Corporate Social Responsibility In Multinational Corporations Commerce Essay

The inflow of foreign direct investment (FDI) has the ability to play an important role in the contributions to the development of local economy of a developing country. Such role includes capacity building, employment opportunities and the transfer of technology (Ite, 2004). Corporate Social Responsibility is a concept that has created global awareness. Its popularity arouse as a result of globalization and information technology.

According to the World Business Council on Sustainable Development (WBCSD): CSR is ”the continuing commitment by business to behaving ethically and contributing to economic development while improving the quality of life of the workforce and their family as well as of the community and society at large” while (Frederick, 1994) sees it ”as an obligation of business to contribute to social welfare beyond their role of producing goods and providing services.

Multinational Corporations (MNCs) therefore has a major role to play through CSR initiatives, focusing on the development of a developing economy such as Nigeria. However, for many MNCs, ”CSR is an outcome of public pressure arising from their operations in developing countries in relation to human right, environmental pollution and labour issues. In other words, it has generally being a pragmatic response to consumer and civil society pressures” (Raynard & Forstater, 2002).

This proposal seeks to focus on CSR practices and understanding how CSR theories relates to its practices by MNCs in Nigeria using Shell Petroleum Development Company (SPDC) as an example. ‘ Various researches that have been carried out focused on the activities of the MNCs and they have revealed that there was a mounting evidence of gap between the stated intention of business leaders and their actual behaviour and impact in the real world'(Frynas, 2005). Little has been researched on how CSR theories relates to its practices by MNCs such as Shell in Nigeria. Nigeria was chosen because it is the most populous black nation in the continent and the largest producer of oil in sub Saharan Africa. The question this project seeks to ask is, ‘how far is Shell Petroleum Development Company improving on the social welfare in Nigeria? In other words were they able to practice CSR.

LITERATURE REVIEW.

The literature on CSR has produced much definition over the decade since its emergence on the business scene (Carroll, 2004). The concept CSR has evoked lots of debate among scholars. It is sometimes referred to as ”business virtue” or ”social responsibilities”. It means different things to different people. To some, it means the idea of legal responsibility or obligation and to others it means social responsible behaviour which is sometimes seen as a charitable contribution to the society.

According to the foremost scholar of CSR Carroll (1983) ‘CSR involves the conduct of a business so that it is economically profitable, law abiding, ethical and socially supportive’. The commission of European communities defined CSR as a ”concept whereby companies integrate social and environmental concerns in the business operations and in their interaction with their stakeholder in a voluntary basis”. As good as the notion of CSR may seem there are different views by different scholars as to what constitute CSR. According to parsons (1961) CSR theory is rooted in four aspects of hypothesis

It can be observed in any social system.

It adapts to its environment i.e. its relation to resources

Goal attainment i.e. its relation to politics

Social integration and pattern maintenance i.e. its relation to culture and values.

From these hypotheses aforementioned, CSR theory was then classified into four groups

Instrumental theory- here it is assumed that corporation is an instrument for wealth creation. According to friedman (1970), ‘the only responsibility of business towards society is the maximisation of profits to the shareholders within the legal framework and the ethical custom of the country’. Any organisation that adopt CSR initiative will always have to answer the question ‘to whom are we responsible?’ the answer to this question is usually to ‘the stakeholder’. Stakeholders here include the employees, customers, shareholders, staff in the supply chain and the community living in vicinity where the company is located.

Political theory – here the social power of corporation is specifically emphasized in its relationship with the society and its duty in the political environment. Davis (1960) introduced business power in the CSR debate. He proposed that business is a social institution that must use its power responsibly. In his own words ‘whoever does not use his social power responsibly will lose its position in the society.

Integrative theories – it is considered that business ought to integrate social demand. Social demand implies the way in which society relates with business through certain legitimacy and prestige. This goes further to explain that business depends on society for its continuity and existence.

Ethical theory – firm ought to accept social responsibility as an ethical obligation above any other consideration. Donaldson and Dunfee (1999) proposed the integrated social contract theory. This theory was meant to guide managers to make decision in an ethical way in other words, to get involved with the society.

To cynics, CSR is antithetical to sound business practice and serves to weaken its focus on wealth creation ( Clement-Jones,2005; Murray, 2005). Advocates however characterises CSR as necessary for successful business operations and as a gateway for business to look beyond wealth creation and also take into consideration the social welfare of the society in which they operate (Jackson & Nelson, 2004; Rudolph 2005). In other words, businesses that are socially responsible can help to solve crucial environmental and social problems. Some studies consider CSR to involve ethical responsibility while philanthropic responsibility is seen as an add on ( Longo et al 2005). Other studies have made discrepancy between CSR as simple legal compliance and CSR as carrying out business operations with high regards to morality (Juholin, 2004). Henderson (2001), attempt to show that CSR distorts the market by distracting business from its primary role of wealth creation. These different views by scholars have led to confusion as to what CSR practices really entail. Based on the fact that little has been discussed on how CSR practice fit or does not fit with CSR theories, my main project will involve critical analysis of CSR theory and how it relates to its practices by Shell in Nigeria.

RESEARCH OBJECTIVE AND RESEARCH QUESTION

The central objective of this research is

To develop a better understanding of CSR theories and practices.

To investigate on the CSR policies of Shell Petroleum Development company and how it relates to the CSR theories.

To investigate the effect of their CSR activities in Nigeria.

These objectives will be looked into in order to ascertain if Shell really practiced their CSR policies and to what extent does the policy create effect in the community which they operate.

Therefore my research question will be ‘to what extent is Shell improving on the social welfare in Nigeria?’

RESEARCH DESIGN

The research strategy that will be adopted for this research will be a case study approach. A case study approach is a single unit of analysis such as a company, an event or group of events. In this case a company i.e. Shell Petroleum Development Company will be used. The case study type is exploratory as well as explanatory in nature. It involves gathering detailed information about the company over a period of time with a view to obtain an in-depth knowledge (Collis et al 2003).

A qualitative approach will be adopted for this research because it is designed to study social and cultural phenomena. It will be aimed at conducting an in depth analysis of how Shell practiced Corporate Social Responsibility in Nigeria. Questionnaires will be used as an instrument for this research. These questionnaires will be administered to the host community where Shell is operating because it is assumed that the community understands the subject matter that is been analysed. The sample size of this research will be classified according to age, gender, academic qualification and the number of years of residency within the community.

Simple Random Sampling Techniques will be used to administer the questionnaires to the member of the host community because it gives each member of the population an equal chance of being chosen and it also guarantee that the sample was a representative of the entire population (Saunders et al 2007)

DATA COLLECTION AND ANALYSIS

Data would be collected using questionnaires. Through face to face interaction, the respondents would be gathered at a particular place and instruction would be given to them as to how to fill out the questionnaires. I intend to give out 150 questionnaires. The data that would be collected will include the age, gender, education qualification and the number of years of residency within the community. Secondary data would also be collected from sources like industry journal and other relevant published and unpublished articles.

Descriptive method of data analysis would be used to analyse the responses from the questionnaires collected. This method includes the use of charts and tables to describe the data generated.

LIMITATIONS

Constraint to finance will be one of my major limitations for this research because it will entail me to travel to the Niger Delta region in Nigeria which is the region where Shell operates. Due to the fact that the questionnaires would be handed out by myself, some members of the community would want to be paid before they fill out the questionnaires.