Acknowledgement The acquisition of knowledge is the result of effective co-operation between different individuals. Knowledge is the key to success in all human endeavors. Knowledge is power.
Hence, I wish to acknowledge a lot of persons without whose help and contribution this project would not have come to a successful conclusion. One of such people which I am greatly indebted to is Prof. G.U. Nwanguma, my project supervisor and Head of department, for persistently taking time off his much crowded schedule to ensure the smooth success of this academic pursuit.
I also wish to place on record my special gratitude to my lecturers Mr. Walter Ani, Mr. Kenneth, Mr. Melletus, Mr. Innocent Ubawike, also Mr. Joshua Kajang, Lecturer marketing department, for their interest, useful suggestions, understanding and brotherly advice/assistance in the selection of topic and where to get the materials.
This list would be incomplete without mentioning my indebtedness to my family to who I owe the greatest gratitude. These are my mother-Lolo Mrs. Victoria Eme Njoku whose love and hard work has encouraged me to strive for success, my sister Arch.
Mrs. Eme Ngozi Anele, Mrs. Okon Esther Eme, and my brothers Engineer Chijioke EmeNjoku, Mr. Obinna Eme Njoku, Engineer Eme Njoku Iheanyi for their innumerable sacrifices to ensure that my academic work is pursued in a most comfortable condition, I remain indebted to my special friends who have contributed in no small way to my stay in Caritas University a happy one, such persons are Arc. Nwosu Chijioke, Roseline Aidelomon, Ezeigwe Chinyere, Udu Anya. They, in a special way see to the completion of this project work. I thank them all.
INTRODUCTION 1. BACKGROUND OF STUDY Profit maximization was regarded as the primary mission and over-reaching economic motive of any business enterprises little or no attention was paid to the fact that, in pursuit of their profit objective, business enterprises have to be ask to assemble the resource from the local environment and have the stable socio-political and investment climate in which to operate successfully.
If business organization relies on society for existence, it is only logical that this environment be acculturated and nurtured to ensure its continuity. It is in this regard that the orientation of the modern business manager has changed to reflect the increasingly important interdependence between organizations and there environments with these, there is an increasing public glamour that business should participate actively in the well being and environment in which they operate and make their profit.
However, the aim of establishing any business is to provide competitive goods and services to the consumer and society at large. This does not however, mean that they have concluded their obligation to the people especially to the host community where the business is sited and operated.
Although there is no law as what form of services the host community should benefit from the business, it is morally obliged to cater for at least their host. This they do by aiding the development of infrastructures such as access roads where necessary and the provision of good water for domestic use and also the provision of electricity of the local population. Other forms of services that could be rendered for the young members of that community and of course the provision of gainful employment for those who have graduated from college.
There are a lot of other services that the host community can benefit from the business such as the provision of safety measures against pollution other air or water. On the other hand, to the business also look forward to the local populace, for continued patronage and also for ensuring the safety of lives and properties of the business and employees of that business who are not from that community. Therefore, the recognition by businessmen of the need to keep the good of society as a whole to mind while conducting business in the bed-rock of social responsibility. 1.2STATEMENT OF THE PROBLEM
The controversy about the public clamor that business should participate actively in the well being and welfare of the community, society environment in which they operate and make their profit are the problems among others this research intend to solve. Has business social responsibility any part to play in the total marketing effort of business organizations or enterprises?
Does business social responsibility contribute anything to the total revenue of the company? Is the conception that there is no need for business enterprise to be socially responsible to its society “SHELL PORT-HARCOURT” true or false? Of what use is business social responsibility to the general public? The problem for this research is what the responsiveness of companies to social responsibility is.
The following research hypothesis are formulated for the purpose of carrying out this project of which: HYPOTHESIS I: Ho: socials responsibility of business does not significantly enhance the success and development of the host community Hi: social responsibility of business significantly enhances the success and development of the host community. HYPOTHESIS 2 I: Ho: There is no significant relationship between the success of business and its social responsibility. H1: There is a significant relationship between the success of business and its social responsibility. 1.3 OBJECTIVES OF THE STUDY
This research work was conducted with the following main objectives: a. To met up with the requirement in partial fulfillment for the award of B.Sc in the department of Business Administration Caritas University, Enugu. b. To examine and determine the extent of benefits that the company shell company has contributed to the development of Port Harcourt in response towards to the business social responsibility. c. To investigate the causes of business enterprise nonchalant attitudes towards business social responsibility to the development of its host community. d. To advance solution of the problems of business social responsibility to the development of her host community. 4. SIGNIFICANCE OF THE STUDY
This research is significant in the sense that it provides the basis for further research into the topics by providing related data. This study is also of important for the fact that business have been criticized on ethical, moral, economic and political grounds. Businesses have also contributed to the determination of our physical environment the case of SHELL company’s pollutants like poisonous waste materials have been buried in abandoned plant sites; solid wasters have been thrown into lakes and seas or rivers; poisonous gases have been released into the air we breathe etc. Trying to be socially responsible involves extra cost or expenses for industries.
This study is important because it will be useful to “SHELL COMPANY” and its customers by helping them understand and appreciate more of the effort it has made. If any, it will also be useful to the government and registration because it will help them make more meaningful and useful legislature and help them to set achievable standards concerning social responsibility of businesses. 5. RESEARCH QUESITIONS.
This study intends to provide answers to these questions. 1. Does social responsibility of business organization enhance the development of the community? 2. In what way has the company carried out their social responsibility in community? 3. To know the extent of implementation of this policy, the problems, argument and difficulties facing the company in carrying out their social responsibility in their host community. 6. SCOPE AND LIMITATIONS OF THE STUDY
The scope of social responsibilities of business in relation to this project focus on obligation which business have voluntarily imposed on themselves to ensure the survival of the system under which they thrive. In order to give the reader a board base from which to see all of the implications of the social responsibilities of business, it is necessary to examine such responsibilities from the perspective of consumers, employees and general public shell Port Harcourt.
