ABSRACTThis paper explores the relationships between wealth maximization for a firm and corporate social responsibility. Focus is on the effects of corporate social responsibility (CSR) to a firm’s and wealth maximization ability. This paper addresses the essence of prioritizing CSR rather than sticking to wealth maximization. There is an analysis of the arguments that discredit prioritizing for CSR and a hybrid explanation that takes into consideration all the arguments for or against giving priority to CSR.

A continuing debate concerns whether these three objections (business ethics, CSR, and stakeholder theory) justify basic changes in corporate governance principles and/or corporate purpose. Many companies operating in Nigeria argue that they perform better in their responsibilities to the society and that government should gather its loins to perform optimally. They contend that it is the failure of government to discharge its responsibilities that have made the various communities to be turning the heat on them.

Many scholars and managers endorse the idea that the primary purpose of the firms is to make money for its owners. This wealth maximization objective is justice on the grounds that it maximizes social responsibility. In this article, the firms of a two-part set, we argue that, although this shareholder primacy model may have been appropriate in an earlier era, it no longer is, given our current state of economic and social responsibility. To make our case, we employ a utilitarian moral standard and examine the apparent logical sequence behind the link between wealth maximization and corporate social responsibility. Upon close empirical and conceptual scrutiny, firms that utilitarian criteria do not support the shareholder model; that is, wealth maximization is only weakly linked to corporate social responsibility maximization.

1.0 INTRODUCTION The definition of Corporate Social Responsibility (CSR) is an issue that dominates the existing literature. Many authors made an attempt to approach this term with many views. Davis (1973, pp.312-313) defined CSR as “the

firm’s considerations of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm to accomplish social benefits along with the traditional economic gains which the firm seeks”. The World Business Council for Sustainable Development (1999) suggests that: ‘‘CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large’’. There is also a disagreement on the definition of CSR among those that face CSR as an ethical attitude and those who argue that it is a firm’s strategy (Wan-Jan, 2006). Stainer (2006, pp.253) states that “CSR concept is to show that ethical principles, from wherever derived, can improve reasoning and harmonize decisions, especially in complex situations and thus, enhance performance”.

The unclear state of CSR definition is recognized also by Dahlsrud (2008). Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship or responsible business) is a form of corporate self-regulation integrated into a business model. CSR policy functions as a self-regulatory mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards and international norms. With some models, a firm's implementation of CSR goes beyond compliance and engages in "actions that appear to further some social good, beyond the interests of the firm and that which is required by law.

CSR aims to embrace responsibility for corporate actions and to encourage a positive impact on the environment and stakeholders including consumers, employees, investors, communities, and others. The EU’s Green paper on CSR defined it as ‘a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. The common approach to CSR is corporate philanthropy in Nigeria firms includes monetary donations and aid given to nonprofit organizations and communities. Donations are made in areas such as the arts, education, housing, health, social welfare and the environment, among others, but excluding political contributions and commercial event sponsorship. Another approach to CSR is to incorporate the

CSR strategy directly into operations. For instance, procurement of Fair Trade tea and coffee.

Wealth maximization is a process that increases the current net value of business or shareholder capital gains, with the objective of bringing in the highest possible return. The wealth maximization strategy generally involves making sound financial investment decisions which take into consideration any risk factors that would compromise or outweigh the anticipated benefits. The wealth maximization (WM) principle states that the immediate operating goal and the ultimate purpose of a public corporation is and should be to maximize return on equity capital. The WM specification of what is often termed the firm objective makes operating goal and ultimate purpose the same.

Wealth maximization focuses on the motives and behaviors of financial stakeholders. The thesis of separation of ownership and control (Berle and Means 1932) posits that principals (or shareowners) employ agents (or man-agent) who must have some reasonable discretion (e.g., the business judgment rule. Two competing views about multiple principles can be articulated. A mono-tonic WM view is that any two or more principles must be strictly hierarchical (Jensen 2001). Legal and ethical constraints can be antecedent conditions. “Some-times the aims of the business and rational self-interest will clash with ethics, and when they do, those aims and interests must give way” (Economist 2005).

Considerations of CSR and stakeholder satisfaction would be subordinate to Wealth Maximization and function as strategic variables only (Husted and Salazar 2006). A competing view is that two or more firm goals should be pursued simultaneously. The firm serves a diverse set of social goals. Either there is some win-win combination of goals or else multiple goals must be balanced in some way. An ongoing controversy concerns whether observable varieties of capitalism, addressing these matters differently, will converge or continue to diverge.

Corporate Social Responsibility (CSR) is a form of self-regulation, conscious attempts and self-efforts undertaken by organizations for self-preservation and enhancement of their operations. CSR is usually integrated into a business model for an organization to be able to live in harmony with its operating environment. Corporate social responsibility policy functions as a built-in, self-regulating mechanism for a business entity to monitor and ensure its adherence to laws, ethical standards, and norms and nuances of its environment. CSR when proactively undertaken promotes the public interest by encouraging community growth and development, and by voluntarily eliminating practices that harm the public sphere, regardless of legality. It is the deliberate inclusion of public interest into corporate decision-making and the honoring of a triple bottom line known as People, Planet and Profit. "People, planet and profit", also known as the triple bottom line form one way to evaluate CSR.

"People" refers to fair labor practices, the community and region where the business operates. "Planet" refers to sustainable environmental practices. Profit is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital (unlike accounting definitions of profit).In the interest of its business and its environment, a firms needs to relate its operations and policies in ways that are mutually beneficial. The models of CSR and WM encourage businesses to actively and voluntarily contribute to community development. An important element of Corporate Social Responsibility in businesses is taking responsibility for its impact on society or their activities on the environment, consumers, employees, communities, stakeholders, and all other members of the public sphere.

