Academy of Entrepreneurship Journal (Print ISSN: 1087-9595; Online ISSN: 1528-2686)

Research Article: 2020 Vol: 26 Issue: 2S

Effect of Corporate Social Responsibility On the Sustainable Performance Among Selected Downstream Firms

Oyo-Ita Dorothy, Covenant University

Ogunnaike Olaleke, Covenant University

Worlu Rowland, Covenant University

Udoh Iboro, Covenant University

Ogundipe Mary, Covenant University

Chris-Ossai Ekene, Covenant University

Oguntula Omodesola, Covenant University

Marega Eseoghene, Covenant University

Kehinde Segun, Covenant University

Abstract

This study aims to examine and analyze strategies for improving Business Performance through Entrepreneurship Competence, Market Orientation, and Entrepreneurial Motivation (Study on SME Coffee Shops in Makassar City). The population of this research is all coffee shops in Makassar City, amounting to 546 units. The sample consisted of 80 Warkops (coffee shops), using a proportional cluster random sampling method, namely random sampling based on coffee shop clusters and proportional. It used a descriptive quantitative approach, with a valid and reliable questionnaire as an instrument for data collection. In terms of data analysis technique, the researchers used multiple linear regression. This study found that entrepreneurial competence, market orientation, and entrepreneurial motivation partially and simultaneously affect the SME Coffee Shop's business performance positively and significantly. Researchers recommend to SME Coffee Shops in Makassar City to improve their business performance through increasing entrepreneurial competence, market orientation, and entrepreneurial motivation, along with the provision of coffee shop facilities and conveniences in response to consumer demands for a touch of technology and excellent service.

Keywords

Economic Responsibility, Environmental Performance, Social Responsibility, Quality Performance, Technical Performance.

Introduction

The Niger Delta region of Nigeria, which stands as the richly endowed with crude oil, and most popular for its gas, wealth of hydrocarbon along with water resources had suffered the effect of oil drilling with its attendant environmental degradation for years because of the activities of multinational oil corporations in the region. It is argued that the corporations in recent times have exploited the general obliviousness of the people of the region about the obligation for them to be socially responsible. Consequently, until the late 2000s, the rich natural endowment was not seen to have converted into substantial development in the region (Marrewijk, 2010).

However, as the Niger Delta Environmental Survey of 1992 pointed out that, while the exploitation was going on, the people in the region were becoming ever more informed about their rights as citizens. Similarly, that they were more conscious of the extent of what was taken from their localities as oil revenues both for the government and for the multinational oil companies (Niger Delta Survey, 1992). Thus, as their business activities continued to expand and their sizes increased, the companies were faced with challenges in regards to sustainable growth in the region through Corporate Social Responsibility (CSR). The call for CSR was based on the fact that businesses that align business concerns with societal concerns in terms of CSR goals would reduce the risks and liabilities involved with operating in culturally diverse regions from their countries of origin (Mahmood et al., 2019).

Corporate social responsibility represents companies’ ability to promote community growth and development as well as voluntarily eradicate activities that are not in conformity with public interest. It is therefore the purposeful incorporation of the benefits of the society into business decision making as well as upholding of a triple bottom line: People, Planet and Profit (Solihin, 2009). According to Motilewa & Worlu (2015), CSR is seen as the relationship between an operating organization and the community which include its stakeholders, whereupon it carries out its business activities. It is assumed that if organizations develop an agreement with host community where such businesses are situated, an agreement that is rooted in protecting the people from the detrimental effects or influences of its operations, will further improve the organization’s activities of such business. However, in the Niger Delta oil companies have been found to be practicing CSR in the form of donations and charitable concerns to less privileged, contributions, sponsorship and charitable gifts devoid of consideration of their different sizes and scope of activities instead of long-lasting CSR programs.

