CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
As globalization accelerates and large corporations serve as universal providers, these organizations have increasingly recognized the benefits of providing various Corporate Social Responsibility (CSR) programs. World Business Council for Sustainable Development defines CSR as the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large Purna (2011) . The European Commission advocates CSR as ‘Being socially responsible means not only fulfilling legal expectations, but also going beyond compliance and investing more into human capital, the environment and relations with stakeholders.
Many corporations undertake CSR activities in order to protect their public image and the ‘good name’ of the corporation and its associates. Many corporations value their public image and good name even if they are relatively non-responsive to consumer pressures Moir ( 2001). A good public image is very hard to create and relatively fragile and a single high profile incident can create lasting negative sentiments in a community or the public at large Haywood (1994), Ali (2003).
Corporate Social Responsibility (CSR) is becoming an increasingly important activity to businesses nationally and internationally. CSR is often referred to as an organization's response on environmental, social and economic issues, Purna (2011). Also, businesses need to integrate the economic, social and environmental effect in their operations because the concept of CSR means that organizations have moral, ethical, and philanthropic responsibilities in addition to their responsibilities to earn a fair return for investors and comply with the law Jimmy, (2011). CSR, which in simple term translates as Social Giving, is an emotional call on business organizations/entities to give back to the host environment(society) a portion of their profits as social investment as a way to cushion the effects of inadequacies in socio-economic well-being and poverty among the citizenry. It entails the practice whereby corporate entities voluntarily integrate both social and environmental upliftment in their business philosophy and operations.
However, new social and market pressures are gradually producing a change in values and in the horizon of business activities. A growing perception amongst enterprises today is that sustainable business success and shareholders’ value cannot be achieved by merely maximizing short-term profits but also through market-oriented, yet responsible behavior. Companies are thinking new ways in which they can contribute to sustainable development. They are managing their operations in such a way as to enhance economic growth and increase competitiveness while protecting the environment and promoting social responsibility. The Work Foundation report Stephen (2004) entitled Achieving High Performance: CSR at the Heart of Business, claims that there was ‘a sufficient weight of empirical evidence’ to suggest that building CSR activities into the heart of business strategy leads to higher productivity and profitability. Those companies who placed CSR policy and practice at the very heart of their business strategy gain most in terms of performance outcomes. The report concludes that CSR is no merely fashionable, but is an essential component in delivering improved performance. This CSR will lead to sustainable development and performance will increase in the long run. Hence, managers of the 21st century need to aside managing people, processes and resources for results and for fulfilling requirements of stakeholders for quality include CSR programs in order to remain competitive and profitable in the industry.
Quality concepts have been spread across industries and countries. Current practice of achieving quality in manufacturing and servicing industries is obtaining ISO 9000 and other industry-related certificates. How about quality standard used in banking industries? What are the common practices for banking organizations to prove their service quality? According to Kothari (2006), quality includes fulfilling a set of inherent characteristics, meeting stated or implied needs or expectations, conforming to specifications; and moving towards customer satisfaction. Bornman, (2004) mentioned that there were many attempts to define “quality”. One of the definitions used in managerial literature is that “quality” is the extent to which the product meets the demands; another is “customer satisfaction”.
Some research works have been carried out in areas relating to Corporate Social Responsibility and have also examined its impact on the operations of such institutions that have adopted it, in terms of both the negative and positive impacts on such organizations; most studies have been focused on manufacturing organizations and little of service firms especially the banking industry. Hence, the aim of this research is to fill this gap by evaluating the impact of this practice (CSR) on the performance and operations of Zenith Bank Nig. Plc in Port Harcourt, Rivers State.
1.2 STATEMENT OF PROBLEM
Most organizations do not see reason in given back to the society a little of their profit. Hence, some organizations including banks see no reason why they should involve themselves in Corporate Social Responsibility. This has created a problem in the environment where they operate, because many banks see the programme of CSR as a burdensome task.
The relationship between organizations and their host community has become increasingly important. The decision made in an organization may influence community prosperity and also national even international economic activity might be affected. An example of this problem is the on-going crisis in the Niger Delta region which has led to the destruction of lives and properties. There are accusation from the youths in these areas that organizations misdirect their efforts and resources that they should have used to develop the community to bribe opinion leaders in order to overlook their responsibilities to the community and firm.
