CORPORATE SOCIAL RESPONSIBILITY (CSR) AS A CONFLICT MANAGEMENT STRATEGY IN SELECTED OIL PRODUCING COMMUNITIES
1.1 Background of the Research
Every nation on earth survives through some means or another. Others survive primarily on agriculture, while others rely solely on tourism. Some countries, however, are lucky enough to be endowed with mineral resources such as oil and gas, which generate substantial cash.
Nigeria once relied heavily on agricultural items such as groundnut, cocoa, and palm produce to thrive. This was prior to the 1956 discovery of oil in Olobiri, Rivers State. Today, the country’s primary sources of revenue are oil and gas.
The blessing was accompanied by issues such as environmental deterioration, harm to economic crops and fish ponds, contamination of drinking water sources, and general threats to the health of the inhabitants in oil and gas producing regions.
According to Okoko and Nna (1998), oil and gas are the primary energy sources in the majority of industrialized nations in the world today. Furthermore, oil is Nigeria’s most valuable resource, contributing around 90 percent of the country’s income.
Nigeria’s petroleum sector is centered on the Niger Delta, which contains oil resources in the geopolitical regions of Abia, Akwa-Ibom, Bayelsa, Cross River, Delta, Imo, Ondo, and Rivers. Prior to the introduction of oil and gas activity in the region, the people of Niger Delta relied on a variety of agricultural and natural resources for their livelihood.
Whiteman (1982) noted that traditional medicine and subsistence occupations were prevalent among the populace.
Things have changed drastically, as the region has been engulfed in a crisis of instability as a result of protests carried out by communities in oil-producing regions over the impact of oil activities on the environment, which has led to environmental degradation, poverty, and a lack of social development and employment opportunities.
Four of the host villages’ youths blocked the entrance roads leading to the Mobil Production Terminal in Eket, Akwa-Ibom state, Nigeria, during February and March 2001. The youngsters took action because they were excluded from the company’s employment policies, contracts, and services.
In response to the company’s destruction of the environment and other unfavorable actions, the government rallied its legislative, executive, and judicial branches, as well as the media, against it.
Over the years, there have also been protests from Okoloba to Ogidigben, Ogbotobo to Bonny, Ogoni to Iko, Gbaran to Obagi, Umuechem to Peremabiri, and Egbema to Odegberi, among other locations. All of these issues are a result of a lackadaisical approach to spill cleanup, excessive delays in environmental impact assessment, and failure to compensate places whose environment has been negatively impacted.
In November 1990, for instance, residents of the Umuechem community in the state of Rivers demonstrated against environmental degradation caused by SPDC, the oil firm operating in the region whose operations had a negative impact on the environment.
This resulted in the soldier’s invasion of the town, which resulted in many deaths and the destruction of approximately 300 homes (NDND, 1991). Between January, 1993 and March 1997, the people of Ogoni in Rivers State organized a series of protests against oil drilling by SPDC in the area, which has resulted in the ‘theft’ of natural resources (Crude Oil) and the deterioration of the ecosystem without proper recompense for the people.
Many Ogoni people and foreigners, some of whom were kidnapped for ransom, were killed as a result of the impulsive response of the Federal government, which led to the invasion of the area by soldiers. Other measures detrimental to the corporate existence of Nigeria were also taken.
The Ogonis boycotted the 1999 presidential election, oil corporations ceased operations in the region, resulting in a historic reduction in the country’s oil earnings, and the economic loss was conservatively estimated at $7.2 billion (Barinuwa, 1999; Human Rights Watch, 2001; ICE case study, No 64, 1997).
In the past two decades, the relationship between the private sector and other stakeholders has undergone dramatic transformations. Consequently, the expansion of Corporate Social Responsibility is one of the most important and significant business trends of the past decade (CSR).
Due to a lack of consensus on the true meaning and contents of CSR practices, the concept of CSR is highly complex and contested among writers, scholars, and practitioners (Carroll & Shabana, 2010; Dahlsrud, 2008; Dobers & Halme 2009; Taneja, Taneja, & Gupta, 2011).
Although the definitions of CSR differ from author to author, it generally refers to serving people, communities, and the environment in a manner that beyond what is required by law for a business. CSR is a commitment to enhancing community well-being through best business practices and corporate resource contributions (Kotler & Lee, 2005).
