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CORPORATE SOCIAL RESPONSIBILITY IN ANAMBRA AND ENUGU STATES A CASE STUDY OF MTN AND GLO FROM 2003 TO 2013

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CHAPTER ONE

INTRODUCTION

  • Background to the Study

In recent times, corporations are encouraged to adopt corporate social responsibility, as part of their business practices. This is unlike the past, when the major aim of companies was focused on efficient resource allocation and profit maximization. This move for companies to behave in socially responsible ways is in accordance with the United Nations initiative on “Global Compact”. The Global Compact encourages business organizations globally to commit socially and ecologically to sustainable development.

Corporate Social Responsibility (CSR), originated from the book, ‘Social Responsibility of Businessmen’ by Bowen in 1953 (Choudhary and Singh, 2012). However, great importance was never attached to corporate social responsibility until the outbreak of series of scandals in the early 21st century; some of the scandals includes: the Enron fraud of 2001, which highlighted the issue of corporate governance and the WorldCom in the US; the infamous Rebar Group and Zanadau cases both in Taiwan; the Coca- Cola bottle pollution in India highlighting environmental issues of water resources protection and the tainted milk incident, involving the Japanese Snow Brand Dairy company in 2003 (Uwuigbe, Uwuigbe, and Egbide, 2012; Chiu and Hsu, 2010). The formalized history of corporate social responsibility practices in Nigeria, according to Uadiale and Fagbemi (2012: 44), was in the Oil and Gas multinationals which were mainly focused on remedying the effects of their extraction activities on local communities by providing social amenities like pipe- borne waters, hospitals and schools.

Despite the wide acceptance of corporate social responsibility, there are contentious debate by researchers and practitioners on its relevance and how it should be practiced. This debate was steered in (1958) by an American Economist Milton Friedman who challenged the notion of corporate social responsibility, saying that the main focus of business should be on generating money and creating economic benefits within the framework of the law. As Friedman (1970) wrote in New York Magazine article “The Social Responsibility of the business is to make profit”, its resources should be used to engage in activities designed to increase its profit so long as it wishes to exist (Chrandrakanka, 2010; Malik, 2008; Hill, Ainscough, Shank and Manullang, 2007; Choudhary, 2012).

In response to Milton Friedman’s view of corporate social responsibility, Edward Freeman (1984) emphasized that organizations should not only be accountable and responsible to their shareholders but also balance the interests of their other stakeholders such as customers, employees, suppliers, government and community, who can either influence or be influenced by organizational activities (Wang, 2011; Lee, 2008; Hanuman, Ramdhony and Cheong, 2009). Edward Freeman’s view, according to MC William (2001) is called the dominant paradigm. The views of Friedman and Freeman were integrated in Drucker (2002) as thus:

“A business that does not show a profit at least equal to its cost of capital is socially irresponsible: it wastes society’s resources. Economic profit performance is the best, without which businesses cannot discharge any other responsibility, cannot be a good employer, a good citizen, a good neighbor: but economic performance is not the only responsibility of a business ….. Every organization must assume responsibility for its impact on its employees, the environment, the customers and whomever and whatever it touches. That is Social Responsibility” (Chrandrakanka, 2010).

Carroll Archie .B, in 1979 developed a four – part conceptualization of corporate social responsibility which includes economic, legal, ethical and discretionary (philanthropic) responsibilities. For corporate social responsibility to be accepted as legitimate according to him, it has to address the entire spectrum of obligations business has to the society, including economic, which is the most fundamental (Carroll,1991).

As argued by Edward Freeman, different stakeholders view on corporate social responsibility varies; the shareholders may interpret it as profit maximization; government may regard it as legitimate compliance and ensuring safe products and workplaces; Consumers may view it as a means of delivering high quality products at a good price and probably, ethical and philanthropic behavior, while the remaining stakeholder groups including communities, employees and society also have their diverse interpretation of corporate social responsibility (Chrandrakanka, 2010).

Studies have shown that corporate social responsibility is a key to long term success, reputation and brand image and without healthy and prosperous society, business entities would not excel (Asa, 2007; Zadek, 2005; Adeyanju, 2012; Amole, Adebiyi and Awolaja, 2012). The main objective of business activities in a society, apart from making profit includes serving the society by providing employment, raising the standard of living, playing role in civic affairs, providing basic amenities like health care, and education (Choudhary and Singh, 2012).

The deregulation and liberalization of the economy in 2001 due to the failure of NITEL controlled by the Federal government, led to advent of mobile telecommunication in Nigerian. Since then, the Global System for Mobile Communication (GSM) industry have been experiencing rapid growth, boosted the nation’s economy and have led to employment of millions of Nigerian citizens, either as distributors of GSM phones, recharge card sellers or GSM phone repairers; but this does not mean that it existed without some consequences. In as much as the telecoms industry is affecting Nigerian economy and the lives of citizens and the as a whole, it is important that their activities do not compromise Nigerians lives and environment.

