An Appraisal of Social Responsibility Practice by Nigerian Corporate Organisations

 AN APPRAISAL OF SOCIAL RESPONSIBILITY PRACTICE BY NIGERIAN CORPORATE ORGANISATIONS (A CASE STUDY OF ANAMBRA MOTOR MANUFACTURING COMPANY EMENE-ENUGU) (ANAMMCO)

Many reasons have been given for the growth of the idea of social responsibility, such reasons arose from inability of Adam Smith invisible hand of competition and critics of private enterprise have asked business organization to be socially responsible to the society.

The concept of business social responsibility arises for two basic reasons:

Firstly, it arises because of the negative social impact of business organization on the society such as pollution of all kinds air, water, solid waste, noise and such others as deceptive advertising, unsafe product, inferior product etc.

The second reason is the fact that society itself is faced with many problems which adversely affect the society at large and will also have impact on business operating in such society.  It is reasonable and rational that business should contribute in solving problems relating to erosion, disease of all kinds, unemployment, educational needs of some poor students, provision of infrastructural facilities etc, which are prevalent in most societies.  The issues of business social responsibility has become a subject of wide discussion and growing concern to many organizations especially to multinational corporations.  This has in two made in turn made it difficult to proffer a comprehensive definition of the concept.

The question:-      What is social responsibility?  So many definitions have been put forward but non-has gained a universal acceptance.

Infact, many writes shy away from attempting a definition because in today’s business world, the concept cannot different things to different people especially in the developing world.

The scope and extent of social responsibility varies such as to the various definitions.  Each write’s perception of what social responsibility is, covers what can be seen to reflect the society in which the writer fixed at the time of writing as well as the period of time.  This can be seen from the analysis of the various definitions of the concept put forward by different authors.

According to Renon (1986) “the concept of social responsibility is the obligation of the businessmen to pursue to policies t make those decisions or to follow.  Those lines of action, which are desirable in terms of the objectives and values of the society.

But the analysis of the definition shows that it has some short falls.  The major problem with the definition is that operationally, it is found wanting for one thing.  It failed to state the line of actions, which are desirable in terms of the objectives, and values of the society.  The definition therefore assumed that managers know their obligation in the area of social responsibility and should perform them.

Nwachukwu (1988:272) defined social responsibility as the intelligent and objective concern for the welfare of the society which restrains individuals and corporate bodies from ultimate destructive activities no matter how immediately profitable and which leads to the direction of positive contributions to human betterment.

This definition stressed the important of being socially responsible both by individual’s pr corporate organizations.

Thus, social responsibility is not limited to business organizations but extends to individuals.  To buttress this point, he further stated that an organization is made up of people and typical executive members of the society.

In this capacity as the owner of the society, the individual should realize that whatever type of society he helps to create, he will participate in.

 

Davis and Blomsstron (1975:^) defined the concept as the obligation of the decision makes or organizations to make decision, take actions, which protect and improve the welfare of society as a whole along with their own interests.

Ejiofor (1989:452) defined it as those investment and contributions to the wider community designed to create the healthy environment that company requires to survive and operate efficiently.

Onuoha (1991:295) stated the concept of social responsibility can be taken to involve all the activities of the organization in which their limited resources are expended, appear less economically attractive and viable, but are socially desirable by members of the society.  In the broadest sense therefore, the net effect of social responsibility is to improve the quality of life.

It also harmonizes business actions aimed at achieving the traditional economic objectives of business (such as profit and growth) with the society’s wants (such as product and good environment).

Andrew Carnegic (1935-1999) an American industrialist and philanthropist who set forth the classic statement of corporate social responsibility.  Carnegic’s view was based on two basic ideas:-

  1. The charity principle
  2. The stewardship principle

Both are frankly paternalistic.

The charity principle requires the more fortunate members of the society to assist its less fortunate members including the unemployed, the handicapped, the sick and the elderly.

The stewardship principle is biblical doctrine that requires business and wealthy individuals to see themselves as stewards or care takes holding their properties in trust for the benefit of society as a whole.