Time and financial constraints are the two limitation of this study. Subsequent difficulty in obtaining data from other companies led to the selection of shell company Port Harcourt as a case study. This limits the generalized ability of the conclusions of the research to shell Port Harcourt and no other company in the country.
Another problem was the shortage of literature on related topics and non- availability of shell publications in libraries. The absence of accurate and up to date statistical figures because of the recent of events as regards the research topic. Again, in regarded as confidential, it was very difficult to get the company to release the required information. The problem of gateman and messengers stopping the researcher from entering was another constraint to this study. Lastly, the case of official’s absence in the company to field work and other assignments constituted other major constraints to the research this work. 1.7DEFINITION OF TERM
(BSR) Business Social Responsibility (NNPC) Nigeria National Petroleum Corporation (ITT) International Telecommunication Technology (SPDC) Shell Petroleum Development Company
CHAPTER TWO REVIEW OF RELATED LITERATURE 1. LITERATURE REVIEW This chapter will give a clear understanding to reveal the related literature given about this research and also to identify areas considered necessary for the purpose of this research. Thus this chapter includes the common impression about evolution of social responsibility, definition, theoretical framework; Reason for or against corporate social responsibilities in Nigeria, Advantages of corporate social responsibilities, Strategies of corporate social responsibilities, Difficulties failed by Multinationals in carrying corporate social Responsibilities. It also includes the meaning of multinationals, Advantages of Multinationals, and challenges of multinationals in their host communities shell company Port-Harcourt. 1. THEORITICAL FRAME WORK
What this research will achieve in the theoretical concept of the iron law of responsibility. This law states that in a long run, those who do not use power in ways that society considers responsible will tend to lose it.
The implication of this theoretical constant is that those multinationals organization that are blind towards the provision of infrastructure and social amenities to the host communities will eventually have opposition at a long run.
A typical example is the agitation of the Niger – Delta situation which has affected the production of crude oil by multinational companies operating the region, which SHELL is a Victim. There are so many social threats in the region like kidnapping, pipe lines destruction, militant killing among others. HISTORICAL BACKGROUNDS
2.2 EVOLUTION OF SOCIAL RESPONSIBILITY Griffin (1977:45) describes views of social responsibility held by business, the government, and the public at large changed dramatically, over the years. There have been three critical turning points in the evolution of social responsibility. The first turning point in the evolution of social responsibility occurs during the Late 1800’s and it is called the entrepreneurial era. During the entrepreneurial era, business continued to grow and expand but in the more orderly and acceptable fashion.
The second turning point in the evolution of social responsibility is the depression era 1929 through the 1930’s. The public blamed business for economic problems and sought to regulate business though government to prevent such problems in the future. Grill from lecture note of university of Nigeria Nuskka. The third major turning points in view of social responsibility came during social era of the 1960’s. A period of great social unrest during which business was seen as responsible for social problems and called upon the government to help those problems. Grill from lecture note of university of Nigeria Nuskka The concept of corporate social responsibility is a direct involvement in the community affairs. The continued acceptance of a company and its survival depends to a large extent on its demonstration on awareness of the problem of the society and willingness as well as its capacity to contribute to the problems.
Corporate social responsibilities theory is closely related to community relations. This involves advising management of an organization and working with it to ensure that the company or organization is responsible and responsive as corporate citizens. It includes the participation of the company in such vital issues as environmental protection campaigns, contributing to education, in a vacuum it operates in the society and contribute intensively to the hazards of the environment for citizens and at the same time provide employment, security and other many values to the communities.
Thus, this concept of social responsibility is a controversial one. While some believe in the concept others do not. Those who believe view it as the responsibility to plan and manage an organizations relationship with all those involved in or affected by its activities.
They see it as a bright opportunity to bank goodwill in the community. They see it as a social investment. Those of opposite opinion view corporate social responsibility as not been a person and as such cannot be responsible that only people can have responsibilities. But, this author, believe in corporate social responsibility theory. This is because participatory in the community is a natural part of successful because practice. In the present rapid technologically advanced world, the world is highly sophisticated at least in the business world. Consumers are becoming wiser with many option of choice, environmental users are becoming more problematic and dangerous, companies that are not socially responsible are viewed as enemies of progress and people do not like investing in it.
Those companies that extract all the good resources from the immediate environment but give little or nothing but environmental problem/pollution back to the communities especially in the case of the Niger Delta region of Nigeria using shell company as a case study. A company exist for the welfare of the shareholders and staff as well as own a duty to contribute to the development of the community in which it operates. The organization on the other side expects the community to be fair to them fair taxation, good labor supply and support for business and its products as well as stability of the environment for smooth operation of their business. (Ajala 2003:120) BRIEF HISTORY OF SHELL
SHELL COMPANY was known as Royal Dutch Company ➢ In November 1938 shell D’Arcy granted exploration license to prospect for oil throughout Nigeria. ➢ In January 1956-first successful well drilled at Oloibiri by shell D’Arcy ➢ In April 1956-changed name to shell-B.P Petroleum Development Company of Nigeria Limited. ➢ In February 17, 1958-first shipment of oil from Nigeria ➢ In April 7, 1961-shell’s bonny terminal was commissioned.
➢ September 1971-shell’s forcados terminal was commissioned ➢ April, 1974-SECOND participation agreement (through NNPC) increases equity to 60% ➢ August 1, 1979-fourth participation agreement, BP’S share holding nationalized; NNPC = 80%, SHELL= 20%. ➢ December 13, 1979 – changed name to shell petroleum development company y of Nigeria (SPDC) ➢ August 1984 – agreement consolidating NNPC/SHELL Joint Venture.
