THE CONCEPT OF SOCIAL RESPONSIBILITY - MATTERS ARISING

THE CONCEPT OF SOCIAL RESPONSIBILITY – OVERVIEW

BACKGROUND:

Perhaps the most important influence on the formulation of business policy is the concept of social responsibility. The relationship between business and society: business and its environments and business and participants are very complex yet dynamic. The notion of social responsibility of business has emerged out of dynamism (frequent changes) of the relationship between those parties. Corporate enterprises have grown in size, the level of education has significantly increased and people now ask a lot of more questions about their rights, privileges and their responsibilities. Related to this is the fact that, the awareness of the social impact of business activities as a whole is enormous both overtly and covertly, directly and indirectly.  The outer environment has remained relevant in most management writing, and one of the most publicized aspects of this is the issue of social responsibility.  For as long as the business system remains a subsystem of the organised society, the modern business manager/executive is left with no choice other than to be concerned with societal expectations i.e. be socially responsible.

Every organization function as a part of an interactive system, which has several shareholders, prominent among those stakeholders, are: managers, owners, employees, consumers and society at large.  The organization manager cannot afford to ignore or short-change any of these groups, if it does the success of the organization would be affected and it might die.

If owners are unhappy with the performance of the company, they may withdraw their fund and re-invest elsewhere. When workers are unhappy, and unable to meet their needs they may quit their job and seek alternative employment. When consumers’ needs, tastes, values and requirements are ignored they will stop buying the product or services and seek substitutes. Where the larger society is disregarded, the company may be isolated or unfavourable legislation clamoured for against the company.

It makes sense therefore for all business concern to respond to these groups and satisfy their needs by being socially responsible.  However, this work is meant to examine and analyse the social responsibilities of business in Nigeria.  The Nigerian National Petroleum Corporation has been chosen as a case study.

STATEMENT OF PROBLEM

Many firms are faced with the problem of how best to perform their social duties and yet remain afloat in a dynamic economy like ours.  The system comprises three classes of firms with their respective peculiar perceptions as to what social responsibility entails and the society.

The first class comprise firms that perceive social responsibility as the mere act of producing safe and reliable products or services: when this is actualised, they see themselves as been socially responsible forgetting the fact that lots of harm has been done to the environment during the course of production and should be corrected.

The second class are those firms that view social responsibility as that, that pertain to the employed general welfare, such as adequate payment of salaries, good conditions of service and other employment benefits. They fail to recognize the fact that apart from what I would call ‘internal welfare security’ been offered to the employees that the external welfare security (which is the environment) ought not to be neglected because efficiency can only be maximized on an employee when the internal and external environment of work is relatively conducive.

The third class comprises firms though have perfect understanding of what social responsibility is all about, but could not perform due to persistent poor turnover and return.  This they blame on government’s nonchalance towards the regulation of importation into the economy.

However, the society (i.e. the inhabitations of the environment) on the other hand has an interest to protect and that is, a better and conducive environment.  They would go to any length to achieve this thus, restiveness and riots, not considering the immediate capacity and financial position of the companies in question.

These enumerate misconception has caused a lot of problem in the company – community relations and will continue to linger unless clarity is given to the term and that is what this work seek to resolve.

DEFINITIONS OF SOCIAL RESPONSIBILITY

One major problem facing businesses especially in this part of the world is defining precisely what social responsibility is. Does it mean manufacturing environmentally friendly products? Donating a portion of the profit to charitable homes? Creating jobs in the inner cities plagued by high unemployment? Or what?

The dictionary of management defined social responsibility as:

“The duty of a privately owned enterprise to ensure that , it does not adversely affect the life of the community in which it operates (French and Seward, 1975)

Lord Holmes and Richard Watt (1985) in their publication “Making Good Business Sense” defined corporate social responsibility 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”.

David and Blomstom (1075) defined social responsibility as:

“The obligation of decision makers in the corporation to take action which projects and improves the welfare of the society as a whole along their own interest”.

Professor Umo O. (1994) in his book Social Responsibility of a Firm defined Social responsibility from three points of view.

(a)               As a concept

(b)               As an impact on accounting profit

(c)               As a specific societal programme

AS A CONCEPT:  This refers to the business firms’ decisions and actions taken to reason partially beyond the firm’s economic or technical interest.  Broadly speaking, it means to pursue policies, make decisions that follow those lines of actions, which are desirable in terms of objectives and values of the society.

AS ANIMPACT ON ACCOUNTING PROFIT:        This may take the form of using part of the profit to sponsor scholarship of the children of the employed.

