Impact of Corporate Social Responsibility (CSR) on Employee Loyalty and Retention (a Case Study of Mtn)





The interrelationship between organisations and their environment has become increasingly important. There is no business organisation that can exist in isolation; it must have a community that it associates with in terms of location for its successful operations. Also in any society, the need for a remarkable growth and development cannot be easily attained if the principal actors, that is, the citizenry, the government and the corporate business organizations are not in harmony.

Therefore, this section expressly and critically reviews literatures on corporate social responsibility as discussed by various scholars.


Ali et al (2010) expressed that the inception point of corporate social responsibility (CSR) can be traced to 1953 when New Jersey Supreme court allowed standard oil company to donate money to Princeton University as a philanthropic action. This decision was given against the suit filed by one of the shareholders of standard oil, believing that it would reduce shareholder’s wealth. CSR notion was initially advocated by Beyer (1972) and Drucker (1974) while stating that corporations should do social activities for the welfare of the community and feel the sense of self-ombudsmanship. It was argued that corporations are earning huge amount of profits from community and deteriorating the natural resources. Therefore, they should contribute for the sustainability of the environment and other natural resources and work for the uplifting of the society. Freeman (1970) opposed the idea of CSR by stating that, “corporations are neither meant for social activities nor have they expertise in the regime”. Therefore, it is better that they produce quality products for consumers, obey legal rules and regulations and contribute to the economic development of the country. Many researchers, including Kashyap Mir and Iyer (2006) supported the concept of CSR by corporations when they endorsed the fact that such actions of corporations should also be reported as information to the owners, consumers, community, competitors and the government.


Corporate Social Responsibility focuses on what an organisation does that affects the society in which it exist (Stoner et al, 2006). Different organisations have framed different definitions, although there is considerable common ground among them. Baker (2006) argues that corporate social responsibility is about how companies manage the business processes to produce and overall positive impact on society. Holmes and Watts (2006) gives the following definitions; corporate social responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the work force and their families as well as the local community and society at large.

“Corporate Social Responsibility is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunities is building the skills of employees, the community and the government” (A publication of World Business Council for Sustainability Development, 2006).

The European Commission in 2010 as obtained in a free encyclopedia from wikipedia hedges its bets with two definitions wrapped into one; “A concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. A concept whereby companies integrate social and environmental concerns in their business operations, and in their interaction with their stakeholders on a voluntary basis”.

A free encyclopedia from Wikipedia (2010) viewed corporate social responsibility as “corporate conscience, corporate citizenship, responsible business, Sustainable Responsible Business (SRB), or corporate social performance and a form of corporate self regulation integrated into a business model”. Further emphasis on it include taking CSR as a concept or policy that would function as a built-in, self regulating mechanism whereby business would monitor and ensure its support to law, ethical standards and international norms.

Nickels, et al. (2008) express their definitions of CSR as “the concern businesses have for the welfare of society”. It is based on a company’s concern for the welfare of all its stakeholders, not just the owners. CSR goes well beyond merely being ethical. It is based on a commitment to such basic principles as integrity, fairness and respect.

According to Davies (2005), “a firm is not being socially responsible if it merely complies with the minimum requirement of law”. Social responsibility goes one step further; it is a firm’s acceptance of social obligation beyond the requirement of the law. In accordance with the view of Friedman (2002), a corporation or an enterprise engages in socially responsible behaviour when it pursues a profit within the constraint of law as imposed by the society”. He also believed that there is one and only one social responsibility of business to using its resources and engage in activities designed to increase its profit so long as it stays with the rule of the game.

Johnson and Scholes (2000) suggested that social responsibility and business can be analysed using a three level model: macro, corporate and the individual levels of analysis. The macro level is concerned with the behaviour, power and influence of business at a national and global level. Johnson and Scholes (2000) suggest four corporate categories into which organisations may fit.

The first corporate categories are those organizations which accept Milton Friedman’s claim that the business of business is business and that the only responsibility of business is to increase its profit. Secondly, there are those organizations, which despite tending towards the beliefs of the first group, also acknowledge the growing social pressure for business to recognize and meet its social responsibilities. The third corporate group comprised companies that are termed progressive organisation and are characterized by a belief that performance should be judged by more complex criteria than profit alone. Finally, these are corporate organizations which have core objective of meeting particular social needs; in this case, making a profit is, at best, secondary to meeting social need (Johnson and Scholes, 2000). The individual level concerns the behaviour of individual employees in a given organisation.

