Organizational Ethics and Corporate Social Responsibility

Organizational Ethics and Corporate Social Responsibility

Chapter One of Organizational Ethics and Corporate Social Responsibility

INTRODUCTION

Background to the Study

The role of organizational ethics in the performance of corporate social responsibility in our nation can never be under-estimated. This is simply because corporate social responsibilityispracticedbecausecustomersaswell as governmentstodayaredemandingmoreethical behaviorsfrom organizations.However, understanding the landscape of organizational ethics can be sometimes difficult due to the fact that the field is vast and often encompassing such concerns as corporate governance, reputation management, accurate accounting, good labor practices and environmental stewardship to name but a few, Sullivan (2009). In fact, the field addresses the entire scope of responsibilities that an organization has to each of its stakeholders: those who have a vestedinterestin the decisions and actions of an organization; like customers, clients, employees, shareholders, suppliers and the host communities.

According to Kashyapetal., (2006) organizationsare volunteeringthemselvesto incorporate corporate social responsibility as part oftheir businessstrategies andmissionstatement,whiletakingcareofthecontradictoryinterestofvariousstakeholders.Anotherjustificationinfavorof organizations that perform corporate social responsibilityactions todayistogaincompetitive advantage which may not be enjoyed by the peer  corporations.  Corporate social responsibilityactions in this respect alsohelp organizationstoattractandretainnotonlycustomersbutalsomotivateemployees,whichinturnensure long-term survivaloftheorganization.Drumwright(1996) opined that organizationswithsoundCSRactions developpositivesocialidentityandenjoyincreasedloyaltyfrom theircustomers, employees and host communities.

Corporate social responsibility actionsarealsooftenassociatedwithbetterfinancial performanceoftheorganizations.Howeverthisrequired long-term perspective butasinshort-run,CSRactionsmaybeviewedasexpense butinthe long-run it is viewed asinvestment which willyield additionalcashflowsforthe organizations. Similarly,Margoliset al.(2001) averred that there is a positive relationshipbetweenCSRandcorporatefinancialperformance. Corporate social responsibility actions havepotentialtocreateadditional valuefororganizations. Corporate social responsibility combines both thesocial andenvironmentalaspectsin doing business.Itis an approach wherebyan organization considers the interests ofallstakeholdersbothwithintheorganizationandin society andappliesthose interestswhile developingitsstrategy andduring execution.Nolan, Norton&Co. (2009) posited that organizations with efficient and effective management of corporate social responsibility would create value for both themselves and the society.

Apparently, an organizationthatisconcernedaboutsocietyaswellasearningprofitsislikelyto investvoluntarilyinsociallyresponsibleactivities thus ensuring its economic survival and that of the society. Organization ethicscontribute towardthetotalwell-beingofthesociety withinwhichthey operate.They supportlocalinitiativesinanattempttodeepentheirstakeholders’roleand toalsoshowappreciationforthesupportsthey havebeenenjoyinginthe host communities. For instance, it is believed that organizations such as banks should not only make profit but they should also consider the social implications of their activities to their stakeholders. This is because their unethical way of making profit can invariably affect the discharge of its corporate social responsibility. Therefore, based on this background, this study was designed to investigate the effect of organizational ethics on the performance of corporate social responsibility.

STATEMENT OF THE PROBLEM

Organizations in Nigeria are facing a myriad of challenges in fulfilling their corporate social responsibilities to their communities and other stakeholders. These challenges range from lack of accurate accounting practices, good labor practices, environmental stewardship, corporate governance and reputation management, to mention but a few. However, corporate social responsibilitydemands acarefulexaminationofcostsandbenefits.Some organizations, for instance, banks might havefailedtorecognizemostof the stakeholders’groupsintheir performance of corporate socialresponsibilities due to poor ethical values.

These poor ethical approaches may affect the way and manner banking organizations go about their corporate social responsibilities. This however, may impact negatively on the achievement of their objectives since the achievement of their objectives depends on the perception and patronage of their customers toward their services.  Panic andconsequentialfinancialandeconomicwoescouldemanatefrom situationwherethereislossofconfidenceinthefinancial institutions by the stakeholders.Suchlackorlossofconfidencecouldbeattributedto unethicalmanagementpractices of banks in carrying out their activities.Apparently, ethicalissues inorganizationshavebecomemorecomplicatedandcomplex because of thecomplexity of economic,social andenvironmentalissues.

Moreover, in spiteof theacclaimedsoundcorporategovernance in many organizations which oughtto promotegoodethicalpractices towards their stakeholders, some organizations for instance,banks are still lagging behind in providing satisfactory services to their stakeholders.On the basis of the aforementioned, this study seeks to investigate if organizational ethics could enhance performance of corporate social responsibility in United Bank for Africa Plc. Uyo, Akwa-Ibom State.

Objectives of the Study

The main objective of this study is to investigate the relationship between organizational ethics and corporate social responsibility in in United Bank for Africa Plc. Uyo, AkwaIbom State. Specific objectives include to:

i.        Determine the relationship between bank accurate accounting practices and performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State.

ii.       Examine the relationship between good labor practices and performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State.

iii.     Examine the relationship between bank environmental stewardship and the performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State.

Research Questions

iWhat is the relationship between bank accurate accounting practices and performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State?

ii   What is the relationship between good labor practices and the performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State?

iii What is the relationship between bank environmental stewardship and the performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State?

Research Hypotheses

From the objectives of the study, the following hypotheses were formulated for this study:

i There is no significant relationship between bank accurate accounting practices and performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State.

ii There is no significant relationship between good labor practices and the performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State.

iii There is no significant relationship between bank environmental stewardship and the performance of corporate social responsibility in United Bank for Africa Plc. Uyo, AkwaIbom State.

Significance of the Study

This study is significant in several ways since it highlights on those benefits and challenges faced by Banking Industry as regards organizational ethics. Thus, it would serve as a source of instrument to Banking Industry particularly, United Bank for Africa Plc. Uyo, AkwaIbom State. The study would be of immense benefit as the findings and recommendations of the study would serve as a guide for policy makers in the financial institutions when formulating policies on organizational ethics.

The study will also assist Banking Industry to identify the various factors militating against organizational ethics and highlight the gap and lapse that exists between organizational ethics and the performance of corporate social responsibility in the banking industry. Finally, the information which this study provides would serve as reference materials for the public and researchers, particularly students of high institutions for further research in related areas.