AcknowledgementThe 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.
INTRODUCTION1. BACKGROUND OF STUDYProfit 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 TWOREVIEW OF RELATED LITERATURE1. LITERATURE REVIEWThis 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 RESPONSIBILITYGriffin (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 greatsocial 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 thedevelopment 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 RESPONSIBILITYREASON 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 NIGERIAIt 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