The Definition of corporate social responsibility
According to (Mattern and Moon 2004) the concept of CSR overlaps with concept of business ethics, corporate philanthropy, corporate citizenship, sustainability, and environmental responsibility. From a general perspective (Brown and Dacin 1997) defined CSR as a company’s status and activities with respect to its perceived societal or at least to its stakeholders obligations.
2.2 History of corporate social responsibility
Both past and future research studies have shown that the history on CSR and concern for environment as much as business is concerned is as old as trade itself. .The law to protect trade forests and commercial activities can be traced as far back as 5000 years. About 1700 BC in old Mesopotamia, the law at the time recommended death penalty for builders, farmers and innkeepers if their negligence leads to the death of others, or caused hazards to local community. Findings on ancient Rome indicated that the senators at that time complained about the lacklustre attitude of businesses in contributing enough taxes to finance the military campaign. The 1622 campaign by the shareholders of Dutch east India company is a today a testimony of genesis of CSR in which shareholders staged protests by distributing pamphlets and complaining about management self enrichment and secrecy. From the word of (Crane, A et al 2008) issues concerned with social responsibility practices can be traced as far back as the industrial revolution. (Cranes et al 2008) was of the opinion that industrial revolution in which adequate working condition, giving charities, adequate infrastructural facilities as campaigned by the early industrialist in America and Europe were all important issues since the early part of 19th and 20th centuries. However, the revolution of CSR started in 1920s, By 1929 Wallace B Donham of Harvard business school commented thus about CSR.
“Business started long centuries before the dawn of history, but business as we know it is new-new in its broadening scope ,new in its social significance .Business has not learned how to handle these changes ,nor does it recognise the magnitude of its responsibility for the future of civilisation”(Donham,W.1929)
This statement of fact by Donham depicts the happenings in today’s business world. Most multinationals companies have been involved in health risk business, genetically modified foods amongst others, there is therefore the possibility that social and environmental concerns is an issue which every generation must think about.
2.3 MNCs and the Telecommunications Sector in Nigeria
The Nigerian government’s decision to deregulate the telecommunications industry has brought about the influx of multinationals companies in the country. From the report monitored by economist intelligence unit (2007) the country has realised the important of diversifying its economy from only one sector, which is oil being the only source of economic growth and development. The influx of foreign multinational companies in the telecom sector has been of tremendous advantage to the country’s gross domestic product. Successful privatisation of this sector has led to increase in revenue generation, improvement in communications, job opportunities and improvement in infrastructural facilities. The successful story of deregulation of Nigeria telecommunication industry was not without challenges especially for the multinational telecoms companies. Report monitored from BMI’s risk (2006) opined that has risen to 44.6 from 4.5. Inconsistency in government policy, monetary policy and inadequate infrastructure facilities has been the bane of most MNCs.
The telecommunication industry in Nigeria was first operated by Nigeria telecommunications (NITEL). Government monopoly of the establishment, mismanagement, corruption and politics led to complete collapse of the industry in Nigeria.
However by 2001, Nigeria government licensed 4 MNCs to flag-off the take of private telecoms in the country, they are MTN Nigeria communications, Econet wireless Nigeria limited, GloMobile and government owned NITEL which was later renamed M-TEL.
MTN Nigeria communications became the largest telecoms multinational in 2003 with estimated active subscribers of 1,650,000. Econet on the other hand had an estimated one million subscribers, while Glo-Mobile and M-TEL had an estimated one million in between them. However, from the report by Nigeria communication commission (2004) an estimated 21 million subscribers were recorded on the entire network. The development therefore enables the country to realise the potentials of telecommunication market in the country. Nigeria demographic factors were believed to be responsible for the success of the telecomm industry, with a population of about 150 million people (Nigeria census 2006).
One of the pioneers of telecom companies, Econet wireless has experienced a tremendous change in its ownership structure. Another multinational companies V-Mobile network having saw the potential of Nigeria market took over the company in 2005 and a year after ,Celtel international from middle east, and a part of MTC group of companies in Kuwait invested heavily in V-mobile and took over the ownership in 2006 (Adomi 2006: 18).
However ,despite the benefits the telecommunication has brought to Nigeria, there are areas of concern and challenges faced by these multinationals, unavailability of network coverage in most rural areas, where villagers have to travel a distance to get network coverage to make calls.