➢ January 1986-signing of memorandum of understanding (MOU) ➢ June 30, 1989 –fifth participation agreement, NNPC = 60%, SHELL = 30%, ELF 5%, Agip = 5% ➢ July 11, 1991-siging of memorandum of understanding and joint venture operating g agreement ➢ April 19. 1993-production sharing contracts signed – SNEPCO ➢ July 1993 – sixty participation agreement, NNPC =55%, shell = 30%, ELF = 10% Agip = 5% ➢ In 1995 –SNEPCO starts drilling first exploration well. ➢ November 1995 – NLNG final investment decision taken
➢ March 30, 1998 – shell Nigeria Gas company established
➢ 2000 – Shell Nigeria Oil products established. ➢ Dec. 2002 – commencement of production from EA field
➢ October 5, 2003-achievement of 1 million + barrels of oils day production from SPDC operation.
➢ 2004 – THE NEW SPDC- A restructuring exercise; Nigerians placed in to position of management.
➢ January 1, 2005-New SPDC Launched Basil Omiyi appointed first Nigeria MD.
➢ September 1, 2005 – Basil Omiyi became country chair, Nigeria; overseer all shell companies in Nigeria as well as shell interest ORGANIZATION DEVELOPMENT OF SHELL COMPANY
In carrying out its assignment, the SHELL COMPANY has always been mindful of the need for structural changes in its organization to reflect the realities of the situation. From a very centralized structure the corporation has continued to evolve new organizational structure with a view to running its busyness mush more effectively and efficiently. In the corporation, the re-organization into semi-autonomous sectors each headed by a sector coordinator. The five sectors were: ❖ Oil and gas
❖ Refineries ❖ Petrochemicals ❖ Pipelines and product marketing and ❖ Petroleum Inspectorate
2.3 CURRENT LITERATURES ON SOCIAL RESPONSIBILITY REASON FOR OR AGAINST CORPORATE SOCIAL RESPONSIBILITIES. One possible reason for this state of affairs is that up to now no comprehensive attempt has been made to examine these issues in a systematic fashion. The objective of this paper is, therefore, to delineate and examine, in a more or less organized manner, some of the more critical of these conceptual and practical difficulties. It is hoped that he exercise will be of some help to the multitude of special interest groups – businessmen, academics, intellectuals, governments, etc – that engage in the Business social Responsibility discussion. WHAT IS BUSINESS SOCIAL RESPONSIBITY?
The primary conceptual difficulty has to do with the meaning of business social responsibility. At least business Responsibility is a bibulous concept and defies neat definition. Perhaps the most instructive way to gain an insight into the meaning and nature of the term is to offer examples that cover its major aspects.
It will be readily agreed that Business Responsibility or corporate social responsibility has three broad facets, namely, Outright charity to social cases:-Education, health, art and culture, etc –which does not necessarily make any direct impact on the profitability of the charitable firm and, therefore, cannot be sustained objectively on the basis of ordinary private cost – benefit analysis. (We will examine the issue of conflict between Business social Responsibility and profitability and some practical problems relating to these aspects of Business social Responsibility will be discussed later.
The U.S. Business Ethics Advisory council, established in 1961 by the U.S. Secretary of commerce, had this to say on the subject of Business social Responsibility. Druker .P, (1977:234) “Every business enterprise has manifold responsibilities to the society of which it is a part. The prime legal and social obligation of the managers of a business is to operate it for the long- term profit if its owners.
Concurrent social responsibilities pertain to a company’s treatment of its past, present and prospective employees, to its various relationships with customers, suppliers, government, the community and the public at large. These responsibilities may often be, or appear to be in conflict, and at times a managements recognition of its broad responsibilities may affects the amount of an enterprises immediate profits and the means of attaining them”.
Perhaps it is in recognition of such difficulties that the use. Business Ethics Advisory Council did not lay down a code of business ethic for general application, preferring instead to let “every enterprise and every association to conduct a soul – searching examination”, concentrating this exercise “on the real problems of their business and industries, to find and apply concretely to those problems the abiding ethical principles which derive from our religious heritage and our traditions of social, political and economic freedom. Drucker. P,(2005:45).
IS BUSINESS THEORETICALLY CONCEIVABLE? Quit apart from what we observe Business social Responsibilities to be in practice, a fundamental question concerning its theoretical conceivability persists. This difficulty stems from the fine distinction between businesses as artificial entities and the owners of businesses as real persons. The distinction is clearest in the case of the corporate form of business organization or the so – called Limited Liability Company.
An important tenet of business theory is that, by definition, only real persons can have responsibility. Artificial entities such as official positions or business qua businesses cannot be responsible. Only authority and power can attach to them.
Since business qua businesses cannot be socially responsible, to who is Business social Responsible exhortations directed? The owners of business or the business themselves? Unless this basic theoretical confusion is banished from the BSR discussion further debates, instead of clearing the Fog, will generate fruitless controversy, acrimony and misunderstandings. DO BUSINESS HAVE THE AUTHORITY TO ENGAGE IN
SOCIALLY RESPONSIBLE BEHAVIOUR? The question as to whether business have the authority to spend corporate funds in the pursuit of BSR policies cannot, like the issue of responsibility, be settled with finality on theoretical grounds alone. It is also a legal matter, at least potentially.
From the theoretical viewpoint we must, again use the distinction between owners and businesses themselves. The ultimate sources of authority to engage in BSR pursuits are the owners and businesses.
