ABSTRACT
The purpose of this research work is to highlight the effects of corporate social responsibility on the performance of Shell Petroleum Development Company. The study was motivated by none responsiveness of corporate bodies to their social responsibility as requested by their host communities. The objectives of the study include: to examine the effect of social responsibility on the productivity of Shell Petroleum Development Company, to ascertain the effect of social responsibility on the innovation and learning of Shell Petroleum Development Company, to examine the effect of social responsibility on the efficiency of Shell Petroleum Development Company and to ascertain the effect of social responsibility on the profitability of Shell Petroleum Development Company. This study was carried out in Shell Petroleum Development Company in both River and Delta state. The study population size is 463 out of which a sample size of 210 was selected using Taro Yamane’s formula at 5% error tolerance and 95% level of confidence. Instrument used for data collection was primarily questionnaire and interview. The total number of 210 copies of questionnaire was distributed while 190 copies were returned. Cross-sectional survey research design was adopted for the study. The four hypotheses were tested using Chi- Square statistical tool. The findings indicate that social responsibility significantly affect productivity of Shell Petroleum Development Company, social responsibility significantly affect innovation and learning of Shell Petroleum Development Company, social responsibility significantly affect efficiency of Shell Petroleum Development Company and social responsibility significantly affect profitability of Shell Development Company. The study concluded that organization that imbibe a good corporate social responsibility culture will reduce unrest of the host communities and in turn increase the organization’s performance. The study recommended that Shell Petroleum Development Company can improve its performance by providing employment, infrastructural projects and effective waste control for members of communities of their operation.
CHAPTER ONE INTODUCTION
1.1 BACKGROUND OF THE STUDY
There has been a source of controversy about Multinational Corporation over the years. Tatum (2010) holds that a typical multinational corporation (MNC) normally functions with a headquarters that is based in one country, while other facilities are based in other countries. In some perspective a multinational corporation is referred to as a multinational enterprise (MNE) or a transnational corporation. In the view of Obumneke (2013), multinational corporations enter host countries in different ways and different strategies. For this reason, some enter by exporting their products to test the market and to find whether their existing products can gain sizeable market share. For such firm they rely on export agents. These foreign assembly operations are established to save transport cost because there is a limit to what foreign exports can achieve for a firm owing mainly to tariff barriers and quotas, and also owing to logistics or cost of transportation. Most of the firms are encouraged by the low wage rates and other environmental factors.
To meet the growing demands in the foreign countries, the firm considers other options such as licensing or foreign direct investment which are critical steps. Every step takes strategic planning and is motivated by profit through sales growth.
Obumneke (2013) goes further to assert that the idea of Multinational Corporation has been around for centuries but the second half of the twentieth century multinational corporations have become very important enterprises in different structural models. The first and common model is for the
multinational corporation positioning its executive headquarters in one nation, while production facilities are located in one or more other countries. Ozoigbo and Chukuezi (2011) also accept that this model often allows the country to take advantage of benefits of incorporation in a given locality, while also being able to produce goods and services in areas where the cost of production is lower.
The second structural model is for a MNC to base the parent company in one nation and operate subsidiaries in other countries around the world. With this model, just about all the functions of the parent are based in the country of origin. The subsidiaries more or less function independently outside of a few basic ties to the parent. A third approach to the step of a MNC involves the establishment of a headquarters in one country that oversees a diverse conglomeration that stretches to many different countries and industries (Robinson, 1979). In view of the above, Gilpin (1978) concludes that the multinational corporation include affiliates, subsidiaries and possibly even some facilities that report directly to the headquarters. Such direct investment means the extension of the managerial control across national boundaries.
Rugman (1985) who prefer to use the name multinational enterprises, say that the concept of the MNE is that “the difference between Domestic Corporation and the MNE is that the latter operates across national boundaries”. While institutions are important for economic development, particularly in resource rich countries, the interaction between multinational corporations and host country institutions is not well understood (Wiig and Kolstad, 2010). There is a risk that multinational corporation facilities patronage problems in resource rich countries, exacerbating the resource curse.
Gilpin (1987); Stapford (1988) observe that the Marxists view the emergence of the multinational corporations (MNCs) as a historically progressive aspect of capitalism in the process of developing, at international level. In all these, the common basic productive activity is more than one social formation. However, it is worthy of note that in a social formation there may be many multinationals with different nationalities and also many corporations of the same nationality.