Adomi (2006:19) noted that investment in telecommunications industry by these multinational companies has increased the socio –economic activities in the country. The influx of MNCs especially MNCs in the telecoms industry, this MNCs have contributed to growth in the industry in terms of technological advancement, financial resources, professional manpower and IT specialist in Nigeria. It is imperative to know that with the large investment and advent of telecoms MNCs, the big players in the Oil sector still make up for foreign inflow than any other sector in the economy. The exploration of oil and Gas attracts over 80-85% of Nigeria aggregate revenue.
The Nigeria telecommunication commission was able to realise over $1bn us dollar in license payment deposit from the all the initial private operators (Adomi 2006)
Nigeria is regarded as one of Africa’s largest telecommunications market bearing in mind that it has an estimated annual growth of between 40-45%.
2.4 Corporate Social Responsibility in Africa
Historically, the African continent has witnessed an era of sustained conflict, dictatorship, high level of poverty, high corruption, poor working standards, and disease. In recent decades the drive towards socio-political development, human development and addressing social issues has left an environment where social responsibility in business emerges to be a low priority. However the concept of corporate social responsibility (CSR) is sometimes referred to as businesses’ contribution to sustainable development which implies that CSR is a potential contributor to social and economic development. In addition, policy makers in Africa have recognised that poverty alleviation and sustainable development cannot be achieved through government alone, thus more attention has shifted to the potential contribution of private sectors through government policies to address development issues such as labour standards, child labour, human rights, poverty reduction, education, health and environmental impacts. The major drivers of CSR in Africa are
Political reforms: the process of political reforms often drive businesses’ to inculcate behaviour which combines social and ethical issues for example in south Africa, political reforms towards democracy and justice has been an important driver of CSR through improved corporate governance, collective business action for social upliftment and environmental reforms.
Socio economic priorities: it is argued that most CSR activities in Africa are directed towards addressing the development challenges of the socio-economic environment in which firms operate. For example In Nigeria CSR is directed toward addressing the socio-economic development challenges of the country such as infrastructure development, provision of health care facilities, poverty alleviation and education while in developed parts of the world CSR priorities involve issues such as climate change, consumer protection and socially responsible investments.
Governance gaps: is another driver of CSR which is seen as a way of filling the gaps left by weak and corrupt governments that have failed to adequately provide social amenities such as roads, electricity, health care, housing etc.
Crises response can also drive CSR activities, however the term crises can be social, environmental, health related, or economic for example HIV/AIDS crises has been used to create awareness of firm’s CSR activities, also catastrophic events are often likely to bring out CSR responses particularly through philanthropic programmes. For example: shell’s response, through the donation of huge sum money to the families of human right activist Ken Saro-Wiwa in Nigeria.
Cultural Tradition: evidence show that the evolution of CSR in Africa can be traced back to the deep rooted indigenous cultural traditions of philanthropy and business ethics. For example: In Nigeria, CSR is framed within the confines of socio-cultural influences such as charitable traditions, ethnic religious beliefs and communalism (Amaeshi 2006).
International standardization: CSR in Africa is also driven by standardization imposed by multinationals on their subsidiaries operating in this region for example the issue of child labour in the cocoa and textile industry.
A major driver of CSR in Africa in the past two decades was triggered by the activities of western multinationals in Africa; most of these multinationals see Africa as a source of cheap labour, and cheap source of raw materials for example shell’s activities in Nigeria. It was against this conditions that induced changes towards responsible conduct of business activities in many MNCs in the region. However, MNCs contribute positively in the socio economic development of most African countries even when they have limited interest in the political goals of these countries. The activities of CSR in Africa tend to be less formalized compared to that of developed economies, CSR standards and guidelines in this region tend to be sector driven for example agriculture, mining etc. CSR in Africa is mostly attributed to philanthropy or charity in terms of investments in social issues or community services such as health, sports, education and environmental developments. Many issues of CSR in Africa are seen as tradeoffs between job creation against high labour standards, development against environment and philanthropy against political governance. The broader impact of CSR on social and economic development in terms of ethical responsibilities and good governance in Africa still remains an area to be addressed.
2.5 Corporate Social Responsibility focus on Nigeria
In today’s business world CSR is regarded as core to the requirement of making businesses sustainable, but in Nigeria the concept of CSR is still sidelined to the background of philanthropy which is said to be inadequate in addressing the complex problems of today’s business environment.