The host communities on their part perceived those donations as not sufficient but deceptive and destructive to the environment compared to the damage being caused by the companies especially those with expanded scope of activities. According to the host communities, the region had been stripped of its resources that were supposed to give rise to a good life to its inhabitants throughout the years (Madichie et al., 2018). Preceding the sighting and drilling of oil and gas resources in the region, the main profession of the people was farming and fishing. It was, however, observed that oil activities had destroyed the food- producing agriculture activities of the people and the environment suffered degradation caused by oil spillages which had made life really hard for the local people (Fidelis & Kimiebi, 2011).

Furthermore, as the various oil companies are of varying sizes, the extent of their damage to the host communities vary as well, hence the need for the companies to increase their CSR activities. In view of the mixed feelings, a study on the effect of the intervention activities of CSR also consequently sustainable performance of the oil company is considered imperative (Fidelis & Kimiebi, 2011). Many empirical researches have been carried out on CSR and its influence on the performance of firms largely in developed countries and relatively in developing countries. The studies have however yielded mixed results which create a motivation for further research.

The pursuit of sustainable performance does not consistently lead to social development and could be destructive to the environment, contributing to unhealthy workplaces, high risk to toxic substances and sometimes death as a result of inhalation of toxic waste (Shehu, 2013). Corporate social responsibility (CSR) has continued to be a subject of discussion especially in downstream oil firms. The relationship between downstream oil firms and majority of their host communities was not cordial by reason of diverse impression of the role that the downstream oil firms are expected to discharge for the development of their host communities. On the contrary these firms have created environmental degradation in their host communities. The host communities maintain that downstream oil firms are not sufficiently addressing the amount of oil wealth taken from their lands. Notwithstanding, downstream oil firms feel they are doing sufficiently well in this and have gone beyond the realm of normal corporate social responsibility (Alabi & Ntukekpo, 2012).

Organizations that neglect to incorporate CSR measures into their business activities allow themselves exposed to adverse impressions of the stakeholder (Spangler and Pompper, 2011). Downstream oil firms are frequently listed among those least trusted by the public. The significance of oil, intricacy of the oil business, rewarding profits, sufficient capital for extraction and environmental risks all contribute to the public’s scrutiny of the industry. Thus, it is crucial that downstream oil firms explore means to reduce the “observation gap” between them and their stakeholders (Spangler & Pompper, 2011).

The development of situations has compelled downstream oil firms to put profound energy into a vast variety of CSR activities. Corporate social responsibility has become a vital facet in strategic decision making of downstream oil firms primarily due to tension from host community and drop in investors’ expectation. Numerous arguments premised on researches are found in literature as to the significance or otherwise of CSR on the host environment, as there is no general understanding on the issue at hand due to the features of diverse sectors and the variations in methodologies adopted by the studies. Some of the studies argue in favour of CSR as it results to sustainable performance (environmental stability, profitability). Amole, et al. (2012) view it to be irrelevant and a waste resulting in the misuse of firm’s resources to project motive. This stimulated the need to undertake a study of a specific sector so as to determine the effect of implementing CSR. In view of the above, this study assessed the perception of employees of downstream oil firms on the effect of CSR on sustainable performance in their respective firms.

Objectives of the Study

The detailed objectives were established:

1. To assess the effect of economic responsibility on environmental performance.

2. To determine the effect of social responsibility on quality performance.

3. To evaluate the effect of legal responsibility on technical performance

Literature Review

Corporate Social Responsibility

In common with other complex circumstances in the context of management and social sciences, because of its conceptual nature, it is hard to accomplish corporate social responsibility in a clear and concise way (Ejumudo, 2011). There is no agreement regarding what constitutes a generally recognized CSR concept. This has culminated in various definitions of the terms (Ejumudo, 2011). Despite that, it is convenient to recognize several ways researchers, corporate bodies and international organizations have used the term. The European Union Commission defined CSR as a voluntary obligation by organizations seeking to incorporate social as well as environmental issues into their business activities, involving collaborations with their stakeholders on behalf of the society. According to Ogunnaike et al. (2019) it is necessary for CSR to be incorporated into an organization’s operations as well as the business getting involved in improving the society in order to expand. The world Business Council on Sustainable Development has described CSR as the corporate obligation to support the sustainable economic development by collaborating with employees, their families and host communities (WBCSD 2001).