Gould (1992) opined that “corporate social performance is an important consideration for many investors in developed economies who believes that an organization’s good social performance is not only socially responsible but leads to good financial performance”. Companies operating in Nigeria should take cues from companies in developed economies to reduce clash of interest between communities and companies.

Gordon Brown, the British Prime Minister points that “corporate social responsibility goes for beyond the old philanthropy of the past- donating money to good cause at the end of the financial year and is instead on all year round responsibility that companies accept for the environment around them, for best working practices, for their engagement in the local communities and for their recognition that brand names depends not on quality, price and uniqueness but on how cumulatively, they interact with companies workforce, community environment…” (First Bank of Nigeria Plc., 2007).

According to Adi (2005), “good corporate responsibility in business should promote the long-term good of the company and not necessarily of the majority or minority stakeholders. It is well understood that neglecting or bypassing the interests of stakeholders like shareholders, employees, suppliers, customers, consumers, the government or the society at large is likely to adversely affect the long-term interests of the company. Good corporate social responsibility entails a strong performance ethic framework leading to a true meritocracy (Matama Rogers, 2006).

According to Wartick and Cochran (1985), “Corporate social responsibility incorporates the interaction between the principles of social responsibility, the process of social responsiveness, and the policies and programs designed by corporations to address social issues. CSR is considered to be comprised of factors that encapsulate a firms’ attention to social and environmental issues (Hillman and Keim, 2001).

Various other developments on the concept of CSR are examined as follows:

Arx and Ziegler (2008), have studied the relationship between CSR and corporate financial performance. The study expressed a positive relationship between these two variables. Likely, many studies have supported, positive effects of CSR on consumer behaviour including Brinkman and Peattie (2008) and Ali et al (2010). Heshin and Achoa (2008) also emphasized the strategic significance of corporate social responsibility for corporate succees.

Kashyap, et al (2006) supported the concept of CSR by corporation and endorsed that such actions of corporations should also be reported as information to the consumer, community, competitors and the government.

Kashyap, et al (2006); Gua, et al (2009) and Ali, et al (2010) emphasized on the significance of CSR for the satisfaction and retention of different stakeholders and sustainable corporate performance. These studies were conducted in different contexts including CSR and financial performance, consumer behaviour and employee behaviour.

Brammer, et al (2007) noted that CSR increased employee organizational commitment. Sharma, et al (2009) discussed the role of Human Resource Manager (HRM) as main contributor towards CSR performance and development. Stawiski, et al (2010) conducted a research where he stated that “Researches proved that CSR supports employee organizational commitment but not as much as employee job satisfaction, the good deeds of corporation motivates and feel a strong sense of belongingness with the organization. Stawiski, et al (2010) proposed that “in order to yield maximum benefits of CSR, employees should be involved in decision making regarding which actions should be undertaken relating to environment, community, employees themselves and the likes.

Trucker (2008) found CSR as the strongest positive predictor or employee organizational commitment. This has also been viewed in the case of Pakistan especially in 2005 earthquake, when many companies took their employees for rehabilitation of earthquake victims on voluntary basis. This action of corporations not only built positive rapport of corporation with society but also a strong sense of belongingness and pride among employees as well.

This motivates employees to remain committed to the organization and work harder for its progress. The positive association between CSR actions and corporate financial performance is also well supported by many studies including Stanwick and Stanwick (1998); Arx and Ziegler (2008) and Rettab, et al (2009).


According to Robbins and Coulter (2007) in their book, it was established that two different views dominated the thinking here. On one side, there is the classical or purely economic view and on the other side is the socio-economic view.