Prior to democracy in 1960, the agricultural sector was dominant in the country accounting for over 50% of gross domestic product (GDP); the sector was the source of foreign exchange earnings. Nigerians were mainly engaged in agriculture, fishing, hunting and trading. Nigeria has a population of over 149 million people being the most populous country in Africa; it is composed of 250 ethnic groups and 3 main languages namely Hausa, Yoruba and Igbo. The predominant tribes in the country are Hausas, Yorubas and Igbos who are politically influential and have co-existed for long notwithstanding tribal and religious conflict which has created backdrops in economic development.
In the early 1970s , oil boom in Nigeria dominated the national economic scene, since then the Nigerian economy has been largely dependent on the oil sector which now accounts for 95% of the country’s foreign exchange earnings and about 80% of government revenues. However oil rich Nigeria is still embedded with political instability, high level of corruption, inadequate infrastructure, poverty and poor education system. The government has since failed to diversify the economy from its overdependence on the oil sector.
The evolution of CSR in Nigeria can be traced back to the activities of multinational companies (MNCs) in the oil sector. The exploitation of oil resources by MNCs has constantly lead to environmental pollution and environmental degradation especially in the Niger-delta region of the country. The pollution of rivers and farmlands in the host communities by MNCs have often been criticized by indigenes and human right activist which consequently has lead to continuous conflict in the Niger-delta region as militant groups from the region continue to fight against this act and destruction of oil pipelines continues to be rampant throughout the country. This is evidenced in the case of shell and the ogoni people documented in most CSR literature. The total disregard for the environment and its inhabitant by MNCs still continues to generate tension despite the struggle for social justice and environment protection; which is due to the powerful interest of government and oil firms that dominate the oil sector.
MNCs operating in the sector embrace the concept of CSR in order to protect their business interest and also to redress the effects of their exploitation on the host communities, firms often provide social amenities such as pipe borne water, schools and hospitals etc.
The deregulation of the telecommunication sector in 2001 opened up the sector for private investment; the sector is the second largest producer of foreign direct investment after the oil and gas industry accounting for over US$6 billion in investment in 2008. The sector consists of 5 GSM operators (Mobile telecommunication Network (MTN), Glo Mobile, Zain network, Etisalat, and Mtel), 4 CDMA operators (Starcomms, Multilinks, visafone and Zoom) and 5 other companies with active license. How the CSR activities of these firms contribute to a socio-economic development and sustainable development in Nigeria is an area of consideration in this research work. However for the purpose of this research, the CSR activities of Mobile Telecommunication Network (MTN) will be considered in details.
In general, most MNCs are driven to engage in CSR activities as a result market forces, civil society pressures and globalisation etc, also there are high motivation to protect their brands and investments through CSR. But these factors that drive MNCs might not be applicable to indigenous firms rather CSR activities will be driven by socio economic conditions in which the firms operate. In conclusion, CSR in Nigeria like many other African countries are driven towards addressing socio-economic development challenges of the country such as infrastructural development, health care provision, poverty alleviation etc.
2.6 MTN’s Corporate Social Responsibility in Nigeria
MTN describes its overriding mission as being a “catalyst for Nigeria’s economic growth and development, helping to unleash Nigeria’s strong developmental potential not only through the provision of world class telecommunication but also through innovative and sustainable corporate social responsibility initiatives”. The MTN Nigeria foundation limited is a subsidiary of MTN established in July 2004; the foundation is the means through which MTN Nigeria implements its Corporate Social responsibility (CSR) initiatives to assist in poverty alleviation and aid sustainable development in Nigeria. The foundation coordinates MTN’s social investment drive in the key areas of Education, health and Economic empowerment.
In the area of Education, the foundation’s agenda is to provide information technology in education through investment in primary, secondary and tertiary levels of education. The objectives of the education portfolio are as follows:
1) The empowerment of students through the provision of information and technology resources, the project has been designed to offer digital access to information from over 5,500 libraries and technology infrastructures to Nigerian federal universities to assist both students and lecturers in research work. This program has kicked off in three universities (University of Lagos, Ahmadu Bello University, and university of Nigeria).
2) To increase the level of national literacy and also provide educational resources for effective learning through provision of computers, technical training, furniture, and internet connectivity bandwidth for two years.
3) Other programmes includes teaching students how to set up their own companies by selling shares of stocks and other business activities with the help of business consultants.