Social responsibility, as the basis of corporate social responsibility, directs companies by clear legislation to reputable decisions that separate the businesses and their activities. The areas of responsibility according to Ferrell & Fracedrich (1997) can be classified according to economic, legal, ethical and voluntary responsibilities. Organizations have the duty to meet their goals of corporate profit for their investors as part of their economic responsibility. Legal responsibilities oblige commitment to regard statutes as well as regulations of government. Ethical responsibilities consider businesses to understand and comply with other societal expectations which have not been clearly indicated within documented law; while the voluntary responsibilities are additional actions and practices that society considers acceptable and that determine the value of the business (Bateman & Snell, 1999). Therefore, this study made use of economic, social and legal responsibility as indicators of CSR.

Sustainable Performance

Sustainable performance is a corporate responsibility to improve and reinforce the interrelated and collaboratively strengthening fundamental component of economic development, social development as well as environmental protection at a local, regional as well as worldwide level (Adewuyi et al., 2012). Sustainability is the ability to maintain, in a collaboratively comprehensive approach, the resources and capabilities needed for a constant improvement over the long term (Dogaru, 2013). Sustainability can be described as a strategy adopted by any organization which leads largely to the improvement of the society. Sustainability is of great concern to every organization. It involves evaluating the functioning and positioning of an organization concerning environmental, quality, technical, health and security matters (Nicolăescu et al., 2015). According to Yadav (2014) sustainability is when a firm satisfies human needs and wants in the present generation without having an effect on the potential to satisfy future generations.

In achieving sustainable performance, downstream firms have to perform activities with vision and leadership, stay transparent and respond to the dynamic change in the environment (Nicolăescu et al., 2015). Sustainability is deep and addresses a wide range of topics ranging from usual preservation, to consumption of energy, to shareholder fulfillment and economic outcomes. The actual application of this concept is similar to stability which means survival, stability and eternalness (Cheney et al., 2004). Sustainability exceeds being "Environmentally friendly"; it is so much more about reduction in energy and waste, safeguarding ecology as well as recycling. Corporate social responsibility can be viewed as ideas and approaches by which organizations freely and willingly combine both social as well as ecological issues with their business operations and shareholder dealings. Corporate social responsibility as a result of Triple Bottom Line (which comprise economic, social as well as environmental responsibilities), can imply a harmony among these three issues which makes a more generic image of the intricacy of sustainable development (Enquist & Edvardsson, 2006). Therefore, this study made use of environmental, quality and technical performance as sustainable performance indicators.

The Oil and Gas Industry

The oil and gas industry is composed of the upstream, midstream and downstream. The upstream is concerned with exploration and production, at this stage new products are often produced and it has the most investment. The upstream cuts across exploration, discovery of reservoirs, passing through regular production and activities, which include drilling and completion. The activities carried out by the upstream are the high and hazardous procedure of pilot drilling, assembly and operation of platforms, completion of well. The midstream is responsible for transportation and refining. The downstream is involved in distribution of products and by-products to the consumers passing through refining and distribution. The downstream divisions of refining and transportation include the distribution of crude oil and gas to units of derived output. According to Oyewunmi et al. (2017), the downstream sector largely portrays the marketing dimension of the petroleum industry, where the investors start to earn proceeds and profits. The major materials and facilities are massive pumps and compressors, steam turbines, furnaces, walls, pressure vessels and supervisor control systems (Barata et al., 2014).

According to Mojarad et al. (2018), based on the increase on pressure and conditions of the temperature of the underground reservoirs, the use of different chemicals to drill each barrel of crude oil safely, the processing as well as transport of petroleum products to final consumers has caused a lot of contamination and environmental pollution.

Hypothesis Development

Economic responsibility and environmental performance

According to Deng & Lu (2017) an organization’s environmental performance and corporate social responsibility impact each other; the worse the environmental performance of the organization, the reduced rating of the corporate social responsibility. With the advent of emphasis on environmentally sustainable performance, organizations are faced with growing requests that put demand on their economic responsibility (Ejumudo 2011). A business’ influence on the economic welfare of its concerned parties and the society is the maximum interest of the economic aspect.