This notion is actually defined differently by those who believe in it and those who do not. People view it from different angles. It is the obligation of those who believe in it to plan and manage an organization’s relationship with everyone participating in or affected by all of its activities in all of their operational repercussions.
They believe that a socially responsible firm is one that refrains from doing activities that the public may see as irrational, harsh, or insensitive. Those who disagree, on the other hand, argue vehemently that businesses cannot be “responsible” because only individuals can have duties.
For them, this represents a lack of accountability to shareholders who have committed their hard-earned money in order to generate profit. (Ogbemi, 2015). The reality is that making a profit should not come at the expense of the public. Profit-making must be ethical and humane.
The concept of corporate social responsibility is concerned with crucial environmental policies and practices. Its primary focus is on organizations that give back to the societies from which they profit. According to Zadek (2000), firms engage in CSR not just to improve their public image, but also to integrate stakeholders into the core business. Typically, CSR fosters mutual understanding between businesses and the communities in which they operate. (Keinert, 2008; Matten & Moon, 2008; Monowar & Humphrey, 2013).
The practice of Corporate Social Responsibility is becoming an integral aspect of modern company enterprises, which stimulates substantial future profits. (Brik, Rettah & Mellahi, 2010; Carroll & Shabana, 2010; Halme & Laurila, 2009; Kemper, Schilke, Reimann, Wang & Brettel, 2013; Monowar & Humphrey, 2013; Porter & Kramer, 2006; Rodriguez; Melo & Mansouri, 2011). Its significance has also risen as the majority of businesses and organizations have adopted the concept.
Kurucz, Colbert, and Wheeler (2008) enumerated and categorized the CSR-engaged organizations as follows. These include cost and risk reduction, competitive advantage acquisition, reputation and legitimacy development, and the pursuit of win-win outcomes via synergistic value creation.
In contrast to the work of Kurucz, Colbert, and Wheeler (2008), Carroll (1991) established a model that includes four additional types of social responsibilities: economic, legal, ethical, and charitable. Other aspects of CSR activities include Profit Concerns – Economic Responsibility, Legal Concerns – Legal Responsibility, Ethical Concerns – Ethical Responsibility, and Voluntary Action Concerns – Philanthropic Responsibility (Olajide, 2014).
Corporate Social Responsibility is closely related to corporate governance because both are concerned with the organization’s corporate image and its portrayal as a decent corporate citizen. Corporate governance can be defined as the oversight and implementation of an organization’s overarching objectives and strategy by its board of directors and other corporate bodies.
It may therefore be viewed as the set of rules that control and direct the behavior of corporations, shareholders, and management. These guidelines pertain to the characteristics of particular organizations and the variables that enable them to exercise sound governance even in instances where governmental institutions are deficient.
According to Cornelius and Kogut (2003), such elements often consist of a company’s ownership structure, its interactions with stakeholders, its financial transparency and information disclosure standards, and the composition of its managing boards.
It is the tactics and processes used to manage a company or the manner in which a particular firm is managed. It also refers to the techniques, procedures, and relationships through which corporations are directed, controlled, and managed. (www.investpedia.com/terms/c/arpirategover).
Corporate governance was also defined by Cornelius and Kogut (2003) as a system consisting of formal and informal institutions, laws, values, and rules that generate the menu of legal and organizational forms available in a country and determine the distribution of power on how ownership is assigned, managerial decisions are made and monitored, information is audited and released, and profits and benefits are distributed.
Corporate governance is also a theory and mechanism that comprises processes and structure that assist and enable the production of shareholder value through management of the corporation’s operations in a manner that protects the individual and collective interests of all stakeholders.
It is often connected with the presence of an agency problem, and its origins can be attributed to the separation of ownership and control within the organization. Corporate governance involves consequently public and shareholder openness and is directly tied to Corporate Social Responsibility (CSR). They both emphasize shareholder and stakeholder accountability as a means of conflict management.
Conflict management is essential for the peaceful resolution of disputes in any company. Conflict theory aids in elucidating its effects on societies and organizations. According to studies on conflict management, its significance is heightened in relation to the evolution and expansion of organizations. (Azar, 1990).
