CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Corporate social responsibility (CSR) has been recognized as one of the important factors for business sustainability. This for the past decades has been the core focus of a number of researches, with much emphasis on the explicit normative arguments for its adoption by large corporations (Moyeen and Courvisanos, 2012). With much emphasis on the application of Corporate Social Responsibility by large companies, this ignores the role of small and medium-sized enterprises (Medium scale businesses) and the investigation of how such firms actually perform CSR activities (Dahlsrud, 2008). But, it could also be argued in support of the recent claims that Medium Scale businesses can design appropriate CSR strategies to address issues in local communities. In that Medium scale businesses operate within these communities and subsequently are more aware of community and environmental issues than their larger counterparts (Davis, 1973).
As a matter of fact, in the early 2000s, Governments, Development Organizations, Media and Academia World-Wide have called for greater incorporation of Corporate Social Responsibility into business strategy. According to Curran et al., (2000), the intention was to engage in activities that address wider social, community and environmental issues with a view to improve the conditions of society at large, both locally and globally. Jenkins (2006) and Blombäck and Wigren (2009) affirms this assertion and right from that time onward, the corporate world have responded to this call and a growing number of private sector enterprises, regardless of size, are now actively engaged in defining and integrating CSR into their businesses process and strategies, and reporting their social and environmental performance (Ogrizek, 2002; Zu and Song, 2009).
In today’s dynamic business environment, corporate organizations are faced with the needs to impact positively on the host communities, by taking upon themselves certain responsibilities in order to increase their societal and environmental influence. Organizations also included social and environmental concerns in business operations rather than focusing on profit making only. Organizations have developed a variety of strategies for dealing with this intersection of societal needs, the natural environment, and corresponding business imperatives with respect to how deeply and how well they are integrating social responsibility approaches into both strategy and daily operations worldwide.
Many organizations such as banks and some manufacturing companies in Nigeria are driven by the need to make more and more profits and that is the sole aim of every business. In a bid to meet this target, some companies do not adequately respond to the needs of host communities, employees’ welfare (cheap labour often preferred), environmental protection and community development. Research has shown that corporate social responsibility can increase profitability, sustainability, integrity and reputation of any business that includes it in its policy (Davis, 1960).
Nkanga (2007) posited that corporate social responsibility involves the commitment shown by companies to contribute to the economic development of a local community and the society at large. The adoption of corporate social responsibility policy should not be driven or motivated by increased profit. Rather, giving back to the society that gave to the business first should be the motivating factor. It is a common practice by Nigerian organizations to put as one of their mission statements the provision of corporate social responsibility. The organizations must have realized that stating corporate social responsibility as one of their mission statements hold special appeal to the stakeholders. Hence, there is an increasing awareness and recognition accorded corporate social responsibility by corporations.
Even though the CSR agenda has traditionally been linked with large corporations, there has been an increasing expectation and pressure on Medium scale businesses to engage in CSR initiatives and reporting of such activities (Davis, 1973). Hence, it becomes necessary here to examine the application of Corporate Social Responsibility by Medium Scale Business on the community of operation and its effect on their financial performance. This concern arises owing to the fact that medium scale businesses tend to face more financial challenges than the large scale business that carry out their CSR conveniently. So, what are the possible effects of the application of CSR on the financial performance of medium scale businesses: does it help boast their finances or is it a financial burden to these businesses?
1.2 Statement of the Problem
It has been observed that the vast majority of CSR research focuses almost exclusively on large corporations. Despite the important contribution that Medium scale businesses make in the world economy and their impact on both the social and natural environments, the issue of CSR in Medium scale businesses has not yet received adequate research attention (Lepoutre and Heene, 2006; Fassin, 2008; Blombäck and Wigren, 2009). Furthermore, much of the existing literature on CSR in Medium scale businesses is either prescriptive or normative without being extensively empirically grounded (Dahlsrud, 2008). This is largely due to the inclination of researchers to adopt the large businesses framework as the norm for CSR strategies and tools development in the Medium scale businesses field, which is broadly guided by assumption that “Medium scale businesses are little big business” (Jenkins, 2006).
Tilley (2000) have suggested the need for more research on CSR in Medium scale businesses, not only because it will help advance the wider knowledge of CSR, but also to explore how CSR can be promoted among Medium scale businesses. In response to this, academia has come forward to investigate how Medium scale businesses engage in CSR and how they perform it to attain the goal of sustainable development. So, to contribute to the researches on CSR in medium scale businesses, the problem of this study is stated thus: what are the corporate social responsibility of medium scale businesses to their community and environment of operation and how does this affect the financial performance of these medium scale businesses?
1.3 Objectives of the Study
The objectives of this study were to:
determine the extent to which medium scale businesses implement corporate social responsibility to their community and environment of operation;
find out the corporate social responsibility activities implemented by medium scale businesses to their community and environment of operation;
examine the effect of implementing corporate social responsibility on the financial performance of medium scale businesses;
ascertain the constrain of implementing CSR by medium scale businesses.
1.4 Research Questions
The following research question was adopted to guide the execution of this study:
What is the extent to which medium scale businesses implement corporate social responsibility to community and environment of operation?
What are the corporate social responsibility activities implemented by medium scale businesses to their community and environment of operation?
How does implementing corporate social responsibility on the community and environment affect the financial performance of these medium scale businesses?
What are the constrains of implementing corporate social responsibility by medium scale businesses
1.5 Significance of the Study
This work will be of immense importance to stakeholders of medium scale businesses such as the employees, employers, communities, government etc among others because it will serve as an eye opener on the CSR activities that should be carried out by them as well as point out the possible effect of the application of these CSR activities on the financial performance of their medium scale businesses. Government agencies and any other bodies will find the outcome of this study relevant. Nonetheless, other researchers will also make use of the finding of this work as an indication for further researches.
1.6 Delimitation of the Study
This study will be delimited to CSR activities on the community and environment by medium scale businesses and the financial implication of the application of CSR on medium scale businesses. One hundred (100) medium scale businesses in Akwa Ibom State will consist of the companies under study.
1.7 Definition of Terms
Medium Scale Businesses: These are businesses whose personnel numbers fall below certain limits. The primary metrics used to determine whether a company is a Medium scale or not is the amount of revenue the company earns per year and the size of its workforce (Sweeney, 2007).
Corporate Social Responsibility: Corporate social responsibility (CSR) is a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders (Sarbutts, 2003).
CSR Activities: These are activities that fall within the CSR capacity of a firm. The most common type of CSR activity relates to community development and appears in the form of ad hoc philanthropic donation of money, time and in-kind support (Jenkins, 2006).
1.8 Research Design and Methodology
The survey research design will be used for this study. It is the ideal research design for this study, because it will aid the researcher to elicit opinion from the respondents. The data for the study will be collected by interviewing owners/managers and workers of one hundred (100) medium scale businesses within Akwa Ibom State. The questionnaire used for the interview will be completed in the presence of the interviewee. Each transcript including the responses of the interviews will be presented in the data analysis session of the study or as appendices. Data collected from the questionnaire will be analyzed using table distribution, frequency and simple percentage.
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