Orlitzky, Schmidt and Rynes found a correlation between social/environmental performance and wealth maximization. A CSR programmed can be an aid to recruitment and retention, particularly within the competitive graduate market. CSR also helps to improve the perception of a company among its staff, particularly when employees become involved through donations, fund raising activities, and community volunteering. For global companies or corporations,

also known as multinationals, a critical success factor will be to respect other cultures and workforce environments and the formation of a globally acceptable profile of social consciousness. Recognizing cultural and ethical differences, vis-à-vis development needs with a sound corporate consciousness that includes the preservation of the environment increases shareholders wealth, boost employee engagement and increase brand recognition.

1.1 PROBLEMFirms should be more concerned with corporate social responsibility rather than focusing on wealth maximization only. The objectives of a firm are the leading justifications for its existence. Firm’s objectives exist to make the maximum possible profits for the shareholders. Wealth accumulation can be termed as the leading motivation for business practice. However, business does not take place in a vacuum. There are concerns of the public who relate with the business that needs to be addressed by the firms.

Jonathan and Guay (2006), notes that the existence of an organization should have positive impacts on its host society. Its negative effects should be minimal and mitigated. This reduction of the negative effects while ensuring positive impacts both directly and indirectly is described as the concept of social responsibility.

Debate ranges on whether firm should concentrate in wealth accumulation without social responsibility or whether they should give back a section of their profits to the host community. Prioritizing wealth maximization and social responsibility is an issue that calls for attention.

1.2 OBJECTIVEIn this paper, we explore the current meaning and practice of corporate social responsibility and wealth maximization in firms with emphasis on the waves, issues and modes of CSR amongst indigenous firms. The study is largely exploratory and does not present or adopt any normative stance (or ‘best practice’ approach) towards the practice and meaning of CSR. It examines CSR

as a neutral business practice (Amaeshi and Adi, 2006). We first explore the context in which firms operate in Nigeria – i.e. the corporate governance framework and socio‐economic conditions influencing indigenous firms.

2.0 LITERATURE REVIEWThe term "corporate social responsibility" became popular in the 1960s and has remained a term used indiscriminately by many to cover legal and moral responsibility more narrowly construed. CSR is a long term investment to organizations.Proponents argue that corporations increase long term profits by operating with a CSR perspective, while critics argue that CSR distracts from business' economic role. A 2000 study compared existing econometric studies of the relationship between social and financial performance, concluding that the contradictory results of previous studies reporting positive, negative, and neutral financial impact, were due to flawed empirical analysis and claimed when the study is properly specified, CSR has a neutral impact on financial outcomes.

Critics questioned the "lofty" and sometimes "unrealistic expectations" in CSR or that CSR is merely window-dressing, or an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations.Political sociologists became interested in CSR in the context of theories of globalization, neoliberalism and late capitalism. Some sociologists viewed CSR as a form of capitalist legitimacy and in particular point out that what began as a social movement against uninhibited corporate power was transformed by corporations into a 'business model' and a 'risk management' device, often with questionable results.

CSR is titled to aid a firm's mission as well as a guide to what the company stands for to its consumers. Business ethics is the part of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment. ISO 26000 is the recognized international standard for

Value

CSR. Public sector organizations (the United Nations for example) adhere to the triple bottom line (TBL). It is widely accepted that CSR adheres to similar principles, but with no formal act of legislation. Wealth maximization is a process that increases the current net value of business or shareholder capital gains, with the objective of bringing in the highest possible return. The wealth maximization strategy generally involves making sound financial investment decisions which take into consideration any risk factors that would compromise or outweigh the anticipated benefits.

Where should big corporations be spending their CSR resources?

CSR as value Creation

Purpose Impact BenefitsInnovative and Fundamental strategic • Shared value (business-institutionsPromote and operational impact and communitiesSustainable business • Promote competitiveness and InnovationModel • Promotes & sustainable business model

• Integrates business into the community• Developing Human Capital (key in developing

countries)• Incorporated into the Business Strategy

CSR as risk Management

Compliance Medium to high • Mitigates operational Impactstrategic and • Mitigates operational risksoperational impact • Supports external relationships

CSR as corporate Philanthropy

Providing funding Little strategic and • Corporate Philanthropy and sponsorshipsAnd skills operational impact • Short term benefits/not always sustainable

• Limited funds available • Impact diluted because limited budget in

allocated to many ……• Corporate competencies and other business

assets not fully utilized. • Misalignment between business and social responsibility strategies and functions• Result in minimal social and business Impact of social programmes.

Source: Mohr et al.(2001) and Groza et al. (2011) APPROACH CORPORATE SOCIAL RESPONSIBILITY

Managers and investors should focus narrowly on Wealth Maximization. The question of whether the firm objective can be a strict emphasis on WM or must recognize significant differences between the operating goal for managers and investors and the ultimate social purpose of the public corporation lies at the intersection of three literatures. In economics and finance literature, Wealth Maximization is a standard assumption. This WM operating goal is expected to yield the most socially efficient allocation of capital. Business ethics, corporate social responsibility, and stakeholder theory literature emphasizes significant differences between an operating goal of Wealth Maximization and the ultimate social purpose of the public corporation.

Corporation law addresses duties, responsibilities, and rights of both financial and nonfinancial stakeholders. In the United States, the business judgment rule and in various states corporate constituency statutes permit relaxation in WM as an operating goal in favor of stakeholder and social considerations. This addresses ethical considerations concerning the WM principle and its managerial implications. A key factor in understanding WM is that the firm corporation is simultaneously private property, a web or nexus of contracts, a governmentally licensed and traded securities registrant, a social benefits entity, and a locus of stakeholder relationships.

This explains some basic points of general relevance. The second section discusses the historical background of WM, corporate social responsibility in Nigeria firms, corporate social responsibility in Nigeria oil sector. The explicate three critiques of SWM arising from (1) Business ethics and corporation law, (2) Corporate social responsibility (CSR), (3) Stakeholder theory: The concludes with a summary of the arguments for and against WM and (CSR) their implications for managers. At law, officers and directors have a fiduciary duty to safeguard the financial interests of the shareholders (or shareowners). The WM principle can be

stated, however, in two forms. The stronger firm argues that, within any set of legal and ethical constraints, the firm objective is and should be strictly WM.

