Corporate Social Responsibility: An Instrument of Social

Economic Development in Nigeria

Olusegun Gabriel Adegbite (Scotland)

E-mail: Gabriel.Adegbite@yahoo.co.uk

Abstract

Corporate Social Responsibility (CSR) is becoming a popular tool of the twenty first century in business circles while it effects on communities and the role it plays in social development can never be overemphasised. While it is now being deployed as an instrument of social development in most developed countries, it is still at an evolutionary stage in most developing economies. In the case of Nigeria where a neo-classical economic approach of the international finance institutions like World Bank and the IMF is practiced like other developing economies, CSR is seen as a re-engineering tool to reinventing her hailing economy. Thus, social development through CSR is seen as a way of reducing poverty and bridging the seemingly inequality gap in the country. “Social development” is conceived as the multidimensional process that leads to sustainable improvements in the well-being of Individuals, families, communities and society as a whole in a context of justice and equity. It is a path that includes economic growth, improved competitiveness in the globalised economy, environmental sustainability, sustainable improvements in living conditions, reduction of poverty and inequality, and the development of human and social capital. This study explores the potential that private corporations have in fostering social development. It investigates the impact and effects of the CSR approach on communities and the role that they should play at reducing poverty. It contributes to the growing literature on CSR, in a yet relatively under-explored area. Keywords: Corporate Social Responsibility, Social Economic Development

1. Introduction

Since the 1990s, the concept of Corporate Social Responsibility (CSR) has gained strong popularity within the business industry of developing countries. In the beginning, the concept had an Anglo-American feature based on stakeholder economy by British Prime Minister, Tony Blair, in 1996 and followed by the US view of market driven operation of business, and later became, the general use of social and environmental aspects of business operations (Buldybayeva, 2014). Also, there was a major shift in the balance of opinion, as international development agencies and many governments of developing-countries abandoned the rhetoric of a new international economic order and actively courted foreign direct investment. To do so, they largely accepted the policy proposals and conditionality of international finance institutions such as the World Bank and the IMF, which encouraged developing countries to pursue export-led growth, liberalise their trade and investment regimes, and privatise state enterprises and public services. These trends and policies continue today in many developing countries but are now gradually complemented by another approach, often labelled “corporate social responsibility” (CSR) or “corporate citizenship” (Utting, 2003). Corporate Social Responsibility (CSR) is one of the panaceas prescribed by an emerging “school” of academic institutions who seek to boost firms and economies out of the world business slump. Broadly, CSR as been seen as the antidote to market lethargy and corporate decay and as the shock therapy needed to resuscitate and revive the private sector as the engine of growth and progress, especially in transitional economies (Contretas, 2004). A number of analysts and governments are beginning to exploring the prospects that promotion of CSR in the domestic economy can bring benefits for competitiveness as a whole. However, the extent to which this happens is likely to depend on the sector and country-specific features (United Nations, 2007). Grayson and Hodges (2004) states that CSR has moved from the margins to the mainstream of business practices. Thus, as CSR becomes more widespread, the effect it has on communities and the role it can play in social development in the developing world is worth exploring (Contretas, 2004). What has really been the impact of CSR of private corporations on developing countries? Unfortunately much of the “evidence” for and against CSR is based on supposition, anecdotes and a limited number of “best” or “bad” practice examples. There has been little systematic research on the developmental implications of CSR (Utting, 2003). Specifically, this study explores the potential that private corporations have in fostering development in Nigeria. CSR is not the only development concept that is evolving in theory and in practice, however, the content and context of social development and the impacts on the communities is worth exploring (Contretas, 2004; Collins 2000).

2. Corporate Social Responsibility Though there is still no ‘universally agreed’ definition of CSR due to its multiple

meaning in culturally different places, it is generally held that it involves going

beyond the basic business responsibility of ‘maximizing profits’ to meeting the needs

of other interest groups in addition to those of shareholders (Buldybayeva, 2014;

Anderson et al., 2005). CSR has become more sophisticated and complex than it

was before (Frynas, 2010). Thus, it has increasingly attracted attention from the

business, political and public spheres (Saleh, 2009; Brammer and Palevin, 2004)

while triggering debate as a social development tool in the mould of foreign direct

investment (Utting, 2003).