Each individual owner, e.g. a shareholder, has the authority to spend his business income as he sees fit, and this includes spending it on socially responsible causes. Furthermore he has the authority to spend his income on one cause and to withhold it from another, without let or hindrance. Both statements apply to groups of individual’s owners as well.
However when ownership is separated from control the matter of authority ceases to be that simple. The executives of a business firm have no authority in the absence of a mandate from the owners – to spend business funds on socially responsible projects. One outspoken shareholder (owner of business) has been reported to advise the great Atlantic and pacific Tea company to “Give us higher cash dividends so that we can make more contributions to whoever we want”.
The firm, unless its executives happen to be the same as its owners, has no authority to spend corporate monies in ways that do not overtly advance the maximization of the wealth of its owners. It is economic irresponsibility for the firm to arrogate this authority to itself.
From the legal angle the key question is: How are owners to be protected from socially responsible, but economically irresponsible, executives?
This is not a novel issue. As far back s 1883 Lord Justice Bowen opined, in a legal decision that “charity has no business to sit at the board of directors qua charity. “Charity qua charity” refers to that socially responsible spending which yields no” direct benefits” to the firm in terms of profitability. IS IT IN THE INTEREST OF BUSINESS TO PRACTICE THE BSR PHILOSOPHY? Adam Smith, in his brilliant exposition of the working of free – market economics, observed long ago that “it is not from he benevolence of the butcher, the brewer, or the banker, that we expect our dinner, but from their regard for their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages”.
The price mechanism is the “invisible hand” which coordinates the activities of a multiplicity of self- seeking atomistic agents towards a more or less harmonious operation of the economy. The primary responsibility of each economic agent is to itself. Each unit acts in such a way as to maximize whatever its goals is in the case of consumers the goal is utility – for the business firm, the traditional goals is projects. The answer to the question posed as the heading of this section is, therefore, “NO”. First, it is discriminatory to expect or require only business firms to be socially responsible.
The social responsibility required of other self-seeking units is, after all, limited to payment of taxes and observance of the laws of the land. Second, there is an Inherent conflict between the traditional goals of the firm (profit – maximization) and BSR. Orthodox micro – economic theory honestly and unabashedly adopts profit-maximization as a basic assumption. Among contemporarily text- book writers, however, it has become fashionable to seek, even if with equivocation, to accommodate BSR in their discussion of corporate objectives. The danger posed by this trend is that having surreptitiously text –books BSR could one day crystallize into dogma.
Our answer must, however, be qualified to recognize, the dictates of “enlightened self – interest”, a principle respected also by Adam Smith. Each economic agent should pursue its self – interests in a manner that does not jeopardize the interests of others. Even in our own day it has been wittily suggested by a U.S. Supreme Court Justice that “my freedom to move my fist must be limited by the proximity of your chin. This modification of our otherwise flat “no”, however, does no serious injury to our basic stand, for enlightened self-interest can be secured without recourse to BSR. The way to provide for it is to establish generally applicable and enforceable of the game. Burke, R. S.& Brittle, I.R.(1981:541)
CORPORATE SOCIAL RESPONSIBILITY IN NIGERIA It is order from the many years of debate on the issue of corporate social responsibility that the root cause of the controversy was the declining confidence in the social role of business organizations. The doctrine of corporate social responsibility is perhaps management’s most current ideology! Looking back into business history, one is tempted to dismiss it as a mere fad, and most management thinkers would probably prefer to predict that corporate social responsibility will as usual be more preached than practiced. Corporate social responsibility or, to put it in plain language.
The doctrine of the social responsibility of business firms is not the first managerial ideology. Nor it is likely to be the last. Basically, its tents are that the business sector has a duty to the society as a whole, apart from its stockholders who may also belong to the society and that extension of governmental power into the private sector may not be in the best interests of society, and that by the judicious exercise of its responsibility, the business sector can reduce the need for such extensions of governmental power, leaving government free to pursue its functions of regulating, and policing society according to pre-set rules of conduct. With the passage of time, social Darwinism gave way to the scientific management and paternalism of F.
Winslow Taylor, paternalism gave way in part to the Administrative Design School of max Weber and the Human relations movement of Elton Mayo. Today, it is social responsibility. All the earlier managerial ideologist were more preached than practiced, management merely paid lip service to them; and hence the temptation is to predict a similar fate for the doctrine of social responsibility. In Nigeria, and indeed in most under-developed nations, any discussion of the doctrine of corporate social responsibility faces special problems, some which derive from the ownership and the size effects of business firms.
Firstly, most business corporations, in the less – developed nations are foreign owned as in the case of shell company and hence corporate social responsibility touches on questions of national pride and independence. The fear of course is that foreign corporations may wish to modify society in their own interest, (if they can even be convinced that they have any social responsibility the society). If indeed they do have a social responsibility to Nigeria, as they will almost certainly could easily be maintained in our institutions of higher learning for a few Naira. Another, is the factory accidents reported in the press, and the neglect of the staff involved, or their retirement with frugal benefits surely remind us how far we still have to go.
The helplessness of villagers in the reverie areas while they watch the oil companies pollute their waters and depopulate their fisheries is of course another issue. Even in the public sector, corporations like the Power Holding Company of Nigeria get away with frequent power supply interruptions and the concomitant damage caused to consumer electrical appliances, to name a few. Surely no responsible business executive can say that remedies cannot be found to these maladies.
Where such chronic maladies exists, sure evidence of the failure or lack of application of the doctrine of corporate social responsibility and accountability, side by side with the annual declaration of super profits by the companies, then we can conclude that there is a substantial under-estimation of the costs of operations.