1.2     Statement of the Problem

Despite the numerous benefits brought in by the GSM services on Nigerian economy such as ease of business transaction, communication, e-banking services, among others, the GSM services also came with other problems such as health and safety issues related to base stations and radio frequency, emissions, noise, air and ground pollution (MTN, Annual Report, 2005) in Osemene (2012). In recent times, the need for increased financial worth and pressure from stakeholders; mostly in terms of consumer decisions, investors’ pressure, company image and reputation, competitors, employee working conditions, human rights, environmental and social concerns has made companies to engage in corporate social responsibility. Stakeholders expect the companies to manage the effect of their activities on the environment. In terms of environmental and health concerns, citing of MTN and Glo masts close to residential areas leads to noise pollution resulting from the use of fuel/ diesel generator in business operations due to irregular power supply, electromagnetic field (EMF) and destruction of lives and properties resulting from collapsed masts which in turn poses great threat not only to the general public but to the employees who work in telecommunication companies.

The relationship between organizations and their host community has become increasingly important. The decisions made in an organization may influence community prosperity; as well as national and even international economic activity. An example of these problems is the on- going crises in Niger Delta region which has led to the destruction of lives and properties. There are accusations from the youths in these areas that companies misdirect their responsibilities to the communities and these have caused a lot of acrimonies between the community and firms. These scenarios prompted the researcher to unravel the reason for these firms to see the need to make positive impact in the society by helping the society solve some of its problems, most especially those they created, and involve in philanthropic donations to the needs of these communities and provide the communities with some social amenities vis-à-vis, achieving development through the corporate social responsibility of MTN and Glo in the states.

Most stakeholders of MTN and Glo do not know much about the companies’ corporate social responsibility, the companies therefore need to invest more time and resources in communicating and training of their stakeholders so as to increase their awareness level.  Again, these companies generates huge profits from their operations and therefore the stakeholders expect some of these profits to be continuously ploughed back to the environment as corporate social responsibility by helping in the growth and development of the host community, reducing poverty and contributing to infrastructural development. Most existing literature on Corporate Social Responsibility has been done in the context of developed western economies, especially in America and Europe but limited literature exist on the status of Corporate Social Responsibility in developing countries, particularly in Nigeria. It is in the light of these gaps that this study focuses on to investigating the Corporate Social Responsibility of MTN and Glo in Anambra and Enugu states from 2003 to 2013 and the impact of MTN and Glo corporate social responsibility on the stakeholders in the states.

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

  1. Why do MTN and Glo engage in corporate social responsibility?
  2. What impact do the MTN and Glo corporate social responsibility have on stakeholders in Anambra and Enugu states?
  3. How can MTN and Glo enhance their corporate social responsibility in order to achieve greater stakeholder satisfaction in Anambra and Enugu States?
    • Objectives of the Study

This study therefore has both main and specific objectives. The main objective is to investigate the Corporate Social Responsibility of MTN and Glo in Anambra and Enugu States from 2003 to 2013. While the specific objectives are:

  1. To examine why MTN and Glo companies engage in corporate social responsibility.
  2. To identify the impact of MTN and Glo corporate social responsibility on stakeholders in Anambra and Enugu states.
  3. To find out how MTN and Glo can enhance their corporate social responsibility in order to achieve greater stakeholder satisfaction in Anambra and Enugu States.
    • Significance of the Study

This study has both theoretical and empirical significance.

Theoretically, this study would not only contribute academically to the volume of knowledge in corporate social responsibility, but would as well fill the existing gaps in literature obtainable in developing nations particularly in Nigeria. Research has also shown that corporate social responsibility has several benefits for the company such as: improved financial performance and profitability, reduced operation costs, long- term sustainability for the companies and its employees etc. Also stakeholders can, in one way or the other, be influenced or affected by the corporate social responsibility of companies and when neglected, might withdraw their support which in turn would have negative effect in the organization. This study will therefore help companies in Nigeria to engage in or increase their corporate social responsibility activities in order to maximize profit, gain the stakeholder’s support, and survive in the ever competitive market.

Empirically, this study is also going to help the Nigerian Communication commission (NCC) and other regulatory agencies to make strong policies that will help the telecommunication companies in Nigeria, to carry out adequately, its corporate social responsibilities so as to enhance sustainability.

This study would also join the Global efforts of government and international organizations in creating more awareness of corporate social responsibility.  Again, studies have shown that corporate social responsibility helps in enhancing firm’s profitability; this study would motivate managers of other organizations in Nigeria who do not practice corporate social responsibility to know why MTN and Glo embark on corporate social responsibility and then include it in their business plans in order to enhance their profitability in order to attain better result in the states.

  • Scope and Limitations of the Study

            This study focuses on the Corporate Social Responsibility of MTN and Glo in Anambra and Enugu States. However, due to the vast nature of stakeholders, the researcher  decided to restrict the study to four (4) local government areas in Anambra and Enugu states including Awka South and Aguata in Anambra state and Enugu North and Nsukka, in Enugu state respectively.

The limitations of this study includes: difficulty and inaccessibility of necessary data to carry out the research as some management staff of the companies thought that the researcher’s request was an attempt to publicize some information that could be detrimental to the companies. Also some consumers and people from the local communities felt that the researcher was working for the companies and were unwilling to disclose some information without some financial benefits.

However, notwithstanding the limitations of this research, and with the resilience and doggedness of the researcher, the problems were overcome

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