For banks, taking deposits, granting loans and providing complementary services which could and would yield profitable returns are the essential business of banks in whatever kinds of countries, whatever kinds of culture, and whatever kinds of business environments. However, the trend in social responsibility is increasingly adopted by banks to respond to the need of the society within which it operates and to be responsible for meeting the expectations of their customers and other stakeholders in a socially responsible way. Thus, apparent drawbacks on this practice could be on the amount of capital that has to be devoted in solving society’s needs and meeting up with their expectations.
Again, this trend may be viewed as a drift from the main focus of banks as profit making institutions to charitable organizations. However, there is need to battle with this wrong perception and orientation to accepting CSR programs as a necessity and an inevitable option to modern day Banks knowing that they are not operating in a vacuum but within the society and as such should reciprocate by meeting some of her expectations.
1.3 OBJECTIVES OF THE STUDY
The general objective of this research work is to determine the Impact of Corporate Social Responsibility on Organizational Performance of Zenith Bank Nigeria Plc. However other specific objectives are to;
i. Ascertain the relationship between employee relations and innovation.
ii. Access the relationship between environmental management and increase in performance/profitability.
iii. Ascertain the effect of ethical obligation and ability to attract professional work force.
iv. To ascertain the mediatory role of organizational trust between CSR perceptions and organizational performance.
1.4 RESEARCH QUESTIONS
This work is guided by the following research questions:
i. What is the relationship between employee relations and innovation?
ii. What is the relationship between environmental management and increase performance/profitability?
iii. What is the effect of ethical obligation on ability to attract professional work force?
iv. Do perceptions of organizational trust mediate between CSR perceptions and organizational performance?
1.5 RESEARCH HYPOTHESES
This study is guided by the following hypotheses;
Ho1: There is no significant relationship between employee relations and innovation.
Ho2: There is no significant relationship between environmental management and increase in performance/profitability.
HO3: There is no significant relationship between ethical obligation and ability to attract professional work force.
HO4: Perceptions of organizational trust partially mediate between CSR perceptions and organizational performance.
1.6 SCOPE OF THE STUDY
The scope of this research work is limited to the Banking Industry specifically Zenith Bank of Nig. Plc. In Port Harcourt, Rivers State. With the study focused on the staff, management, customers and other stakeholders. The role that CSR plays in the overall organizational performance of the bank(s) is examined.
Zenith Bank Plc. was established in May, 1990 and commenced operations in July of the same year as a commercial bank. It was founded by Jim Ovia in 1990 and has grown astronomically to become one of the leading financial institutions in Africa. It is currently ranked as the 6th biggest bank in the continent.
The study covers the various variables or components of Corporate Social Responsibility (CSR) such as employee relations, environmental management, social performance, ethical obligation, and community welfare, and furthermore examines the impact these have on organizational performance of Zenith Bank’s operations as reflected in her sales and corporate reputation, corporate image, her ability to attract professional candidates and appeal to investors.
This study also outlines the significance of CSR as a strategic option that banks should adopt in other to survive in this era of stiff competition and to remain relevant in the industry.
1.7 SIGNIFICANCE OF THE STUDY
This study will add to existing knowledge in the area of Corporate Social Responsibility (CSR) and its impact on Organizational Performance of banks.
The study will serve as reference for students and researchers in future research work.
Furthermore, this study will enlighten banks and other profit-making organizations that involving in Social Responsibility is not a total drift from their profit motives, but organizations’ corporate image would be enhanced and they will be positioned properly in the minds of their prospective customers. The study would make significant contribution to the society and her development when the concept has been fully adopted by banks and other organizations.
1.8 LIMITATIONS OF THE STUDY
This study is limited to the following dimensions of CSR-employee relations, community welfare, social performance, ethical obligation, and community welfare, other dimensions like- legal responsibility, economic responsibility, philanthropy responsibility, corporate citizenship and others were not considered.
This research work was constrained in the following ways;
Time factor: this research work is being carried out as at the time the researcher was a full-fledged worker in an organization thereby reducing the time devoted to this research work.
Secrecy: some needful information was concealed by the organization(s) involved with the claim that their activities shouldn’t be made known in that manner to the public.
1.9 OPERATIONAL DEFINITION OF TERMS
Various literary terms used in the write up will be defined as follows:
1. CSR –
2. Social responsibility -
3. Organization –
4. Performance -
4. Corporate social performance –
5. Zenith bank –
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