Fauzi & Idris (2010) investigated the possible existence of any positive relationships between environmental performance (EP) and CSR within the slack resource theory and the existence of any positive relationships between CSR and environmental performance within good management theory by incorporating the strategic management concept into the interpretation of CSR as sustainable corporate performance especially with regards to the environment. The study employed a questionnaire-based survey research design, sampling responses from managers of state-owned companies and private owned companies using post and e-mail services. Results obtained thereof indicated that there was a positive relationship between EP and CSR within the slack resource theory and within good management theory.

In line with the views of Krajinc & Glavic (2005) research investigating wide range of firms showed that the environment addresses the influence of company on natural systems equally whether living or non-living such as the ecosystem, land, air, and water. He concluded that across the Nigerian setting at least, sustainability has an impact on corporate performance and y perhaps it might be a feasible means for corporate settlement of disputes. Thus, the first hypothesis was developed:

H1: Economic responsibility has a significant effect on environmental performance.

Social responsibility and quality performance

Tatiana (2013) evaluated the relationship between social responsibility and quality performance. Social responsibility was mandated by labor practices and human rights, employees while quality performance was measured by percentage of export to sales and export growth. Data were collected from questionnaires survey and analyzed using average percentage. The findings revealed that social responsibility significantly affect quality performance but when the proxies vary, opposite results are achieved.

Visser (2010) posited that often times it is not about being socially responsible that matters but the quality performance derived from being socially responsible. New technology emerges rapidly as the result of the dynamics of the business environment. Laws, therefore, are implemented by government agencies to checkmate specifically the developed technology confirming that social responsibility impacts quality performance (Nicolăescu et al., 2015). These laws help organization to develop technologies that will not cause harm to the society at large with a view to ensure a level of quality performance. Thus, the second hypothesis was developed:

H2: Social responsibility has a significant effect on quality performance.

Legal responsibility and technical performance

Ngwakwe (2009) attempted to determine a feasible relationship between sustainable business practice and technical performance. A field survey methodology was employed with a sample size of sixty (60) manufacturing firms in Nigeria was studied. Categorizing the firms into two groups, as environmentally responsible and irresponsible firms, he investigated upon the possible relationship amidst technical performance and three selected measure of sustainable business activities: employee health and safety (EHS), waste management (WM), and legal responsibility (LR), common within the thirty (30) responsible firms. Findings from the empirical results disclosed that the sustainable activities of the reliable firms are considerably associated to technical performance.

Uadiale & Fagbemi (2012) focused their study on Nigeria. Their study considered the effectiveness of CSR activities on technical performance. The outcome was that CSR has a positive and significant relationship with the technical performance measures. These results enhance the increasing body of empirical support for the positive impact of CSR on technical performance. This study was well sampled and as such the conclusions were reasonable. Thus, the third hypothesis was developed:

H3: Legal responsibility has a significant effect on technical performance.

Methodology

This research used the quantitative method by questionnaire to the study participants. The study also adopted the descriptive survey design. This design was chosen since it intensely defines and evaluates the effect of corporate social responsibility on sustainable performance among oil downstream firms. This constituted the primary data for this study.

The population of this study comprised of the listed downstream oil firms in Nigeria. Based on Nigerian Stock Exchange Fact Book as at December 2019, there are (8) quoted companies: Mobil, Oando, Forte, MRS, Total, Etema, Conoil and Beco Oil. Two criteria were adopted in order to arrive at an adjusted population. The first criterion was availability of annual reports within the period of study. This was to ensure consistency of data and completeness of observations. The second criterion was disclosure of CSR cost. For a company to be included, the amount spent on CSR in lump sum or additional of the aggregate values disclosed for the period of study was required. For example, CSR figures can be in terms of donations, charitable concerns to the less privileged, sponsorships, etc. Therefore, once company practice any of these CSR activities and disclose such in their financial report, it was considered socially responsible and thus eligible to be included in the study. Based on the two criteria some selected downstream oil firms were considered for inclusion in the study.