Current profits are therefore being enjoyed by the few at the expense of the many. And unless management can introduce remedies to check its own excesses, the consumers will be forced to ask for governmental protection and the out liniment of managerial and corporate independence of action. There are so many things which could been done and which are being done in other places that one is tempted to agree with professor Vernon of Harvard that multinational corporations behave in a way which suggests that they have no responsibility to anyone, and are not accountable to anybody. Effiong, J. E. (1987:45).
The same cannot, however, be said of indigenous business firms, and those corporations which do want to live in state of constant confrontation with the government and their market. We may therefore conclude that business in Nigeria does indeed have a social responsibility. In spite of the fact that corporate power may often prove a sad reminder of the colonial past, and may involve fears of intervention in local politics, there is room for the constructive use of corporate power in the social area.
The use of indigenous personnel, both as managers and as co-owners not only reduces fears, but also increases public confidence in the ability of the corporations to provide for them and for posterity, a better tomorrow, as a free people, and as a proud people. However, in recent times, and in particular with the indigenization decree, Nigeria businessmen are beginning to come into their own.
It will be a tragedy if exploitation increases under our indigenous entrepreneurs. Social responsibility achieves greater meaning where corporate leaders have a stake in society and do not wait for the government to do everything. Without endangering corporate survival, businessmen should realize the advantages of giving grants to universities and to local councils, to name a few. Businessmen should realize that an increase in the entrepreneurial spirit of the populace can only be beneficial to the business sector and that government cannot do this all the way.
The government has played some part in recent times. We can only hope that the business sector will reciprocate – Based, however as it is, on voluntarism, the “social responsibility of business” is likely to satisfy all the needs of society. Gilled from management in Nigeria – October 1976.
ADVANTAGES OF SOCIAL RESPONSIBILITY The new concept of social responsibility no longer asks what the limitations on business are, or what business should be doing for those under its immediate authority. It demands that business take responsibility for social problems, social issues, social and political goals and that it becomes the keeper of society’s conscience and the solver of society’s problems. The following are the advantages of corporate social responsibility.
BALANCE POWER WITH RESPONSIBILITY
Most multinational companies (SHELL COMPANY – PORT- HARCOURT) possess much power and influence. Most people believe that responsibility accompanies power and whosoever holds it. Which the Iron Law of Responsibility says “That in the Long run, those who do not use power in ways that society considers responsibility will tend to lose it. Grill from lecture note on public relation.
Companies that are callous and cordless in disposing of toxic waste may face angry public that will disrupt their activities and operations – Niger Delta crisis.
DISCOURAGE GOVERNMENT REGULATIONS
Some regulations may reduce freedom for business. These voluntary social acts may lead to reduction in government regulations on companies for public good. People look to business for leadership because of a growing disenchantment with government, and a growing disbelief in government’s ability to solve major social problems.
The people of River State – port – Harcourt Niger Delta’s who now demand social Responsibility from business expected government to be able to take care of every problem of society, if not of every problem of the individual as well. There is still, in all countries/states in Nigeria where shell operates, pressure for more and more government programs- though there is also growing resistance to more expenditures and taxes. But even the most fervent advocate of an activist government no longer truly expects results.
In Nigeria, specific in Port – Harcourt where respect for and belief in government are still high. As a result, the people most concerned with these problems – the Niger Delta who many years ago rallied under the banner of “more government” – now increasingly look to SHELL company– port – Harcourt, to take on the problems that government is not able to solve. IMPROVE A COMPANY’S PUBLIC IMAGE
Social expectations have increased presently like demand for cleaner environment, beautification of environment safety and security among others. Some organization whose leaders grasp these basic social changes and needs will be able to guide their companies more effectively on the direction accepted by the public. Businesses derive their Legitimate from society which authorized their existence.
They must therefore operate in consonance with societal expectations, in order to avoid it’s sanctions. It therefore follows that since society expects then to be socially responsible; they don’t have a choice than to be so. Any attempt to go against societal demands that they be socially responsible, means they are against society and may not survive for too long in a hostile society. CURRECT SOCIAL PROBLEMS
Many people hold that business has a responsibility to social for the harm it has introduced, water, land, air pollution affect everyday health and endangers the environment create inequalities among men and women discrimination against the handicapped persons or older employees. Thus, business has the duty to correct these social problems.
RECOGNISES BUSINESS MORAL OBLIGATIONS Many people hold the assertion that business has a moral obligation to help society. If social justice demands that equal pay be given for equal work performed by both and men and women than a company is morally obligation to have equal pay scale. Also, married women should have equal opportunities with unmarried women. 4. DIFFICULTIES FACE BY MULTINATIONALS IN
CARRYING OUT CORPORATE SOCIAL RESPONSIBILITY Even if, somehow, we circumvent the conceptual difficulties surrounding Business social Responsibility, we still have to grapple with a number of sticky practical problems. There are three major categories of such problems. a) Problems of enforcement
b) Problems of establishing criteria for selecting social Causes. c) Problems of measurement
PROBLEMS OF ENFORCEMENT Suppose Business social Responsibility is deemed acceptable, how do we ensure that the businesses pursue that policy? Generally acceptance of the philosophy is not sufficient to guarantee its implementation.
In addition to the practical political problems connected with the legislative process, we have to settle what form of legislation to adopt. i) Should business firms be required to give specific or determinable portions of their earnings to charity? If the answer is “Yes” This would amount to an additional tax on profit, quite distinct from ordinary company taxation. Such an increase in the effective company tax rate would probably create an incentive for business firms to understate their pre-tax profits, with disastrous consequences in terms of the potentials company tax revenue accruing to governments. ii)
Should firms required to donate these specific or determinable sums directly to social causes of their choice or to ear-marked candidates? No matter what the decision is, argument is bound to arise concerning “discrimination” in the selection of projects. A flexible solution may appear to be to collect all Business social responsibility monies into a common cool to be disbursed by an “impartial” governmental agency.