Meanwhile, for multinational corporations to thrive well in their business there should be certain responsibilities they must carry out. Being honest to these responsibilities and commitment to their social responsibilities, will create much environmental harmony for business growth. It is true that people engage in business to earn profit. However, profit making is not the sole function of business. It performs a number of social functions, as it is a part of the society. It takes care of those who are instrumental in securing it existence and survival like the owners, investors, employees, customers and government in particular and the society and community in general. So, every business must contribute in some way or the other for their benefit. For examples, every business man must ensure a satisfactory rate of return to investors, provide good salary, security and proper working conditions for its employees, make available quality products at reasonable price to its consumers, maintain the environment properly etc. These functions are what is referred to as corporate social responsibilities (CSR).
Multinational Corporations (MNCs) can therefore have a positive impact in their host communities or counties, especially through corporate social responsibility initiative focusing on sustainable development and co-operation with civil society.
1.2 STATEMENT OF THE PROBLEM
Presently, it is obvious that most corporate citizens or groups organization are not living up to expectation of their duties in the host communities. These contributed immensely to environmental degradation of the region, the air, water and land pollution, destruction of natural habitations and waste disposal system that are harmful and destructive to the host community.
Lack of corporation to tackle the problem and reduce the effects of drilling activities on the environment and raise the standard of living of the people in the host communities became a source of concern to the youth of the region.
Secondly, lack of infrastructures and social amenities in the host communities of Niger Delta region by the federal government and the oil multinational companies operating in the state.
Thus, the researcher is intended in finding out the effect of these problems on the performance of
Multinational Corporation in Niger Delta region.
1.3 OBJECTIVES OF THE STUDY
In the view of the above, the main objectives of this study include the following.
1. To examine the effect of social responsibly on the productivity of SPDC.
2. To ascertain the effect of social responsibility on the innovation and learning of
SPDC.
3. To examine the effect of social responsibility on the efficiency of SPDC.
4. To ascertain the effect of social responsibility on the profitability of SPDC.
1.4 RESEARCH QUESTIONS
In order to enhance the achievement of the set objectives of the study, the researcher formulated the following research questions.
1. How does social responsibility affect the productivity of SPDC?
2. How does social responsibility affect innovation and learning of SPDC?
3. How does social responsibility affect the efficiency of SPDC?
4. How does social responsibility affect the profitability of SPDC?
1.5 STATEMENT OF THE HYPOTHESIS
The following variables would be investigated in the course of this study:
1. Hi: Social responsibility embarked upon by SPDC in communities of their operation affect their productivity.
2. Hi: Social responsibility embarked upon by SPDC in communities of their operation affects their innovation and learning.
3. Hi: Social responsibility embarked upon by SPDC in communities of their operation increase their efficiency.
4. Hi: Social responsibility embarked upon by SPDC in communities of their operation affect their profitability.
1.6 SIGNIFICANCE OF THE STUDY
No business enterprise exists and operates in a vacuum. Business operates in a dynamic environment. The growth and survival of a business is dependent on the environment and other factors. A better understanding of the environment and how it work will help in the understanding of the social responsibility of business.
Business is socially responsible if its actions are anticipatory and preventive instead of reactive and restorative. Thus, social responsibility means acting in anticipation of the future need of the society. A socially responsive organization sees itself as part of the society and contributes its quota toward solving societal problems. It does not have to wait for groups to make demands on it before it act rather, it initiates social programmers which it feels would help society and execute them without prompting from any quarters. Hence, corporate social responsibility can be best understood in terms of the changing relationship between business and society. Because the business looks up to the society to accommodate it and to protect it while carrying out its operations. From the foregoing, this study shall be relevant to:
– Multinational Corporations operating in the oil sector.
– Government and government agencies associated with these multinational corporations.
– Indigenes from the oil producing areas to enlighten them on what to expect from these multinational corporations operating in their environment.
– International communities.
– The study has been undertaken with the explicit objective of enabling the researcher obtain a Master’s degree in management in University of Nigeria.
1.7 SCOPE OF THE STUDY
This study is focused on the social aspect of business responsibilities of Oil Multinational Corporation, with concentration on Shell Petroleum Development Company (SPDC) located in Niger Delta region and shall in no wise explore the other business responsibilities, although reference may be made.
1.8 LIMITATION OF THE STUDY
In the course of this study, it is quite obvious that the researcher encountered some limitations which no doubt where beyond his control but do not in any way affect the validity of this study. Financial Constraint: The researcher spent quite large amount of money to source information from the internet. Most of the journals sites are classified and require foreign currency for access to be obtained.
Power Failure: During the course of doing the project, there was no light that cause the project price to go high that pose a threat to the research.
Unwillingness: The researcher had to go to the organization more than expected to source for information because of the unwillingness of top managements of the corporation to give the researcher enough information because they are afraid not to disclose some of their organization’s secret.
This material content is developed to serve as a GUIDE for students to conduct academic research
THE EFFECTS OF CORPORATE SOCIAL RESPONSIBILITY ON THE PERFORMANCE OF OIL MULTINATIONAL CORPORATION
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