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AN ASSESSMENT OF CORPORATE SOCIAL RESPONSIBILITY PRACTICES OF SELECTED INDIGENOUS MANUFACTURING COMPANIES IN ENUGU STATE, NIGERIA.
- Background of the Study and History of Selected Companies
Today, increasing numbers of companies are beginning to appreciate the rising importance of Corporate Social Responsibility (CSR). They can no longer overlook societal expectation. Corporate Social Responsibility is rapidly becoming one of the principles and important priorities which modern businesses should adopt regardless of their size and type (Jiyoung, 2007:7). Recently, businesses are expected to take account not only of their economic interests but of their societal and environmental impacts as well. They are responsible for delivering sustainable development where they operate – locally, regionally and globally.
Corporate social responsibility goes beyond the old-fashioned and altruistic philanthropy of the past. Instead, now it is an all year round responsibility for business. In spite of mixed evidence on the financial impact of corporate social responsibility, the largest and most powerful global corporations embrace it as their core business principle. Hardelman and Arnold, (1999:35) explained that Corporate Social Responsibility seems to be something of a holy grail to invigorate the business only if they can discover it. In his view corporate social responsibility is very elusive. How to integrate corporate social responsibility into business is one of the biggest challenges that today’s business face.
In the past decades, there has been a significant change in the relationship between business and society. As witnessed by governments’ lack of capability to solve social problems, the public’s expectation for business has begun to increase (Smith et al, 2001:107). In Nigeria, business organizations are expected to be socially responsible to the environment they operate. Thus, many companies see themselves as caught between social demanding and maximizing short-term profits (Porter and Kramer, 2002:80).
Therefore, this prompt the enactment and implementation of CSR bill to enforce the practices of corporate social responsibility by the companies and by Nigerian. Government as published in Nigerian daily independent newspaper 29th January, 2009:17.
In this millennium, however, the demands for corporate social responsibility have become more specific and more imperative than they used to be; the public began to demand that businesses make social issues a part of their strategy (Lantos, 2001:600). Not only general business associations, but the World Business Council for Sustainable Development (WBCSD) and the Business for Social Responsibility (BSP) Promote Corporate Social Responsibility. A number of organizations have started to rank companies on the performance of their corporate social responsibility and these rankings have had a significant effect on both the publics and investors. As a result, Corporate Social Responsibility has become a priority for business, i.e. it is no longer a business option but a fundamental (Smith, 2003:56).
History of the Selected Companies
- Anambra Motor Manufacturing Company
Mercedes Benz ANAMMCO Limited was incorporated on January 17, 1979 and the plant was commissioned on July 8, 1980 by the First Executive President of Nigeria, Alhaji Shehu Shagari. It started official production in January 1989, and has to date made an enviable mark in the nation’s transportation industry, adding over 30,000 vehicles to it.
The company is a joint venture between the Federal Government of Nigeria and Daimler Benz Ag/Mercedes Benz Ag of Germany. The plant has an installed production capacity of 7,500 commercial vehicles (Truck Assembly), however, unfortunately, due to the general economic downturn in the country, ANAMMCO’s current capacity utilization is put at a little over 15% of her installed capacity. For this reason, between the period of 1981 when the started production to 1994, ANAMMCO can just boast of having added only about 20,000 vehicle made up of Trucks and Buses to the nation’s transport sector. The company has since diversified to the production of buses. She also has a network of over 36 after-sales services points and spare part supply depots.
1.1.2 Emenite Company Limited
Emenite Limited was incorporated in the month of October 1961 as Turners Asbestos Cement Nigeria Limited. On the 22nd March, 1976, the name was change to turners building products Emene Limited as a result of indigenization decree. The significance of that changed the Head office which was formerly in Lagos was changed to Emene. Then, on the 24th March, 1988, the company started answering the name Emenite Limited. This change was occasioned by the subsequent sale of the foreign partners share i.e. (Turner and Newall) to Eteroutremer S.A., presently known as Elex Group who now holds the majority of shares and consequently controls the affairs of the company as of now.
The company – Emenite Ltd is in business producing Asbestos Cement Building Topics, presently changed to Fibre Cement Building Topics because of the negative connotations which the word “Asbestos” has among the publics. The company’s product lines consist of the following: corrugated roofing sheets, ceiling boards; flower pots and water pipes which are presently out of production.
1.2 Statement of Problem
Many companies see themselves as caught between social demanding and maximizing short term profits (Porter and Kramer, 2002:80). Although, it is believed that stakeholder value is hardly compatible with Shareholder value, today’s businesses have a fiduciary duty to shareholders and at the same time a social responsibility to stakeholders. So far it is widely accepted that being responsible means a cost rather than financial benefit (Jiyoung, 2007:17). Possessing a strong Corporate Social Responsibility profile means a cost rather than as asset that can be invested in. However, the growth in socially responsible investments and in Corporate Social Responsibility awareness assures organizations that the future champions will be those who proactively balance short-term financial goals to meet shareholder demands, with building long-term sustainability to satisfy stakeholder demands. Consumers make a purchasing decision according to a company’s corporate reputation.. Apparently, it seems like today’s companies are caught in a morality. Being moral involves costs, thus morality demands the price of resources of companies. On the other hand, are consumers willing to pay premium prices caused by corporate social responsibility investment? Research shows that not many of them are (Smith, 2005:62). If so, how can companies recover the loss caused by (CSR)? How do companies reconcile this negative financial impact caused by (CSR)? What role can Corporate Social Responsibility play in the life of business organizations? Can it reconcile the gap between social needs and their virtue of capitalism? Therefore, this study intends to do an assessment of Corporate Social Responsibility practices of selected indigenous manufacturing companies in Enugu Metropolis in Enugu State.
