CORPORATE SOCIAL RESPONSIBILITY AND HOST COMMUNITY RELATIONS (A STUDY OF SHELL NIGERIA PLC PORT HARCOURT)

CHAPTER 1

INTRODUCTION

1.1 Background of the Study

Effective host community relations can only be achieved when an organization recognizes its interdependence with other institutions. When the management recognizes the many ways its organization can impact on the local community and the extent of reciprocal dependence, it will help to establish social balance. The practice of good community relations assists the organization in securing its needs from the community while it also provides what the community expects. Also, it helps to secure the company’s investments, increase sales of products, the value of stocks, and improve the general operating climate of business.

Community relations are not about window dressing; rather, it is about protecting the host community. As Baskinm (1997) point out, even the staff of the organization would be productive when proper community relations is carried out. Considering the fact that most of the staff of any organization live in that community, any improper or inconsiderate attitude displayed by the management can endanger their lives, as can be seen in the kidnap cases in the Niger Delta. One of the ways an organization can have good relationship with host communities is by practicing corporate social responsibility. Corporate social responsibility is a nebulous concept that has been described in a number of ways; it is widely used in literature of sociology, anthropology, economics, politics and business administration. Most writers on corporate social responsibility see the concept as the disposition of an organization to exhibit ‘missionary’’ rather than “mercenary’’ attitudes toward the society. Corporate social responsibility in relation to business is the obligation of a business organization to pursue those lines of action, which are desirable in terms of objectives, and values of society. (Lawal & Sulaimon, 2007) defined it as ‘’ intelligent and objective concern, which restrains individual or corporate behaviour from ultimately destructive activities, no matter how immediately  profitable,  and  leads  to  the  direction  of  the  positive  contribution  to  human  betterment. Presumably, corporate executives as agents of the owners are to be responsible for conducting the business in accordance with the desire of the owner while conforming to the basic rules of the society. The responsibility has three broad facets (Ikpeze, 2001).First, contribution to charity. Second, elimination of social costs. The third facet  of social  responsibility is the adoption  and observance  of ethical  codes aimed  at reducing  business malpractices.

Oil exploratory firms in Nigeria and other types of business must be seen in many actions domains can pursue social responsibility in areas such as: concern for ecology and environment, commitment to quality, truth in advertisement, customer satisfaction and education. Other concern include service to community needs, fair employment practices, progressive  labour relations, employment assistance and corporate philanthropy.(Ogbeuchi, 2008). This study proxies corporate social responsibility with economic, legal, ethical and discretionary responsibility while host community relation was proxies with three non-financial outcomes associated with Shell Nigeria PLC namely; Adaptability, community involvement and community opinion.

1.2 Statement of the Problem

The purpose of this study is to investigate corporate social responsibility and host community relations. It attempts to determine how an organization carries out its obligation to the stakeholders which serves as a strategy for carrying out business activities peacefully. Most times claims made by various stakeholders are too much on the organization, yet they are expected to get actively involved in getting them solved. In trying to meet up these expectations, most organizations indulge in some unethical acts which most times return on them.

This study attempt to understand which CSR elements have the ability to influence the corporate reputation. The study also attempt employees’ perception on their organization’s corporate image affects their behavior as well as how they promote their organization to the other stakeholders.

Previous researchers indicated certain elements of CSR (such as organizational ethics) as having impact on employees’ perceived corporate image that can affect their commitment to their organizations well as host community relations (Ikpeze, 2001). From the foregoing, therefore this study seeks to examine the relationship between corporate social responsibility and host community relations in Shell Nigeria PLC Port Harcourt, Rivers State.

1.3 Objectives of the Study

The main objective of the study is to examine the relationship between corporate social responsibility and host community relations in Shell Nigeria PLC Port Harcourt. The following objectives are to be achieved:

i.        To examine the relationship between economic responsibility and host community relations in Shell Nigeria PLC Port Harcourt.

ii.       To examine the relationship between legal responsibility and host community relations in Shell Nigeria PLC Port Harcourt.

iii.      To examine the relationship between ethical responsibility and host community relations in Shell Nigeria PLC Port Harcourt.

iv.      To examine the relationship between discretionary responsibility and host community relations in Shell Nigeria PLC Port Harcourt.