According to the conflict theory, societal conflict occurs when a few privileged and powerful minority groups rule against the majority’s interests. This has led to a great deal of violence in the Niger delta region of Nigeria, where the majority of oil and gas operations are conducted by multinational corporations or oil and gas businesses (Ojokarotu, 2008).
As a result of its persistence, conflict is unabated and diverse. This conflict has been described as having “deep roots.” Azar (1990) describes it as long-lasting and manageable, i.e. as complex, community-enduring, and frequently violent.
Conflict can be defined as conflicts resulting from participants’ dissimilar views, interests, and beliefs. It can also be viewed as a struggle between those who feel their interests are being challenged. Conflict management refers to the methods and strategies used to resolve it.
Conflict management refers to the techniques and procedures that aid in preventing or resolving conflict. These include appropriate methods for resolving problems, communication challenges, and complaints, as well as maintaining amicable and long-lasting relationships.
Studies in communication and related domains have shed light on the capacity of communication to foster relationship sustainability, which can propel positive change (Kotter, 1990). This will also contribute to the promotion of peaceful and efficient economic transactions between them and the host communities – broader stakeholders.
Information and communication are essential to any organization’s survival. The distinction between information and communication is rather weak. “While all communication contains information, not all information is communicatively valuable.” (15 Myers and Myers, 1982, p. Therefore, they are not identical in meaning but are quite close. According to Myers & Myers (1982):
Information is comparable to a vast canopy, a wide term that encompasses communication as one type of information. Information is a generic term for any pattern of energy intake to which you are exposed. The term ‘communication’ refers to a particular type of patterning that is expressed symbolically.
For communication to occur between and among people, two conditions must be met: (1) all parties must have a common symbolic system. (2) The connection between symbols and their signified must be shared (p. 15).
Communication is dependent on perception, which necessitates the sending of a message to a recipient who decodes it; hence, communication involves at least two parties. In contrast, information is founded on logic and is not codified in reciprocity (Drucker, 2007).
Communication is the giving and receiving of messages through signs, and in this context, organizational communication is a crucial aspect of organizational climate (Kotter, 1990). Communication is the process whereby humans convey meaning to another through vocal or nonverbal messages (McCroskey & Richmond, 1996).
In the Encoder/Decoder paradigm, communication is described as the flow of information through a code (Ivancevich, 2002), where communicators understand each other based on shared social and communicative cues. This is the simplest understanding of communication.
Nonetheless, where this is lacking, conflict arises. People’s (stakeholders’) perspectives must be considered for mutuality in order for communication to be effective and shared within and outside of an organization for conflict management.
According to Ivancevich (2002), the degree of significance in connection to comprehension is frequently indicated by the recipient’s response. When recipients comprehend messages, the likelihood of mutual understanding between sender and recipient improves.
When there is mutual understanding, relationships are inevitable. This also aids in conflict resolution. The practice of Corporate Social Responsibility (CSR) has thus become a recognized means and approach for attempting to address problems between corporations, corporate entities, and stakeholders, including host communities.
This is due to the fact that Corporate Social Responsibility (CSR) involves communication between oil producing businesses and members of the host communities in order to gain an awareness of the areas in which the host communities have requirements.
On the basis of the resulting knowledge, a good communication process could result in oil producing firms being sensitive to the requirements of the host communities. As the oil producing firms meet the requirements of the communities, tension between the communities and the companies will inevitably decrease, and goodwill will be shared by both parties.
In light of this, this study investigates the functions of Corporate Social Responsibility (CSR) as a conflict management technique in selected oil-producing areas in Delta State, Nigeria.
1.2 Description of the Problem
Since the discovery of oil in Nigeria, particularly in the Niger-Delta region, there have been numerous activity involving oil production, oil marketing, seismic companies, and all other ancillary enterprises. The exploration of oil has brought both rewards and hardships to the inhabitants of these regions.
According to Wosu (2013), oil companies’ exploratory activity in the Niger-Delta region of Nigeria has resulted in oil spillage and other types of contamination and degradation of the ecology, which is invariably the means of subsistence for the locals.
The oil corporations operating in the area and tasked with helping to develop it are accused of not caring about the wellbeing of the local population. In addition, they have frequently been accused of dishonesty and broken promises about the wellbeing of the people in their host communities.