The operating goal and ultimate purpose of the firm corporation are the same. Fiduciary duty ought therefore to be tightly focused on WM. From this viewpoint, CSR activity is inappropriate wealth-decreasing altruism unless it yields future positive returns to the firm. This strong firm associates with the views that legal and ethical constraints on corporate activity ought to be minimal and that institutions (including common law and social norms) should be market-facilitating. A multinational corporation may be able to select sets of legal and ethical constraints, varying by country, within which it will operate.There may be a significant difference between firm objective operating goal and the ultimate social responsibility of the firm corporation. A weaker firm therefore relaxes the strict formulation to a more nuanced argument that the firm objective is and should be primarily WM. A relaxation admits, beyond legal and ethical constraints, consideration of CSR and interests of nonfinancial stakeholders. The relaxation understands that managerial responsibility is more complicated than mere fiduciary duty. The relaxation accepts that legal and ethical constraints are and ought to be stronger than minimalist (Windsor 2008).

One must decide which view to accept. One way to combine strong firm and weak firms is to argue that shareowners can and do make pragmatic choices that best protect their financial interest. A combined approach retains the financial goal and market context of the strong firm but expects shareowners to figure out how best to address agents, nonfinancial stakeholders, and gatekeepers (Boatright 2007). The shareowners may decide to act in accord with the weak firm in order to advance the WM goal posited in the strong firm.

This explains three key objections to a strong Wealth Maximization formulation of the firm objective. These objectives are logically admitted by any nuanced statement of WM as a primary rather than as a singular goal for managers. As previously explained, a goal and a purpose need not be the same. The narrow

(but socially penultimate) goal of investors is to maximize financial return. The broader (and ultimate) purpose of a public corporation, a rationale for government licensing, is generation of social benefits. Both corporate social responsibility (CSR) and wealth maximization should be positive.

The three objections are as follows. First, business ethics functions as a set of supra legal constraints on managerial conduct to avoid wrong acts and social harms. Second, CSR is a justification for corporate contribution of social goods in addition to legal compliance and business ethics. Third, stakeholder theory argues that any business must be a multiple-constituency and a social entity.

2.1 TECHNICAL CONSIDERATIONS WEALTH MAXIMIZATION (WM)The first important joint stock company was London-based Muscovy Company, which was chartered in the sixteenth century to trade with Russia (Sasse and Trahan 2007, 30). Adam Smith, in The Wealth of Nations (1776), commented adversely on Honorable East India Company’s (HEIC, 1600–1874) governance problems and the handling of monopoly rule in India. The Dutch East India Company (VOC, 1602–1800) was likely the first to issue public stock (i.e., shares traded on a stock exchange as distinct from a private placement). There was not much attention to corporate governance until the passage of the Joint Stock Companies Act in 1844 in the United Kingdom, and the United Kingdom introduced limited liability only in 1862 (Cadbury 2006, 16). Legal liability of public corporation shareowners today remains limited to capital invested. Bismarck introduced mandatory supervisory boards (i.e., today’s two-tier board system) for joint stock companies in Germany in 1870 (Cadbury 2006, 16).

The WM principle is relatively recent (Englander and Kaufman 2004). The traditional underpinning of firm corporations has always been an appreciation of private property rights as the foundation of market capitalism: in theory, capital investors organize firms and hire agents to manage them. This underpinning aims at prudent conservation. The classical statement occurred in Harvard College and Massachusetts General Hospital v. Francis Amory (9

Pick., 26 Mass. 446, 461, 1830, Supreme Court of Massachusetts, for Suffolk and Nantucket, Judge Samuel Putnam): “Do what you will, the capital is at hazard.” Trustee Armory, trading in riskier business stocks rather than investing in bonds or real property, lost much of a corpus bequeathed to Harvard College (an annual dividend being paid to the donor’s widow) and was sued for recovery.

Modifying stricter English common-law standards requiring virtually absolute conservation of capital, the court accepted greater flexibility in the conduct of trustees. The court articulated the guiding principle as follows: “These trustees are not to be made chargeable but for gross neglect and will mismanagement. The capital stock of any for-profit enterprise is divisible into ownership shares for legal definition of duties, responsibilities, and rights, and for purposes of theorizing. The exact form of the enterprise and the related division into shares is a matter of law. Large, publicly traded corporations typically have many owners and diffused ownership, even with large blocks of institutional investors. A shareowner, or shareholder, is an individual or entity owning an equitable interest. The interest (or financial stake), consisting of one or more shares, conveys to the holder limited rights (and liability) to control the entity and to the residual revenues (or profits), if any. A shareowner risks capital in order to obtain return on investment. Rights to control and residual revenues are held jointly by (distributed among) the owners in some proportion to number of (and sometimes type of) shares held. Issues of majority versus minority shareholder rights and types of shares (preferred versus common, voting versus nonvoting) are not the concern of this chapter. The discussion of WM here proceeds from a basic, idealized conception of the firm corporation as a large set of shareholders holding approximately equal rights to control and to profits.

New underpinnings for today’s WM principle developed in the twentieth century. One underpinning is agency theory, positing the separation of legal ownership and effective control. Another underpinning is economic efficiency in real and financial markets: Investors contribute capital to firms in

expectation of earning the relatively highest return on investment (Lea 2008). Another underpinning is an understanding of the firm as a web or nexus of contracts (Lea 2008). This contractual view is the dominant one in economics and finance literature.

Managers in a firm owned corporation with a separation of ownership and control are agents in a position of trust, which is defined as having a fiduciary duty to the principals. This fiduciary duty is to safeguard the assets of the owners. The fiduciary duty is not, however, necessarily to maximize shareholder wealth in the sense of return in addition to safeguarding assets. The fiduciary’s first responsibility and concern is always to safeguard firm assets. Shareholder wealth maximization is a norm for prescribing what the fiduciary should do once asset safety is reasonably assured. Both return and risk are involved in WM higher return implies greater risk.