By 1950’s and 1960’s these two principles had become widely accepted in American business as more and more companies began to recognize the power begets responsibility.

Many companies that rejected the principle non the less realized that if business didn’t accept social responsibility on its own free will, they would be forced upon it by the government.

Even at high point of concern for corporate social responsibility in the 1950’s and 19960’s doubts began to undermine it.  In 1953 H.R. Bowen insisted that business managers are morally bound to pursue those policies, to make those decisions on to follow those line of action which are desirable in terms of objectives and value of our society.  This is rather different concept of social responsibility of business, once which saw business both as reflection of social objectives and values and as an agency for promoting them inspired much new thinking on the subject.

 

  • CONTROVERSY OVER THE CONCEPT OF BUSINESS SOCIAL RESPONSIBILITY

Some organizations and businessmen see the concept of business social responsibility as an obstacle to their profit-making objective.  Actually, these concepts dates to the late 1980’s and early 1990’s when the major view or corporate social responsibility that business should provide consume with a product or service at the least possible price.

Renon (1986:495) commenting on this and observed that most business acted solely as profit maximize.  He further remarked that attitude toward consumer was careat emptor, that is “let the buyer be ware” this requires no further explanation as most businessmen then and even today believe at making as much profit as possible.

The above position received the support of Uzoaga (1975:2) when he stated that “one side of the argument about the proper place of social responsibility is the view that the business of every business is business”.

Looking at Uzoaga’s view from its face value.  But the critical evaluation of the statement indicate that it has a lot of meaning and goes at a length to elicit the perception of the concept by Nigerian businessmen.

Simply, this means that the society should not accept any contribution from business firms outside profit maximization since there are other institutions that can take charge of social welfare.

David (1987:164) stated that what is especially unfortunate is how many business people have misinterpreted and misunderstand the concept of social responsibility.

Many of them has viewed it as a focus which detract from or is counter to their profit minded pursuit.  According to him, even though there may be some clearly distinct economic versus social concerns, there is a rather broad area in which economic and social concern are consistence with each other.

 

He believes that when a firm engages in social activities, it most do so in a way that receives and ensures economic advantage.  Thus: the aim should be that the firm achieves both social and economic objective.

Drucker (1974:314) a management expert states that management of all institutions are responsible for their products, that is the impact of their legitimate activities on people and on the physical and social environment.  They are therefore increasing anticipated to solve social problems.

The issue of whether business organization will be socially responsible or not has generated a lot of arguments.  These arguments have produced two school of thought, one supporting the view that business should have social responsibility, the other opposing it.

  • THE CASE AGAINST SOCIAL RESPONSIBILITY

Some people believe that the only social responsibility of business is the maximization of profits.  In espousing this view, Milton Friedman has become the leading opponent of the idea that business has a social responsibility other than being profitable.

 

MILTON FRIEDMAN’S ARGUMENT

There is only one social responsibility of business to use it resources and energy in activities designed to increase it profit so long as it stays within the rule of the game and engages in open and free competition, without deception and fraud.

He contends that corporate officials are in no position to determine the determine the relative urgency of social problems or the amount of organisaitonal resources that should be committed to a given problem.  He also insists that managers who devote corporate resources to pursue personal and perhaps misguided, nations of the social goods unfairly tax their own shareholders, employees and customers.

In short, business should produce goods and service efficiently and leave the solution of social problem to concern individuals and government agencies.

Mostly recently Friedman has also argued that government invention is often undersirable.  It charges that bureaucratic officials responsible for implementing programmes actually have little incentive to solve the problems that their organization were created to deal with Friedman favours eliminating many social securities and government benefits and adopting instead a limited set of government policies to influence national income.

His view are generally consider to respondent one extreme on a continuum that recognizes some division of social responsibility among the various segments of society including government and business community.  Most managers and other people believe that both the government and business community do have some responsibilities to act in the interest of the society.

As the two and most powerful institutions in the country, the sheer size of business and government obliges them to address problems of public concern.

Both corporate and government depends upon acceptance by the society to which they belong.  “For them to ignore social problem might in the long run be destructive in any case, if business does not amend its public image voluntarily would almost inevitably be subject to increase government regulation.

