to effectively consider the perceived needs of these
often disparate groups of stakeholders, and some companies appear much more successful in this
regard than others.

NEED FOR SOCIAL RESPONSIBILITY OF BUSINESS

When a business contributes to goals associated with social activism, it is embracing corporate
responsibility. This includes paying attention to how business practices impact marginalized
groups, the environment, and society as a whole. Incentivizing volunteer work for employees,
setting up charitable funds, and revising ethical guidelines to go above and beyond also play a
part in CSR. Why is corporate responsibility important? Here are 10 reasons why:

It encourages customer loyalty: People are giving to charitable organizations in high numbers.
Millennials are especially active. To attract customers and keep their loyalty, corporations need
to pay attention to what customers care about. If a customer feels like they are living out their
values by supporting a certain business, they are more likely to stick with the brand. They will
feel a sense of pride when buying from the business and are more likely to recommend it. Loyal
customers are the best marketing a company can get.

It gives businesses a competitive edge: Customers care about a business’s part in social issues
and they will be loyal to corporations they believe align with their values. That means
corporations that cater to these customers have a competitive edge over companies that do not.
They might offer the same products and services, but the fact that they are making corporate
responsibility a priority makes them more appealing. Drawing that distinction is essential for
marketing purposes.
Corporate responsibility makes employees happier and more fulfilled: Research shows that
employees of businesses that prioritize CSR are happier and more fulfilled. 80% of employees
report feeling more purpose when they believe their work makes a difference in the world. That
sense of purpose is essential to employee loyalty and dedication. When personally fulfilled,

1
people are less vulnerable to fatigue and stress. They are also more likely to stay with the
company.
It makes a business more sustainable: When a corporation decides to make corporate
responsibility a focus, it needs to be more innovative and creative. It can not be “business as
usual.” Nurturing innovation and creativity forces a company to stay relevant and adjust
according to what customers want. These days and for the foreseeable future, customers want
social responsibility. The ability to adapt is important for longevity and sustainability.
Customers are willing to pay more: Corporate responsibility is great for business in a few
ways. One of them is that companies can charge more for their products and services. A Nielsen
Global Survey of Corporate Social Responsibility revealed that more than half of the surveyed
customers are willing to pay more if the company is committed to corporate responsibility.
It attracts more investors: Investors care about a business’s sustainability, customer loyalty,
and competitiveness. There are also many eager to support companies that work to make the
world better. Corporations that commit to social change and are willing to adapt are very
attractive to investors. Incorporating CSR is an effective way to attract socially-minded investors
as well as those thinking about long-term financial success.
Corporate responsibility attracts more employees: The generations that really care about
social justice and social change will make up the majority of the workforce. 66% of people
surveyed in the Nielsen Global Survey of Corporate Social Responsibility prefer to work for
companies that prioritize corporate responsibility. By embracing that, a corporation can attract
the best employees and keep them, making the business stronger.
Corporate responsibility can reduce costs: Making money has been the primary goal of
“business as usual,” but corporate responsibility does not mean a company sacrifices profits. In
fact, it can reduce costs. Since General Mills installed an energy monitoring system, they have
saved millions of dollars each year. While equipment can cost a company initially, it saves
money in the long-term. When reduced costs and higher-priced products are combined,
companies can make a very good profit by being socially responsible.
Corporate responsibility opens up new opportunities/markets: There are a lot of markets that
haven’t been tapped into because traditional business thinking doesn’t see them as “profitable.”
With social activism on the brain, corporations can open new doors into neglected areas and
causes. In considering social impact as well as profit, corporations can find a balance and set
themselves apart from the crowd. Consumers will appreciate that a corporation is thinking about
where it can help and not only about profits.
Corporate responsibility makes the world a better place: Businesses, especially big
corporations, can change society in significant ways. They have a lot of influence, so they can
not only raise awareness of issues, they can play an essential role in progress. Addressing climate
change is a prime example of where corporations can take charge. By taking responsibility for
their impact, corporations can help the world become a healthier, happier place.

SOCIAL RESPONSIBILITY OF BUSINESS TOWARDS DIFFERENT GROUPS

Employees:
i. Provide employees with a fair and safe working environment
ii. Encourage and help employees to develop skills that further their personal and
professional development
iii. Not tolerating harassment in the workplace.

