Effect Of Corporate Social Responsibility On Profitability Of Listed Deposit Money Banks In Nigeria

CHAPTER TWO LITERATURE REVIEW
2.1    Introduction
In this chapter, a review of the extant literature on the subject matter is carried out covering conceptual framework, theoretical literature, and empirical literature.
2.2    Conceptual Framework

2.2.1    Corporate Social Responsibility

A key indicator to determine the true worth and value of modern organizations is their ability to give back to the society part of their income through some mutually beneficial initiatives otherwise often referred to as corporate social responsibility (Nkanbra & Okorite, 2007). The concept of CSR as a social obligation was first advocated by Carroll (1979). Carroll (1979) CSR pyramid is one of the best-known CSR concept which covers economic, legal, ethical and philanthropic expectations that a society has in relation to a company. According to Rendtorff and Mattson (2012), companies are perceived as human communities that use social practices in order to achieve common goals. These objectives are realized through bond of trust and authentic relationships with customers. The most important ethical principles that promote good life of customers are customer‘s autonomy, dignity, honesty, customer‘s vulnerability that represents basic presumption for decent access to customers.
Yeung (2011) defines key elements of CSR in the banking sector to include as understanding of financial services complexity, risk management, ethics in the banking business, strategy implementation for financial crisis, protection of customers‘ rights and channels settings for customer complaints. Macdonald and Rundle-Thiele (2008) examine a relationship between CSR and customers‘ satisfaction in the bank. According to the conclusion of their study, customers‘ satisfaction is more affected by pro-client oriented events than CSR activities. And if the bank decides to develop CSR activities, focus of these activities has to be properly chosen.
Robin (2008) states that society would like to have an economic system that creates opportunities for the growth of economic welfare and a happy life of people. The mission of ethics is to minimize the abuse of companies‘ power in the bilateral exchange relations and to reduce a negative impact on a people‘s daily live. A fundamental issue of business ethics is how to make capitalism more ethical. According to Sigurthorsson (2012), risk of CSR consists in the fact that it tends to become an excuse for soft law and corporate self-regulation. Icelandic banks implement their CSR concept through a financial support of charitable activities and they did not pay attention to a formation of socially responsible practices but reduced CSR tools only for public communication. Corporate social responsible practices should focus more on processes that make socially responsible profit and not on its distribution. Fassin and Gosselin (2011) also report that large institutions have a strong CSR and ethical culture.
CSR models present company‘s social obligations as comprising economic, legal, ethical and philanthropic responsibilities. Carroll (1991) notes that businesses were created as economic entities driven by a profit motive, thus economic performance undergirds the other three CSR components. Legal responsibility involves businesses complying with federal, state and local government laws and regulations (Carroll, 1991). This was followed by ethical responsibilities, those standards, norms and expectations that reflect a concern for what consumers, employees, shareholders and the community regard as fair, just and respectful of stakeholders‘ moral rights (Carroll, 1991). Finally, philanthropic responsibility was the expectation that businesses be good corporate citizens, actively engaging in programs to promote human welfare and goodwill (Carroll, 1991). A considerable amount of research effort has been directed towards identifying the positive impact of CSR initiatives on customers.
CSR as philanthropy in Nigeria could also be tied to some religious influences. N igeria    is    a    very    theistic country. The belief in   the   supernatural   or   some   spiritual   realities   is   central   to an average Nigerian (Adi, 2006). It can be argued, therefore, that since gifts and sacrific es are core to religion, the same beliefs could have easily found an outlet/expression in t he Nigerians‘ understanding and  practice of business‐society relations.