Milton Friedman has declared that if any thing is certain to destroy our free society to undermine its every foundation it would be a wide spread acceptance by management of social responsibilities in some sense other than to make as much money as possible.

The first opposition of the social responsibility concept is that it lacks universal definition.  Many writers have asked how workable it is when it cannot even be defined.

Stone (1975) Kayet (1969) and many others have raised questions regarding the vagueness of the concept.  Stone and Kayet for instance have argued that if business organisaiton is to be socially responsible then the vagueness of the concept must be removed to enable them define the limits of this responsibility.

The next question of social responsibility is the question of practicability.  How feasible is the concept?

Already one notes that not only does the concept varies but its limited undefined the scope varies with time, period and the country in question.

Business finds it hand to decide on what ground resources should be allocated to social programmes should it be on the basis of equal resources for all cost.  This school of thought also believes that if social responsibility becomes accepted, business may begin to find it difficult to make sound economic, decision with respect to prices, wages investment.

These is difficult in measuring social responsibility programme.  Social cost and benefits cannot be measured in financial term that using measures for ascertaining social responsiveness in all its irrelevant.

No matter what business does society will never be satisfied?  Argument has also entered around where then cost of social programmes should be discharged to individual allowance.

If we follow the first suggestion, operating cost is bound to rise and consequently price.

If we decide to charge the cost on profit, not only to the shareholder’s loss government also losses in the form of tax revenue.  Charging the cost of allowance for dividend give some result loss in revenue to shareholders and government.

Profitability is another bone of contention opponents of social responsibility as argued that the only responsibility of business is to make as much profit as possible.  Profit plays an important role in the life of every organization.

It is because of profit that investors decide to invest their money.

It is through profit in the form of retained earning that business organization expands and grows.

 

ARGUMENT AGAINST SOCIAL INVOLVEMENT OF BUSINESS

  1. The primary task of a business is to maximize profit by focusing strictly on economic activities. Social involvement could reduce economic efficiency.
  2. Society must pay for the social involvement of business through higher prices social involvement would great cost for business which it cannot commit its resources to social actions.
  • Social involvement can create a weakened international balance of payment situation. The cost of social programmes the reasoning goes would have to be added to the price of the product.
  1. Business has enough power and additional social involvement would further increase its power and influence.
  2. Business people lack social skills to deal with the problem of the society there training and experience is with the economic matters and their skill may not be pertinent to social programme.
  3. There is lack of accountability of business to the society. Unless accountability could be established business would not get involved.
  • There is no complete support for involvement in social actions. Consequently, disagreement among groups with different viewpoints will cause friction.

 

  • THE CASE FOR SOCIAL RESPONSIBILITY

Keeth Davis is the Chief Priest of the school of thought that supports the view that business should be socially responsible.  He and his associate remain that in addition to business carring out its normal and legitimate operations of providing goods and services effectively and efficiently.

It must also engage in some other activities, which make it sociality responsible.

Onuoha (1991:296) and Steiner (1975:163-165) also noted that business organizations are creatures of society and should respond to societal demands, and that the long run self interest of business are best served when business assumes social responsibility stressing that its normal and right thing to do.

The major argument for social responsibility has been the improvement of the society.  Each institution as the argument goes is responsible for helping to achieve all societal objectives.

In projecting their     views that a healthy business could not exist in unhealthy society, practice of management, business therefore has self-interest in a healthy society, when the cause of societies illness is not the business organizations.

Business has the necessary resources at its disposal and thus the ability to embody upon solving social issues and problems.  Business has the necessary talents to solve problem, but business comes in contact with the society more than any other social group in the society.

Firms should channel some of their surplus into solving some of the community problems.

Some oil companies awards scholarship to students.

Donations for charity is another issues of social responsibility.

Business organization should donate to the less privileged in the society so as to reduce the burden of government on these less privilege to protect the pluralist society.

Business organisation has also to be socially responsible because of their side effect of their operation upon the society and environment.