Shareholder wealth can be defined, at any time, as the market capitalization of the public corporation. This market cap is the number of equity shares out-standing multiplied by the share price at the time of calculation. Market cap is an estimate, by capital markets, of the net worth of the firm. The market cap reflects the firm’s tangible assets plus the future expected residual revenues, which may be distributed as dividends or kept as retained earnings. The estimate thus includes the future expected dividend stream. Higher earnings per share (EPS) of common stock (i.e., equity) will tend, ceteris paribus, to increase the market price of each share (and thus the market value of the firm) and to permit in principle either additional investments in profitable projects or higher dividends.

A problem inherent in the market cap definition is that it involves an artificial dimension of subjective valuation by buyers and sellers. There can be artificial bubbles, particularly for real estate and commodities. In a bubble, the price-to-earnings ratio rises, often rapidly. The WM principle effectively encourages investors to demand, and management to supply, actions that will increase share price over time. There is a significant difference between these

management actions and the process of subjective valuation in capital markets. Free cash flow, defined as net operating cash flow minus capital investments, occurs in product markets; and management has direct control of decisions affecting free cash flow, which is then available to exploit opportunities to enhance shareholder value. Real free cash flow is more difficult to manipulate than accounting profit. But capital markets independently evaluate the estimated worth of free cash flow or earnings per share or any other relevant measure.

This evaluation process might be influenced by management actions and information, but it is not under direct control of management. (Management itself is subject to being disciplined or even replaced by what is termed the market for control of the firm itself.)

How to define the WM norm as a specific corporate objective and how to measure that objective concretely in order to show an increase or decline in wealth remains a matter of disagreement. There are three different approaches to thinking about measurement: accrual accounting, cash flow, and market value added. The traditional profit-maximization model of the firm embeds the accrual concept of net income (i.e., profit). Accrual profit is a declaration, in accordance with accounting principles, of the difference between revenues and expenses over an accounting time period (such as a quarter or a year). Accounting declaration is subject to manipulation of revenues, expenses, and net income.

One the approaches, stock price has the strongest claim to approximating shareholder wealth. Aggregate shareholder wealth, measured as market capitalization or market value, is then the value (i.e., market price) of each share times the number of shares outstanding. The formula for this measurement can be stated as follows:

MV = V × S

WhereMV = market value

V = value of each share (i.e., of common stock)

S = number of shares outstanding (i.e., of common stock

The wealth of an investor is more related to cash flows than to accrual profits. The cash-flow model of the firm uses free cash flow computed as net operating cash flow less capital expenditures without respect to specific accounting time periods. One can think of a cash flow return on investment. This real measure avoids accounting distortions or manipulations. Free cash flow can also be computed as net income plus amortization and depreciation less changes in working capital less capital expenditures. Negative cash flow might signal large investments in the firm’s future success.

2.2 CORPERATE SOCIAL RESPONSIBILTY IN NIGERIA FIRMSThe foregoing brings to the fore, Corporate Social Responsibility in Nigeria vis-à-vis the CSR Bill before the National Assembly. The most active sector in Nigeria is the oil industry and it is where the Nigerian Government derives over 70 per cent of its revenue. The Nigerian oil sector is dominated by big players such as Shell, Chevron-Texaco, Exxon Mobil, and Agip that have extended business interests across the seas into the geographic confines of the country. While the Nigerian state has a strong challenge of abuses of rights by multinational corporations over the years, recent interventions by international advocacy groups and the unrelenting struggles of victims of the operations of these oil companies are making them to be more socially responsible. This of course is still not within the acceptable range. The environmental protection laws have been largely neglected as government lacks the political will to enforce its own laws.

While Nigeria government slow in enforce CRS in firm, developed nation enforced and adopted CSR. Canada adopted CSR in 2007. Prime Minister Harper encouraged Canadian mining companies to meet Canada’s newly developed CSR standards.The ‘Heilbronn Declaration’ is a voluntary agreement of enterprises and institutions in Germany especially of the Heilbronn-Franconia region signed the 15th of September 2012. The approach of the ‘Heilbronn Declaration’ targets the decisive factors of success or failure, the achievements of the implementation and best practices regarding CSR. A form of responsible entrepreneurship shall be initiated to meet the requirements of stakeholders’ trust in economy. It is an approach to make voluntary commitments more binding.

In the 1800s, the US government could take away a firm's license if it acted irresponsibly. Corporations were viewed as "creatures of the state" under the law. In 1819, the United States Supreme Court in Dartmouth College vs. Woodward established a corporation as a legal person in specific contexts. This ruling allowed corporations to be protected under the Constitution and prevented states from regulating firms. Recently countries included CSR policies in government agendas.On 16 December 2008, the Danish parliament adopted a bill making it mandatory for the 1100 largest Danish companies, investors and state-owned companies to include CSR information in their financial reports. The reporting requirements became effective on 1 January 2009. The required information included:

CSR/SRI policies

How such policies are implemented in practice

Results and management expectations

CSR/SRI is voluntary in Denmark, but if a company has no policy on this it must state its positioning on CSR in financial reports.

Many companies operating in Nigeria argue that they perform better in their responsibilities to the society and that government should gather its loins to perform optimally. They contend that it is the failure of government to discharge its responsibilities that have made the various communities to be turning the heat on them.The discourse on corporate social responsibility raises the question of how social performance can be evaluated. A social impact assessment is a reasonable yardstick. It consists of a regular, independent, systematic, documented and objective evaluation of the environment performance of an organization. It is imperative however to have these procedures not only on paper but transparently undertaken.

The perceived infrastructural dearth and inequities in the Niger Delta prompted government to establish the Niger Delta Development Commission (NDDC) and recently the Niger Delta Ministry to cater for the needs of the Niger Delta Area. Established in 2000, NDDC was to facilitate ‘the rapid, even, and sustainable development of the Niger Delta into a region that is economically prosperous, socially stable, ecologically regenerative and politically peaceful’. The performance of NDDC to many observers is conjectural, and cynics and sceptics are not willing to give the new Ministry of the Niger Delta a chance as it is seen as one agency too many.