The sampling technique adopted was the stratified sampling method. Sampling techniques can be defined as the process that involves choosing components (samples) from a specified population. There are 2 main classes of sampling which are probability and non-probability sampling. The probability sampling gives specific component of a population equal chance to be chosen, while non-probability sampling are those schemes that do not involve components of randomization (Ojo, 2005). For the purpose of this study, the probability sampling technique was embraced using the stratified sampling method to draw the required sample size for the research. This process yielded one hundred respondents from the selected firms. The analysis of the data was done using statistical package for social sciences (SPSS). Descriptive analysis was carried out which included frequencies and percentages. Simple regression analysis in line with the research hypotheses was used to determine the extent of the impact of the independent variables on the dependent variables.

Content validity of the study instrument was carried out by giving the instrument to academic and research experts to proof read and remark on. This was to make sure that all questions in the questionnaire were fully in agreement with the research questions and hypotheses. The general reliability that showed internal consistency (Cronbach Alpha Coefficient) was 0.927 on 26 items in the questionnaire which implied that the reliability was good (Table 1).

Table 1 Reliability
  Construct No. of Items Reliability Coefficient
CSR Economic responsibility 4 0.688
Social responsibility 5 0.759
Legal responsibility 2 0.630
Sustainable Performance Environmental performance 3 0.890
Quality performance 4 0.920
Technical performance 4 0.754

Results

This segment displays the stated demographics of the respondents, presenting distribution in terms of gender, age, marital status and educational qualification (Table 2).

Table 2 Demographic Profile of Respondents
    Frequency Percent
Gender Male 62 62.0
Female 38 38.0
Total 100 100.0
Age 18-22 14 14.0
23-27 34 34.0
28-32 42 42.0
33 and above 10 10.0
Total 100 100.0
Marital Status Single 62 62.0
Married 38 38.0
Total 100 100.0
Educational Qualification O’level 6 6.0
Diploma 24 24.0
Graduate 58 58.0
Master degree 12 12.0
Total 100 100.0

Demographic Profile of Respondents

Majority (62%) of the respondents were males. Most were aged between 28 to 32 years and were single; 58% were graduates. The age distribution showed that 14 (14%) respondents were in the age bracket of 18-22 years, followed by 34 (34%) participants within the age bracket of 23-27 years: 42 (42%) participants were in the age bracket of 28-32 years while 10 (10%) participants were in the age bracket of 33 years and above. 62 (62%) of them were single and 38 (38%) were married.

The respondents’ educational qualification showed that 6 (6%) had O’level education while 24 (24%) had diploma, 58(58%) were graduates and 12 (12%) were holders of Master degree.

Descriptive Analysis of Data on Significant Variables

This segment elaborates on participants’ replies to assertions about corporate social responsibility and sustainable performance. Participants specified whether they strongly agree, agree, disagree or strongly disagree with the assertions given.

Table 3 shows the indicators of corporate social responsibility of the included firms. For the economic responsibility 56 and 34 respondents strongly agreed and agreed respectively to be offered training sessions by their firms, while 6 disagreed and 4 strongly disagreed on this. All the respondents either strongly agreed (64) or agreed (36) that their the community perceive their products to be of good quality. 38 strongly agreed and 56 agreed on the transparency of their firms. However, 4 disagreed and 2 strongly disagreed that their firms were transparent. All, except 8 agreed (24) and strongly agreed (68) that their firm had good relationship with the community their firm is located in.

Table 3 Corporate Social Responsibilty
Economic Responsibility
Statement SA A D SD Total Mean
Training sessions 56 34 6 4 100 3.42
Good quality product 64 36     100 3.64
Transparency 38 56 4 2 100 3.30
Good relationships 68 24 8   100 3.60
Social Responsibility
  SA A D SD Total Mean
Understanding CSR 40 50 10   100 3.30
Cordial relationship 66 24 10   100 3.56
Impact in the community 48 44 8   100 3.40
Impact on my life 46 50 4   100 3.42
Social campaigns 14 62 24   100 2.90
Legal Responsibility
  SA A D SD Total Mean
Trainings 44 46 10   100 3.34
Adherence to legal laws 60 38 2   100 3.58

Table 3 also shows the responses on social responsibility indicators. Majority of the respondents either agreed or strongly agreed to these indicators being observed in their firms. Fewer respondents disagreed that their firms exhibited these indicators. The indicator that had the highest number of respondents disagreeing was the social campaigns (24) while impact on respondents’ life was the least indicator (4) disagreed by the respondents.