There are other ways business can contribute to the well being of the society.  These miscellaneous contributions include campaign against pollution, providing housing loans to workers and inflation campaign.

Conversion and judicious use of resources, education of combat drug abuse and road accidents discriminations, recycling waste paper and eliminating all undesirable social impact.

This is done either through causative activity or converting sawdust into practice board.

Being socially responsible means playing more than just an economic role in the society.  Increasing firms are being expected by society to play a direct role in meeting community needs in the act and education, in health and environmental matters and in society welfare, in addition to their role as employers and producers, in response to the pressure to be socially responsible many firm have developed their own social or community programmes.  These are aimed at demonstrating that corporate organizations are just as capable as individuals of being goods citizens.

ARGUMENTS FOR SOCIAL INVOLVEMENT OF BUSINESS

  1. Public needs have changed, leading to changed expectations.

Business is suggested, receive its charter from society and consequently has to respond to the needs of the society.

  1. The creation of a better social environment benefit both society and the business. Society gains through better neigbourhoods and employment opportunities business benefit from a better community since the community is the source of its work force and consumer of its product and services.

iii.      Social involvement discourages additional government regulations and intervention, the result is greater freedom and more flexibility in decision making for the business.

  1. Business has a great deal of power, which it is reasoned, should be accomplished by an equal amount of responsibility.
  2. Modern society is an interdependent system and the internal activities of the enterprise have an impact on the external environment.
  3. Social involvement may be in the interest of stockholders.

vii.     Problems can become profit.  Items that may once have been considered waste can be profitably used again.

viii.    Social involvement creates a favourable public image, thus a firm may attract customers, employees and investors.

  1. Business has the resources specifically business should use its talented managers and specialists as well as its capital resources to solve some of society’s problems.
  2. It is better to prevent social problems through business involvement than to cure them.

It is easier to help the hardcore unemployed than to cope with social unrest.

 

  • NEGLECT OF SOCIAL RESPONSIBILITY BY NIGERIAN BUSINESS

However, in talking about the need for social responsibility in developing country like Nigeria, one finds that the effect if the practice of social responsibility by organizations in Nigeria is still very small due to the fact that Nigeria is still developing economically and technologically and therefore needs all the technological know how it can obtain.

Others are to change our economic from import dominated one to an export substituted one.

The increase demand for social amenities for which government alone cannot cope adequately.  All these are areas business can help.

In recommended that a business should be socially responsible, one must not forget Nigeria’s geographical diversity.  As a result of this, it becomes necessary that every group in the society including business organization should try to employ people from different parts of the country within the constrain of merits.

Social impact is one area in which Nigerian business organizations have to buckle up.  It is not an uncommon sight to see some Nigerians produce substandard products, and upon this we still have an environmental edict of 19977.

The result is that business tends to ignore this very important aspect of social responsibility.

Sawmill located in the city and oil exploration companies in the river line areas continually generate heaps of saw dust and stream of crude oil respectively which pollute the air and constitute immense danger to marine life.

As a result of this neglect the supreme  count of Nigeria awarded damages of N11915.67 against an Ikeja based fertile mill for an allege nuisance by industrial west matter which emanated from the firm.

Several factors account for the apparent neglect of social responsibility by Nigeria organizations.  These factors are:-

  1. The relative small size of Nigerian business enterprise. This reduces their financial strength.
  2. Many of the large firms are owned by foreigner whose main pre-occupation is profit maximization.
  3. Many managers don’t perceive social responsibility as one of the key function of management.
  4. The laws on business social responsibility are not seriously being enforce.
  5. The dishonesty of Nigeria businessmen deceive the government and the general public about the true worth of their business so that nobody will except any contribution towards social issues from them.
  6. Ignorance of the social responsibility by Nigerian businessmen,
  7. The poor educational background of many entrepreneurs.

There are two ways of encouraging commercial enterprises to develop a sense of social responsibility.

  1. They can be forced by law
  2. They can be persuaded voluntarily

in Britain and most other states, the law plays an important thought not dormant role in regulation the relationship between firms and their various shareholders.  Commercial activities such as industrial pollution, unsightly building development and hazardous products.  However, when we are discussing social responsibility, we are generally referring to voluntary measures undertaken by firms as part of their wider role in society.