At its broadest, CSR is defined as the overall contribution of business to sustainable development (United Nations, 2007). It involves a range of activities such as working in partnership with local communities, socially sensitive investment, developing relationships with employees, customers and their families, and involving in activities for environmental conservation and sustainability (Ismail, 2009). For the purpose of this study, CSR is operationally defined as “corporation-community collaboration (CCC) towards social development”. The concept (CSR) aims both to examine the role of business in society, and to maximise the positive societal outcomes of business activity (United Nations, 2007). It is not a new concept to generations of Nigerian entrepreneurs and the communities they serve; only that it is seen as a mere philanthropic gestures (Ismail, 2009; Amaechi et al., 2006; Carroll, 1977; Aquino, 1981; Dhiravegin, 1985; Cox et al., 1987; Harivash, 1990).

However, in spite of its extensive history, Nigerian corporation-community

collaboration in social reform is an under-studied area of policy research and

attention, even in recent CSR conferences and publications in Nigeria. Throughout

Africa and Nigeria to be specific, scholars and practitioners are focusing on global

and regional-level CSR issues such as human rights, environmental and health

concerns, worker welfare, corruption, and social safety nets as well as company-

level CSR issues such as board governance, ethical fund management, shareholder

accountability, corporate restructuring, and corporate citizenship (Contretas, 2004;

Chowdhury and Kabir, 2000; Gescher, 2002; Holland 2002).

Moreover, part of the reasons why CSR has attracted so much attention is that it is being propelled by two powerful sets of actors or movements: one comprising non-governmental organisations (NGOs), trade unions and various social movements concerned with sustainable development, labour, human rights, corruption and ‘alternative globalisation’; the other involving organised business interests and policy makers concerned with opposition to economic liberalism and cognisant of the need for institutional arrangements that can minimise and mitigate the perverse effects of economic liberalisation. However, much of the criticism of CSR is centred on concerns that: first, many CSR initiatives amount to “greenwash”, or attempts to camouflage what is essentially business-as-usual (Utting, 2003); second, that CSR concept is only a social marketing idea, a general speech from corporations which

take care of their public image but avoid making any important changes, or even worse, it is managed by business people who have no moral responsibility for the business and the community (Buldybayeva, 2014); third, that it is a misguided principle. According to this view, by pursuing social and environmental objectives, firms may ultimately hurt shareholders by generating lower profits, while firms are said to lack the expertise to engage in solving social and environmental problems (Frynas, 2012); and finally, North-South tensions. This is apparent given the reality or perception that CSR was very much a northern agenda that had not been shaped through the effective participation of southern organisations and actors (Utting and Ives, 2006). Despite the criticisms, the infusion of CSR interventions into business and economic bloodstream has been quite pervasive in this era of intense globalisation, from the boardroom to the supply chain, corporate headquarters to regional subsidiaries, business models to operational applications, assembly line workers to front line clients, and human rights to the protection of the environment (Contretas, 2004). It is not only being touted as a cure-all but also a potent tool that could help sustains reforms and prevents future outbreaks of organisational infections and managerial dysfunctions (Contretas, 2004). No doubt there is a wide range of reasons for CSR development and these are associated with specific country contexts and the types of interventions that are best suitable for corporations, society at large and governments. Thus, CSR can be made for bridging the gap between business and poverty in a pragmatic way, especially in sub-Sahara Africa where poverty as been very endemic (Contretas, 2004; Forstater, MacDonald and Raybard, 2002).

3. CSR – A Social Development in Nigeria One of the measures of CSR is the development of economic values in a society. Business and society is proposed to mean ‘business in society’ with CSR emerging as an interaction between the two entities (Ismail, 2009). Thus, good corporate citizenship and corporate social responsibility involve doing business with ethics, going beyond compliance with the law and taking into account the expectations of the society or community in which a company operates (Peinado-Vara, 2006). Community in this study is generally defined as a group of people sharing a common purpose, who are interdependent for the fulfilment of certain needs, living in close proximity and interacting on a regular basis. In a community there is a sense of a society with the feelings of cooperation, of commitment to the group welfare, of willingness to communicate openly, and of responsibility to and for others as well as to one’s self. Community development (CD) refers to initiatives undertaken by community in partnership with external organisations or corporation. It is undeniable that CSR has implications on community development in many ways (Ismail, 2009). In this context, bridging the gap between the rich and the poor is one of the private sector’s responsibilities. Most importantly, the base of the pyramid is to focus on meeting the needs of the least favoured segments of the society. This requires

