EFFECT OF LEGAL ENFORCEMENT ON CORPORATE SOCIAL RESPONSIBILITY IN NIGERIA

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Corporate Social Responsibility, the set of standards to which a company subscribes in order to make its impact on society, has the potential to make positive contributions to the development of society and businesses. More and more organisations are beginning to see the benefits from setting up strategic corporate social responsibility agendas. The corporate social responsibility movement is spreading over the world and in recent years a large number of methods and frameworks have been developed, the majority being developed in the West. This thesis, though, will take its focus on Africa in general, and on Nigeria specifically.

There are many perspectives one can adopt in reflecting upon the enforcement of corporate social responsibility and its corresponding effects in Nigerian business environment. Thus, self-regulation in the field of corporate social responsibility and its effect has been looked at extensively from the sociological, psychological, ethical, economic  and business  perspectives, as well as from a plethora of different legal perspectives ranging from, inter alia, international and criminal law to environmental and private law. This focus on different perspectives in understanding corporate social responsibility is in many ways unique for an academic subject: although countless topics in present-day academia lend themselves to be looked at from different perspectives, only few are actually discussed in that way. At the same time, whether caused by paying particular attention to the non-legal aspects or not, one striking aspect of many corporate social responsibility literature is that it is often more focused on the desirability of legal enforcement rather than on its viability. In other words, many arguments from a social, political or ethical standpoint can be put forward in favor of enforcing corporate social responsibility in business organisations, but these arguments are only relevant for the law if they are accepted as legal arguments. In this respect, corporate social responsibility can suffer from the same drawback as much academic work on the subject of human rights and privileges, namely to be carried away by what is desired rather than discussing what is legally possible. This study aims to show that the question to what extent legal enforcement of corporate social responsibility and its resulting effects is possible is best answered by reference to the applicable doctrinal legal system in Nigeria. The focus of this article is on the effect of enforcing corporate social responsibility Codes in Nigerian business environment in relationships among private actors, either companies or individuals.

STATEMENT OF THE PROBLEM

One approach to evaluating company’s corporate social responsibility behavior is to examine if they engage in social responsibility disclosure. It is believed that when a company engages in corporate social reporting it presents a balanced reporting of its activities and impacts and provides a basis for stakeholders to evaluate its performance.

The reporting entity can also be held accountable for its impact since it is disclosed. However, environmental reporting has developed rather voluntarily and this implies that companies can choose what to disclose and may even decide not to. Research attention (Sharfman & Fernandoi, 2008; Schneider, 2010; Roberts 2001) in this regard has been focused largely on why and what factors could influence a company to engage in social responsibility disclosures voluntarily. Studies (Hackston & Mime, 1996; Adams & Hart, 1998) highlighted the importance of the company size. Connors and Gao (2009), Sharfman and Fernandoi (2008) and Schneider (2010) examined the role of leverage. Dye and Sridha (2007) and Hackston and Mime (1996) have considered the role of industry type. Roberts (2001) examined the role of profitability. However, the research evidence in this regards has been inconclusive and the role of the firm specific factors have been vacillating indicating that the issues are still quite unresolved in the literature and this defines the contribution and relevance of the study.

In addition, the empirical evidence in this area from developing economies is still largely inadequate and a number of reasons may account for this and of paramount amongst them being the voluntary stance on CSR reporting. With the extensive empirical evidence from developed economies, there is a knowledge gap about how corporate characteristics will influence voluntary reporting for developed and developing economies as the magnitude: level of awareness and implications of social cost differs considerably. Consequently, do we expect differences in the influence of corporate factors on social responsibility disclosure for both developing and developed economies? The study findings are an important contribution in this regards.

AIMS AND OBJECTIVES OF THE STUDY

The major aim of the study is to examine the effect of legal enforcement on corporate social responsibility in Nigeria. Other objectives of the study include;

1. To examine the history of corporate social responsibility in Nigeria.
2. To examine the prospects of total compliance to corporate social responsibility in Nigeria.
3. To examine the effect of legal enforcement on corporate social responsibility code in Nigeria.
4. To highlight the relationship between effective legal enforcement of corporate social responsibility and compliance to corporate social responsibility.
5. To highlight the major factors affecting legal enforcement on corporate social responsibility in Nigeria.
6. To recommend ways of improving the compliance to corporate social responsibility codes through appropriate laws in Nigeria.

1. RESEARCH QUESTIONS

1. What is the history corporate social responsibility in Nigeria?
2. What are the prospects of total compliance to corporate social responsibility in Nigeria?
3. What is the effect of legal enforcement on corporate social responsibility code in Nigeria?
4. What is the relationship between effective legal enforcement of corporate social responsibility and compliance to corporate social responsibility?
5. What are the major factors affecting legal enforcement on corporate social responsibility in Nigeria?
6. What are the ways of improving the compliance to corporate social responsibility codes through appropriate laws in Nigeria?

RESEARCH HYPOTHESES

H0: There is no significant effect of legal enforcement on corporate social responsibility in Nigeria

H1: There is a significant effect of legal enforcement on corporate social responsibility in Nigeria

H0: There is no significant relationship between legal enforcement on corporate social responsibility compliance in Nigeria

H1: There is a significant relationship between legal enforcement on corporate social responsibility compliance in Nigeria

SIGNIFICANCE OF TH STUDY

The study would be of immense importance to government at all levels and related stakeholders as it is geared towards the total compliance of corporate social responsibility codes in Nigeria as it would highlight ways of improving compliance through the effective application of effective laws to that effect. The study would also benefit students, researchers and scholars who are interested in developing further studies o the subject matter by being a relevant source of literature.

SCOPE AND LIMITATION OF THE STUDY

This study is restricted to the effect of legal enforcement on corporate social responsibility in Nigeria using selected companies as a case study.

LIMITATION OF THE STUDY

This research work was constrained in the following ways;

Time factor: this research work is being carried out as at the time the researcher was a full-fledged worker in an organization thereby reducing the time devoted to this research work.

Secrecy: some needful information was concealed by the organization(s) involved with the claim that their activities shouldn’t be made known in that manner to the public.