While the struggles of the freedom fighters cum militants, and those agitating for resource control in the spirit and letters of Federalism expose the region as the hottest battlefield in the country, it has succeeded in crippling the economic expectations from oil sales in the face of daunting global challenges.In the midst of the cacophonous buck-passing, a Bill on Corporate Social Responsibility is now before the National Assembly. The Bill is for an Act to create the Corporate Social Responsibility Commission, which will be charged with providing standards, integration of social responsibility, and international trade issues. The bill seeks to establish a supervisory organ that will mandate corporations and companies to spend 3.5 per cent of their profit before tax on Corporate Social Responsibility (CSR).

The role of the Commission will include: • Publishing the annual report of the social and environmental impact of the activities of firms;• Developing policies to encourage corporate organizations to undertake community engagement as part of CSR;• Ensuring that companies sponsor cultural and educational activities that offer added value to Nigeria’s socio-political and technological development;• Promoting statutory labor standards and collective social governance in the context of globalization; and• Ensuring that companies are accountable not only to employees and their trade unions but also to investors, consumers, and host communities and to the wider environment.These contribute to the merge literature on CSR in developing economies by providing a Nigerian perspective of CSR. Nigeria makes an interesting case to explore the meaning and practice of CSR for many reasons. Nigeria is the most populous black‐country in the world and is influential both within sub Saharan Africa and in the global economy – not least in the proven capability of her internal events to destabilize the global oil market. In fact, incessant political unrests within the country are not unconnected to the social and environmental concerns that lie at the heart of CSR debate.

Problems of poverty in the midst of plenty, environmental negligence and bureau‐political corruption implicate both the behavior of the Nigerian government and those of multinational oil companies in particular. There have been a number of studies on CSR in Nigeria, most of which have, mainly, focused on multinational firms and less on indigenous firms (e.g. Ite, 2004, 2005; Frynas, 2000, 2001; Boele et al 2001; Wheeler et al., 2002). If the CSR practices of multinational firms operating in Nigeria reflect the national business systems of their home countries, as Jones (1999) and van.The Shell vs Ogoni saga is a well-documented case study in CSR literature Tulder and Kolk (2001) argue, the question therefore arises on how indigenous Nigerian firms perceive and practice CSR. In other words, is there a Nigerian brand of CSR or is it an imitation of western CSR practices?

The EU’s Green paper on CSR defined it as ‘a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. And more recently, McWilliams and Siegel (2001:117) define it as “… actions that appear to further some social good, beyond the interests of the firm and that which is required by law. While the CSR construct is a new coinage, it is not a new practice. It could be traced back to such examples as the Quakers in 17th and 18th centuries whose business philosophy was not primarily driven by wealth maximization but by the need to add value to the society at large – business was framed as part of the society and not separate from it. The resurgent interest in the practice provides a fertile ground for different discourses and actors, which lends it to multiple and contested constructions (Moon 2002).

Despite her rich natural resources, Nigeria has a per capita income of around $390 and life expectancy of 45 years (World Bank, 2006). A more graphic comparative data on the socio‐economic condition of Nigeria is presented in the table below:TABLE 1Indices (2006) Nigeria Malaysia UK USAPopulation (millions) 139.8 25.2 59.4 293.3GNI per capita (atlas method, US$) 390 4650 33,940 41,400HDI 158 61 15 10Poverty (Head Count Ratio) 92.4 9.3 ---- ----Literacy (% of population age 15+) 67 89 >95 >95GDP (US$ billions) 72.1 118.3 2,140.9 11,667.5

World Bank (2006)

Given the dominance of the West in shaping the CSR agenda, the contemporary CSR movement could be, arguably, said to be largely founded on Anglo‐American priorities, philosophies and values (Kemp 2001; Chapple and Moon, 2005; Fig, 2005). And as typical of other business concepts, CSR is on its way to globalization, especially through Multinational Corporations (MNCs) and Multinational Institutions (MNIs).

However, a central concern in the current drive for global CSR practice is the seeming underlying assumptions of the homogeneity of the CSR construct at a global level. In this regard, there is a burgeoning literature on the meaning and practice of CSR across cultures and national boundaries (e.g. Orpen, 1987; Langlois and Schlegelmilch, 1990; Bennett, 1998; Jones, 1999; Quazi and O’Brien, 2000; Maignan, 2001; Kusku and Zarkada‐Fraser, 2004; Hamann et al., 2005; Fig, 2005; Chapple and Moon, 2005)6. A common strand that runs through most of these studies, suggests that meaning and practice of CSR is socio‐ culturally emblem.

2.3 CORPORATE SOCIAL RESPONSILIBILY IN NIGERIA OIL SECTORSThis section is founded on the assumption that firms are products of their socio‐ economic environment, which in turn shapes or influences their CSR activities. In order to understand the meaning and practice of CSR amongst Nigeria indigenous firms, therefore, it is worthwhile to situate the concept of ‘the firm’ within the Nigerian context. We do this by, first, examining the characteristic of the Nigerian corporate governance framework – which is the socio‐legal contract between firms and society; and later by exploring the socio‐economic conditions in which these firms operate.

This, in our opinion, creates some real challenges in adopting and implementing some western notions of CSR (i.e. responsible employee relations) in Nigeria and further questions the touting of CSR as a standardized global practice. Given the contract orientation of the Nigerian corporate governance framework we propose, therefore, that:The Niger‐delta region of the country, and indeed the entire Nigerian nation, has up to today continued to seek social justice and environmental protection but the oil politics is restlessly driven by powerful interests – the government and the oil firms. The Nigerian oil sector is dominated by MNCs. In order to make up for the government’s governance failures and in order to protect their business interests in the region, these firms often engage in CSR.

Arguably, the history of ‘organized’ CSR in Nigeria can be traced to practices in the oil and gas sector driven by western MNCs. Shell, for instance, has over time described their CSR activities in various terms to match with their intended strategies at each time – sustainable development, community investment, etc. The CSR activities in this sector are mainly focused on remedying the effects of their extraction activities on the local communities. So, the firms operating in this sector have often provided pipe‐borne waters, hospitals, schools, etc. However, these provisions have often been on an ad hoc basis and often not sustained.

