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CHAPTER ONE

INTRODUCTION

1.1Background to the Study

All nations in the world survive by one means or the other. Some rely on tourism for survival, while others depend solely on agriculture. There are however some that are fortunate enough to be blessed with mineral resources such as oil and gas, which bring in a lot of revenue. At a time, Nigeria depended mainly on agricultural products like groundnut, cocoa, palm produce and others to survive. This was before the discovery of oil in 1956 at Olobiri in Rivers State. Today, the main sources of revenue to the country are oil and gas. The blessing also came with its attendant problems and these include environmental degradation, damage of economic crops and fish ponds, pollution of sources of drinking water and general hazards to the health of the people in the oil and gas producing areas.

According to Okoko and Nna (1998), oil and gas are the main energy sources in most industrialized countries in the world today, and by all standards Nigeria’s most economic resource, as it contributes about 90 percent of the country’s revenue.  The Niger Delta with distribution of oil fields in the geo-political areas of Abia, Akwa-Ibom, Bayelsa, Cross River, Delta, Imo, Ondo, and Rivers is the hub of the petroleum industry in Nigeria. Before the advent of oil and gas activities in the area, Niger Delta could boast of different agricultural and natural resources that sustained the economic life of the people.  Whiteman (1982), observed that traditional medicine practice and subsistence occupations were common among the people.

Things have changed significantly, as the area has been engulfed in crisis of instability due to protests carried out by communities in these oil producing areas because of the influence of oil activities on the environment resulting into degradation of the environment, poverty and lack of social development and employment opportunities. Sometime in February and March 2001, the youths of four of the host communities barricaded the access roads leadings to Mobil Production Terminal, in Eket, Akwa-Ibom state in Nigeria. The youths’ reason for the action was that they were being marginalized in the company’s employment policies, contracts and services. The government, apart from the activities of the youths had also mobilized its machinery – legislature, executive, judiciary and the media against the company as reaction against degradation of the environment and other unfavourable activities of the companies.

There have also been protest over the years which cut across Okoloba to Ogidigben, Ogbotobo to Bonny; Ogoni to Iko; Gbaran to Obagi, Umuechem to Peremabiri, Egbema to Odegberi and other areas. All these are as a result of problems associated with poor attitude to spill clean up, and unnecessary delay in environmental impact assessment and non payment of compensation to the areas that their environment are affected.  November 1990 for instance, witnessed the people of Umuechem community in Rivers state demonstrating against environmental degradation by SPDC, the oil company operating in the area that their operations affected the environment.  This led to the Soldier’s invasion of the community in which a lot of people were killed and about 300  houses destroyed (NDND, 1991). The people of Ogoni in Rivers State, between January, 1993 and March 1997 also staged a series of  protests against oil exploration by SPDC in the area that have resulted to ‘stealing’ of natural resources (Crude Oil) and the degradation of environment without adequate compensation for the people.

The reaction of the Federal government was spontaneous and soldiers invaded the area and many Ogoni people were killed, so were foreigners of which some were kidnapped for ransom and other measures inimical to the corporate existence of Nigeria. The Ogoni’s  boycotted the 1999 presidential election, operations of oil companies in the area stopped leading to an unprecedented drop of the country’s earning from oil and the economic loss was conservatively put at 7.2 billion dollars (Barinuwa, 1999; Human Rights Watch, 2001; ICE case study,  No 64, 1997).

In the last two decades, there have been drastic changes in the relationship between the private sector and other stakeholders.  Therefore, one of the most important and significant corporate trends of the last decade is the growth of Corporate Social Responsibility (CSR). The concept of CSR is highly complex and contentious among writers, scholars and practitioners due to lack of consensus on the true meaning and contents of CSR practices (Carroll & Shabana, 2010; Dahlsrud, 2008; Dobers & Halme 2009; Taneja, Taneja, & Gupta, 2011). Although, the definitions of CSR vary from author to author, however, it generally refers to serving people, communities and the environment in a way that goes above and beyond what is legally required of a firm. CSR is a commitment to improving community well-being through best business practices and contributions of corporate resources (Kotler & Lee, 2005).

