Emmanuel Ocran 3

THE EFFECT OF CORPORATE SOCIAL RESPONSIBILITY(CSR) ON PROFITABILITY OF MULTINATIONAL COMPANIES.
A CASE STUDY OF NESTLE GHANA LIMITED
By
Emmanuel Ocran PG3079509
A Thesis submitted to the Institute of Distance Learning, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the degree of EXECUTIVE MASTERS OF BUSINESS ADMINISTRATION
OCTOBER 2011
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DECLARATION I hereby declare that this submission is my own work towards the Commonwealth Executive Masters of Business Administration (CEMBA) and that, to the best of my knowledge, it contains no materials previously published by another person nor materials which has been accepted for the award of any other degree of the university, except where due acknowledgement has been made in the text.
Emmanuel Ocran PG3079509
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... Date
Certified By:
Mr Samuel Kwesi Enninful (Supervisor)
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Professor I. K. Dontwi (Dean KNUST - IDL)
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ABSTRACT The purpose of the paper is to understand the various CSR activities carried by multinational companies (MNCs) in Ghana and how these CSR programmes impact of the companys profitability. Hundred (100) questionnaires were administered by the researcher to staff of Nestle Ghana, made up of top management staff, middle management staff and junior staff. Out of the 100 questionnaires administered for the sample population of 100, eighty six (86) were completed and retrieved. Five (5) questionnaires were distributed to selected business partners of Nestle Ghana and all 5 respondents completed the questionnaires. Three hundred (300) shoppers or customers were randomly interviewed face to face at some selected shopping areas in Accra. The areas were Accra Mall, Kaneshie market and Okaishie business areas. In all two hundred and fifty (250) shoppers were interviewed over a period of three days (3) at the selected shopping centers. Secondary data for the study were obtained from the internet, journals, financial statements of Nestle Ghana ltd and trade journals such as the business and financial times. The Pearson Product Moment Correlation coefficient table was used. From the result obtained the calculated r (rc) 0.49 is greater > tabled value (rt) 0.21 thus, reject H0 and accept H1.This means that, the relationship is significant at 55% confidence level. This confirms that there is a positive relationship between Corporate Social Responsibility and profitability. From the study it also was clear that most customers or shoppers are not aware on CSR and even understand the meaning. The study was however, limited to finding out exactly how much in terms of monetary value CSR programmes contribute to the overall profitability ratios of the companies. For academic and industry discourse it is recommended that further study should be conducted to establish the real value in monetary terms how much CSRs contribute to the organisations profitability. Also further research should be conducted to quantify how much or to what
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degree these CSR programmes have impacted on the society and its corresponding value generation for the company.
DEDICATION This work is dedicated to my loving family for their support and encouragement to the successful completion of my course.
ACKNOWLEDGEMENTS I would like to give praise and thanks to the Almighty God for His guidance and protection throughout my life and also seeing me through my studies. I wish to express my gratitude to my supervisor Mr Samuel Kwesi Enninful who took time to read and made the necessary criticisms, suggestions and corrections in the course of writing this thesis. I am extremely grateful to Mr & Mrs John Serbe Marfo and the Achimota Study Group for their support. Thank you very much and may God reward you abundantly. Again my gratitude goes to my study mates namely, Hannah Tinkorang, Akosua Okrah and Ophelia Osei. Finally to Mr Desmond Quaye of Nestle Ghana Ltd and Nestle business partners like Fio Enterprise who participated in the study, I am very grateful.