As a result, the populace appears to be suffering from greater hardship, poverty, starvation, unemployment, and malnutrition. Intercommunal and intracommunal confrontations, intense agitations, and even the kidnapping of both indigenous and international oil company employees are some of the results of the scenario.
Moreover, oil exploration by various businesses in the region typically causes a great deal of social issues within the host communities. Numerous instances exist in which explosives used in prospecting activities harm aquatic life and leave cracks in structures, while oil leakage as a result of destroyed pipelines destroys the environment.
In addition to devastating crop destruction, farmlands and soil become barren and unproductive (Adekola & Uzoagu, 2012). Other difficulties include the elimination of aquatic life, which renders the people’s primary occupation, fishing, impossible.
As a result of the people’s recourse to violence, protests, and retaliation against the oil firms, it appears difficult to manage, resolve, or stop the issues. In 2008 and 2010, for instance, the inhabitants of the Kokori community in the Ethiope East local government area of Delta state, Nigeria, staged significant demonstrations. This resulted in the blockade and disruption of Shell Petroleum Development Company’s (SPDC) and Nigeria Petroleum Development Company’s (NPDC) operations in the region.
Companies were compelled to reevaluate their CSR policies as a result of the participation of the federal and state governments, which remedied these problems. Similar protests have occurred at various times in Ekakpamre in Ughelli South Local Government Area, Beneku in Ndokwa East Local Government Area, and Out-Jeremi in Ughelli South Local Government Area, all in Delta State, in relation to the activities of the oil producing company and the neglect of members of their Host Communities.
Corporate Social Responsibility (CSR) evolved to prevent and lessen conflicts between oil producing corporations and host communities and to enable organizations to participate in the development of host communities.
Thus, the idea mandates oil producing companies to invest a portion of their revenue towards the physical and human resource development of the host towns (Adekola & Uzoagu, 2012). Several oil corporations, like Mobil Producing Oil Company, Elf Oil Producing Company, and others, have been utilizing the notion of Corporate Social Responsibility to address issues of violence between them and their host communities for some time.
What are these oil corporations’ Corporate Social Responsibility (CSR) initiatives? How effectively have they managed the tensions between oil-producing businesses and host communities? Have these CSR initiatives been effective?
These and similar questions require responses. Therefore, it is necessary to examine the effectiveness of Corporate Social Responsibility (CSR) as a conflict management strategy and to determine the success of the CSR approaches employed by oil firms in resolving the issue.
1.3 Objective of the Research
The primary purpose of this study was to evaluate Corporate Social Responsibility (CSR) as a conflict management approach in selected Nigerian oil producing communities. This particular purpose is to:
Determine the level of warmth between oil firms and oil-producing communities in Delta State, Nigeria;
2. examine the CSR programs used by oil producing firms in Delta State, Nigeria, in oil producing communities;
3. evaluate the adequacy of CSR programs used by oil producing businesses in Delta State, Nigeria, as a conflict management technique;
4. determine the significance of Corporate Social Responsibility (CSR) as a conflict management approach for oil corporations in Delta State, Nigeria;
5. demonstrate the usefulness of CSR as a technique for managing conflicts in oil-producing areas in Delta State, Nigeria and
6. investigate how the CSR programs of oil producing businesses in Delta State, Nigeria have fostered stronger relationships with the local populations.
1.4 Investigative Questions
This investigation addressed the following research questions:
What is the level of amicability between oil firms and oil-producing villages in Delta State, Nigeria?
What specific CSR programs do oil producing firms in Delta State, Nigeria implement in the oil producing communities?
How effective are the CSR programs used by oil firms in Delta State, Nigeria, as a conflict management approach in the oil producing communities?
How important is Corporate Social Responsibility (CSR) as a conflict management technique for oil producing communities in Delta State, Nigeria?
How effective is CSR as a method for managing conflicts in oil-producing areas in Delta State, Nigeria?
In what ways have the CSR programs of oil producing corporations in Delta State, Nigeria improved relations with the local communities?
The following hypothesis was also tested at the 0.05 level of significance:
Corporate Social Responsibility (CSR) has no substantial impact on conflict management in Nigeria’s Delta State oil-producing areas.
CORPORATE SOCIAL RESPONSIBILITY (CSR) AS A CONFLICT MANAGEMENT STRATEGY IN SELECTED OIL PRODUCING COMMUNITIES