Author: Akindele, R I
Date published: September 1, 2011
Journal code: FPSY
Corporate Social Responsibility (CSR) is an essential ingrethent for the survival of any organization. Given that all organizations have some connection with society in which they are, CSR is becoming popular irrespective of an organization's size or sector. Also in the modern world, it has been observed that organizations of every size and in every market have to earn and retain the consent of society at large to stay in business and that consent will only be given if communities believe the operation has a beneficial 'footprint' on the human and natural environment.
CSR has today become imperative, due to the goodwill it generates and the belief that the overall health of both the corporate entities and the environment where they operate are mutually dependent. A business enterprise is primarily established to create value by producing goods and services which society demands. In the process, the organization generates profits for its owners and welfare for society. Today, corporate organizations are managing their operations in such a way as to enhance economic growth and increase competitiveness while protecting the environment and promoting social responsibility.
Ordinary citizen, potential investors, pressure groups, politicians, insurance companies and a wide range of other stakeholders are increasingly holding organizations to account for the social, natural environmental and economic impacts that they have on every community in which they operate.
Incessant political unrests within the country (Nigeria) are not unconnected to the social and environmental concerns that lies at the heart of CSR debate. Problems of poverty in the midst of plenty, environmental negligence, poor infrastructural development, poor road network, poor funding of the educational system, high illiteracy rate and bureau-political corruption implicate both the behaviour of the Nigerian government and those of private organizations.
There have been a number of studies on CSR, most of which have, mainly, focused on multinational firms and less on the banking industries (Ite, 2004). If the CSR practices of multinational firms operating in Nigeria reflect the national business systems of their home countries, as Jones (1999) argue, the question therefore arises on how indigenous Nigerian firm most importantly the retail banking sector perceive and practice CSR. In other words, is there a Nigerian brand of CSR or is it an imitation of western CSR practices?
The purpose of this study is primarily to gain a first understanding of CSR and to examine how Nigerian Banks view their role, in reaching sustainable growth and development in Nigeria. The study also aims to examine the extent and role of the retail banking industries in corporate social responsibilities practices to help achieve sustainable growth and development in the local communities. The study specific objectives are:
i. To examine the relationship between the type of the bank and CSR practices.
ii. To examine the relationship between the bank policies and the practice of CSR
iii. To determine the role of bank's profitability in relation with CSR practice.
While some scholars claim that CSR lacks a dominant paradigm' Lockert, ?., Moon, J. and Visser, W. (2006); other argues that the dominant approach of CSR is instrumental and focuses on the economic function of the firm (Banerjee, 2007; Clarke, 1998). Carroll's (1979) categories of CSR as consisting of economic, legal, ethical and discretionary responsibilities have been influential in understanding the nature and type of obligations that business has to society.
Underpinning the vast literature on CSR is a core normative assumption that a corporation should behave ethically and responsibly not only to their employees, shareholders and customers but also to the broader community. CSR advocates argue that ethical and responsible corporate behaviour is related to good financial performance (despite the dubious nature of empirical evidence of this relationship, (Orlitzky et al, 2003, Vogel, 2005. Consumer and community pressures were strong enough to force a major transactional corporation like Shell to reverse their decision even though the company continued to insist that the social and environmental damage arising from disposal at sea was significantly lesser than for on-shore disposal (Lofsted and Renn, 1997).
Several surveys in the US and Europe have shown that socially responsible investing (SRI) has brown in recent years. In the U. S for instance $2.14 trillion dollars was invested in socially screened portfolios in 2003 and the European SRI retail market was worth 12.2billion euros (Vogel, 2005). The assumption is that addressing social and environmental risks positively impacts a firm's market value in the long term. Both institutional and individual investors can use shareholder resolution processes to force corporations to address environmental impacts, develop between workplace policies and address human rights issues.
Pension funds in the UK for example are now required to declare how they integrate social and environmental issues into their investment decisions (Vogel, 2005). However, the actual social and environmental performance of corporations that constitute screened portfolios is reported in fairly basic terms - many firms receive 'good' ratings simply because they do not manufacture harmful products like tobacco or alcohol or weapons. While there are a few cases where shareholder activism has influenced corporate behaviour these have focused on specific corporate abuses and not on promoting corporate social initiatives per se. It is unlikely that shareholder resolutions will compel corporations to address social issues like poverty, health and education unless this is part of a broader political movement with the backing of governments, international organizations and other agencies (Walsh, 2003).
As Margolis and Walsh (2003) have pointed out the 'practical necessities' of stakeholder theory have meant that normative justifications beyond that of providing shareholder value have not gained significant ground in theory or practice. Even in 'stakeholder firms' the focus is on the interest of primary stakeholders that can influence the firm's economic bottom line as shown by some recent court rulings have attempted to include some level of stakeholder recognition.