But is this not infinitely inferior to simple taxing business firms in the normal way and adding the tax proceeds to the general pool of government revenues, which the state may spend on socially responsible causes, among other things? Is public do-goodism, after all, not the legitimate domain and the raison d’ etre of government? Without question, government has more competence is this fields than self-seeking economic agents. The usual economic arguments in favor of specialization apply here.
The enforcement problem is less difficult with regard to the remaining two facets of Business Social Responsibility. The elimination or reduction, by offending firms, of the social costs or external diseconomies arising from their normal business operations (e.g.) Environmental pollution – can be best ensured through punitive measures such as special taxes which make it more expensive to special than to avoid pollution.
The adoption and observance o9f ethnical codes aimed at extirpating business malpractices can be secured through legal sanctions – e.g. product liability laws. Clearly both situations come under enlightened that the way to provide for enlightened self-interest is for government to laid down and enforce rules of the game. CHOICE OF SOCIAL CAUSES
This we have already noted presents no problems for individuals in their private capacities or as owners of businesses. As such they are entirely free to spend their incomes on whatever causes they choose. Their responsibility is to themselves. But suppose, for the sake of discussion those controllers of business are authorized by the owners to disburse Business social responsibility funds, practical problems immediately sprout. How can owners ensure that controllers spend the money in keeping with the preferences of the former? Again, how do you secure unanimity in preferences among a multiplicity of owners?
A way around the problem may appear to be for owners to subordinate their personal preferences to those of the controllers among whom unanimity can, presumably, be reached more easily. But this would be begging the question. Controllers would still have to agree on considerations or criteria for allocating Business social responsibility funds. Should it be equity considerations equal sums for all causes?
But, surely, some causes are “more equal” than others. Should funds be assigned to causes with a potential for promoting particular objectives (e.g. public relations) of the firm? But this would turn the Business social Responsibility philosophy into sheer hypocrisy. Should disbursements be made with an eye on tax shelters? But this would quickly transform Business social responsibility into a tax haven. (Even if there are no specific tax relieves Business Responsibility expenditure would tend to depress earnings thus reducing the potentials tax yield available to the tax collector). From a lecture note of Onyema,o.(1984)
MEASUREMENT PROBLEMS As a pragmatic matter the measurement problems of Business Social Responsibility pose most perplexing questions and constitute the core of the practical difficulties. The question applies to three main groups- business firms, monitoring/enforcing agencies, investors (i.e. business owners and creditors of businesses). a) MEASUREMENT PROBLEMS AS THEY RELATE TO
BUSINESS FIRMS AND MONITORING/ENFORCING AGENCIES. For purpose of measurement the three elements of Business Social Responsibility identified at the beginning of this project have to be reduced to social costs and social benefits.
Each business action or non- action and the consequences there of must be examined in terms of the cost imposed or benefit bestowed, upon society as a whole. Positive actions/non-actions would be designated benefits, while negative ones would be represented as costs. So far so good. But beyond this point, practical measurement issues multiply. b) How do you isolate the costs and benefits emanating from one firm in order to distinguish from those generated by the operations of another firm in the same or another industry?
Similar costs and benefits tend to agglomerate. Furthermore costs, on the one land, and benefits, on the other, tend to compound each other. However, within the mixed basket of aggregated costs and aggregated benefits, irrespective of source; and vice versa. It is quite conceivable, even if far-fetched, that cost and benefits, in the aggregate, may cancel each other out-in which case all talk about Business Social Responsibility should fizzle out. Such considerations make it practically impossible to isolate precisely any particular cost or benefit and attribute it to a specific business firm.
The same reasoning applies to the monitoring functions which is further complicated by the possibility that costs and benefits may operate with time – lags and exponentially over time, with or without decay. How do you under such circumstances, confine specific costs and benefits to specific periods of, or points in, time?
In the light of these difficulties such measurement – related concepts as “arithmetic of quality”, “social budget”, and “Social audit”, which have been canvassed in connection with Business social Responsibility remained, and are likely to remain, a mirage. iii) Assuming some isolate technique is available, how do you assign numerical values to these cost and benefits so that the figures carry any real significance? Since the perceptions of the three groups identified are not uniform, widely divergent estimates are possible and likely. Even if some unanimity is obtained, how can the figures be reflected within the framework of the usual business balance – sheets and profit – and – loss statement? Will the accounting professions have an easy time redesigning the formats? (b)MEASUREMENT PROBLEMS AS THEY AFFECTS BUSINESS FIRM INVESTOR RELATIONS AND INVESTORS PERSE
“By ‘Investors per se’ we mean owners of business sole proprietors, partners, shareholders and external creditors. We have already noted the possible influence of variations in perception on numerical estimates of social costs and benefits investors are not bound to view matters the way business firms and monitoring/enforcing agencies do. In all likelihood they will tend to differ significantly, unless social values in economic behavior shift away from self interest towards social responsibility.
There is indeed a possibility, even if a remote one, that the shift may one day occur. According to professor Philip Bloomberg there are indications in the America society that a “socially oriented stockholder power base” may emerged, what with the “tremendous accumulation of stock ownership by non-profit. Institutions – churches, foundations, and universities – which by their nature are particularly sensitive to social issues and non – economic values”. In the interim, however, we may continue to assume self-interest as the dominant motive in economic behavior.
The practical question, then, is: How do you reflect business good deeds and bad deeds in balance sheets and profit – and –loss statements, so that a downward – bias in investor evaluation of business performance is not inextricably built into the financial statements?