AS A SPECIFIC CORPORATE PROGRAMME:  This involves the identification of specific corporate programmes, which ranges from economic, educational to medical and governmental programmes. They are distinguished from those programmes, which may be classified as internal and external to the business.

INTERNAL SOCIAL RESPONSIBILITY:  This has to do with ensuring due process of justice, equity and morality in employees’ selection, training, promotion and even firing.  It may also relate to such things as increasing employee’s productivity, improving workers physical environment and so on.

EXTERNAL SOCIAL RESPONSIBILITY: This refers to such actions as stimulating environmental development and entrepreneurship, improving the level of public enlightenment training and hiring the unemployed in the society.

            In a general sense social responsibility of business involves those actions or behaviour that is expected from the organization by the society.

HISTORICAL EVOLUTION

The term ‘corporate social responsibility is basically of American origin.  Between1929 and1933unemployment rose from 23% to 30% in the United States due to the ‘great depression’. Business was deteriorating, incomes were dropping and national moral was low. Increasingly, society’s value began to play down, individual is emerged, a new view of social responsibility, one in which business are seen as responsible for well-being of their employees, customers community and the society at large.

            In Nigeria, the concept of social responsibility is not as systematic sophisticated as those of western industrialized nation and the US.  The concept evolved basically after the civil war in 1970.

            Limited records exist to show the social note of business in pre-independent era.  This was because the bulk of companies operating in Nigeria than were owned and managed by foreign colonial exploiters that enjoyed government support.  The primary concern of the then government, which was the only societal agent, is not to ensure social duty performance of businesses but how to make Nigeria a cheap and dependable raw material base for British companies abroad.  Therefore no effort was geared towards this and government blocked every move made towards this end.  For instance, trade union activities were illegal until 1939 and even at that, the 1942 General Defence Regulation outlaid strikes, which is about one of the major strategies of making companies socially responsible.

            Despite these impediments, there were some certain bold moves to note. The earliest was the 1943successfulgeneraldstrikewhich resulted in workers getting cost of living allowances for inflation, which skyrocketed immediately after the Second World War. In 1987the employees of Public Works Department (PWD) went on a 3-day strike demanding amongst other things better conditions of service and increase in pay.

            The post independent era saw the development of the concept of social responsibility in Nigeria.  The law reform (Torts) Act of d1961, Part II, made business organization to be responsible for the provision of safety for persons entering in or upon its environment irrespective of whether the person has a contract with the organization or not.

            The period 1970 – 1977 saw further development in corporate social responsibility.  The Nigerian Standard Organization (now Standard Organization of Nigeria) decree was promulgated to develop and monitor quality standard of Nigeria made products.  1971 witnessed the emergence of the Industrial Training Fund Decree. This compels employers to contribute towards a fund for training in industrial manpower.

            In 1973, Wages Board and Industrial council decree emerged to administer matters relating to wages. 1974 saw Labour Decree promulgated to govern general labour conditions in Nigeria.

           

            Perhaps, the Zenith of the development of corporate social responsibility in Nigeria was in 1979 when the economic and social goals of the society were boldly enshrined in Nigerian Constitution.

            Though the historical development of the concept of social responsibility of business is not as organized and systematic as that of Western nations, the concern or focus of the societies are logically the same; control of the economy in such a way and manner as to secure the maximum welfare, freedom and happiness of every citizen.

 SOCIAL RESPONSIBILITY -  PROBLEMS

PROBLEM OF DEFINITION

            Dr. Iyanda (1980) postulated that what constitutes social responsibility today may become normal business expectation tomorrow.  Worse still, it may become irrelevant. He claimed that not long ago, free medical services, year bonuses even payment of taxes were regarded as evidence of socially responsible businesses, but today, they are normal business practices for which no social credit can be claimed. Oshagbemi (1983) in his book ‘Small Business Management in Nigeria’ observed that business as an element of the society, has a responsibility to aid the society in realising her goals and objectives. Business organizations contributes to the societal problems and therefore are duty bound to help found solutions to these problems and consequently make the society a better place to live in.

            According to Milton Friedman (an internationally known classical economist) “there is one and only one social responsibility of business; to use its resources and energy in activities designed to increase its profit, so long it stays within the rules of the game … engages in free competition without deception or fraud”.

            These various ideas on social responsibility of business have been politicised between those who support and those who oppose it in such a way that the term corporate social responsibility has several meaning and emphasis today.