Over 24 schools have benefited from this CSR programme so far.
The goal of the foundation in terms of health is to alleviate health challenges across Nigeria through projects geared towards improving health concerns. The objectives of the foundation are:
1) To increase awareness of the HIV/AIDS epidemic through culturally sensitive behavioural change message across different communities and to provide user friendly information and services about HIV/AIDS, the project is designed to enlighten million of Nigerians with information through interpersonal communication, mass media, and self instructional HIV/AIDS touch screens installed in strategic locations. Also, providing voluntary counselling and testing.
2) The foundation’s C.L.E.A.N programme was an environmental initiative designed to improve environmental health and sanitation in urban areas. This was implemented through the construction of waste recycling plants and provision of disposable equipments to help in waste collection and lastly job creation in the facility.
3) Creating awareness through genetic counselling in order to address the problem of sickle cell disorder.
In 2008, over 100,000 Nigerians benefited from these programmes.
The foundation’s economic empowerment portfolio is designed with an ultimate goal of empowering the Nigerian people and poverty alleviation. Through the provision of capital by microfinance banks, technology and other resources needed to establish themselves.
The Rural telephone project RTP is aimed at providing micro finance to women in the rural areas to establish businesses or to empower themselves which contributes to socio-economic wellbeing not only them but also their children. Over 1,500 rural women in about 21 states and over 200 communities across Nigeria has benefited from the programme.
The children development centre was also established by the foundation with the aid of creating public awareness on disabilities and also to remind the Nigerian communities of the significance of accepting and respecting people with disabilities, the programme is being implemented through road shows and seminars. Over 20 states have been covered by the programme across the country
Low cost housing project is another programme aimed at alleviating poverty through the provision of simple and affordable houses to low income earners which is geared towards supporting government’s social and economic development efforts. The foundation is committed to building 600 low cost housing units across Nigeria which will be mortgaged to the low income earners repayable over a period of 15 years. Loan repayments will be injected into building more houses for others. The MTNF has also made considerable investment in the area of agriculture, by empowering cattle rearers through teaching them effective methods of cross breeding, ways to produce more milk and the use of modern veterinary care. MTNF partners with integrated Dairy Farms to provide equipments and expertise in animal husbandry, cross breeding techniques and veterinary care.
The above CSR programmes of MTN reflect the philanthropic responsibilities described by Carroll A, which refers to “corporate actions that are in response to society’s expectation that businesses should be good corporate citizens”.
2.9 Benefits of corporate social responsibility and multinational companies
There is no doubt that CSR through MNCs has been of tremendous advantage to economic activities in Nigeria. However, Adomi (2006:22) observed that the advent of, multinationals companies brought necessitated foreign direct inflows into the economy which brought about skills and financial resources into the country. The influx of MNCs has increased the revenue generation capacity of the host country which as in turn led to increment in infrastructural facilities of the host economy. The economic empowerment portfolio of MTN communications best exemplifies its quest to improve the quality of life in Nigerian communities on a solid platform through programmes designed to empower people by providing affordable capital, appropriate technology and capacity building resources they require to alleviate poverty, the most of which is the rural telephone project.
According to Funke Majekodunmi (2002) the rural telephone project, also referred to “as the phone ladies initiative” which began in 2002 with just 5 rural women in eastern part of Nigeria as pioneer beneficiaries has since become the essence of sustainable poverty reduction and wealth creation mechanism in the country. The project has steadily grown to currently benefit over 300 women in about 9 states and over 100 communities of the federation.
Similarly, the commencement of MTN’s music scholarship programme in Nigeria. The scholarship according to (Nonny N, 2002) was awarded to talented youth to develop their talents. The programme has however led to the conferment of diploma certificates in musical education on completion of the two year study by participants.
From the report monitored by (Economic intelligence unit 2007) Nigeria became the greatest beneficiaries to deregulation of the telecommunication industry. Apart from the benefits accrued through CSR, the payment for operating license by the private telecoms multinationals generated over $1bn us dollar for the country. The total capital brought about an increase in the foreign reserve in the country. According to Nigeria communication commission (NCC), investment by these multinationals in the telecoms sector alone generated about 1.5 million direct jobs and about 500,000 supporting jobs (Economist Intelligence unit 2007). Job creation therefore is one of the value and benefits of corporate social responsibility through the multinational companies, which also impacted positively on the host country gross domestic product.