innovative business models and ideas that will contribute to alleviating the poverty and improving living standards. However, social networks and structures are highly complex in communities that are usually overpopulated and where trust in formal structures is absent (Peinado-Vara, 2006). Nigeria for instance is a typical illustration. It is an ethnically diverse society, with over two hundred and fifty identifiable ethnic groups which cluster into major (or broad) classes, each with a distinctive unifying language, with Hausa, Ibo and Yoruba being the most significant. However, the socio-cultural characteristics of Nigeria are unique and as such the practice of CSR amongst Nigerian firms would mainly be shaped by the socio-economic conditions in which these firms operate (Adegbite, G., 2012a; 2012b; Okike, 2007; Amaeshi et al, 2006). The present-day CSR concept will consider the interest of society by taking responsibility for the impact of business organisations’ activities on customers, suppliers, employees, shareholders, communities and other stakeholders as well as their environment. The obligation shows that the organisations have to comply with legislation and voluntary take initiatives to improve the well-being of their employees and their families as well as for the local community and society at large (Ismail, 2009). Due to corruption, there are many uncertainties in the Nigerian environment, which can put a great deal on CSR practices (Adegbite, G., 2012b). However, the private sector cannot ignore the challenges of lack of infrastructure, institutional capacity and a sound enabling business environment by contributing to alleviating these deficiencies; supporting and being supported by governments and other stakeholders, business and society in Nigeria. There has been an upsurge in “voluntary initiatives” associated with codes of conduct, improvements in environmental management systems, improved health and safety standards, company reporting on social and environmental policy and performance, participation in certification and labelling schemes, an increase in corporate social investment in, for example, community development projects, and philanthropy. Large companies are also participating in so-called “multi-stakeholder initiatives” and “public-private partnerships” with NGOs and governmental or multilateral organisations. The development debaters and proponent of CSR generally hail voluntary initiatives as a pragmatic and innovative way of enhancing development. Many also regard such initiatives as an alternative to government regulation, which is often seen not only as unfriendly towards business but also as difficult to implement, particularly in developing countries (Utting, 2003). However, a minimum standard for CSR might be that businesses fulfil their legal obligations or, if laws or enforcement are lacking, that they ‘do no harm’. A median approach goes beyond compliance, calling for businesses to do their best, where a ‘business case’ can be made, to contribute positively to sustainable development by addressing their social and environmental impacts, and potentially also through social or community investments. A maximum standard points toward the active alignment of internal business goals with externally set societal goals (that is, those that support sustainable development). However, CSR activities also have the potential to generate or exacerbate social tensions at local level. For example, social investment programmes that focus exclusively on indigenous people may serve to heighten social tensions between indigenous and non-indigenous members of mixed

communities. Also, they might prioritize issues that are most subject to international campaign pressure (United Nations, 2007). CSR policy theory would function ideally as a built- in, self-regulating mechanism, whereas in practice CSR will only thrive in the context of a consistently applied and enforced set of minimum environmental and social standards and the right mix of policies from governments (Jamali, 2011). Governments are thus expected to play four key roles (Fox et al., 2002): mandating (legislative), facilitating (guidelines on content, fiscal and funding mechanisms, creating framework conditions), partnering (engagement in multi-stakeholder processes, stimulating dialogue) and endorsing (publicity). Throughout these roles, they can switch gears as they deem appropriate, between soft incentives and hard regulation. Forms of soft law or soft incentives can range from private and voluntary codes, to certification and labelling schemes to transparency or reporting guidelines. Soft laws, as appealing as they may sound, often lack the legitimacy and enforcement mechanisms of hard law. On the other hand, the problem with the regulatory or hard approach is that the private sector may switch to a box-ticking or compliance mode without genuine commitment or concrete substance, gradually compromising the voluntary character or CSR, in deed one of its hallmark, defining features. The real challenge is to deploy the right types of soft/hard incentives and cross-sector partnership that serve the public interest; and to create a stimulating and enabling environment for businesses to create long – term added social value (Adegbite, G., 2012a; Jamali, 2011). While companies operating in the banking, telecommunications and oil sectors are playing key CSR role within the Nigerian societies, an evolution towards increased private-sector involvement is needed so that the poorest in most communities can have access to health care, safe drinking water and sanitation through private organisations while they ‘eat and breathe’ social development to such areas in return. Foundations and non- governmental organisations (NGOs) should also encourage corporations to move beyond philanthropism by moving towards corporate citizenship that are tailored to specific local characteristics (Barrett, 2002). Business contributions to social development, to be effective in the long run, must combine profits with improving poor people’s lives in order for companies to be financially able to sustain any programme (Peinado-Vara, 2006). A proper reorientation and reform should also be carried out while encouraging hard laws to complement already available soft laws on CSR. There should also be better oversight on government agencies saddled with the supervision of charitable duties in Nigeria.