Table of Contents Cover Page Certification Page.i Abstractii Dedicationiv Acknowledgement.v Table of Contents.vi List of Tablesix CHAPTER ONE - INTRODUCTION 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 Background Information1 Statement of Research Problem..5 Research Objectives...6 Research Questions6 Justification for Study6 Scope and Limitation of Study ..6 Brief Methodology of Study..7 Organisation of the Work...7
CHAPTER TWO - LITERATURE REVIEW 2.1 2.1 2.2 2.3 2.4 2.5 2.5.1 2.5.2 Introduction....8 From Philanthropy to Corporate Responsibility10 Multinational Corporation.12 Small and Medium-Sized Enterprises....13 Size of organisation....14 CSR Practices.15 Government-linked corporations....15 Multinational corporations..15
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2.5.3 2.6
Local Ghanaian Corporation..16 Size of organisation and CSR practices.16 Empirical Studies of CSR and Financial Performance..17 Measures of Corporate Social Responsibility....18 Measures of Financial Performance...19 Conclusions and Implications19 Future Research.20 Corporate Social Responsibility in Nestle Ghana..21 The Impact of Corporate Social Responsibility.23
2.7 2.8 2.8.1 2.9 2.10
2.11 2.8
CHAPTER THREE - RESEARCH METHODOLOGY 3.1 3.2 3.3 3.4 3.5 3.6 Introduction.25 Research Design...25 Population and Sample Size....25 Research Instrument.26 Validity of Research Instrument...26 Data Analysis Technique..27
CHAPTER FOUR - DATA PRESENTATION, ANALYSIS AND INTERPRETATION 4.1 4.2. 4.2 Introduction..29 Data Presentation and Analysis.29 Questionnaire to Staff...29
4.2.1 Descriptive Statistics....29 4.2.2. Presentation and Analysis of research questions37 4.3 Questionnaire to External Stakeholders...46 4.4 Test of Hypothesis56
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CHAPTER FIVE - SUMMARY, RECOMMENDATION AND CONCLUSION 5.0 5.1 5.1.1 5.1.2 5.1.3 5.1.4 5.1.5 5.2 5.3 Introduction..61 Summary of Findings61 Findings Profitability..61 CSR in the Community..62 Nestls Financial Commitment to CSR...............................................................62 Value Creation.......................................................................................................62 Customer Ignorance of CSR programmes.62 CONCLUSION.63 RECOMMENDATION64
REFERENCES..66 APPENDIX I..69 APP ENDIX II71
List of Tables Table 4.1.1.1: Sex Distribution of Respondents29 Table 4.1.1.2: Marital Status of Respondents31 Table 4.1.1.3: Age Distribution of Respondents.32 Table 4.1.1.4: Respondents Job Levels..33 Table 4.1.1.5: Work Experience Distribution of Respondents35 Table 4.1.1.6: Education Qualification Distribution of Respondents..35 Table 4.1.1.7: Professional Qualification Distribution of Respondents..37 Table 4.2.1.1: Respondents awareness on Nestle Ghana embarking on CSR37 Table 4.2.1.2: Respondent responds to impact of the CSR projects/programme on the community39 Table 4.2.1.3: Respondent responds about other benefits Nestle Ghana stands to gain apart from profitability..39 Table 4.2.1.4: Respondent response to question 11..41 Table 4.2.1.5: Respondent response to question 12..42 Table 4.2.1.6 Respondent response to question 1344 Table 4.2.1.7: Respondent response to question 14...44 Table 4.2.1.8: Respondent response to question 15...45 Table 4.3.1.1 Sex Distribution of Respondents 46 Table 4.3.1.2 Marital Status Distribution of Respondents 46 Table 4.3.1.3 Age Distribution of Respondents.47 Table 4.3.1.4: Corporate Relationship47 Table 4.3.1.5 Level Of Transactions with Nestle Ghana48 Table 4.3.1.6: Respondents response to question 6.48 Table 4.3.1.7: Respondents response to question 7.49 Table 4.3.1.8: Respondent responds to Question 8 49 Table 4.3.1.9: Respondents response to question 9.50
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Table 4.3.1.10: Respondents response to question 10.51 Table 4.3.1.11: Respondents response to question 11.51 Table 4.3.1.12: Respondents response to question 12....52 Table 4.3.1.13: Respondents response to question 13.53 Table 4.4.1.1: Sex Distribution of Respondents.53 Table 4.4.1.2 Customers responds on benefits of CSR...54
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CHAPTER ONE INTRODUCTION
1.1
BACKGROUND INFORMATION
Corporate Social Responsibility (CSR) as a concept entails the practice whereby corporate entities voluntarily integrate both social and environment upliftment in their business philosophy and operations. A business enterprise is primarily established to create value by producing goods and services which society demands. The present-day conception of corporate social responsibility (CSR) implies that companies voluntarily integrate social and environmental concerns in their operations and interaction with stakeholders. The notion of CSR is one of ethical and moral issues surrounding corporate decision making and behaviour, thus if a company should undertake certain activities or refrain from doing so because they are beneficial or harmful to society is a central question. Social issues deserve moral consideration of their own and should lead managers to consider the social impacts of corporate activities in decision making. Today, managers of Multinational Companies(MNCs) have found a need that the environment in which they operate should be provided for because their intermediate and macro environments have a direct impact on the attainment of the corporate goals, objectives and mission statement. The purpose of all Profit-making organizations, and even the non-profit making organizations, is to maximize profit and in turn minimize cost, through optimal utilization of available resources to achieve the best results they are capable of. Profitability is an important factor to all MNCs, because it is one of the major purpose for which the MNCs are established. CSR involves a business identifying its stakeholder groups and incorporating their needs and values within the strategic and day-to-day decision-making process, thus a means of analyzing the inter-dependent relationships that exist between businesses, the economic systems and the communities within which they are operating. CSR is a means of