In terms of intrinsic benefits, corporate social responsibility improves the growth of a country human and natural resource development and effective utilization. However one can note that the development of CSR has not actually matched the advantage from the liberalisation of the telecommunications industry, but one can agree with the fact that capacity development through CSR with the inflow of multinationals has been established. However the capacity development by these MNCs brought about increase in technology transfer, infrastructural facilities, financial transfer, philanthropic donations which have contributed to the development of domestic economy.
In addition MNCs communications in Nigeria has boosted the infrastructural development in the country. The influx of telecommunications industries in spite of the pitiable situation of Nigeria’s telecommunications has been of tremendous advantage to the country mostly before the liberalisation of the telecommunication sector, the Private Telecommunication companies who were granted telecoms licenses were responsible for the development of Nigeria’s existing telecoms infrastructure up to the required standard. CSR can also lead to environmental and social benefits to the host nation which can be achieved through the transfer of cleaner technologies from developed countries to developing nations (OECD 2006).
2.7 Theoretical and Conceptual framework of Corporate Social Responsibility
In the early 1950s the concept of CSR was basically about business responsibility, according to (Bowen 1953) he argued that the obligation of businesses is to pursue policies that represent the desired societal objectives and values. Twenty five years later (Carroll A 1979) proposed that organisation’s obligation should ‘‘encompass the Economic, Legal, Ethical and Discretionary/Philanthropy expectations that society has of organizations at a given point in time.’’ The four components of CSR are shown:
The Pyramid of Corporate Social Responsibility in an African Context
Most empirical studies of CSR are discussed in European and American context which the above diagram depicts; however, they acknowledged that culture plays an important role in the influence of CSR priorities. (Crane and Matten 2007) in their study examines CSR in the European context using Carroll’s CSR pyramid, they argued that each level of the CSR pyramid plays a different role in the European environment with different significance and they are also interlinked in different ways. For the purpose of this research the Carroll’s CSR pyramid levels will discussed in an African context with emphasis on Nigeria and MTN
Economic responsibilities: business organizations are created to provide goods and services to meet the needs of the consumers. One of the primary motives of entrepreneurship is profit maximization, which means being productive and making profit in the process. The economic responsibility of an organization is therefore the foundation in which other business responsibilities can be achieved. Nigeria is faced with high unemployment, high rate of poverty, inadequate foreign direct investment which therefore makes economic contribution of firms being highly prized by communities and the government, this is evidenced with over 33 merit awards received by MTN for its CSR activities in four years. (Fox 2004) argued that a development oriented approach to CSR that emphasis on creating an enabling environment for responsible business in developing countries brings about socio-economic development in a sustainable way. The economic responsibility of firms tends to stress the significance of economic multipliers which include job creation, human capital investment, provision of technical know-how and institutional infrastructure etc (Nelson 2003).
Legal responsibilities: organisations pursuing economic benefits in terms of profit maximization are compelled to operate within the existing laws and regulations of government; In Nigeria the legal system is poorly developed with high administrative inefficiency and there less regard for human rights and labour laws. This consequently leads to lower priority being given to the legal aspect of CSR in most MNCs in Nigeria (Mwaura 2004). The enforcement of legal laws still remains a constrain the deter the effectiveness of government legislation as a driver of CSR, also the issue of tax avoidance by firms is rampant, this often contradicts the notion of good conduct by these firms (Christensen and Murphy 2004).
Ethical responsibilities: “involves those activities and practices that are prohibited by societal members even though they are not codified into law”. Ethical responsibilities encompass the expectation that reflects stakeholder’s moral rights. In practice ethical responsibilities of firms in Europe enjoy higher priority compared to the United States, however, in Africa, ethical issues tends to have the least influence on the CSR pyramid. Another factor that affects the conduct of business in an ethical manner is the high level of corruption in Nigeria, which often affects business to a great extent.
Philanthropic responsibilities: this entails corporate activities that reflect society’s expectation that businesses should good corporate citizens. This includes activities like human welfare promotion and company’s goodwill. The philanthropic responsibilities of firms are discretionary or voluntary in nature even though there is societal expectation. The major difference between philanthropic and ethical responsibilities is that CSR include voluntary or philanthropic contribution but it is not limited to them. Some authors argue that the philanthropic responsibility is the least important compared to the other three categories of social responsibility even though it is highly desired.