Christian Aid (2004) in its report on the activities of Shell in this region, for example, confirmed that some of the schools, hospitals and other social amenities claimed to be provided by some of the firms in this sector have been abandoned or did not meet the needs of the communities they were meant to support. On the other hand, Ite (2004) argued that the government has continued to renegade on its commitment that it becomes almost impossible for the CSR investments by the oil firms to contribute positively to their host communities.

As typical of MNCs, the motivations to engage in CSR are varied – response to market forces, globalization, consumer and civil society pressures, etc. The activities of these firms are therefore visible because of their global reach. As such, there is a higher incentive to protect their brands and investments through CSR. However, most of these compelling pressures to be engaged in CSR may not necessarily be applicable to most Nigerian indigenous firms. For instance, no indigenous Nigerian firm has multinational operations 16 and less than 20 percent of all registered companies are publicly quoted. Most indigenous firms in Nigeria are SMEs, privately held, family owned and operated (Limbs and Fort 2000; Oyejide and Soyibo, 2001; Ahunwan, 2002). Local consumer and civil society pressures are almost non‐existent.

And moreover, law enforcement mechanisms are weak and made inefficient by institutionalized corruption. In this regard, we argue the case that the socio‐cultural characteristics of Nigeria are unique and as such, the meaning and

practice of CSR amongst indigenous Nigerian firms would mainly be shaped by the socio‐economic conditions in which these firms operate.

2.4 Some of the drivers pushing business towards CSR include:

1. The shrinking role of governmentIn the past, governments have relied on legislation and regulation to deliver social and environmental objectives in the business sector. Shrinking government resources, coupled with a distrust of regulations, has led to the exploration of voluntary and non-regulatory initiatives instead.2. Demands for greater disclosureThere is a growing demand for corporate disclosure from stakeholders, including customers, suppliers, employees, communities, investors, and activist organizations.3. Increased customer interestThere is evidence that the ethical conduct of companies exerts a growing influence on the purchasing decisions of customers. In a recent survey by Environs’ International, more than one in five consumers reported having either rewarded or punished companies based on their perceived social performance.4. Growing investor pressureInvestors are changing the way they assess companies' performance, and are making decisions based on criteria that include ethical concerns. The Social Investment Forum reports that in the US in 1999, there was more than $2 trillion worth of assets invested in portfolios that used screens linked to the environment and social responsibility. A separate survey by environs International revealed that more than a quarter of share-owning Americans took into account ethical considerations when buying and selling stocks. (More on socially responsible investment can be found in the 'Banking and investment' section of the site.)5. Competitive labour marketsEmployees are increasingly looking beyond paychecks and benefits, and seeking out employers whose philosophies and operating practices match their

own principles. In order to hire and retain skilled employees, companies are being forced to improve working conditions.6. Supplier relationsAs stakeholders are becoming increasingly interested in business affairs, many companies are taking steps to ensure that their partners conduct themselves in a socially responsible manner. Some are introducing codes of conduct for their suppliers, to ensure that other companies' policies or practices do not tarnish their reputation.Some of the positive outcomes that can arise when businesses adopt a policy of social responsibility include:1. Company benefits:

Improved financial performance;

Lower operating costs;

Enhanced brand image and reputation;

Increased sales and customer loyalty;

Greater productivity and quality;

More ability to attract and retain employees;

Reduced regulatory oversight;

Access to capital;

Workforce diversity;

Product safety and decreased liability.

2. Benefits to the community and the general public: Charitable contributions;

Employee volunteer programs

Corporate involvement in community education, employment and homelessness programs

Product safety and quality.

3. Environmental benefits:

Greater material recyclability;

Better product durability and functionality;

Greater use of renewable resources;

Integration of environmental management tools into business plans, including life-cycle assessment and costing, environmental management standards, and eco-labelling.

2.5 Limitations of CSR in regard to wealth maximization

The practice of CSR is not a universally accepted principle in business

organizations. Although the media and current business systems have

rationalized it to make it appear legitimate and close to mandatory. Some

organizations practice it not out of principle but to conform to the hype and

avoid being viewed as irresponsible (Friedman, 1970).

The classical thoughts on business practice did not give much concern to CSR.

Wealth maximization was the premise that all business organization should

subscribe to. The rise of capitalism also gave credence to wealth accumulation.

In the Wealth of Nations, Adam Smith presents a production model that

emphasize on specialization. Production for wealth accumulation is presented

as the core business of organizations while other agencies should specialize in

other activities.

The classical economic thoughts present CSR as a diversion from the core

business of an organization. It is against the principles of specialization since

an organization involved in CSR is venturing into the activities of other people.

CSR makes business organizations act like the state and its agencies

(Friedman, 1970). There are state departments that should be involved with

environmental conservation. It is their duty to ensure that the environment is

conserved. Organizations should not bear this burden. This deprives the unit of

organization wealth.

3.0 MethodologyCSR is a long term investment to organizations. From the surface, CSR can be viewed plainly as taking resources from the business to another activity. This view makes CSR appear like an expense and as wealth maximization of firms’ objective. However, the effects of CSR in both short term and long term are instrumental in achieving an organization’s objectives (Blackburn, Doran and Shrader, 1994).

And then use the results of a purposive survey of the meaning of CSR among Nigerian banks to conduct an exploratory analysis of indigenous conception of CSR. We finally discuss the findings and conclude Nigerian Corporate Governance framework and Socio‐economic conditions.We ensured that the research design and data collection matched the research objective – to explore the meaning and practice of CSR in Nigeria.

In order to avoid imposing any pre conceived connotations of CSR, the study adopts a two pronged and two stage approach. First, it starts by drawing on ‘informed’ firm opinion of Nigerian indigenous private sector leaders across the four key sectors of the Nigerian economy: oil & gas, telecom, finance and manufacturing. From available directories, comprehensive list of companies in each sector was generated.

