IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON FINANCIAL PERFORMANCE IN BUA PLC (CASE STUDY OF BUA FLOUR MILLS PLC)

ABSTRACT

An organization is a collection of people who work to achieve a common goal (Amos, Hellriegel, Jackson, Klopper, Louw, Oosthuizen, Slocum & Staude, 2008). Similarly, Judge and Robbins (2009) stressed that an organization is a consciously organized social entity, which comprises two or more people, and functions on a continuous basis to achieve a common goal or set of goals. In order to meet its goals, vision and to improve its effectiveness, efficiency and productivity, the management of any organization should engage all stakeholders in the running of their businesses.

The concept of corporate social responsibility (CSR) has gained significant attention in recent years, as organizations recognize the importance of contributing to society and the environment. The practice of corporate social responsibility (CSR) is now a global phenomenon. There is a growing need for firms operating in various communities to have a great deal of harmony with their host communities. This practice of ensuring that divergent needs of the host communities are reasonably attained in order to ensure smooth and harmonious operations is coined as corporate social responsibility (Khan, Majid, Yasir & Arshad M., 2013).  This phenomenon is not only nationally accepted but it is globally practiced. Globally, there is an enhance need for corporate manager to build new relationship between business and the natural (physical) environment as a means of mitigating the impacts of the past abuses (ill practices) on the environment (Bhattacharya, Korschun & Sen, 2009).

While CSR is practiced by corporate bodies, it is imperative to evaluate its contributions to the attainment of organizational effectiveness. A plethora of studies have found a correlation between social environmental performance and organizational performance (Asemah, Okpanachi & Edegoh, 2013). Cornell and Shapiro (2004) suggests that a company’s explicit costs are opposite of the hidden costs of the stakeholders. This assertion is made from the perspective of cost avoidance to major stakeholder and considering their satisfaction.

Drawing from the stakeholders’ theory by Freeman (2004), the manager must satisfy a variety of constituents (e.g. investors and shareholders, employees, customers, suppliers, government and local community organizations) who can influence firm’s outcomes.

Many authors have pinpointed that companies which neglect their social responsibilities are likely to experience several negative consequences that can affect the economic value of the firm directly, when fines and pay damages or subsidies are due, and indirectly, through impact on the firm’s reputation, which can ultimately weaken the brand (Brammer & Pavelin, 2006).A firm can't rival different associations in 21st Century on the off chance that it gets to be neglected to recognize the clients' need and desire. Request has been expanded for the responsibility of the organizations and support of transparency. The idea of CSR has been presented in 1910, perceived in 1950 and get formalized in 1960. CSR implies that "doing Right things for public prosperity and wellbeing ". It helps to assemble the high esteem in clients' psyche which prompts the significant yields for the firm. The multinational partnerships held weight on firms to enhance their corporate social execution (McWilliams & Siegel, 2001).

1.2 STATEMENT OF PROBLEM

The manufacturing industry in Nigeria is a crucial contributor to the region's economic growth and development. However, there is a lack of understanding regarding the impact of corporate social responsibility (CSR) on the financial performance of manufacturing companies in Nigeria.

These companies face various challenges related to operational efficiency, employee productivity, supply chain management, and reputation management. It remains unclear how implementing CSR practices can address these challenges and improve overall financial performance in the manufacturing sector.

In addition, there is a dearth of specific guidelines or frameworks for integrating CSR into the core business strategies of manufacturing companies in Nigeria. The lack of awareness and knowledge regarding the potential benefits and opportunities of CSR initiatives hinders the growth and competitiveness of these organizations. Therefore, there is a need to investigate and understand the impact of corporate social responsibility on the financial performance of manufacturing companies in Nigeria.

This research aims to fill the existing knowledge gap by exploring the relationship between CSR practices and financial performance, including factors such as employee satisfaction, customer loyalty, and community engagement etc. By studying this relationship, the research will provide valuable insights into how manufacturing companies can strategically incorporate CSR initiatives to enhance their overall performance. The findings of this study will not only benefit individual organizations but also contribute to the broader understanding of the role of CSR in the manufacturing industry.