In developing countries like Nigeria the philanthropy responsibilities of firms are given higher priority after the economic responsibility, this might be as a result of strong indigenous traditions of philanthropy in Nigeria. Other factors might include socio-economic needs identified in the discussion above which makes philanthropy an expected norm, philanthropy is viewed by firms as the most direct method of positively impacting on the communities in which they operate, because company’s success depends on a society that prosper (Ahmad, 2006). CSR in Nigeria is still at its early stage of maturity, this could also be one of the reasons for prioritizing philanthropy.
After an intensive analysis of CSR in the Nigerian environment, the researchers’ contention is that the order of the CSR pyramid in the context of the Nigerian environment taking into consideration the emphasis given to various responsibilities, the economic responsibilities still gets the highest emphasis followed by the philanthropy responsibilities which has the second highest priority, followed by legal and lastly ethical responsibilities.
(Visser 2006) in his argument suggests that ethical responsibilities should be given highest priority in developing countries in terms of incorporating good governance which in turn holds the key to improvements in all other dimensions ranging from economic development, legal, and philanthropic act.
One of the critics of Carroll’s conceptualization was Milton Friedman who argued that “the only one responsibility of business towards society is the maximization of profit to the shareholder within the legal framework and ethical custom of the country” (Friedman 1970). However, the above statement of Friedman which points out conformity to the law and ethical customs has been said to embrace the three classification of Carroll’s CSR pyramid- economic, legal and ethical.
Another conceptualization was developed based on Carroll’s work to measure CSR activities, (Maignan and Ferrell 2001) proposed the replacement of the word ‘society’ that it lacked specific direction with “stakeholder expectation” and defined CSR as ‘‘the extent to which businesses assume the economic, legal, ethical and discretionary responsibilities imposed on them by their various stakeholders”. Stakeholders on the other hand refer to groups or persons that have a stake, or claim, rights or interest in the operations of the firm.
This research presents other theories and approaches of CSR relating to aspects of social reality in terms of economic, social, political, ethics and integration.
2.7.1 Instrumental theories
These sets of CSR theories presume that the sole social responsibility of business is to achieve economic benefits and wealth creation. Friedman is a well known proponent of these theories. (Winsdor 2001) also acknowledged that the managerial conception of responsibilities should focus only on the economic aspect and other social activities could be accepted if it contributes to the creation of wealth or to the maximization of shareholders value. Empirical studies have shown that there is a positive correlation between social responsibility and financial performance of firms in most cases, we should however be careful with findings because such correlation is somewhat difficult to measure. There three approaches of instrumental theories depending on the company’s economic goal: the maximization of shareholder value is the first approach, the second entails the goal of achievement of competitive advantage. And lastly cause related marketing.
2.7.2 Political theories
This theory assumes that “the social power of the firms is emphasized, specifically in its relationship with society and its responsibility in the political arena associated with this power” the two major theories relating to political theories are corporate constitutionalism and corporate citizenship. Corporate constitutionalism was proposed by Davis in 1960, he introduced the notion of business power to the CSR literature, and he argued that business being a social institution should use its power responsible and whoever does not use power responsible will lose it. While “corporate citizenship” has been described by different authors in different perspectives, some view it as having similar meaning to corporate philanthropy or social investment or responsibility towards the local communities. According to Carroll Corporate citizenship overlaps other theories on the responsibility of business in society. (Matten 2003) argued that the failure of government in the protection of citizenship made corporations enter the arena of citizenship.
2.7.3 Integrative theories
This group of theories explain how business integrates social demand and the success, growth and continuous existence of business depends largely on the society. (Adrew, C 2008) in her words suggests that “corporate management should take into account social demands and integrate them in such a way that business operates in accordance with social values”. Integrative theories are basically concerned with scanning and responding to social demands in order to achieve social legitimacy and prestige. The approaches to integrative theories include: issues management which entails social responsiveness to the gaps that exist between what the public expects the performance of the public to be and the actual performance of the firm, it is important for firms to perceive this gaps and react in order to close it. Stakeholder management is another approach presented by (Emshoff and Freeman 1978) fewer than two basic principles; the first principle is that firms should attempt to achieve maximum cooperation between stakeholders and the firm’s objectives. The second states the managing stakeholder relations involve efficient strategies and effort. Corporate social performance involves the integration of the entire responsibility of business to society which include legal, economic, ethical and philanthropy categories of business performance.