These business leaders were identified and selected based on their entrepreneurial achievements, which are visible in the firm’s domain. Most of these respondents are CEOs or other Senior Executive Personnel who, by virtue of their positions have sufficient knowledge of CSR activities in their sector and the economy. Data were collected through structured interviews (face‐to‐face,

telephone and emails). Getting hold of this caliber of people is very challenging given their very busy schedules and distance. We leveraged on social networks to overcome this barrier. In all we recorded 41 interviews.

The instruments for the structured interviews were designed and developed strictly to elicit responses in relation to meaning and practice of CSR activities in Nigeria. The researchers recognize that one of the drawbacks of self-reporting of CSR activities is the danger of public relations (PR) misuse (i.e. blowing one’s trumpet), as such, questions were open‐ended to avoid biasing the responses. In addition, the questions were phrased to give respondents the leeway to talk of activities outside their firms and not use the self-reporting for PR. The questions were also brief and straight to the point.The second leg of the research maps the outcome of the interviews on one of the key sectors of the economy in order to validate the first stage. In this case, the financial services sector (especially banks) was chosen because it is about 90 percent owned and run by indigenous firms. It is anticipated that this sector will provide a much more succinct indigenous meaning and practice of CSR in the Nigerian economy than manufacturing, telecoms and oil/gas sectors, respectively, which have significant presence of multinational firms.

This part of the study was based on CSR customers reporting of the firms in this sector in line with similar studies in this area (Chapple and Moon, 2005).The result of both the structured interviews and the content analysis of the customers‐based CSR reporting are presented below.

4.0 DATA ANAYSISAll the interviewees acknowledged that Nigerian firms are engaged in one CSR activity or the other. However, In line with this philanthropic and altruistic understanding of CSR 85 percent of the respondents said that there is an awareness of CSR in Nigeria but without significant actions, while 7.7 percent either claimed there is almost no awareness of CSR or there is high awareness with significant actions, respectively as shown in the table below:

TABLE 2

Level of Awareness Characteristic of level %Low Almost no awareness 7.7Medium Awareness without significant action 8.5High Awareness with significant action 7.7

In terms of CSR waves, the interviews and customers reporting both show that the emphasis is more on community involvement, less on socially responsible employee relations and almost none existent in relation to socially responsible products and processes. Only a bank reported of its social responsible investment product – ethical funds. The top five issues reported on the community involvement wave from the interviews are as shown below:

TABLE 3

Current Issues Addressed %Education (including training and skill development) 46Provision of health care 38Infrastructure development 31Sports/ Arts and Culture 23Poverty alleviation 8

These correspond to what were identified through customers reporting analysis. When asked of issues they would want addressed via CSR the respondents repeated the above issues but substituted sports/arts and culture CSR activities with security issues:

TABLE 4

Expected Priority Issues %Education (including training and skill development) 85Provision of Health care 62Infrastructure development 54Poverty alleviation 31Security 23

These priorities, again, mirror the peculiarity of the Nigerian socio‐economic conditions. As expected, most multinational firms operating in Nigeria miss out on these priorities but rather focus on either CSR mandates from their home countries or CSR activities that directly impact on their businesses (i.e. ‘strategic’ CSR), while sometimes ignoring local constructions of CSR.

However, these firms are beginning to respond to local needs, albeit, strategically. In November 2002, the British American Tobacco (BAT) Nigeria established a British American Tobacco Foundation, the role of which is to identify and implement community enhancement programmers across Nigeria. The foundation has commenced series of Poverty Reduction Projects for unemployed youths in different States of Nigeria. The foundation is also working with the International Institute of Tropical Agriculture to provide improved maize seedlings and cassava cuttings to farmers from communities of production.

These activities targeted at the community and the suppliers (tobacco farmers) are meant to directly raise the livelihood of these stakeholders and ultimately the purchasing powers of consumers (mostly youths). BAT Nigeria in the same year introduced an Undergraduate Internship Programs to contribute towards the development of promising undergraduates and prepare them for life in the corporate world. This programs, it could be argued, is primarily a strategy for BAT to enhance the quality of its employable labor pool. It could also benefit

the wider society in form of knowledge spill over as BAT may not be in a position to employ all the interns.

Shell Nigeria, also, has a similar program which it uses to enhance the science and engineering skills required in the Nigerian oil and gas sector. In essence, while indigenous firms are more involved in philanthropic CSR, the multinational firms are more strategic ‐ their CSR activities (e.g. poverty alleviation and capacity building) cut across both the market and non-market environments corporate strategy (Baron, 1995; Lantos, 2001).

The following were identified by the interviewees as the top five main drivers of (reasons for) CSR in Nigeria:TABLE 5

Drivers %Local needs (community expectations)/ public pressures 46Globalization (including multinational influences) 38Competition 38Public Relations (branding) 38Regulation 31Firm’s success 31

These drivers are not unique to Nigeria and have been identified in other cultures and national business systems, as well. But the interesting thing, here, is how similar drivers across localities give rise to different CSR responses, which further reinforces the argument that CSR is a socially embedded construct and practice. The respondents all agreed that CSR is necessary in the Nigerian business environment.

Some of the reasons they gave for this response include the need for the private sector to complement the government in providing for the people (e.g. through capacity building, infrastructure development and healthcare provision), as well as the awareness that companies cannot truly claim to be successful and outstanding performers if the economy and people in which they claim to have attained this success are below par – as the case of Nigeria.

Some also argued that many of the firms in Nigeria make huge profits and they need to give back to assuage the sometimes overt or covert deleterious effect of their activities. This view is well reflected in one of the comments of the interviewees:

It is necessary mainly to remind the companies which make huge profits from Nigeria that their customers are not only economic clients but social beings with social needs which can be enhanced by the corporate social responsibility activities (Academic/Consultant). While this comes across as a reasonable expectation, it will be worthwhile to situate it within the context offered by the Nigerian corporate governance framework for such social orientations.