The classical view as expressed by Robbins and Coulter (2007) elicits that management’s only social responsibility is to maximize profits. The most outspoken advocate of this approach is economist and Nobel laureate, Milton Friedman. He argues that manager’s primary responsibility is to operate the business in the best interests of the stockholders (the owners of a corporation). Friedman contends that stockholders have a single concern: financial return. He also argues that anytime managers decide to spend the organization’s resources for “social good”, they are adding to the cost of doing business. These costs have to be passed on to consumers either through higher prices or be absorbed by stockholders through a smaller profit returned as dividends. Do understand that Friedman is not saying that organisations should not be socially responsible, he think they should. But the extent of that responsibility is to maximize profits for stockholders.


The socio-economic view is the view that management’s social responsibility goes beyond making profits to include protecting and improving society’s welfare. The expression above was as given by Robbins and coulter (2007). They were of the opinion that “this position is based on the belief that corporations are not independent entities responsible only to stockholders”. They went further by saying that they (i.e. management of businesses) also have a responsibility to the larger society that allows their formation through various laws and regulations and supports them by purchasing their products and services. In addition, proponents of this view believe that business organizations are not just merely economic institutions. Society expects and even encourages businesses to become involved in social, political and legal issues.


An outline given by Nickels et al (2008) in respect of some of socially responsible business activities are given as follows:

  1. Community-related activities such as participating in local fund raising campaigns, donating executive time to various non-profit organizations (including local government) and participating in urban planning and development.
  2. Employee-related activities such as establishing equal opportunity programmes, offering flex time and other benefits, promoting job enrichment, ensuring job safety and conducting employee development programmes.
  3. Political activities such as taking a position on nuclear safety, gun control, pollution control, consumer protection, and other social issues and working more closely with local, state and federal government officials.
  4. Support for higher education, the arts, and other non-profit social agencies.
  5. Consumer activities such as ensuring product safety, creating truthful advertising, handling complaints promptly, setting fair prices and conducting extensive consumer education programmes.


Robbins and Coulter (2007) in their observation of the fact that the report of stories of irresponsible and unethical questionable practices in large public companies is increasing daily, came up with some among these practices, from the point view of a survey carried out in the US and are listed thus; cutting corners on quality control, covering up incidents, abusing or lying about sick days, lying to/or deceiving customers, putting inappropriate pressure on others, falsifying numbers or reports, lying to or deceiving superiors on serious matters, withholding important information, misusing or stealing company property and engaging in copyright or software infringement.


Social responsibility as earlier pointed out, is an important phenomenon and management in the communication companies should carefully map out viable and reliable activities. By this, various managerial approaches through which social responsibility programmes can be met as itemized in a free encyclopedia from Wikipedia (2010), is defined below:


This is an approach involving the working of the corporation, in collaboration with the local communities to better themselves. Often activities companies participate in are establishing education facilities for adults and HIV/AIDS education programmes (a common CSR project in Africa).


An approach, which include monetary donations and aid given local organizations and impoverished communities in developing countries. Some organisations do not like this approach as it does not help build on the skills of the local people, whereas community-based development approach generally leads to more suitable development.


From Wikipedia Free encyclopedia (2010), another approach to the concept of CSR is to incorporate the CSR strategy directly into the business strategy of an organisation. For example, procurement of fair trade tea and coffee has been adopted by various businesses including KPMG. Its CSR manager commented, “fair trade fits very strongly into our commitment to our communities.


This approach deals with obtaining increasing corporate responsibility interest. The shared value model is based on the idea that corporate success and social welfare are interdependent. A business needs a healthy, educated workforce, sustainable resources and adept government to compete effectively.


This approach according to Lipsey (2007), cited also by Tomisin (2009) in his study stated that, “stakeholders approach presumed corporate executives as agents of the owner and need to be responsible for conducting the business in accordance with the desire of the owners while still conforming to the basic rules of the society.


Three different authorities like Adrian and Bob (2002), Nickels et al (2008) and Segun (2008) recognized the dimensions to which business organizations must take their social responsibility to. They viewed it through the stakeholders’ perspective (those to whom businesses are responsible). These dimensions are: responsibility to its owners/investors/shareholders; responsibility to its customers; responsibility to its employees; responsibility to its suppliers; responsibility to local community; responsibility to subsidiaries; responsibility to the financial community and ultimately, responsibility to government.