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discussing the extent of obligations a business has to its immediate society; a way of proposing policy ideas on how those obligations can be met; as well as a tool by which the benefits to a business for meeting those obligations can be identified (CSR Guide). CSR is also referred to as corporate or business responsibility, corporate or business citizenship, community relations, social responsibility. It involves the way organisations make business decisions, the products and services they offer, their efforts to achieve an open and honest culture, the way they manage the social, environmental and economic impacts of business activities and their relationships with their employees, customers and other key stakeholders having interest in the Business and its operations. The motivations to engage in CSR are varied response to market forces, globalization, consumer and civil society pressures, corporate objectives, etc. The activities of these firms are therefore visible because of their global reach. As such, there is a higher incentive to protect their brands and investments through CSR. The CSR activities in this sector are mainly focused on remedy the effects of their business activities on the local communities. So, the firms operating in this sector have often provided pipe-borne waters, hospitals, schools, etc. The MNCs seek to conduct CSR so that they meet their financial, social and environmental responsibilities in an aligned way. At its core, it is simply about having a set of values and behaviours that underpin its everyday activities, its transparency, its desire for fair dealings, its treatment of people, its attitudes towards and treatment of its customers and its links into the Community. As a result, the environmental aspect of CSR is seen as the duty to cover the environmental implications of the companys operations, products and facilities; eliminate waste and emissions; maximize the efficiency and productivity of its resources; reward for externalities and minimize unethical practices that might adversely affect the enjoyment of the countrys resources by future generations. In the emerging global economy, where the internet, the news media and the
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information revolution shed light on business practices around the world, companies are more frequently judged on the basis of their environmental stewardship (CIBN). Partners in business and consumers want to know what is inside a company. This transparency of business practices means that for MNCs, CSR is no longer a luxury but a requirement. Mazurkiewicz (2004) recognized the concept has been developing since the early 1970s; there is no single, commonly accepted definition of Corporate Social Responsibility (CSR). There are different perceptions of the concept among the private sector, governments and civil society organizations. Depending on the perspective, CSR may cover: a) A company running its business responsibly in relation to internal stakeholders (shareholders, employees, customers and suppliers); b) The role of business in relationship to the state and nationally, as well as to global institutions or standards; and c) Business performance as a responsible member of the society in which it operates and the global community. The first perspective includes ensuring good corporate governance, product responsibility, employment conditions, workers rights, training and education. The second includes corporate compliance with relevant legislation, and the companys responsibility as a taxpayer, ensuring that the state can function effectively. The third perspective is multi-layered and may involve the companys relations with the people and environment in the communities in which it operates, and those to which it transact business. Too often, attaining CSR is understood from the perspective of business generosity to community projects and charitable donations, but this fails to capture the most valuable contributions that a company has to make (Reyes 2002). CSR is seen by leadership companies as more than a collection of discrete practices or occasional gestures, or initiatives motivated by marketing, public relations or other
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business benefits. Rather, it is viewed as a comprehensive set of policies, practices and programs that are integrated throughout business operations, and decision-making processes that are supported and rewarded by top management. Simply, many companies have found that CSR has often had a positive impact on corporate profits. Of all the topics related to corporate social responsibility, it is environmental initiatives that have produced, so far, the greatest amount of quantifiable data linking proactive companies with positive financial results. Corporate Social Responsibility in fast moving consumer goods(FMCG) sector would be aimed towards addressing the peculiarity of the socio-economic development challenges of the country (e.g. poverty alleviation, health care provision, infrastructure development, education, etc) and would be informed by socio-cultural influences (e.g. communalism and charity). They might not necessarily reflect the popular western standard or expectations of CSR (e.g. consumer protection, fair practice, green marketing, climate change concerns, social responsible investments, etc) as a result of the effect of the global economic meltdown. Companies are assumed to be socially responsible because they anticipate a benefit from these actions. Examples of such benefits might include reputation enhancement, the ability to charge a premium price for its output, or the use of CSR to recruit and retain high quality workers. These benefits are presumed to offset the higher costs associated with CSR, since resources must be allocated to allow the firm to achieve CSR status, while 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 (Nkanbra and Okorite, 2007). There is no doubt that CSR is becoming indispensable, though involuntary, in the contemporary business world as societal needs are making it imperative for the corporate organisations to be sensitive to happenings in their environment, which ensure more understanding and good relationship
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between the organisation and the society they exist, since CSR contributes to the wellbeing of the citizenry (Osho 2008). 1.2 STATEMENT OF RESEARCH PROBLEM With the new competent and competitive players, the Ghanaian FMCG system is now driven by advanced competition brought about by globalization, deregulation of financial services, recent replacement of some MNCs Chief Executives, astronomical development in Information and Communication Technology (ICT), among others, to render services according to cost-benefit criteria. This has affected MNCs customers' habits as well, while the increasing demands for clear and hard facts about the social and environmental performance of MNCs by an increasingly well-informed breed of stakeholders have made corporate social responsibility (CSR). MNCs in Ghana perceive and practice Corporate Social Responsibility as a corporate philanthropy aimed at addressing socio-economic development challenges. But then what impact does this have on the profitability of the organisation? It is against this background that, there is the need to find out how CSR impact on the profitability of the MNCs especially, Nestle Ghana Ltd. 1.3 RESEARCH OBJECTIVES The general objective of this study is to examine the effect of Corporate Social Responsibility of Nestle Ghana on its profitability. But specifically, the study sought to achieve the following objectives: 1. To find out how Nestle Ghana carry its CSR as a major partner in the fast moving
consumer goods(FMCG) industry. 2. 3. To find out the challenges of Nestle in practicing of its CSR programmes. To investigate whether Corporate Social Responsibility guarantee customers
confidence and security of depositors fund.