Unfortunately, this will be hard to achieve as long as the institutional framework places more emphasis on firms as private actors, with private rights mainly embedded in contracts (license of operation), and less emphasis on firms as fabrics of the society with the purpose of providing some social benefits (i.e. employment, productivity, economic growth, sustainability, etc) (Fannon, 2003). By its emphasis on shareholders wealth maximization the Nigerian legal framework as earlier discussed in this paper would appear to be promoting a U.S type contractarian approach.

To further underscore the recognized interest within a registered company, the Act makes the constitution of a company i.e. the memorandum and article of association of the company a contract between the company and its members (stockholders) and officers (management) and between members and officers. Under the Act, the law thus essentially reflects the shareholder supremacy and shareholder wealth maximization goal of the U.S contractarian school. In other words, a corporate governance framework reform would be needed to orientate Nigerian firms towards social considerations.

4.1 DISCUESSION OF FINDINGThe practice of CSR is grounded in responsible business practices. This is the greatest pillar of business ethics and firm objectives.

As anticipated, the meaning of CSR was largely framed to reflect the local realities. In an environment where basic human needs and infrastructure (by western standards) are a luxury, CSR was mainly seen from a philanthropic perspective – a way of ‘giving back’ to the society. Almost all the people interviewed described CSR along the lines of philanthropy and altruism. Some of these descriptions include:

Corporate Social Responsibility the corporate act of giving back to the immediate and wider community in which organizations carry out their business in a manner that is meaningful and valuable and relevant to that community” (CEO of a consulting firm).Corporate Social Responsibility is a way for the companies to reach out to their host communities by positively impacting on their environ” (Senior Executive of an Oil/Gas firm)Corporate Social Responsibility a way of saying ‘thank you’ to the environment in which they operate and a way of also showing a sense of belonging to the society at large” Content analysis of the customer’s reports also confirms this inclination to interpret CSR in terms of philanthropy. The overwhelming conception of CSR as philanthropy may not be unconnected to traditional socio‐cultural heritage of the indigenous firms. For different regions of Nigeria, the traditional, family or kinship pattern of production characteristic of agrarian mode of livelihood – the household economy – has been the governing order of business organization which is still reflected in the structure of most indigenous firms (see Nafziger, 1969, 1977; Silverstein, 1983, 1984).

For CSR therefore, the kinship‐network‐ based system of business organization would imply that businesses first serve the interest of their network members as their primary constituency and society. Philanthropy, goodness to society, charity are therefore conceived within the moral economy of kin‐ based solidarity and reciprocity (Adi, 2006). A traditional and informal sector example of this would be the case of auto spare‐parts business cluster found in Nnewi,

Eastern Nigeria that play crucial roles in their local community development including, provision of city‐wide security.

CSR as philanthropy in Nigeria could also be tied to some religious influences. Nigeria is a very theistic country. The belief in the supernatural or some spiritual realities is central to the weltanschauungs of an average Nigerian (Adi, 2006). It can be argued, therefore, that since gifts and sacrifices are core to religion, the same beliefs could have easily found an outlet/expression in the Nigerians’ understanding and practice of business‐society relations. However, one would have expected this religious inclination to influence the attitude of Nigerian businesses to bribery and corruption – the domain of ethical responsibilities. This did not come through in the study.

One way of accounting for this could be that the firm as a mode of production is a borrowed practice and therefore alien to most African countries. As such most of these countries make less demands on firms in terms of economic responsibility, legal and ethical responsibilities, especially as these responsibilities are enforced through market and regulatory forces, which unfortunately are weak in most African countries, including Nigeria. This could also account for the lack of emphasis on the other waves of CSR (i.e. socially responsible products and processes and socially responsible employee relations), which are prevalent in western economies with strong markets and regulatory mechanisms.

5.0 CONCLUSION AND RECOMMENDATIONWealth maximization at the expense of CSR will make organizations inhuman entities that exist to exploit humanity rather than enriching their lives.CSR in Nigeria Firms should be aimed towards addressing the peculiarity of the socio‐economic development challenges of the country (e.g. poverty alleviation, health care provision, infrastructure development, education, etc) and would be informed by socio‐cultural influences (e.g. communalism and charity). Petroleum companies like shell have had their fair share of bad publicity in relation to global warming. These organizations have to invest

heavily in environmental CSR to offer an antidote to the claims in their community. The results/analyses show that the understanding and practice of CSR in Nigeria is still largely philanthropic and altruistic. And most people think that CSR is one of the many ways companies can plough back a portion of their profit to their immediate environment. This finding is in many ways at variance with the current understanding and practice of CSR in Western economies, where CSR is argued to have ‘advanced’ beyond philanthropy.

Today, corporate social responsibility goes far beyond the old philanthropy of the past– donating money to good causes at the end of the financial year – and is instead an all year round responsibility that companies accept for the environment around them, for the best working practices, for their engagement in their local communities and for their recognition that brand names depend not only on quality, price and uniqueness but on how cumulatively, they interact with companies’ workforce, community and environment.

Now we need to move towards a challenging measure of corporate responsibility, where we judge results not just by the input but by its outcomes: the difference we make to the world in which we live, and the contribution we make to poverty reduction. (Gordon Brown, Chancellor of the Exchequer of the UK government).

The Foreign Corrupt Practices Act (1977) and the Sarbanes-Oxley Act (2002) are illustrations.Given compliance with these antecedent conditions, then management should attempt to maximize the sustainable economic value of shareholders’ investments over time. Time horizon is a matter of strategic judgment. The shareholders must be concerned to minimize misappropriation of this economic value by management acting as self-interested (i.e., opportunistic) agents. And such agents may undermine efforts at meeting the antecedent conditions.

The corporates objective is further constrained by three strategic considerations bearing on management choices. First, some purpose like CSR other than money may be a better strategy and may better enhance employee productivity and stakeholder loyalty (George 2001). Second, sufficient stakeholder satisfaction to ensure loyalty (rather than exit or voice) is strategically valuable. Third, doing some social good (some corporate social responsibility or corporate citizenship) beyond avoidance of wrongs and harms may prove to be a smarter long-run strategy, and may be increasingly demanded or expected by important stakeholders.