Response on the legal responsibility also showed that 44 respondents strongly agreed and 46 agreed while 10 disagreed that they had received training on the laws governing the firm; 60 strongly agreed and 38 agreed to adhere to the laws while 2 disagreed.

Table 4 shows the response on indicators on sustainable performance. 64 strongly agreed, 22 disagreed and 14 disagreed that their firms adopted measures for prevention of pollution. 62 strongly disagreed, 30 agreed and 8 disagreed that their activities were environmentally friendly. 62 strongly disagreed 24 agreed and 14 disagreed that they utilize procedures that minimize waste.

Table 4 Sustainable Performance
Environmental Performance
Statement SA A D SD Total Mean
Prevents pollution 64 22 14   100 3.50
Environmentally friendly 62 30 8   100 3.54
Minimizes waste 62 24 14   100 3.48
Quality Performance
  SA A D SD Total Mean
Meets consumer needs 62 32 4 2 100 3.54
Good quality products 52 42 4 2 100 3.44
Continuous improvement 62 32 6   100 3.56
Documentation of customers’ complaints 58 30 10 2 100 3.44
Technical Performance
  SA A D SD Total Mean
Eradicates inefficiency 42 50 8   100 3.34
Seek help from experts 50 38 10 2 100 3.36
Improvement of technology 54 40 4 2 100 3.46
Techniques adapt 22 62 16   100 3.06

Quality performance indicators are also shown on Table 4. On meeting consumer’s needs 62 strongly agreed, 32 agreed, 4 disagreed, and 2 strongly disagreed. Similarly, response to the respondents’ perception of the quality of their firm’s products, 52 strongly agreed, 42 agreed, while 4 disagreed and 2 strongly disagreed. 62 strongly agreed, 32 agreed, while 6 disagreed that their firms showed continuous improvement over time. 58 strongly agreed, 30 agreed, 10 disagreed, and 2 strongly disagreed to their firms documenting customer’s complaints.

Indicators of technical performance of the firms showed that 42 respondents strongly agreed that their firms engaged processes that eradicate inefficiency: 50 agreed and 8 disagreed. 50 of the respondents strongly agreed to seek help from experts when they had challenges; 38 agreed to doing same, 10 disagreed, and 2 strongly agreed. Among the 100 respondents, 54 strongly agreed that there was constant improvement of the technology in their firms; 40 agreed, 4 disagreed, and 2 strongly disagreed. 22 of the respondents strongly agreed that the techniques deployed by their firms were adapted to the dynamic nature of their environment; 62 agreed while 16 disagreed.

Test of Hypothesis

H1: Economic responsibility has a significant effect on environmental performance

Table 5 displays the model summary, anova and regression coefficient (R) of economic responsibility on environmental performance. The R was 0.569. One-way Anova was used to ascertain the equality of mean of an independent variable (economic responsibility) on a dependent variable (environmental performance). The outcome of the f-distribution calculated was 46.808 (p = 0.000).

Table 5 Model Summaryb
Model R R2 Adjusted R2 Std error of the estimate
1 0.569a 0.323 0.316 0.53106
Anovaa
Model 1   Sum of Squares Df Mean Square F Sig
Regression 13.201 1 13.201 46.808 0.000b
Residual 27.639 98 0.282    
Total 40.840 99      
Coefficientsa
Model 1   Unstandardized B Coefficients Std. Error Standardized Coefficients Beta T Sig
(Constant) 0.785 0.406   1.932 0.056
Economic responsibility 0.757 0.111 0.569 6.842 0.000