Ordinarily (i) a social good done by a firm necessarily depresses profit and assets, as traditionally defined; a social misdeed – e.g. Not spending money on anti-pollution devices – normally shows up as a favorable impact on profit and assets, again, in the usual sense of these terms. Unless profit, losses, assets and liabilities and jointly re-defined by investors and business firms to accommodate the requirements of Business social Responsibility, Investor- company relations are bound to sour. 5. MEANING OF MULTI-NATIONAL COMPANIES
Multinational corporations are scores of small medium and large sized firms operating in different countries. Many may not have production facilities abroad but engage primarily in exporting goods and services. Eze,(1998:13) citing speroclann defined a multinational corporation as a firm with foreign subsidiaries, which extend the production and marketing of the firm beyond the boundaries of any one country.
The multinational corporations are therefore, a group of international business, which come together as corporations. They are non- state actors but many of them are richer than much state in third world in which they operate. Multinational Corporation has their headquarters in one country, but their operations are in many different countries. In its early stages, international business was conducted with an ethnocentric outlook; that is, the orientation and type of operation was based on that of the parent company. In contrast, the modern multinational corporation has a geocentric orientation.
This means that the total organization is viewed as an interdependent system operating in many countries. The relationships between headquarters and subsidiaries are collaborative, with communication flowing in both directions. Managers of different nationalities fill key positions. The multinational corporation includes big companies which extract raw materials such as the oil and other minerals. They also include such companies as SHELL- B.P and Coca Cola Company and similar others which produce consumer good, while there are some other engaged in the manufacturing of products.
There are different categories of multinational do to their parent countries, and then do they not bear double costs of operation. The example of I.T.T. is said to be an exception, and whether this is true or not, only the governments of the less – developed nations can tell. As in the case of shell Nigeria port Harcourt. In Nigeria, foreign firms by comparison, are rivals only to the government. Both the people and their government are bound to be jealous of these large foreign corporations, as centers of wealth, power and influence. Indigenization however is a half way house, a “Lapis Lazuli” on the way to economic independence and for this reason, it may not solve all problems, nor will it end exploitation or dishonest practices.
The analysis so far gives the impression that businesses in Nigeria have no social responsibility. This is certainly most incorrect. What has been shown so far is that social responsibility is sensitive area in less developed Nations. But there is reason to believe that, properly practiced, the doctrine of social responsibility could increase the scope of democracy and economic independence in the less- developed nation like Nigeria.
The Nigerian Enterprises Promotion Decree of 1972 and 1977 was promulgated because of certain perceived deficiencies in the development of the business sector, especially in the paucity of indigenous participation, and the paucity of indigenous managers. Both these problems, could very easily have been resolved, or minimized by a proper application of the doctrine of social responsibility in Nigeria. Not only is it sound economics to have indigenous managers, it is also sound business to have Local partners, who can give a hand in the Lobbying process.
If the oil companies in Nigeria are not so popular today, it is not because they did nothing. As a matter of fact, they have done a great deal. One what is significant, is that they have so much and they have given so little. Their steadfast unwillingness to allow Nigerians into their inner management circle, achieved through glaringly uneconomic deployment of trained Nigerian manpower is a case in point. They may have though that by it, they could slow down the growth of a national oil corporation. Maybe they were right, but you cannot fool all the people all the time.
The sooner they get off the trigger and develop pa sound local management team, the better. One of the prime tasks of the chief executives of every corporation is the development of future leaders. The famous by that Nigeria Lacked managerial manpower is a farce. How can you have managerial manpower when you have trained none? To say the least, it also smirks of racism, in suggesting that people who could be trained into excellent technicians could not be trained into managers. The whole argument has now fallen, like a deck of cards.
Another issues closely tied to the issue of management development, is the educational system and the question of innovation. Innovation is related specific markets, and the use of indigenous researchers could provide new insight into the marketing job, rather them the present practice of doing most research aboard. Research and Development is not always indivisible, and research positions Corporations. The different are in the areas they perform their business activities.
The organizations and structures and the markets to which they take products are also different. But there is something which is common to all multinational corporations: they are companies or businesses which take their capital along with their technology abroad in order to get sources of cheap labor markets for the ready consumption of their manufactured goods. The growth in the economies of various nations have also led to the involvement of the multinationals have also been involved in getting sources of raw materials and semi-manufacture of goods for the industries of their countries.
For example, the American Multinational Corporations go out to Asia, Latin America and Africa to get petroleum, bauxite and other minerals as well as wood-pulp and news-print, primary models and other industrial commodities which could be get mostly in the third world. The multinational corporations account for the majority of the inflow of the foreign investment in the countries of the third word. They are also responsible, to a large extent, for certain events, which take place within these countries. Multinationals can move personnel and skilled labour from one country to another and this could result in disrupting the labour situation within a particular host country. ADVANTAGES OF MULTINATIONAL
Multinational corporations have several advantages over films that have a domestic orientation. Obviously, the multinational companies shell Port-Harcourt can take advantage of business opportunities in many different countries. They also can utilize capital market throughout the word.
The large multinational companies also can result management and other personnel from a worldwide labour pool. Moreover, multinational firms benefits by being able to establish production facilities in countries where the products can be produced most effectively and efficiently. Finally, companies with worldwide operations sometimes have better access to natural resources and materials that may not be available to domestic firms. DISADVANTAGE OF MULTINATIONAL
Multinational corporations have been criticized. Some of the criticisms include the chains that because of multinationals are international Oligopolies, they tend to reduce efficiency and, they do not encourage growth but stipple real growth. The nature of multinational corporations is alloyed to be such that also makes it impossible for competition to arise and, because of the absence of competition the multinational corporation usually limit. Production in order to create artificial scarcity and raise the prices of their products. Moreover, they are considered to be monopolizing rents and lowering efficiency.