- Objectives of the Study
Generally, the objective of the study is to assess the Corporate Social Responsibility of the selected companies in Enugu Metropolis in Enugu State. However, the specific objectives are as follows:
- To ascertain whether the selected companies engage in the Corporate Social Responsibility.
- To determine if cost is more valuable other than financial benefit.
- To ascertain if corporate social responsibility can be used as a tool for marketing their company’s products.
- To determine if there is a significant relationship between organizational morality and Corporate Social Responsibility.
- To determine if pitfalls of corporate social responsibility have an impact on the marketing of company’s product.
- To determine if there are any other factor that stimulate company’s to practice corporate social responsibility other than ethical consideration
- To determine if companies assets are used to assess the impact of their Corporate Social Responsibility.
- To identify the benefits ANAMMCO and Emenite derived in their practice of Corporate Social Responsibility.
1.4 Research Questions
- Do the selected companies engaged in the practice of corporate social responsibility?
- Do cost more valuable other than financial benefit?
- Do companies use corporate social responsibility practices as a tool for marketing their company’s products?
- What is the relationship between organizational morality and Corporate Social Responsibility?
- Do pitfalls of corporate social responsibility had an impact on the marketing of company’s product?
- Do any other factor stimulated companies to practice corporate social responsibility other than ethical consideration?
- To determine if companies asset are being used to assess the impact of their corporate social responsibility
- What benefits do the selected companies derive in their practice of Corporate Social Responsibility?
1.5 Hypotheses of the Study
- Ho: Companies did not engage in the corporate social responsibility
- Ho: There is no significant relationship between the companies Corporate Social Responsibility Practices financial cost and benefits derived from it.
- Ho: Companies did not use corporate social responsibility practices as a tool for marketing their company’s products’.
- Ho: There is no significant relationship between organizational morality and corporate social responsibility.
- 5. Ho: The pitfalls of corporate social responsibility have no impact on the marketing of company’s product.
- 6. Ho: Corporate social responsibility cannot be stimulated by any other factor other than ethical consideration.
- Significance of the Study
Globally, Corporate Social Responsibility Practices is another functional area of managing and marketing the activities of business organizations to maximize shareholders/investors value and stakeholders/public value. Therefore, this study will benefit the following:
Government: In the area of infrastructural development which some governments have low capacity to discharge, through Social Responsibility Practices business organizations come to the aid of the governments.
Public/Stakeholders: The stakeholders as a result of the relationship between the business organizations and society and for the sake of promoting loyalty with the customers, business organizations are therefore rendering some social responsibility services to improve the standard of living of their customers.
Business Organizations: The Corporate Social Responsibility Practices may be used as a marketing tool to achieve long-term sustainability of companies and survival in the environment with which they operate.
- Scope of the Study
This study is restricted to the Corporate Social Responsibility Practices in Anambra Motor Manufacturing Company (ANAMMCO) and EMENITE Company Limited in Enugu Metropolis in Enugu State in Nigeria.
- Limitations of the Study
In the process of carrying out this study the researcher encountered the following problems:
Financial Constraint: The researcher was faced with the problem of transport fare from one company to the other in searching for relevant information and administration of questionnaire both in the pilot survey and the real field survey.
Time Constraint: The time allocated to this study was not enough, despite that the researcher managed to complete the research work and delivered the desirable objectives.
Scarcity of Materials: The researcher faced a lot of stress in the process of gathering materials for this study as a result of dearth material in the areas because much emphasis is yet to put on it. However most authors have not treated the topic extensively.
- Definition of Terms
For the purpose of clarification and understanding of this research, some concepts required conceptual definitions. Below are some of these concepts:
Marketing: Marketing, therefore, is the anticipation of needs and wants and providing such needs and wants at the time they are wanted. When, where that are wants, how they are wanted and at the price they are wanted at a profit (optimal profit) (Onah and Thomas 2004:4).
Management: Management is the careful or judicious manipulation of all the factors employee on the production of goods and services that are needed by human beings in any society for whom the good and services are meant, in such a way that the producer and the consumer get their optimum satisfaction from action of production or services (Iwu 1998:3).
Metropolis: Metropolis is defined as urban city: The urban environment is large, intensively developed and typically noisy. Also people in the urban built environment are typically engaged in the secondary and tertiary services. Conceptually, the urban environment is a reflection of the cumulate totality of man’s occupancy of the land as has been made possible by the level of his technology. The urban built environment can be perceived from the stand point of its physical structures, its amenities and facilities. It goods and services and it characteristic problems. It may also be perceived from the stand point of the life styles that have evolved as a result of its “artificiality”, the crime problems, the traffic congestion problems, the insecurity, its cultural mix and heterogeneity, its solid waste problems, it environmental pollution, its noise and various institutional and personal devises to cope with these ‘problems. The urban built environment may also be seen from the stand point of its unique opportunities its unique collection of goods, its superior educational institutions, health, recreational and other amenities and it rare blend of services. (Obasikene at el 2000:53).
Public: according to Black (1989:11) stated that the publics of an organizations are those who are impacted upon by the activities of the organization and or those whose activities, on the other hand, impact or could impact upon the organization.
Organization: This is a combination of people or individual efforts working together in pursuit of certain common purposes called organization goals (Akpala, 1990:2).
Social Responsibility: According to International Finance Corporation (2000:137) Social Responsibility is the commitment of business to contribute to sustainable economic development by working with employees, their families, the local community and society at large to improve their lives in ways that are good for business and for development.