Nickels, et al. (2008) opined that those cheated by corporate wrongdoings are the shareholders themselves. They expressed that unethical behaviour may seem to work for the short-term, but it guarantees eventual failure. Some people believe that before you can do good you must do well (i.e. make a lot of money); others believe that by doing good, you can also do well. Many people according to Nickels, et al. (2008), believe that it makes financial as well as moral sense to invest in companies that are planning ahead to create a better environment. By choosing to put their money into companies whose goods and services benefit the community and the environment, investors can improve their own financial health while improving society’s health.


Adrian and Bob (2002) identified the need for managers to direct the corporate social responsibility towards organization’s customers. They were of the perspective that companies should have a duty to provide goods and services which satisfy their (companies) long-term and broad needs rather than their immediate felt needs. In their own view, Nickels, et al. (2008) stated that “one responsibility of business is to satisfy customers by offering them goods and services of real value”.


Nickels, et al. (2008) put the responsibility to employees by corporation forward this way – “Businesses have several responsibilities to employees. Firstly, they have a responsibility to create job if they want to grow. It’s been said that the best social programme in the world is a job. Once a company creates jobs, it has an obligation to see to it that hard work and talent are fairly rewarded. Employees need realistic hope of better future, which comes only through a chance for upward mobility. People need to see that integrity, hard work, goodwill, ingenuity and talent pay off. Studies have shown that the factors that most influences a company’s effectiveness and financial performance is human resource management….”


Taking into account the needs of suppliers is a combination of shrewd business sense and good ethical practice. Adrian and Bob (2002).

Segun (2008) posits that suppliers can sometimes be critical to business success. This often occur, according to him, where vital inputs are in scarce supply or it is critical that supplier are delivered to a company on time and in good condition.


Adrian and Bob (2002) considered her that market-led companies often try to be seen as a ‘good neighbour’ in their local community. Such companies can enhance their image through the use of charitable cotirbtions, sponsorship of local events and being seen to support the local environment. They confirmed that, this may be interpreted either as part of a firm’s genuine concern for its local community or as a more cynical and pragmatic attempt to buy favour where its own interests are at sake.


Adrian and Bob (2002) expressed that; “companies must not ignore the wholesalers, retailers and agents who may be crucial interfaces between themselves and their final consumers. This intermediaries may share many of the same concerns as customers and need reassurance about the company’s capabilities as a supplier who is capable of working with intermediaries to supply goods and services in an ethical manner.


This includes financial institutions that have supported, are currently supporting or who may support the organization in the future shareholders – both private and institutional – form an important element of this community and must be re-assured that the organization is going to achieve its stated objectives. Many company expansion schemes have failed because the company did not adequately consider the needs and expectations of potential investors… Adrian and Bob (2002).


According to Segun (2008), business organisations need to perform their role towards the government by prompt payment of taxes levied on them and behaving ethically. Such as proper care being provided for government acquired infrastructural facilities.


Management is the process undertaken by one or more individuals to coordinate the activities of others, to achieve results only achievable by one individuals acting alone. According to Prussia (2007), explanation of management reflects on the activities of any organization’s management team. A organization’s management team according to him is socially responsible if it effectively play, organizes, influence and control social programmes.

As stakeholders continue to pressure organisations to respond to societal issues, managers are expected to be responsible in the way they do business. Some experts and writers like Robbins and Coulter (2007) have suggested that managers address their social responsibilities from the perspective of the impacts they have on society. This they referred to as Social Impact Management, which they have defined as an approach to managing in which managers examine the social impacts of their decisions and actions. This concept attempts to get business people to understand the interdependency between business needs and wider societal concerns. For instance, in the marketing area, social impact management would address the cultural impacts of advertising messages or the impacts of product development, design and pricing on customers; in the human resource management area, it would address issues such as employee rights and participation, work/life balance, and workplace equity and diversity; in the finance area, it would involve issues such as differential access to capital, the changing nature and role of shareholders, or the impacts of money flows across international borders. Thus, as managers plan, organize, lead and control, they would ask, “How does this work when we think about the social context within which business operations?” At the least, if managers think about managing social impacts, just as they manager risk or strategy, they will be more aware of whether they are being responsible in their decisions and actions.

Robbins and Coulter (2007) assert that doing the right thing that is, managing responsibly and ethically, is not always easy. However, because society’s expectations of its institutions are regularly changing, managers must continually monitor those expectations. What is acceptable today may be a poor guide for the future.