2.7.4 Ethical theories
These set of theories explains the relationship between business and society in relations to ethical values. These theories see CSR from an ethical perspective and that firms should accept social responsibilities as an ethical obligation above any other categories. Some approaches to these theories include: Universal rights: also refers to human rights which suggest that firms should incorporate social, economic and political justice where they do business. Some authors suggest that social responsibilities should be based on human and labour rights. Another approach is the concept of sustainable development is defined as the “process of achieving human development in an inclusive, connected, prudent and secure manner”.
The above instrumental, integrative, political, and ethical theories represent a broad classification of current theories related to CSR.
2.8 The Impact of CSR Activities to stakeholders
In a CSR context, the significance of stakeholder thinking becomes imperative has managers try to assess and balance the interest of all stakeholders in the firm’s operation. The notion of stakeholder management involves managers representing the interest of not only the shareholders but also different stakeholders, arguable stakeholders should be given a fair share of influence of how the corporation is ran (Matten and Crane 2005).
The stakeholder theory has been argued to be the most influential theory of CSR and it has always been core to CSR, since its argument is that for firms to achieve their goal groups or individual will be affected, and these groups also have legitimate interest in the firm which boils down to their relative power and influence and how the company affects them, a higher stake will put in a position where the interest will be considered (Phillips 2003). However, in practical the firm can choose to ignore some groups or individuals that have little or no impact on the firm. For the stakeholder concept to have practical significance it must confine specific groups and individuals as stakeholders.
2.9 The stakeholder framework
The critical analysis of the stakeholder framework begins with an application of basic definition of stakeholders. More so, to enhance the strategic management process the concept of stakeholder is defined as “any group or individual who can affect or is affected by the achievement of an organization’s purpose”. Therefore, to understand the process of stakeholder management process involves three stages, first is to establish who the stakeholders of the organization are and what are their stakes?, second to critically understand the organizational process employed to manage relationship with stakeholders and lastly to assess whether the organization’s transactions or bargains with stakeholders fit with the stakeholders map. However, the ability to combine the three levels of analysed above is referred to as Stakeholder Management Capability.
The stakeholder map framework of MTN
Owners as Stakeholders
Employees as Stakeholders
Customers as stakeholders
Suppliers as stakeholders
Government as stakeholders
Different stakeholders of the firm have different level of impact or impact on the firm to a different extent for example the owners influence the growth and income of the firm, government legislation also impacts largely on the firm’s operation and employees can also be referred to as owners, customers or consumer advocate, they impact on the success of the organisation to a large extent, which implies that CSR activities in terms of ethical and legal responsibilities to employees should be treated as utmost priority by any firm.
Another stakeholder framework was developed on two dimensional grid, the first one classified stakeholders by interest or stake in the organisation which could be classified as owners equity stakes, customers market stakes while the second grid is classified in terms of power, this include economic power, voting power and political power. Customers and suppliers can use resources in terms of economic power, owner can use resources in terms of voting power for example voting for directors ], and government can also use resources in terms of political power through legislation.
An example of a Real world Stakeholder grid
Formal or voting
The above framework represents the two dimensional grid where owners have equity stake and voting power, customers, debt holders, suppliers and unions have market stake and economic power and government having an influencer stake and political power. The framework represents the world view of a modern business firm.
Corporate social responsibility has no doubt contributed to socio-economic development in Nigeria. The impact of MNCs in Nigeria has added to continuous inflow of manpower and financial resources. The influx of most of these MNCs has led to increase in foreign direct investment in the country, according to (Belshaw and Livingstone 2002:285) FDI in Africa has be pronounced as improvement in urbanisation and industrialisation of developing economies, many authors therefore ascribe these influx to successful implementation of corporate social responsibilities by these multinationals. (Dermot 2004) agreed with Belshaw and Livingstone that Multinational Corporation companies add to infrastructural capacity, manpower and entrepreneurial skills of most developing countries. It is however imperative to note that MNCs are the major factor of CSR activities in developing and emerging economies. However, the successful implementation of CSR in most developing countries especially Africa requires a great deal of commitment from every successive government. In addition, the CSR activities of MTN has had a positive impact on socio-economic development in Nigeria, a great deal of Nigerian have benefited from their CSR programmes in terms of job creation, infrastructural development, human development and poverty alleviation.
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