1.4 Research Question  

The following research questions are posed to guide the study:

i.        To what extent is economic responsibility associate with host community relations in Shell Nigeria PLC Port Harcourt?

ii.       To what extent does legal responsibility associate with host community relations in Shell Nigeria PLC Port Harcourt?

iii.      To what extent is ethical responsibility associate with host community relations in Shell Nigeria PLC Port Harcourt?

iv.      To what extent is discretionary responsibility associate with host community relations in Shell Nigeria PLC Port Harcourt?

1.5 Significance of the Study

One of the main reasons this study is being conducted is because society’s expectation on organizational CSR effort is gaining momentum and fast becoming a standard business practice. Many organizations have started implementing CSR as part of their organization practices as well as to fulfill their legal obligation. However, in order for CSR to be effective and bring to bring value to the organization (such as improving the corporate image and employees commitment), organization and employees’ need to have a deeper insight to the benefit of investing in CSR prior to embarking on this time consuming, resources demanding and costly project.

This study is also significant because it has been able to unveil the roles of corporate social responsibility and host community relations in Shell Nigeria PLC Port Harcourt.

1.6 Research Hypothesis

The following research hypothesis are postulated to guide the study:

HO1: There is no significant relationship between economic responsibility and host community relations in Shell Nigeria PLC Port Harcourt.

 HO2: There is no significant relationship between legal responsibility and host community relations in Shell Nigeria PLC Port Harcourt.

HO3: There is no significant relationship between ethical responsibility and host community relations in Shell Nigeria PLC Port Harcourt.

HO4: There is no significant relationship between discretionary responsibility and host community relations in Shell Nigeria PLC Port Harcourt.

1.7 Scope/Limitation of the study

The study is delimited under the following heading: content scope, geographical scope and unit of analysis.

Content Scope: The content scope of this study involves an investigation to ascertain the relationship between corporate social responsibility and organizational effectiveness. The independent variable is corporate social responsibility measured by Economic responsibility, Legal responsibility, ethical responsibility and discretionary responsibility. While dependent variable is host community relations, measured by community relation, Adaptability, Community Opinion and Community Involvement.

Geographical Scope: This study is delimited in Port Harcourt Metropolis with special reference to Shell Petroleum Development Limited in Port Harcourt, Rivers State.

Unit of Analysis: The unit of analysis in this research involves the individuals at the time of carrying out the study.

In carrying out an investigation of this nature the researcher must of necessity be faced with the following constraint; Time, poor response from respondents and finance.

          This study involves an investigation of corporate social responsibility in relation to organizational effectiveness. Hence it is a micro level study.

1.8 Definition of Terms

The following terms are operationally defined below:

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social responsibility is firm’s obligation to constituent groups in society other than shareholders and beyond that prescribe by law or union contract.

ECONOMIC RESPONSIBILITY

This is base level of the itinerary; it involves returns to owners and shareholders, creations of job, fair play for workers, innovation, efficient utilization of resumes etc.

LEGAL  RESPONSIBILITY

This relates  to  complying  with  legal  legislations  imposed  by  the  government  and regulatory agencies. It means that corporations that want to be ethical must be the economically, and legally responsible.

ETHICAL RESPONSIBILITY

Those activities expected of corporations as members of the society, which are not defined by laws. This shows corporation as being moral, doing things, just and fair.

DISCRETIONARY RESPONSIBILITY

This concerns group activities and actions that are the result of organizations discretions rather than legal demands or ethical norms. Examples are philanthropic contributions, sponsorship, and educational development.

ADAPTABILITY

It is a change by an organization in response to external changes. Successful organizational adaptation may result in a more effective organizational structure and process, replacement of outmoded and a better fit with emerging environmental conditions.

COMMUNITY OPINION

It is a judgment, viewpoint or statement that is not conclusive. It may deal with subjective matters in which there is no conclusive findings, or may deals with facts which are sought to be disputed by the logical fallacy that one is entitled to their opinion.

COMMUNITY INVOLVEMENT

          This is where the community is allowed to involve in the decision making process.