Magoosh GRE

Multinational enterprises and their CSR initiatives in Nigerian oil sector

| December 13, 2016

Abstract

Nigeria is a country which is endowed with considerable energy reserves. The oil and gas reserves found are some of the largest in the entire world. Multinational companies have been involved in the exploration and transportation of crude oil and gas in the country. The Niger delta region is the main area where the country’s rich energy reserves are found. The conduct of multinational enterprises in the region has been criticized because of allegations that corruption, bribery, environmental mismanagement, environmental contamination, and human rights abuses are being perpetrated towards indigenous communities. As a consequence, multinational enterprises have engaged in corporate social responsibility (CSR) initiatives in order to create a better image while serving the needs of local communities.

 

 

Introduction

Nigeria is one of the leading producers of oil and gas in the world. It has oil reserves that are estimated to be around 35 billion barrels while it has 5 trillion cubic meters of gas reserves (Amaeshi et al, 2006: p. 67). Nigeria is a country that has more than 250 ethnic groups with over 500 languages being spoken in the country. Despite its huge energy reserves, the country remains poor with over two thirds of the people living in abject poverty. A total of six multinational organizations are operating in the Nigerian oil and gas sector. These companies are the Royal Dutch Shell, Chevron, Exxon-Mobil, Agip, Total, and Texaco.  The Niger Delta region is the main area where the oil exploration and production is being carried out by foreign enterprises (Beauchamp, 2003: p. 92). These foreign enterprises have been criticized for failing to take adequate measures that can alleviate the poverty and suffering of indigenous communities. There have been accusations of corruption, mismanagement, environmental degradation, oil spills, contaminated water, and other problems in the region. As a consequence, there have been attempts by multinational enterprises to implement corporate social responsibility (CSR) initiatives in the region. However, the existing literature does not comment upon the different CSR practices of MNCs in Nigeria with respect to the local stakeholders and communities. This study will seek to investigate and assess the efficacy of the ethical practices by the multinational enterprises as they related to the empowerment and betterment of indigenous communities.

Research Question

The following research questions will be answered in this dissertation:

  1. What are the CSR strategies of multinational enterprises in Nigeria?
  2. What are the practical implications of CSR as it relates to improving the standards of living for local communities?
  3. Is CSR a genuine attempt to empower communities or is it a marketing strategy by multinationals?

Research Objectives

  • To study the similarities and differences of the CSR initiatives implemented by multinational enterprises in Nigeria
  • To determine the efficacy of CSR initiatives with respect to community empowerment and development
  • To study whether multinational enterprises in the Nigerian oil sector are genuinely concerned about empowering communities or such initiatives are simply marketing tools to improver the image of multinational enterprises

Literature Review

Corporate social responsibility is a term used to denote the actions and policies implemented by business organizations that are in accordance with ethical and legal principles. The goal of organizations is to implement self-regulation and align it with the overall business model.

The goal is to ensure that organizations can integrate ethics into their business model (Carroll, 2006: p. 76). A series of high profile business scandals in the past decades has meant that governments are now seeking to regulate the business environment through legislation that promotes transparency and accountability. Additionally, the customer segments are highly conscious about the business activities of enterprises because the latter must be able to demonstrate ethical behaviors in accordance with their actions. Alternatively, organizations are seeking to reduce the costs of complying with legislation by implementing CSR initiatives so that they can achieve efficiency and effectiveness. A number of theoretical approaches towards CSR have been developed in order to help organizations take responsibility for their actions while encouraging positive impact upon the environment, consumers, employees, and other key stakeholders. Corporate philanthropy is a CSR theoretical model which calls for providing monetary donations and aid to different communities. Such donations can come in specific areas like social welfare, environment, housing, health, and others (Carroll, 2006: p. 71).  The limitations of such a model are that it does not address the root causes of poverty and other problems in local communities. Another theory is that CSR should be combined with the overall business strategy. This theory seeks to help local communities by recruiting locals and training them so that they can upgrade their skills.

Enterprises create support for local industries through mutually beneficial relationships. Another theory focuses on creating shared value because it believes that social welfare is directly linked with business success. It recommends organizations to focus on sustainable development as well as a skilled workforce so that efficiency can be attained (Carroll, 2006: p. 79). There is still a gap in the existing literature as to whether CSR can really bring positive benefits to local communities and other key stakeholders. The Nigerian oil sector has been dominated by multinationals which have been accused of environmental degradation, corruption, human rights violations, and other abuses. As a consequence, they have sought to improve this by focusing on corporate social responsibility initiatives. Some studies argue that CSR is a process which involves organizations taking responsibility for their actions and ensuring that they can create a positive impact through their activities on the environment (Blunt & Richard, 2006: p. 169). Other studies have disputed this as they argue that organizations operate on the principle of profit maximization.

Research Methodology

Qualitative research has been selected for this dissertation because it helps to investigate the reasons behind any particular phenomenon. This is suitable for this dissertation because the aim is to study corporate social responsibility and its efficacy in Nigeria. Quantitative research has not been selected because there is no need for statistics and figures in this dissertation. The data will be collected from primary and secondary sources. Primary data will be collected through a survey that will be sent to top managers of multinational companies working in the Nigerian energy sector. The secondary data will be collected through studies that focus on CSR and its efficacy.

References

Amaeshi, K, Adi, B, Ogbechie, C & Amao, O. (2006) ”Corporate Social Responsibility in Nigeria: Western Mimicry or Indigenous Influences?”. No. 39-2006, ICCSR Research Paper Series – ISSN 1479 – 5124, The University of Nottingham.

Beauchamp, T. (2003) “Case studies in Business, Society and Ethics”. 5th ed”. Pearson, Prentice Hall.

Blunt, P, Jones, M & Richard , D. (2006) “Managing organizations in Africa”. Walter de Gruyter, pp.169-171.

Carroll, A. (2006) “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders”. Business Horizons, July-August 1991.

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Category: Business & Management, Outline Service