According to Prussia (2007), he argued that management should;

a)Never make assumptions

b)Consult outside (expertise) opinion

c)Be careful to ensure that such outside influence is not too sympathetic or too critical

d)Ensure that there is direct top management involvement in such social assignment.


Societal responsibility is not a one-sided affair. Just as business organisations are expected of social services in the society, the society has to take certain steps in order to aid the implementation of enterprises’ social responsibility programmes/objectives.

Society, as we have earlier seen in this chapter, has a cardinal role to make rules, where necessary, make the private sector socially responsible. If society sets such rules reasonably well, it will only need to assist business in living up to its (business) responsibilities.

According to McAfee (2004), he pointed out that the society is expected to perform the following roles:

  1. Set clear and consistent rules through government. Since business enterprises need an appropriate measure of regulation, the society is expected, in collaboration with the government to formulate consistent rules by government to social activities. In other words, it should be what it means.
  2. Keeping the rule technically. This emphasizes on the work apathy of rules made, taking into consideration the nature of environmental variables.
  3. The rule must be economically feasible because whatever rules were made, society ultimately has to pay, especially as total cost of government regulation of business is enormous, even though it cannot be easily computed.
  4. Ensure that productive rules are formulated.
  5. The members of society can make the rules result-oriented and not procedure-pre-describing.

This will be achieved with the support of government in which case, emphasis will have to shift from means to ends.


The business case for corporate social responsibility within a company will likely rest on one or more of these arguments:


A CSR programme can be an aid to recruitment and retention, particularly within the competitive graduate student market. Potential recruits often ask about a firm’s CSR policy during an interview, and having a comprehensive policy can give an advantage. CSR can also help improve the perception of a company among its staff, particularly when staff can become involved through payroll giving, fund raising activities or community volunteering.


Managing risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. These can also draw unwanted attention from regulators, courts, government and media. Building a genuine culture of ‘doing the right thing’ within a corporation can offset these risks.


In crowded marketplaces, companies strive for a unique selling proposition that can separate them from the competition in the mind of consumers. CSR can play a role in building customer loyalty based on distinctive ethical values.


Corporations are keen to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps, they can persuade governments and the wider public that they are taking issues such as health and safety, diversity or the environment seriously as good corporate citizens with respect to labour standards and impacts on the environment.


Critics of CSR, as well as proponents debate a number of concerns related to it. These include CSR’s relationship to the fundamental purpose and nature of business and questionable motives for engaging in CSR, including concerns about insincerity and hypocrisy.


The role among corporate stakeholders is to work collectively to pressure corporations that are changing. Shareholders and investors themselves, through socially responsible investing are exerting pressure on corporations to behave responsibly. Non-governmental organisations are also taking an increasing role, leveraging the power of the media and the internet to increase their scrutiny and collective activism around corporate behaviour.  Through education and dialogue, the development of community in holding businesses responsible for their actions is growing (Roux, 2007).


The rise of ethics training inside corporations is another driver credited with changing the behaviour and culture of corporations. The aim of such training is to help employees make ethical decisions when the answers are nuclear. The most direct benefit is reducing the likelihood of “dirty hands” (Grace and Cohen, 2005), fines and damaged reputations for breaching laws or moral norms. Organisations also see secondary benefit in increasing employee loyalty and pride in the organisation. Caterpillar and Best Buy are examples of organisations that have taken such steps (Thilmany, 2007).

Other business case for CSR within a company, taken from the same source as those already discussed above are given thus:

-Nature of business;


-Ethical consumerism;

-Globalization and market forces;

-Laws and regulation;

-Crises and their consequences; and

-Stakeholders’ priorities.

Source: The Free Encyclopedia from Wikipedia


Obviously, social responsibility is translated to mean profitable investment by corporate business in the social lives of members of its host society. Social investment should however be supportive of market objectives and business directions. In addition to these, organizations which invest in social development programmes tend to device benefits which are reaped and enjoyed on long-term basis. It is thus a clear fact that for an organisation to absolutely reap and enjoy such benefits after fully investing in social development programmes, there is need for the introduction of a viable true perspective.