OTHER PROBLEMS:

            Series of arguments have been advanced against the practice of corporate social responsibility.  Among these arguments are those put forward by Davis Fredrick and Bhaustrow (1959). They are identified thus:

(a)       Profit Maximization:  The most prominent of the arguments against business assumption of social responsibility is that of the classical economies determine to this school of thought, business function is an economic one. The managers are the agent of the stockholders and his decisions are controlled by the desire to maximize profit for them.

            According to Milton Friedman (Chief proponent of this school of thought), in a free enterprise or private property system, a corporate executive i.e. an employee of the owners of the business and as such is directly responsible to his employers.  His duty is to conduct and run the business in accordance toothier desire, which generally is to make as much money as possible while conforming to the basic rules of the society. He also maintained that corporate social responsibility is fundamentally a subversive doctrine in a free enterprise system.

(b)       Lack of Social Skills:  Another point raised against social goals is that many businessmen may lack the understanding and skills for the performance of social duties.  This could be traced to the fact that their views are primarily economic and their skills are the same. Businessmen are therefore philosophically unfit for social jobs.

(c)        Dilution of Business Primary Purposes:  Yet another argument raised is that social goals might dilute business emphasis on economic productivity, divide the attention of its leaders and weaken business in marketplace.  This may result in poor accomplishment of both its economic and social roles.

(d)       Business Has Enough Powers:  According to this line of reasoning, business organization is one of the most powerful institutions in the society.  Therefore, the process of combining social activities with the already established economic activities of the business would give it an excessive concentration of power.

However, the above series of arguments are been put forward against the assumption of social responsibilities by businesses and consequently, these forms the major problems been faced by firms in the discharge of social duties especially in the developing country like Nigeria.

SOCIAL RESPONSIBILITY -  PROSPECTS

Despite the various arguments corporate social responsibility, there are at the other extreme; School of thought that support and advocates for the concept of social responsibility.

A member of this school is Richman (1932) who declare that unless a much more balance is soon achieved between the social and economic power exerted by the private corporate sector and the social responsibilities it assumes.  Corporations stand an excellent chance of losing much of their existing pioneer and independence. Austin (1931) also stated that, the job of top management today must be broadened to include an awareness of societal changes it causes. Such awareness will place new responsibility on business management for intelligent, careful thoughtful decisions as to the basic responsibility for meeting such change.

Koontz and O. Donnel (1990) a strong joint advocate of this school of thought also declared “Business like any other type organization must interact with and live within an environment, so take into account our every action, these element of our surroundings which are important to us and others, we all do this when we drive on the right side of the road, wear clothes, pay tax work for a living, vote, etc” they concluded by saying that managers must respond to their environments by achieving congruence within it. They must endeavour to accomplish their mission best judgement in responding to political environment, respect all the rights of others and act as a constructive force in the society. This is their social responsibility.

Steiner (1983) viewed social responsibility as “an important philosophical drift from unbridled self-interest to an enlightened social interest”. In congruence with him, is the declaration that made management to involve itself in such social causes a said to education, urban renewal, opening up of better job opportunities to both men and women alike, training the disabled persons, environmental pollution control and much more. “Unemployment is an economic and social problem, misuse of resources is an economic and social problem and pollution of the environment also, covers both dimensions.  A manager is not only an economic decision maker but asocial decision maker as well”.

Davis (1993), also in support stated “There is an iron law of responsibilities which state that in the long run, those who do not use power in a manner that the society considers responsible, will tend to lose it”.

Also in consonance with these authors is Eells (1996) who thinks that prudent regard for all the interest that merge in making the future is in fact the only way to protect and augment shareholders equity.

A fierce publicity is recommended on the part of the government to promote this cause.  The government may achieve this by setting up a body that will see to the affairs of companies in this regard.  This body shall put in place a performance standard for companies in this respect and should monitor their activities closely for departures. This body shall also see to the building up of the level of awareness of the general public as regards their rights and entitlements by organising seminars and conferences.

NNPC and its joint ventures should set up community relation Committee. This committed should be charged with the primary responsibility of ensuring that proper community welfare policies and plans are developed and implemented across the community.

Large firms in the industry should create a community relation department to be manned by a manager on fulltime basis.  He (the manager) should educate the communities and negotiate their demands.  Where this is done, it will save the firm the cost of moving from one conflict resolution room to another.

Other non-oil organization should be compelled by the government to form similar committees in their various sectors for even spread of welfare packages across the community.

Akumuo Afam. Thomas

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