They tend also to absorb local capital and sometimes refuse to provide new capital and obstructing national growths. Politically, the multinationals are accused of interfering in the political set-up in their host state, particularly in ensuring that a capitalist regime compatible with the set-up in their host state, particularly in ensuring that capitalist regime compatible with the set-up in the western world is maintained. In many cases, multinational corporations are accused of exporting or applying inappropriate technology and by the way they go about their recruitment policies, they are said to be end up employing expatriates and not the indigenous people to handle their key management positions.
When it happens that the multinational corporations encourage and achieve efficiency at the international level. This may necessarily lead to efficiency in the economy of the particular host countries concerned. The other criticism usually made is that the multinationals, once they go abroad use many external connections to event taxes and other responsibilities. CHALLENGES FOR THE MULTI-NATIONALS.
The advantages of multinational corporations must be weighed against the challenges and risks, associated with operating in foreign environment.
One problem is the increasing national in many countries. Years ago, developing countries managerial, marketing and technical skills. Consequently, they involved the multinationals. But the situation is changing, with people in developing countries not only become aware for the value of their natural resources, but they also become more skilled in international negotiations. Finally multinational must maintain good relations with the host country, which may prove difficult because governments frequently change and corporations must deal with and adapt to these changes .Koontz et al, (1980:138-139)
Shell company,(2004).Annual report. Brittle,I.R.&Burke,R.S.(1981).Introduction to Management Practice: New York, McGraw Hill Book Company.
Drucker,P.(2005).An Introduction To Management: London, Heinemann publishers.
Effiong,J.E.(1987).Foundation of Modern Business management: Calabar, University of Calabar press. Shell company,(2004).Annual report.
CHAPTER THREE RESEARCH DESIGN AND METHODOLOGY. 1. RESEARCH DESIGN Research design is the plan structure and strategy of investigation developed so as to obtain answer to research questions and control variance (Kerlinger, 1973:45). 3.2SOURCES OF DATA The researcher used both primary and secondary methods of data collection. 1. Primary Data: This is data that is obtained first hand from the respondents. Primary data method is obtained through the administration of questionnaires and personal interviews. 2. Secondary Data: secondary source of data are opinions of exports in the experts views and are obtained from related literature from private, professional ad academic libraries.
2. THE POPULATION STUDY The study of population would cover all the straits of staff of SHELL BP in Port Harcourt and the host communities. The population of the study was 552 people. 3.4 SAMPLE DESIGN AND DETERMINATION OF SAMPLE SIZE
The researcher used Yaro Yammane’s formular to determine the sample size from the population. Yaro Yamane’s formula is given Asn = N 1+N (e)2
Where N = population of study n = sample size e = level of significance at 5% 1 = constant
Thus substituting for the formula
n = 552 1 + 552 (5%)
= 552 1 + 552 (0.0025)
= 552 = 552 1 +1.38 2.38
= 552=231.9 2.38 = OR =232 The sample size of the study is 232 respondents. 3.5 METHOD OF DATA COLLECTION The research instrument used by the researcher in collecting useful data is questionnaires and interview. The questions were both close and open ended with multiple answers. These formulated questions were submitted to the supervisor necessary corrections were made. This was necessary because the instrument has to agree with the subject under discussion. 3.5.1 QUESTIONNAIRE DESIGN, DISTRIBUTION AND COLLECTION OF RESPONSES The questionnaires were carefully designed to accommodate two sections. The first section is the demographic characteristics of the respondents such as sex, age, educational level which the second section deals on relevant aspect of the topic under study.
3.5.2 SECONDARY METHOD OF DATA COLLECTION. The researcher used the following sources for the collection of secondary data the used if libraries, textbooks, journals, newspaper conference and seminar papers and the review of other related literature. 3.6 METHOD OF PRESENTION AND ANALYSIS
Data collected subjected to statistical analysis with the use of chi square test of independence. Chi square is given as
X2 = ∑ (o-e) 2 e Where x2 = chi square o = observed frequency e = expected frequency Level of confidence / degree of freedom When employing the chi – square test, a certain level of confidence or margin of error has to be assumed. More also, the degree of freedom in the table has to be determined in simple variable, row and column distribution, degree of freedom is: df = (r-1) (c-1) Where; df = degree of freedom
r = number of row c = number of columns. In determining the critical chi _ square value, the value of confidence is assumed to be at 95% or 0.95. a margin of 5% or 0.05 is allowed for judgment error. DECISION FOR VALIDATION OF HYPOTHESIS
The rule in deciding or whether to accept or reject the null hypothesis is that were the computed chi – square (X2) value is greater than the critical chi – square (X2) values reject the null hypothesis and accept the alternative hypothesis. However, were the critical value (table value) of the chi – square is greater than that of the computed value, accept the null hypothesis and reject the alternative hypothesis. Thus;
Accept HO if X2c < X2t Accept H1 if X2c > X2t Where; Ho; null hypothesis H1; alternative hypothesis
X2c; computed chi – square value X2t; table (critical) chi – square value.
REFERENCE Kerlinger, F.N.(1977:56).Foundation of Behavioral Research.San Francisca Holt: Rinehart and Winto inc.
CHAPTER FOUR 4.1 DATA PRESENTATION AND ANALYSIS
The objective of this chapter is to present analysis and to interpret primary data, which were obtained through questionnaire administration. The data so collected is used to test the hypothesis formulated in chapter one, using the chi – square test. For clarity and simplicity.
The chapter is divided into two (2) sections. In the first section, relevant data collected are presented, analyzed and interpreted in a tabular form with the help of simple percentage method. In the second section, the hypothesis formulated in chapter one are tested through the use of chi – square statistical tool. This section of the study deals with the presentation and analysis of data obtained from the questionnaires. The method of analysis involved the use