The definition of this concept actually depends on how those who believe in it and those who do not, see it. People see it from different perspectives. To those that believe in it, it is the responsibility to plan and manage an organization’s relationship with everybody involved in or affected by all its activities in all its ramifications of operations. It is a beneficial social investment and they believe that a socially responsible company is that, that do not take actions that might be perceived as unreasonable, callous or insensitive by the public.  On the other hand, those who do not believe in it, strongly argue that business cannot be “responsible”, only people can have responsibilities.  To them, it is a loss of accountability to shareholders who have invested their hard earned resources to make profit.  (Ogbemi, 2015). The truth is that profit making should not be at the expense of the public. Profit making should be fair and human.

The concept of CSR is concerned with critical issues that concerns environmental policies  and actions.  Its main business is about organizations giving back to societies where they make profit.  According to Zadek (2000) organizations take part in it not only to attract good image but also to bring in stakeholders into the main stream of the business.  CSR usually encourages mutual understanding between organizations and the communities where they operate. (Keinert, 2008; Matten & Moon, 2008; Monowar & Humphrey, 2013). In this contemporary times, the practice of Corporate Social Responsibility is now an important part of business organizations which encourages a lot of gains in the future.  (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 importance has also come to the fore as most companies and organisations have now come to embrace the concept.

Kurucz, Colbert, and Wheeler (2008) listed and categorized the organization being involved in CSR as follows. These are cost and risk reduction, gaining competitive advantage;  developing reputation and legitimacy; and seeking win-win outcomes through synergistic value creation. In contrast to what Kurucz, Colbert, and Wheeler (2008) did, Carroll (1991) developed a model that consists of four other kinds of social responsibilities namely: economic, legal, ethical, and philanthropic. Similarly, other dimensions 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 as a concept is closely associated with corporate governance because they are both concerned with the corporate image of the organization and its portrayal as a good corporate citizen. Corporate governance can be described as the stewardship responsibility of directors and corporate bodies to provide oversight for the overall goals and strategies of a company and see to their implementation.  It may therefore be seen as the set of related rules by which corporations, shareholders and management govern and guide their corporate behavior. These rules refer to the attributes of individual firms and factors that allow companies to practice sound governance even where public institutions are somehow weak. According is Cornelius and Kogut (2003) such factors normally include a corporation’s ownership structure, its relationships with stakeholders, financial transparency and information disclosure practices as well as the makeup of its managing boards. It is the company management techniques, and processes in general or the way a particular company is managed. It further refers to the mechanisms, processes and relations by which corporations are controlled, directed and managed. (www.investpedia.com/terms/c/arpirategover).

Cornelius and Kogut (2003), also defined corporate governance as a system that consists of those formal and informal institutions, laws, values, and rules that generate the menu of legal and organizational forms available in a country and which in turn 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 allocated and distributed. Corporate governance is also a philosophy and mechanism that entails processes and structure which help and facilitate the creation of shareholders value through management of the corporate affairs in such a way that ensures the protection of the individual and collective interest of all the stakeholders. It is generally associated with the existence of agency problem and its roots can be traced back to separation of ownership and control of the firm. Corporate governance therefore involves transparency to the public and shareholders and it is closely related to Corporate Social Responsibility (CSR). They both emphasize responsibility to the shareholders and stakeholders, which is a way of managing conflict.

Conflict management is very important in the peaceful resolution of conflicts in any organization. Conflict theory helps in explaining how it affects societies and organizations. Studies  in  management of conflict states that it is important especially as regards to the changes and growth of organizations.  (Azar, 1990). Conflict theory further states that conflict creeps into the  society when there arise a situation when the interest of the majority is ruled against by a few privileged and powerful minority groups. Conflict is very rampant and prominent in the Niger delta region of Nigeria, where most of the multinationals or oil and gas companies operations are carried out and this has resulted to a lot of violence (Ojokarotu, 2008). Conflict is unabated and variegated because of how long it lasts. This is what has been characterized as “deep rooted” conflict. Azar (1990) considers it as protracted and tractable i.e. as complex, severe community enduring and often violent.

Conflict can be explained as disagreements which arise because unidentical ideas, interest and beliefs by those involved.  It can also be looked at as a tussle among people that feels their interest are being threatened. The ways and plans used in handling it is what is called conflict management.  Conflict management involve those strategies and processes which aid in controlling or resolving conflict. These include proper method of solving conflicts, communication challenges and complaints and to achieve organizational objectives as well as cordial and sustainable relationship. Researches on communication and related fields have given an insight on the ability of communication to bring about sustainability in relationship, which can drive change in the right direction (Kotter, 1990). This will also help to foster peaceful and smooth business transactions between them and the host communities –wider stakeholders.