Most firms are likely to operate their social responsibility programme from the point of view of enlighten self-interest.  By contributing to those activities, which even in prosperous countries are never sufficiently funded by the state.

A firm can ensure that its reputation is maintained in society.

  • COMPANY RECORDS ON THE PERFORMANCE OF SOCIAL RESPONSIBILITY

The company yearly internal records showed the social responsibility performed by the organization for a period of five years (from 1996-2000).

Most of their social responsibility comes in the form of donation to charity.

  1. Employment of disable persons: The company continues its policy of not discriminating in considering applications for employment including those from disable persons.

All employees whether or not disable are given equal opportunity to develop.  As at 31st December 1996, five disabled persons were in the employment of the company.

  1. Health safety and welfare:- The company operates fully and equipped medical clinic where staff members received treatment during office hours while it also engage, the services of outside working hours.  It is factory basic policy to maintain a safe working environment.

Both the factory and administrative office blocks are well-ventilated air conditioned respectively.

Staff have been trained to handle fire fighting equipment which are strategically located.

All industrial safety regulations are fully complied with.

  1. Training: Development and employee involvement.  Companies believe that professional and expertise of manages and staff constitute a major asset.

Investment in developing companies, such skills have continued to receive attention through our training centre, in house seminars and workshops as well as external training within Nigeria and abroad.

DONATIONS AND GIFTS FOR 1996

RECEIVER                                                        AMOUNT

University of Nigeria                                            100000

Spinal cord injury association of Nigeria             10000

National council of women society                      5000

NYSC magazine the coal kopa                                      2000

Total 117000

FOR THE YEAR 1997

  1. Dr. M. Okpara foundation 50000
  2. Kastina state education endowment trust fund 50000
  3. St Stephen Anglican Ogbotako 30000
  4. Manufacturers association of Nigeria 10000
  5. Education bank 10000
  6. Akabor Ezem Community Nnewi Education Fraud 10000
  7. Nigeria army officers wifes association 5000
  8. Custom officers mass building 5000
  9. Boy’s scout of Nigeria 2nd Emene crew 2000
  10. Controllers of immigration meeting 2000

Total 17400

FOR THE YEAR 1998

Community secondary school Iva Valley                                         3000

University secondary school Enugu                                                  6000

Mass Doujie Eradiri – UNEC                                                           5000

Medical Women Association                                                            6000

Manufacturers association of Nigeria                                                         2000

Institute of Personnel Management                                                   6000

Steel and Engineering Workers Union                                                        10000

Federal Government College Enugu                                                  10000

German club                                                                                     5000

Total 55000

FOR THE YEAR 1999

Steel and engineering workers union                                                 10000

Boys scout of Nigeria                                                                       5000

Institute of personnel management                                                   40000

Therapeutic day care centre                                                              5000

Women aids in Africa                                                                       5000

Institute of public relations                                                               5000

Immigration services                                                                         10000

National social insurance trust fund                                                 5000

Deutsche club IMT                                                                            5000

Total          90000

FOR YEAR 2000

Enugu Chamber of Commerce                                                          10000

Nigeria Labour Congress                                                                            7680

Nike Council of Elders                                                                      10000

Orthopaedic Hospital Enugu                                                            120000

Nigeria Army Officers Wives Association                                        3000

International Women Day Lagos                                                      3000

Total 72000

The organization gave a mini but work 3 million to Red Cross at National level for the victim of the Lagos Bomb Blast.

  • SUMMARY OF LITERATURE REVIEW

The debate over the philosophy of social responsibility has brought a lot of controversy into the study of management.  The proponent of social responsibility ask for a limitation of profit maximization objectives through the execution of social programmes.  The second school of social programmes.  The second school of though vehemently reject this proposition saying that the only social responsibility of business is to make profit and thus improve society.  The 3rd school of though however believes that nothing should temper which the firm profit making ability but this should go hand in hand with social responsibility in the areas of business that has competence but it is profitable to do so.

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