H2: Social responsibility has a significant effect on quality performance

Table 6 shows the regression coefficient (R) of social responsibility on quality of performance to be0.461. One-way Anova was used to assess the equality of mean of social responsibility on the quality performance. The result of the f-distribution calculated was 26.433 (p = 0.000)

Table 6 Model Summaryb
Model R R2 Adjusted R2 Std error of the estimate
1 0.461a 0.212 0.204 0.54264
Anovaa
Model 1   Sum of Squares Df Mean Square F Sig
Regression 7.783 1 7.783 26.433 0.000b
Residual 28.857 98 0.294    
Total 36.640 99      
Coefficientsa
Model 1   Unstandardized B Coefficients Std. Error Standardized Coefficients Beta T Sig
(Constant) 2.073 0.294   7.048 0.000
Social responsibility 0.418 0.081 0.461 5.141 0.000

H3: Legal responsibility has a significant effect on technical performance

Table 7, shows the regression coefficient (R) of legal responsibility on technical performance to be 0.598. One-way Anova was used to measure the equality of mean of legal responsibility on a technical performance. The outcome of the f-distribution calculated was 54.515(p=0.000).

Table 7 Model Summaryb
Model R R2 Adjusted R2 Std error of the estimate
1 0.598a 0.357 0.351 0.54222
Anovaa
Model 1 Sum of Squares Df Mean Square F Sig
Regression 16.028 1 16.028 54.515 0.000b
Residual 28.812 98 0.294    
Total 44.840 99      
Coefficientsa
Model 1 Unstandardized B Coefficients Std. Error Standardized Coefficients Beta T Sig
(Constant) 0.769 0.369   2.086 0.040
Legal responsibility 0.752 0.102 0.598 7.383 0.000

Discussion

Firms, such as downstream oil firms, can play a vital role in an economy and the society at large. The index study has shown a higher tendency to employ young, educated, but unmarried personnel. The results also showed a higher preference for the males. While the employment opportunity created for the young ones is commendable the domination of the industry by male creates gender imbalance which robs the industry of gender diversity required for positive outcomes such as better organizational performance.

The components of corporate social responsibility studied included economic, social, and legal responsibilities. Of the four indicators assessed for economic responsibility, good relationship with host community had the highest response from the respondents. This could have stemmed from the fact that the selected firms had record of delivering on their Corporate Social Responsibility. Their customers also perceived their products to be of good quality. The indicator on transparency scored the lowest on the strongly agreed scale as six of the respondents reported non transparency of their firms. Non transparency could result in mistrust of the system and hinder the growth of an industry. On the other hand, corporate transparency can contribute to reduction in uncertainty, improve efficiency, and sustainable development of the organization (Baraibar-Diez & Sotirrio, 2018).

The firms also scored the highest on the strongly agree scale on cordial relationship between the employer and the employee further indicating that these firms valued the external (community) and internal (staff) relationships to deliver on their CSR. This could explain why the scores on the impact on the community and the lives of their staff were also scored high. However, social campaigns scored the highest on the disagree scale. The reason for this is not easily discernable. It may probably be that campaigns need to be tailored to the needs of the industry for them to be involved.

Legal responsibility ensures the compliance of rules and regulations by the industry that were created in the interest for the community they serve (Chen et al., 2015). From the index study some respondents disagreed that they were trained on what is required of them legally to deliver on their responsibilities. This can predispose to malpractice and compromise on set standards. It is, therefore, advisable to have all employees knowledgeable on the governing laws to forestall such compromise.

The indicators for environmental performance, a component of sustainable performance, were scored high on the strongly agree scale for its indicators, an indication that prevention of pollution was topmost on the scale. The import of this is that the oil industry poses major environmental hazard in the air, water, soil and the ecosystem in general and it has been reported that refining, a downstream activity, is the major source of pollution in the industry (Mariano, 2020). One of the commonest hazards of the downstream oil industry is environmental pollution from accidental spills and gaseous emissions (Mariano & Rovere, 2020). Prevention of pollution and engaging environmentally friendly processes would enhance community acceptance. Though a good number of respondents agreed or strongly agreed that their firms minimize waste yet minimization of waste indicator recorded the highest disagreement score. This could compromise on the environment if not addressed. This is particularly so as these wastes constitute risk to the health of the people and the environment.