4. Conclusion As economy becomes more globalised while corporations play more important role as significant stakeholders of development, there is now greater awareness and positive impacts that private business corporations could bring on the community. Basically, Business Corporation’s goal is to provide value and incentive to their shareholders through profit maximization; however it is in their direct interest to support charitable activities. Furthermore, sometimes corporations or organizations carry out certain activities that governments should undertake, although they are not government agencies. It is beneficial for the corporations to carry out such socially responsible activities while greater interaction between corporations and their surrounding communities evolve. This is particularly relevant where there is wide-scale recognition that governments will not be able to address the development challenges alone. Alliances between governments and non-state actors, including the private sector are thus crucial (Fox and Prescott, 2004; Mohammed and Sawandi, 2003).

Previous studies have shown that firms can generate significant social value, improve their reputations and gain competitive advantage; and at the same time improve profitability when fully engaged in community development. Thus, it is an undeniable fact that CSR is very significant in community and community development. It is however onerous on the government to ensure that an enabling environment is created to ensure that CSR practices and culture thrives. There should be a right mix between soft and hard law that serve the public interest. Soft laws are self-regulating and flexible but often lack the legitimacy and enforcement mechanisms of hard law. On the other hand, the problem with the regulatory or hard law is that the private sector may switch to a box-ticking or compliance mode without genuine commitment or concrete substance, gradually compromising the voluntary character or CSR. Initiatives to increase awareness of the social and economic benefits of CSR practices in Nigeria are still at evolutionary stage but greater efforts are needed to create awareness and to promote real implementation of these practices.

References Aaronson, S. (2005). Minding Our Business: What the United States Government has done and can do to ensure that US Multinationals Act Responsibly in Foreign Markets. Journal of Business Ethics, Vol. 9, pp.17-198. Abbott, W. F. and Monsen, R. J. (1979). On the Measurement of Corporate Social Responsibility: Self-Reported Disclosures as a Method of Measuring Corporate Social Involvement. Academy of Management Journal. Vol 22, No 3, 501-515. Adegbite, O.G. (2012a). Corporate Governance Rules as Policy Instruments for Economic Growth: Soft or Hard Law? Regulation or Self- Regulation? A Paper Accepted for Presentation at the World Finance Conference in Rio de Janeiro; July 2012. Adegbite, O.G. (2012b). Corporate Governance Developments in Ghana: the past, the present and the future, Public and Municipal Finance, Volume 1, Issue 2, 2012. Anderson, C.L. and Bieniaszewska, R.L. (2005). The Role of Corporate Social

Responsibility in an Oil Company’s Expansion into New Territories, Corporate Social

Responsibility and Environmental Management, 12, 1-9 (2005), Wiley Interscience.

Amaeshi et al. (2006). Corporate Social Responsibility (CSR) in Nigeria: Western

Mimicry or indigenous practices, ICCSR Research Paper Series (No. 39)-ISSN

1479- 5124.

Aquino, R. (1981). Perspective on the Social Responsibility of Business. Manila:

Bishop – Businessmen’s Conference for Human Development.

Barrett, D. (2002). Social Responsibility in Latin America: An Evolving View. Giving

and Volunteering in the Americas: From Charity to Solidarity, ReVista Harvard

Review of Latin America 1.3 (Spring 2002): 25-26.

Bond, P. and Dor, G. (2003). Neoliberalism and Poverty Reduction Strategies in Africa, A Discussion Paper for the Regional Network for Equity in Health in Southern Africa (EQUINET). Brammer, S. and Palevin, S. (2004). Voluntary Social Disclosures by large UK

companies, Journal of Business Ethics: A European Review, Volume 13, Issue 2-3,

pages 86-99.

Buldybayeva, G. (2014). Both Sides of CSR Practice: A Case from Oil and Gas Industry in Kazakhstan, Acta Polytechnica Hungarica, vol. 11, No. 2, 2014. Carroll, A. B. (1977). Managing Corporate Social Responsibility. Boston: Little Brown

and Company.