2
Customer:
i. To deliver quality, value and excellent service to customers
ii. To follow responsible marketing practices
iii. Protect the confidentiality of information given to us by our customers in keeping
with relevant laws.
Suppliers:
i. Develop honest and transparent relationships with suppliers
ii. Expect our suppliers and contractors to follow principles similar to our own
iii. To be clear in our supplier contracts and honor agreed payment terms.
Local communities:
i. To support and communicate with the communities where we operate
ii. To contribute to communities where we operate and recruit staff locally wherever
practical
iii. To continue to invest in, and monitor, independent scientific research into mobile
telephony and health.
The Environment:
i. To manage our environmental impacts responsibility
ii. Work to understand and manage our impact on all aspects of the environment: at a
global, national and local level
iii. Strive to minimize our environmental impact in our own operations and by working
with our stakeholders.
Shareholders/Investors:
i. To achieve our financial goals and build long-term success responsibility
ii. Seek to create sustainable operations that deliver a return to our individual and
institutional shareholders and that benefit our employees and the countries where we
operate
iii. To aim to meet the expectations of ethical investors

BARRIERS TO SOCIAL RESPONSIBILITY

i. Corporate Level - Lack of leadership and vision - Too much focus on short-term
goals - Inability to recognize opportunities - Lack of entrepreneurial spirit and
innovation.
ii. Country/Society Level – Lack of creative pressure from the government and civil
society. – Lack of support from the consumers – Lack of peer support through
business associations - reluctance of other companies to follow – Lack of
economic/market incentives
Barriers to social responsibility are: (i) manager (ii) organisation(iii) industry and (iv)
division!

3
To fulfill the task of social responsibility the following problems may be faced at organisational
level which hinder the process of implementation of achieving the goal of social responsibility.

(i) The Manager: The managers are extra cautious while planning and implementing the
programmes related to social responsibility as the people at high level may not approve
the plans of managers if they feel that the plans are non-profitable to organisation. It is
the manager who is ultimately responsible for social action programmes of any
organisation. The manager can also plan or implement the social action programme.
(ii) The Organisation: The main objective of any organisation is profit maximisation as
shareholders want dividend ultimately or they may like the profits to be re-ploughed back
for expansion of business and people working in the organisation expect higher salaries.
So social action projects need to be evaluated very carefully in terms of cost and benefit.
So social responsibility may be overlooked while achieving the main objective of the
organisation i.e. profit maximization
(iii) The Industry: There are many competitors in the same industry for an organisation.
When a particular organisation does some socially beneficial activity for the benefit of
society only then it may not be appreciated by other competitors in the industry which
makes individual organisation very difficult to survive in the industry alone
(iv) The Division: There are number of divisions in the organisation which are competing
among themselves and also strive towards main goal of organisation i.e. profit. Any
social responsibility decision and project which affects or reduces the profit might
threaten the existence of that particular division.

This is one of the main reasons that most of the divisions feel hesitant in initiating and
implementing social responsibility programmes unless and until there are clear guidelines and
instructions from the people at top level.

Corporate Social Responsibility Initiatives in Nigeria

In line with the foregoing discourse on the rationale for CSR in developing countries, CSR
initiatives in Nigeria arise as a result of the practices of multinational companies (MNCs)
operations in the extraction sectors of the Nigerian economy, especially in the oil sector (Amao
and Amaeshi, 2008; Adegbite and Nakajima, 2011). These activities of the MNCs are more
prominent in the Niger Delta region of Nigeria because of the huge oil deposit and presence of
MNCs. Their operations in communities resulted in CSR breaches such as oil spillages, gas
flaring, militancy/community agitations arising from the dumping of toxic waste materials in
rivers. These activities destroyed the sources of income for the communities which are mainly
farming and fishing, leading to widespread poverty and agitation from the communities.

Apart from the activities of MNCs, the failure by successive Nigerian governments to fulfil their
mandatory obligation of providing social amenities for communities has made MNCs to become
quasi-government with communities depending and targeting MNCs to solve their economic
problems (Oyefusi, 2007; Adegbite and Nakajima, 2011). Government from all levels, have
failed to offer solutions (such as building infrastructures, roads, schools and hospitals This is
largely due to the following: corruption, weak institutional framework, lack of transparency and
accountability among public officials and bad governance (Helg, 2007; Rwabizambuga, 2007).

4
According to Idemudia (2007), the community expectations of CSR programs from oil MNCs
has been on the rise. These community expectations are bound to affect both community
decisions and perceptions of MNCs operating in their communities (Idemudia, 2009;
Rwabizambuga, 2007). Therefore, Ehikioya (2009) noted that an understanding of what drives
community expectations is imperative to reduce problems in developing countries like Nigeria
and help companies in implementing CSR policies and practices. The community expects MNCs
to provide more employments to their indigenes, provide poverty reduction schemes such as
hospitals, schools, pipe borne water, electricity, roads, bridges and micro-credits scheme
(Oyefusi, 2007).