These so-called 'stakeholder laws' allow company directors to consider 'the effects of any action upon any or all groups affected by such action, including shareholders, employees, suppliers...' (Cunningham, 1999). However, this simply allows company directors to consider 'public interest' (provided these interest do not harm shareholder value), it is not legally binding in any way, thus limiting the extent of any social initiative pursued by corporations. It is also important to understand that in several US states that have passed these 'stakeholder laws', the driving force behind the legislation was to protect employees, customers and suppliers, a firm's primary stakeholders, from hostile takeover bids (Clarke, 1998). These laws certainly do not prescribe how a corporation might address its impacts on the general public', the 'community' or 'society'. As the American Bar Association states: "While allowing directors to give consideration to the interest of others, the law compels them to find some reasonable relationship to the long-term interest of shareholders when so doing' (American Bar Association, 1990).
Thus, virtually all of the research on CSR and stakeholder theory serves to reinforce the shareholder value maximization theory of the firm because in attempting to broaden the criteria of firm performance the fundamental assumptions of the shareholder view remain unchanged - the approach is to broaden a firm's responsibilities provided they do not harm shareholder values (Margolis and Walsh, 2003).
Dimensions of CSR
Similar to the disagreement in the conceptualization of CSR, there are variations in the dimensions of CSR. Some scholars identified this concept as a continuum (e.g. Vogel, 2005) consisting of mandatory, assumptive and discretionary corporate public responsibilities. The three parts differ from each other in whether a business causes a problem for society, such as environmental harms, and the extent to which the business activity resolves the problem. Based on these criteria, the famous Johnson and Johnson Tylenol crisis in 1982 is an example of assumptive responsibilities. However, the continuum appears too simplistic to account for the complex situations of corporate decisions on CSR-related problems.
Other researchers (e.g. Quazi 2000) regarded CSR as a twodimensional concern including corporate responsibility and outcomes of social commitments. The dimension "corporate responsibility" spans form a narrow view emphasizing profit maximization in the short term, to a broad perspective focusing on serving the wider expectations of society in area such as environmental protection, community development and philanthropy. The second dimension of outcomes of social commitments of business ranges from concern with the cost of social commitment in the short run, to attention to long term benefits from social commitments for businesses. Still, this either-or approach by this model appears too linear to understand the tensions involved in corporate decisions regarding CSR. The two ends of each dimensions may not necessarily be mutually exclusive. It is possible that corporations have mixed motives when fulfilling their corporate responsibilities.
Still others (e.g. Global Compact, 2005; Sponger, 1997 & 2003; Holme & Margolis, 2003) simply considered CSR as a set of social issues in areas of environmental involvement etc. This approach has been widely used in existing literature and helpful for understanding the universality of some CSR issues.
Yet another approach understood CSR as a three-category concept asserted that organizational responsibilities consisted of "the performance of the organization's basic economic functions (.e.g providing employment or refraining from restraint of trade), "responsibilities arising from performance of basic functions (.e.g equal opportunity employment or prevention of pollution by industrial operations)," and "responsibilities for aid with general social problems (e.g. prevention of urban decay)." The first category of responsibilities lies at the core; the second category occupies the middle circle, and the third category lies in the outmost circle. This delineation has elements from Quazi & CBrein's (2000) two-dimensional concern including corporate responsibility and outcomes of social commitments, and Carroll's (1998) conceptualization of economic, legal, ethical and discretionary social responsibilities.
The research design adopted for this study is survey research design using ex-post facto type. The target population comprised of bank officials in 4 randomly selected banks types in Nigerian banks view their role and part in reaching sustainable growth and development in Nigeria.
The table below describes the selected banks within the study area.
The purposive sampling method was adopted to select 30 respondents from four (4) major banks with various branches available within the state. The considered banks namely are: Intercontinental Bank, Guaranty Trust Bank, United Bank of Africa PIc and First Bank PIc within State giving a total of 120 bank officials for the sample size. The initial two being a new generation bank while the later are old generation bank out of the 25 surviving banks after the consolidation exercise giving 16% fraction of the bank population.
The data for this study was generated from two main sources; primary data and secondary data. The primary data was collected from the respondents directly using a structured questionnaire tagged: "Corporate Social Responsibility Evaluation Scale" (CSRES). The questionnaire helped to generate standardized information from a representative sample of a given population. The 5 -point scale was also preferred in the study because it allows for the intensity of perception as expressed by respondents participant. Respondents could "strongly agree or agree or still undecided or disagree or strong disagree" Oscamp 1977) postulated that the Likert method was the initial item pool. The respondents will be required to simply tick on the opinion which best satisfied their response under the headings and code stated e.g. Strong Agree (SA), Agree (A), Undecided (U), Disagree (D) and Strongly Disagree (SD). The secondary data was collected from relevant published articles, Journals, Bulletins, internet and scholarly materials, and annual report of banks.
