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AN ANALYSIS OF CORPORATE SOCIAL RESPONSIBILITY PRACTICES OF GSM OPERATORS IN NIGERIA

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CHAPTER ONE

INTRODUCTION

 

  • Background of the Study

In the past, businesses existed without having much pressure or expectations from the society but instead, organizations were seen as entities of profit maximization for shareholders. Today, events point to the fact that such trend has changed and businesses are expected to be socially responsible and to think beyond profit maximization, if they must survive (Onwuegbuchi, 2009). Globally, more companies have continued to adopt corporate social responsibility (CSR) as a worthwhile business practice. Meanwhile, despite wide acceptance of CSR, there are divergent views about its potential benefits and how it should be practiced, as would be seen later in this study.  Various studies conducted in different countries, have shown that CSR is practiced differently, in different countries.

Also, the idea of companies engaging in corporate social responsibility has been attacked by some scholars, with Milton Friedman, at the forefront of the group. In his book, Capitalism and Freedom, written in 1962, Friedman condemned the view that companies should have a social responsibility that goes beyond serving the interest of their stockholders. In his opinion, managers should concentrate on making as much profit, as possible, for shareholders. He further argued that the claim that businesses should contribute to the support of charitable activities, is an “inappropriate use of corporate funds in a free enterprise society and a fundamental subversive doctrine” (Friedman 1962, p. 133).

Popular amongst those that believe in the spirit and principles of corporate social responsibility of companies is Kenneth Dayton, Chairman of Dayton Hudson Corporation. In his ‘Seegal-Macy Lecture’, delivered at the University of Michigan, 1975, he said: “We are not in business to make maximum profit for our shareholders but to serve society. Profit is our reward for doing it well. If business does not serve society, society will not tolerate our profits or even our existence” (Anderson 1989, p. 1).

There is also the argument that most social problems industries face today are contributed by business growth. Therefore, organisations are expected to contribute in solving them and failure to do this may cause the problems to get worse and organisations might not survive. Also, failure of corporations to be socially responsible may cause society to change business conditions, maybe through law changes or activities of pressure groups and this may make survival difficult for organisations.

Chiu and Hsu (2010), in a study, maintain that the early stage of 21st century experienced corporate scandals such as Enron and WorldCom in the U.S.; the infamous Rebar Group and Zanadau case in Taiwan, and such activities brought doubt to the credibility of companies. The study also notes that the increase in productivity by machinery automation has led to environmental destruction and increased resource consumption, which has attracted more attention to corporate social responsibility (CSR). Also, increased interest in CSR in recent years has been as a result of globalization and international trade, which have reflected in increased business complexity and new demands for enhanced transparency and corporate citizenship (Dima & Ramez, 2007; Parker, 2005; Rahul, 2008).

As noted earlier, scholars and practitioners are yet to agree on a consensus definition and practice of the CSR concept. However, for the purpose of this study, we shall subscribe to the definition provided by the World Business Council for Sustainable Development (WBCSD). According to WBCSD, CSR is “the commitment of business to contribute to sustainable economic development, working with employees, their families and the local communities” (WBCSD, 2001, p. 1). Therefore, the core idea of CSR is that organisations have an obligation to meet certain needs of their various stakeholders (Clarkson, 1995; Waddock et al., 2002).

Mobile communications, no doubt has become an integral part of our day-to-day life, mainly due to its convenience and value to life. Interestingly, Nigeria is included in the league of the largest mobile communications market in Africa. The Nigerian telecommunications industry was deregulated by the Federal Government in 2001, thereby ending NITEL’s monopoly over the sector and marking the entrance of private players.

However, Chiu and Hsu (2010) state that while consumers benefit from the use of mobile telecommunication, they also experience health and safety risks associated with base stations, exposure to electromagnetic fields, noise and air pollution etc. In view of the above mentioned negative implications of the Global System for Mobile Communication (GSM) operations in the society, it is expected that service providers should carry out their business responsibly, while contributing in ameliorating the effects of their operations on the society. This sector was chosen for this study because the growing rate of GSM use in Nigeria, and its attendant health and environmental concerns are always in public debate.

Most CSR studies found in the course of literature search for this study were done in developed countries. It is in the light of this that Belal (2001) suggests the need for more research on CSR practices in the ex-colonial, smaller, and emerging economies. Also, Dima and Ramez (2007, p. 244), reveal a “lingering academic curiosity about diverging CSR understanding and practice in the light of vastly different economic, social, and cultural conditions”. He concludes that “there is value added in exploring CSR conceptions and perceptions in a developing country context, and gauging the extent to which CSR practice in developing countries has matured beyond the boundaries of compliance and public relations (Dima & Ramez, 2007, p. 244).

It is on the heels of the foregoing that this study examined how the GSM companies operating in Nigeria understand and practice CSR, also highlighting the position of CSR within corporate structures. The study went further to discover the level of knowledge of CSR initiatives of the GSM operators by their consumers and the effect of such knowledge on the corporate image of the companies.