The regression coefficient to establish the descriptive power of the economic responsibility in elucidating as well as predicting the environmental performance suggest that economic responsibility had a strong positive effect on the environmental performance. The R2 which is the coefficient of determination explains the degree of variance. The R2 was 0.323 (or 32.3%). The implies that the economic responsibility explains 32.3% of the variance on the environmental performance hence other factors not included in the model explain 67.7% (100-32.3) of the variance in environmental performance. This degree of the relationship can be considered moderate. The hypothesis was further tested by examining the decision rule which states that if the significant value is less than 0.05, the economic responsibility made a significant participation to the prediction of the environmental performance and vice versa. The significant value under coefficients was (.000) therefore economic responsibility has a significant effect on environmental performance.

The result of the regression coefficient (R) of social responsibility on quality of performance suggests that the social responsibility has a strong positive effect on the quality of performance. As in the hypothesis above, social responsibility explained 21.2% of the variation in quality performance. Other factors not included in the model contribute 78.8% of the variance. The degree of the relationship is weak. The hypothesis was further tested by examining the decision rule which states that if the significant value was less than 0.05, the social responsibility made a significant contribution to the prediction of the quality performance and vice versa. The significant value under coefficients was (.000) which was less than 0.05 therefore social responsibility had a significant effect on quality performance.

The regression coefficient of legal responsibility on technical performance showed a positive relationship. This suggests that the legal responsibility had a strong positive effect on the technical performance. The degree of variation contributed by legal responsibility in the model was 35.7% inferring that other factors not included in the model accounted for the remaining 64.3% of the variation. The relationship between the two variables is moderate.

The hypothesis was further tested by examining the decision rule which states that if the significant value was less than 0.05, the legal responsibility made a significant contribution to the prediction of the technical performance and vice versa. The significant value under coefficients is (.000) which was less than 0.05 therefore legal responsibility has a significant effect on technical performance.

Conclusion

In view of the research findings, the study asserts that corporate social responsibility (Economic, social and legal) have a significant effect on sustainable performance (Environmental, quality and technical). Therefore, downstream oil firms pursuing greater sustainable performance should engage more in corporate social responsibility actions. Several researches have shown that organizations that miss the mark to develop suitable corporate social responsibility actions will undeniably encounter the problem of poor sustainable performance. Other areas of corporate social responsibility and sustainable performance can be researched on to further buttress the findings of this study.

In accordance with the findings of the study, the following recommendations are made:

1. The management of downstream oil firms should be transparent in dealing with their staff and the community at large to gain their trust, and continue to extend their economic, social and legal responsibilities to the host communities.

2. Management of oil downstream firms should ignore minimization of waste in the environment as this can pose hazards to the community and hinder the sustainability of the firm.

3. Oil companies should be abreast of on new equipment and strategies to manage spillage and other environmental hazards.

4. The practice of legal responsibility (following laid down government laws) should be encouraged greatly in oil companies in order to boost technical performance.

5. Management of oil downstream firms should maintain cordial relationship between the organization and the community.

The findings of this study have several implications to the management of oil companies, investors, government and host communities. The implications are briefly highlighted below:

Firstly, the findings have implication to management policies and decisions on the issue of what would guarantee a peaceful and secured environment for companies to utilize its capacity.

Secondly, shareholders of oil companies would realize that CSR activities in the communities that host the operations of their firm is very vital to the survival of the companies and that at the level of annual general meetings stakeholders should encourage management to provide CSR services as much as they can.

Thirdly, the findings would place the government on a sound footing to understand the importance of CSR thereby initiating new programs that would cater for the need of citizens.

Lastly, the findings have implications to the host communities as they would be better informed of their rights and are in harmony with the oil companies functioning in their region.

Acknowledgement

The authors acknowledge the financial support of Covenant University-Centre for Research and Development (CUCRID) regarding the data article.

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