Chowdhury, M. R. and Kabir, A. (2000). Social Responsibility of Business: A Study

with Special Reference to Selected Enterprises of CEPZ. Journal of the Institute of

Bangladesh Studies, 23: 235- 248.

Contretas, M. (2004). Corporate Social Responsibility in the Promotion of Social Development: Experiences from Asia and Latin America. [Available online] http://www.iadb.org/wmsfiles/products/publications/documents/2220311.pdf (Accessed on 13/04/2015). Collins, P. (2000). Applying Public Administration in Development: Guideposts to the

Future. London: Jon Wiley.

Coldwell D.A.L (2000). Perception and Expectations of Corporate Social Responsibility: Theoretical Issues and Empirical Findings. Journal of Business Managerial. Pp. 49- 54. Cox et al. (1987). Salvaging a Damaged Image: A Good Corporate Citizen. Asian

Business. September issue, 23(9):82- 88.

Dhiravegin, L. (1985). Business and Social Responsibility. Thailand Business, 8

(10):39- 41.

Fox, T., Ward, H. and Howard, B. (2002). Public Sector Roles in Strengthening

Corporate Social Responsibility: A Baseline Study. Corporate Responsibility for

Environmental and Development Programme. The World Bank.

Fox, T. and Prescott, D. (2004). Exploring the Role of Development Cooperation

Agencies in Corporate Responsibility, A Summary of the Presentations, Plenary

Sessions and workshops convened by the Swedish Foreign Ministry in collaboration

with IIED, IBLF, Sida and the World Bank in Stockholm on 22nd – 23rd March 2004.

Frynas, J. G. (2010). Corporate Social Responsibility and Societal Governance:

Lessons from Transparency in the Oil and Gas Sector, Journal of Business Ethics,

93: 163- 179, DOI 10.1007/s10551-010-0559-1.

Gescher, J. M. (2002). Adding Value: Dimension of Corporate Social Responsibility.

China Review. Spring 21: 21- 23.

Grayson, D. and Hodges, A. (2004). Corporate Social Opportunity!; 7 Steps to make Corporate Social Responsibility work for your business. Sheffield: Greenleaf Publishing.

Harivash, L. (1990). Drugs Industry, Social Responsibility, and the Multinationals.

New Delhi: Commonwealth Publishers.

Holland, T. (2002). Ethics Pay in the Long Run. Far Eastern Economic Review, 165

(15): 49- 51.

Ismail, M. (2009). Corporate Social Responsibility and its role in community

development: An international perspective, The Journal of International Social

Research, Volume 2/9 Fall 2009.

Jamali, D. (2011). Corporate Social Responsibility (CSR) for Social Development in

Arab States, UNESCO Beirut 2011, LB/2011/SS/PI/66.

Joyner, B. E., Payne, D., Raibom, C. E. (2002). Building Values, Business Ethics and Corporate Social Responsibility into the Developing Organization. Journal of Developmental Entrepreneurship. Vol 7, Pp. 113 – 131. Mahmoud, E. (2009). Corporate Social Reporting in a Transition Economy: the Case of Libya, Doctoral Thesis, University of Huddersfield. Mohammed and Sawandi (2003). Corporate Social Responsibility (CSR) Activities in Mobile Telecommunication Industry: Case Study of Malaysia, A Speech Presented at the Malaysian International Trade Seminar. Okike, E.N.M (2007). Corporate Governance in Nigeria: The Status Quo, Corporate

Governance, An International Review 15(2): pp. 173- 193.

Peinado-Vara, E. (2006). Corporate Social Responsibility in Latin America, Inter-American Development Bank, Greenleaf Publishing. Razek, M. A. (2014). The Association between Corporate Social Responsibility Disclosure and Corporate Governance – A Survey of Egypt, Research Journal of Finance and Accounting, Vol. 5, No.1, 2014. United Nations (2007). CSR and Developing Countries: What scope for government action? Sustainable Development- Innovation Briefs, Issue 1 February 2007. Utting, P. (2003). Promoting Development through Corporate Social Responsibility- Does it work? A 2003 third quarter publication of the United Nations Research Institute for Social Development. Utting, P. and Ives, K. (2006). The Politics of Corporate Responsibility and the Oil Industry, Stair 2, No. 1 (2006): 11- 34. Saleh, M. (2009). Corporate Social Responsibility Disclosure in an Emerging Market:

A Longitudinal Analysis Approach, International Business Research, Vol.2, No.1.