1.1 Introduction
The ultimate goal of every firm in business is profit (maximize wealth) and cost minimization in order to maximize shareholder wealth. Many industries today are facing problems due to the expansion through increases sales and the introduction of new product. Some on the other hand are facing problem of contraction owing to the introduction of substitute material. It is vital that management should be in position to plan for these changing levels of activities. Management is faced with the problem of how to make effective and efficient use of their available scarce resources in order to achieve the objective of profit maximization. Most management and organization lack under-standing on the importance of cost minimization as an effective tool or technique that has help in the sustainability on most business organization.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
An organization has been viewed by management practitioners as a social system that its inputs i.e raw materials, money, machine, man and information from the operating environment and subsequently transformed such inputs into finished products that provide satisfaction for the people in the environment. It is a well known fact that corporations are established to achieve certain goals of which profit maximization is said to be imperative.
The need for corporate social responsibility (CSR) to their host communities has become a major concern for governments and business organizations. Reason for this argument is borne out of the fact that companies are not established for their owners alone. It is generally noted that the activities of corporations have both negative and positive impacts on the environment.
The profit maximization objective of a business firm has been widely criticized. It is contented according to Pandy (2016) that profit maximization objective assumes a situation of a perfect competition, and in the face of imperfect modern market, it cannot be a legitimate goal of a business. Further still, it is argued that the profit maximization as a business objective came into existence when business ownership structure were mostly self financing, private property and single entrepreneurship. The singular/common purpose of the owner is therefore, to increase personal wealth and influence, which could easily be satisfied by the profit maximization goal.
Henderson (2001), observed that corporate social responsibility (CSR), the set of standards to which a company subscribes in order to make its impact on society, has the potential to make positive contributions to the development of society and businesses. More and more organizations are beginning to see the benefits from setting up strategic CSR agendas. The CSR movement is spreading over the world and in recent years a large number of methods and frameworks have been developed, the majority being developed in the west. This research work, though, will take its focus on Africa in general, and on Nigeria specifically. The purpose is to investigate and analyse the concept of CSR from a Nigerian perspective.
According to Maignan and Ralston (2002) a wide range of behaviours are classified under CSR including cause-related marketing, sponsoring charitable events, offering employee volunteerism programs, making charitable donations, utilising environmental initiatives and demonstrating a commitment to health and safety issues in the host community. The foregoing implies that as corporations enjoy outstanding performances in terms of profit making and organizational development they should positively impact on the country of operation. This according to Wikipedia (2008) report is synonymous to corporate responsibility.
In the light of the above, the company is responsible to those who invest in it. Shareholders should enjoy adequate returns on money invested on its operations. In the same vein, the workers who are responsible for the organization’s profit generation deserve proper welfare packages. On the other hand, suppliers of raw materials should be catered for, while the customers that purchase the goods and services offered by the company have the right to maximum satisfactions derivable from using it products at affordable prices.
The challenges facing most firms is numerous particularly during the period of economic depression or recession characterized by high liquidation of many companies, merger and acquisition, low technological powers, shortage of foreign exchange to buy needed raw material, high cost of production, erratic powers supply, high volume of imported goods and the advanced state of competition has affected drastically the maximization profit and cost maximization in most business organization.
Therefore, in Nigeria where the research was carried out, the activities that was conducted is to assess the Impact of Wealth Maximization Goal of Business on Corporate Social Responsibility.
1.3 Statement of Problems
Investigation revealed that the drivers for CSR in the west are to be found within areas such as increased brand value, greater access to finance, a healthier and safer workforce, stronger risk management and corporate governance, motivated people, customer loyalty, enhanced confidence and trust of stakeholders as well as enhanced public image. These drivers may not necessarily be applicable to Nigerian companies. Most indigenous companies in Nigeria are seen as, privately held, family owned and operated as such. Local consumer and civil society pressures are almost non-existent and law enforcement mechanisms are weak (Amaeshi, Adi, Ogbechie & Amao, 2006).
There are numerous ways of implementing CSR in an organization. CSR practices can address environmental issues, social issues or both. The implementation can be done by integrating CSR in the business or it can be run as a project. Sometimes there are CSR strategies and policies framing the CSR agenda, sometime there are not.
At the core of this issue is the role of business partnership with government and others to exemplify and model behaviours that restore optimism and improves trust. The challenges that face a business in Nigeria are unique business corporate social responsibility can probably not be optional in such a climate in a country where the social, health, education and environmental needs are so prevalent, where government resources are so stretched, where everyday people live on the breadline, business any other way is not only unethical, it is most probably not sustainable.
1.4 Aim and Objectives of Study
The aim of the study is to assess the Impact of Wealth Maximization Goal of Business on Corporate Social Responsibility in Nigeria. In achieving this aim, the following specific objectives were laid out as follows:
- To find out the relationship between Wealth Maximization Goal and Corporate Social Responsibility of Business in Nigeria;
- To investigate the factors limiting Corporate Social Responsibility on business wealth maximization;
- To examine how Nigerian organizations view their roles and part in reaching sustainable growth and development in Nigeria;
- To identity the major challenges facing CSR with regards to Wealth Maximization Goal of Business in the Nigeria; and
- To suggest ways by which problems of Wealth Maximization Goal of Business on Corporate Social Responsibility CSR can be solved.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- Are the major challenges facing CSR with regards to Wealth Maximization Goal of Business in the Nigeria?
- How does Nigerian organization view their roles and part in reaching sustainable growth and development in Nigeria?
- What are the factors limiting Corporate Social Responsibility on business wealth maximization?
- What is the relationship between Wealth Maximization Goal and Corporate Social Responsibility of Business in Nigeria?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: There is no significant relationship between Wealth Maximization Goal and Corporate Social Responsibility of Business in Nigeria
- H1: There is a significant relationship between Wealth Maximization Goal and Corporate Social Responsibility of Business in Nigeria
1.7 Significance of Study
It is hoped that this study will be of importance to students (Accounting, Banking and Finance, Business Administration, Economics etc) staff and management of business organization, the individuals in banking profession and the shareholders of the companies. The students are to be aware of the role played by profit maximization in business organization. Profit maximization is an essential tool in all business organization. In a competitive world, the key factors are cost, price turnover and profit, and these are factors which no business organization can ignore. Therefore, the significance of the study is as follows:
- It is useful to student in schools since it will serve as a source of reference to them in the nearest future.
- It is useful to the state since it is used by government in making decision for improvement of the states.
- It is useful to the economy as a whole since it is used by policy makers to maximize profit in the economy.
- It is a basis for understanding, contribution, margin pricing, related short run decisions and transfer pricing.
1.8 Scope of Study
The scope of the research is focused on the Assessment of the Impact of Wealth Maximization Goal of Business on Corporate Social Responsibility in Nigeria.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.10 Definition of Terms
Profit: The surplus remaining after total costs are deducted from total revenue, and the basis on which tax is computed and dividend is paid. It is the best known measure of success in an enterprise.
Profit Margin: The amount by which revenue from sales exceeds costs in a business. It is also a ratio of profitability calculated as net income divided by revenues or net profits divided by sales.