Measurement of Variables
The variables used in explaining the objective of the study are classified as follows:
a. Socio-economic characteristics
b. Degree of CSR participation among banks.
c. Factors determining CSR activities among the banks.
d. Positive and negative effects of banks activities
e. Perceived level of companies understanding of CSR
f. Methods used by banks in identifying/ recognizing CSR needs for their environment.
g. Areas of CSR contribution among banks.
Method of Data Analysis
The data was analyzed using both descriptive and inferential statistic. The prediction and decision base on sample data were determine using Analysis of Variance (ANOVA).
Socio-economic characteristics of the respondents
This comprised the personal attributes of the respondents and their relationships to the environment such as sex, age, marital status, educational level, experience among others. Table 3 below present the distribution of the respondents with respect to these factors.
Description of Respondents by Sex
For gender, the findings show that 120 responses were collected and 60% of the respondents were male and 40% were female. This was not unexpected since the study targeted 120 bank staff.
Description of Respondents by Age
The age category of respondents was grouped into four classes. Respondents between the age group 41-50 years were observed to be more than the other groups as they constituted 40% of the study population as well as respondents between 20-30 years constituting 30% of the respondents. Respondents above 50 years of age constitute the smallest fraction as observed with a percentage representation of 6.7%.
For marital status, 120 responses were collected and 76.7% of the respondents were married, 20% were single, while 3.3% were divorced or separated with their spouse.
Educational Description of Respondent
The educational description of the respondents studied revealed that higher level of education was witnessed among the bank officials. 60% of the officials have either a B. Sc or Higher National Diploma Degree in various fields while the remaining 40% are those with professional and other qualifications higher than the initial.
Years of Experience
From the study population, 23.4% of the respondents were observed to fall between these two categories namely those with less than 2 years of starting experience and between 2 to 5 years. Others were observed to have more than 5 years experience with 26.7% having between 6-10years experience, 13.3% having between 10-15 years experience while 36.7% have above 15 years of banking experience.
The level synonymous to the respondents in the study area was the middle management level constituting 70% of the population. 30% were observed to be top management level staff among the considered banks in the study area.
Respondents were observed to fall into three major departments namely: operations and front desk services, marketing and administration. There percentage compositions were observed to be 60%, 10% and 30% respectively.
Table 4: Degree of CSR participation by your banks in achieving sustainable development
From the distribution table below showing the degree of participation by the banks in attaining sustainable development. It can be observed that majority of the respondents; about 90% indicated that the degree of CSR participation is high, while just about 10% indicated the degree of CSR is low.
Test of Hypothesis
Ho there is no significant relationship between the bank type and CRS practices.
From the below Anova table (Table 5) showing the relationship between the bank types and CRS practices, the following result was obtained. (P-value=0.417, DF= 119, F=0.955). Since P-value is greater than 0.05 which is the acceptance level of significance, the null hypothesis was upheld. There is no significant relationship between banks types and CSR practices accepted and the alternative rejected, and it can be concluded that there is no significant relationship between bank types and CSR practices i.e. CSR practices does not differ significantly across the bank.
Ho there is no significant relationship between the bank profitability and CSR practices.
From the below Anova table (Table 6) showing the relationship between the bank profitability and CRS practices, the following result was obtained. (P-value=0.028, DF=119, F=3.142). Since P-value is greater than 0.05 which is the acceptance level of significance, the null hypothesis which states there is no significant relationship between banks types and CSR practices is rejected and the alternative accepted, and it can be concluded that there is a significant relationship between bank profitability and CSR practices.
Ho there is no significant relationship between the bank policies and CSR practices.
From the below Anova table (Table 7) showing the relationship between the bank policies and CRS practices, the following result was obtained. (P-value=0.0317, DF= 119, F=2.155). Since P-value is less than 0.05 which is the acceptance level of significance, the null hypothesis which states there is no significant relationship between banks policies and CSR practices is rejected and the alternative accepted, and it can be concluded that there is a significant relationship between bank policies and CSR practices i.e. Bank Policies does significantly influence CSR practices.
The challenges posed by the ongoing wave of transformation sweeping across the world are enormous, corporate organizations most importantly the banking sector are better positioned for greater achievement of goals if they embrace CSR in truth and deed. Evidently, the banking sector and other organization, both governmental and non-governmental have a major role to play in fasttracking the well-being of the society in which CSR offers a platform for them to be part of this threshold.
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AKINDELE R.I. (Ph.D)*
Department of Management and Accounting
Faculty of Administration
Obafemi Awolowo University, Ile-Ife
* E-mail: firstname.lastname@example.org