Furthermore, the research will identify any barriers or challenges faced by manufacturing companies in Nigeria in implementing CSR practices. This will help in developing practical recommendations and strategies to overcome these obstacles and ensure the successful implementation of CSR initiatives.

1.3AIMS AND OBJECTIVES

The main objective of this study is to examine the impact of corporate social responsibility on financial performance. However, the specific objectives are:

1.                  To examine the impact of environmental corporate social responsibility on financial performance of BUA flour mills Plc

2.                  To examine the impact of employee’s corporate social responsibility on financial performance of BUA flour mills Plc

1.4 RESEARCH QUESTIONS

1.      Does environmental corporate social responsibility have positive and significant impact on financial performance of BUA flour Mill Plc?

2.      Does employees’ corporate social responsibility have positive and significant impact on financial performance of BUA Mills Plc?

1.5 RESEARCH HYPOTHESIS

H₁: Environmental corporate social responsibility has positive and significant impact on financial performance of BUA Flour Mills Plc.

H₂: Employees’ corporate social responsibility has positive and significant impact on financial performance of BUA Flour Mills Plc.

1.6 SIGNIFICANCE OF THE STUDY

This study is significantly considering the importance corporate social responsibility has in today’s business environment. The result of this study will provide knowledge to government/policy makers to gain deep understanding of corporate social responsibility and how it impacts on organizational productivity which government benefits through policies implementations. The outcome of this study will be beneficial to management of many business organizations to understand the dimensions of the internal corporate social responsibility (CSR) that affect organizational productivity which in turns help organizations achieve their objectives.

The study will contribute to the existing body of knowledge by providing better understanding of the relationship between internal corporate social responsibility and firm financial performance.

The study will also form a basis to students pursuing education in business management, finance, or corporate social responsibility in understand the relationship between CSR initiatives and financial performance. It offers an opportunity for students to apply theoretical knowledge to real-world scenarios and gain insights into the strategic implications of CSR on organizational outcomes.

Professionals working in the fields of sustainability, corporate governance, finance, and investor relations can benefit from this research by understanding how CSR practices impact the financial performance of manufacturing companies. It can provide them with evidence-based insights to inform business strategies, stakeholder engagement, and decision-making related to CSR investments and reporting

Regulatory agencies and government bodies responsible for overseeing corporate governance, sustainability reporting, and ethical business practices can use the research findings to evaluate the impact of CSR on financial performance within the context of Bua flour mills Plc. This information can guide policy formulation, disclosure requirements, and regulatory frameworks related to CSR integration into business operations.

1.7 SCOPE OF THE STUDY

The scope of this study will focus specifically on the CSR initiatives of BUA PLC and their impact on various stakeholders, including employees, customers, and the local community. The study will examine the relationship between CSR initiatives and financial outcomes, reputation, employee engagement and satisfaction, customer loyalty, and community support. It will also explore the alignment of CSR initiatives with the broader goals and values of BUA PLC. The study will rely on both primary and secondary data collected through surveys, observations and annual financial report. The research will be conducted within a specific time frame and will be limited to the operations of BUA Flour Mills Plc. The study will provide insights and recommendations that are specific to the company's context and can potentially be applied to other organizations in the same industry or with similar CSR objectives.

Although the study is quite promising, the study covers the BUA Flour Mills PLC. Nigeria which serves as the scope of the study while the study focuses on the impact of corporate social responsibility as the independent variable with two dimensions (environmental corporate social responsibility and employees corporate social responsibility), while financial performance serves as the dependent variable of the study.

1.8 LIMITATIONS OF THE STUDY

1.  Sample Size: Due to time and resource constraints, the study may have a limited sample size, which may affect the generalizability of the findings.

2. Time Constraints: Conducting a comprehensive analysis of the impact of CSR on organizational performance requires a significant amount of time.

3.  Data availability and quality: The study's conclusions may be limited by the availability and quality of data. If the data used is incomplete, outdated, or unreliable, it can impact the accuracy and reliability of the findings.

4. External Factors: The study may be influenced by external factors such as economic conditions, government policies, and social trends, which may impact the perception of stakeholders and the performance of BUA Flour Mills PLC.

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