 

1.1.1  Overview of the GSM Sector in Nigeria

In Nigeria, the Global System for Mobile communications (GSM) companies includes MTN Nigeria, Airtel, Globacom and Etisalat. MTN Nigeria, which is part of the MTN Group, commenced operation on May 16, 2001. It was the first GSM network to make a call in the country, following the liberalization of the Nigerian telecommunications sector earlier that year (Telecomscompare, 2012). The company which began full commercial operations in Lagos, Abuja and Port-Harcourt, has so far expanded operations to all states of the federation. Airtel is owned by BhartiAirtel, Asia’s leading telecommunications service provider. The Airtel Group operates in 15 countries. Globacom is the only indigenous GSM company operating in Nigeria and it was established in 2003. With over 25 million subscribers, (Telecomscompare, 2012), the company has so far extended its coverage into other African countries like the Republic of Benin, Ghana and the Ivory Coast. It made history as the first company to build an $800 million high-capacity fiber-optic cable, known as Glo-1, the first successful submarine cable from the United Kingdom to Nigeria, meant to decrease telecom process and provide adequate bandwidth to all the cities connected to the cable.

Etisalat, which came into the Nigeria GSM sector in 2007, originated from the United Arab Emirates (UAE), in 1976. The company acquired the Unified Access License, which includes a mobile license and spectrum in the GSM 1800 and 900 MHz bands at the price of $400 million (Four Hundred Million U.S. Dollars). The company has footprints in 17 countries, traversing the Middle East, Asia and Africa. In Africa, it exists in 10 countries.

 

  • Statement of the Problem

Literature search for this study revealed that several research exist on CSR, but most of them were done in the Western world. Those studies delved into various areas of CSR, and some sought to find out how CSR is practiced in different countries. Interestingly, some of those studies have given us reasons to believe that significant difference exist in the ways CSR is understood and practiced by different organisations in different countries around the globe. While there are several studies telling us how CSR is understood, conceptualized and practiced in the developed world, especially in America and Europe, not much of such studies have been done in the context of the developing countries. It is, therefore, in the light of this gap that this study sought to unravel how the GSM companies in Nigeria understand and practice CSR in the country. In doing this, the study would also discover some of the motivating factors behind CSR initiatives of the GSM operators in Nigeria.

Some of the studies done outside the country also suggest a link between corporate image and a company’s CSR. In other words, the studies reveal that CSR positively affects the perceptions stakeholders have on organizations and even affect consumer behaviour and decision making. Also, only little of such studies exist in the developing countries and none was found done in Nigeria’s GSM sector. The foregoing prompted this study to go further to ascertain if the GSM consumers have knowledge of CSR practices of the operators and how the knowledge has influenced the attitude of the consumers towards the operators.

 

 

 

 

  • Objectives of the Study

This study examined how the GSM companies operating in Nigeria understand and practice CSR, while highlighting their motivating principles. It further tried to find out the level of knowledge GSM operators’ consumers have about the CSR initiatives and the effect of such knowledge on the corporate image of the companies.

Therefore, to achieve this, the study had the following objectives:

  1. To determine the understanding of CSR amongst the GSM service providers in Nigeria.
  2. To unravel the motivating principles behind CSR practice of the GSM operators in Nigeria.
  3. To discover how the GSM companies implement CSR in the country.
  4. To find out if the GSM consumers have knowledge of the CSR practices of the GSM operators.
  5. To ascertain how knowledge of CSR actions of the GSM operators influence GSM consumers.

 

1.4     Research Questions

The following research questions were formulated to help achieve the objectives of the study:

  1. What is the understanding of CSR amongst the GSM operators in Nigeria?
  2. What are the motivating principles behind CSR practice of the GSM operators?
  3. How do the GSM operators implement CSR in Nigeria?
  4. Do the GSM consumers know the CSR initiatives of the GSM operators?
  5. How does knowledge of CSR efforts of the GSM operators influence the consumers?

 

1.5     Significance of the Study

Academically, this research will, not only contribute to the volume of knowledge on CSR, but will help in filling the gap existing in CSR research in the developing countries and particularly in Nigeria. As noted earlier, most existing CSR studies were done in the Western world and several of them have proved the lack of consensus in the definition and practice of CSR around the globe. Since it is an established fact that CSR is not practiced the same way by different organisations in different countries, this study becomes relevant because it will help us to know how CSR is understood and practiced by the GSM companies in Nigeria.

Professionally, this study will help CSR practitioners in other organisations to know what the GSM companies are doing in the area of CSR and also provide learning opportunities for them. Such knowledge could help them in conceptualizing their own CSR strategies. The various literature cited in this study will also help these professionals to know how CSR is understood and practiced in other parts of the world. In addition, results gotten from the second part of the study will help the GSM companies find out if their customers have knowledge of their CSR efforts and also to know how this knowledge influences customers’ attitudes towards them. Since studies in other parts of the world have shown how customers claimed they were influenced in one way or another by the CSR of companies,  it is important to know if such could be said of customers of the GSM companies in Nigeria.

Furthermore, this study will join the global effort in raising more awareness of CSR. It is hoped that such CSR consciousness will motivate managers in other organisations where CSR is not practiced to begin to include CSR in their business plans.

 

1.6     Scope of the Study

Given the broad nature of CSR, this study focuses on the GSM operators in Nigeria, with the view to disclose how they understand and practice CSR. It has a second part, meant to find out if customers of the operators know and are influenced by their CSR practices. The second phase of the study was delimited to only GSM consumers in the South-Eastern part of Nigeria. There are five states in the South-East and they include; Imo, Enugu, Anambra, Abia, and Ebonyi. Only the final consumers were focused on.

1.7     Definition of Key Terms

The following terms have been defined to aid understanding of the study:

GSM:

In full, GSM means Global System for Mobile Communication. It is a standard set developed by the European Telecommunications Standards Institute (ETSI) to describe technologies for second generation (2G) digital cellular networks. It replaced the first generation (1G) analog cellular networks.

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