Most scholars who argue that businesses have a stake in the social responsibilities of their host communities view social investment from two perspective. Over the short-term and over the long-term. Prussia (2007), for example, notes that often times, organisation lay strict emphasis on profit maximization in the short term and allocate their resources essentially to gain immediate returns from such investment. He further argues that this type of business objective is myopic since the success or failure of the operations of an organization can be more easily determined by raising the social investment prospect over the long-term.

In the same vein, if social investment is well focused and channeled, it will strengthen the society’s infrastructural base thereby, assisting government in the duties of rendering social service (Tomisin, 2009).

Furthermore, social investment will help make develop, over the long-term, vital markets for business.

In a developing economy, such as Nigeria, innovative ways may be developed to finance highly capital intensive schemes like the building of a dam for irrigation and hydroelectric power. When this is done, subsequent schemes which are closely related, such as Agricultural productions and supply of pipe borne water can be provided (Tomisin, 2009).

Though, the yield may be difficult to be accurately quantified in a conventional sense, they will at least, create a more attractive market for investors, while also creating and giving the country’s economy a boost.

By way of summary, social responsibility helps to build and assist businesses in the long-run to expand its market frontiers. In spite of the argument against business performing social responsibility, social responsibility in modern time has become inevitable as the only evident system that can deal effectively with the new condition found in our society. How far the communication companies of the study has fared in the area of social responsibility to members of the society will be discussed and analyzed under chapter four.


There are so many factors, identified by Segun (2008), militating against engaging in CSR and which have caused the neglect of social development in the society. Some according to him are listed as follows:

i.Lack of management concerns for CSR: Many managers do not perceive social responsibility as one of the key functions of management; their training and experience do not arouse such consciousness in them.

ii.Total reliance on publicly owned enterprises in the provision of services in health, water, rail, electricity, etc. Since these large enterprises are financed by tax payer, it is assume that they are socially responsible since their preoccupation is in social welfare redistribution.

iii.Societal little expectation of social responsibility: The various bodies to play dominant role were non-functional. Generally, there is no well established department of public affairs, scarcely any group of individual bodies that scrutinize corporate responsibility or welfare in any Nigerian business organisation.

iv.Unethical business practices such as fraud and forgeries, dishonesty and over inflation of invoices, embezzlement, etc. do not provide a conducive environment for organization to perform their social obligation.

v.Profit-oriented concern or pursuit by enterprises owned by foreign firms to the detriment of caring less for social responsibility.

vi.Relative small size of Nigeria business in terms of size and financial strength of many enterprises. This precludes the consideration of many social responsibilities as a task that is serious to be considered.



“A busload of Samsung employees and managers are transported each month to a city pack, where they spread out to pick up garbage, pull weeds, and plant saplings. Managers even volunteer to help spruce up employee homes. Local employees feel such loyalty to the company that in the height of an unrest that destroyed many businesses in Indonesia, local employees and their neighbours pulled together to protect Samsung’s refrigerator factory” (Nickel, et al. 2008)


“… Avon products Inc. was being socially responsible when it started its Breast Cancer Crusade to provide women with breast cancer education and early detection screening services and which after 14 years, has raised more than $400 million in 50 countries worldwide” (Robbins and Coulter, 2007).


“During March 2006, Wal-Mart Stores – recognizing that hunger is a serious issue that has a lasting impact on not only children and our elderly, but on our entire nation, sponsored a programme to help the course. Customers donated money to Second Harvest Network by purchasing pieces and Wal-Mart and Sam’s Club matched the first $5 million raised. As part of this programme, Wal-Mart ran advertisements in large newspapers showing the word H_NGER and the tag line, “The problem cannot be solved without You” (Robbins and Coulter, 2007).


This case has to do with responsibility towards employees when considering salaries and benefits. “… the wage and benefit packages offered by Castro are among the best in hourly retail. Even part-time workers are covered by Castro’s health plan, and the workers pay less for their coverage than at other retailers such as Wal-Mart. The increased benefits reduce employee turnover. Employee turnover at Castro is less than a third of the industry average. Given that the U.S. Department of labour estimates that replacing employees costs between 150 and 250 percent of their annual salaries, retaining workers is good for business as well as for morale” (Nickels, et al. 2008).




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