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1.4 Research Questions 1. How does Nestle Ghana embark on Corporate Social Responsibility? 2. What challenges does Corporate Social Responsibility impose on Nestle Ghana? 3. Does Nestle Ghanas Corporate Social Responsibility guarantee the customers confidence level in the organisation? 1.5 JUSTIFICATION FOR THE STUDY The study is expected to make contribution to knowledge in the following areas: Provide information about CSR in relation to corporate institution especially the FMCG sector. It is also to be a fundamental material for scholarly discourse in management science relating to Corporate Social Responsibility. The study will provide information on the impact of CSR on the profitability of MNCs operations in Ghana. Finally, the research work will provide information on the challenges of CSR in the fast moving consumer good(FMCG) sectors with recommendations. 1.6 SCOPE AND LIMITATION OF THE STUDY The study is focused on the headquarters of Nestle Ghana. It critically examines what impact Corporate Social Responsibility has on the profitability of Nestle Ghana for the period 2008-2010. However the study is limited to finding out how much in monetary terms Nestle commits to towards corporate social responsibility programmes yearly.
1.7 BRIEF METHODOLOGY OF THE STUDY Primary data was used through the administering of questionnaires to respondents at Nestle Ghana Limited, Customers, Nestle Business partners and shoppers in general. The study population is very large, so 100 respondents were selected from the top level management, middle level management and the supervisors which is a good representation of the population based on stratified sampling. This cuts across the various departments in
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the organisation such as corporate affair department, customer services department, retail department, marketing department and others. Again 300 shoppers/customers were selected through random sampling. Finally, 5 business partners of Nestle were also interviewed through administering of simple structured questionnaires for their response in relation to the study.
1.8 ORGANISATION OF THE WORK This work is organized and presented in five chapters. Chapter one covered the background information to the study, objectives of the study, the research questions, significance of the study as well as the limitations of the study. Chapter two looked at the review of literature on the subject. This is a review of books, papers, publications of earlier writers on the topic or similar to that. Chapter three did an appraisal of Nestle Ghana and their operations, it discussed the methods of collecting the data into details. Chapter four analyzed and discussed the data collected for the study. Finally, chapter five discussed the findings, conclusions and recommendations for addressing the problems identified in the study.
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CHAPTER TWO LITERATURE REVIEW 2.0 INTRODUCTION CSR as defined by European Commission (2001) is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis following increasingly aware that responsible behaviour leads to sustainable business success. CSR is about managing change at company level in a socially responsible manner which can be viewed in two different dimensions: a) Internal socially responsible practices that mainly deal with employees and related to issues such as investing in human capital, health and safety and management change, while environmentally responsible practices related mainly to the management of natural resources and its usage in production. b) External CSR beyond the company into the local community and involves a wide range of stakeholders such as business partners, suppliers, customers, public authorities and NGOs that representing local communities as well as environment. A company should focus on areas such as economic, environmental and social when developing sustainability strategy (Szekely & Knirsch 2005). Sustainability strategy development can be based on legitimacy, economic and social theories. These theories explain social disclosures pattern by organisations (Haniffa & Cooke 2005). Thus, CSR practices can be based on the these three strategies. Legitimacy theory is whereby corporate social disclosures were motivated by the corporate need to legitimise activities (Hogner 1982). This is where corporate management will react to community expectations (Guthrie & Parker, 1989). Thus, companies are expected to carry out activities that are acceptable by the community. Legitimacy also implies that companies will take cautious to ensure their activities and performance acceptable to the
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community given a growth in community awareness (Wilmshurst & Frost 2000). Corporate social disclosure can be used to appease some of the concerns of the relevant publics and also as a proactive legitimation strategy to obtain continued inflows of capital and to please ethical investors (Haniffa & Cooke 2005). Economic theory reflects the degree of association of CSR and financial performance by taking consideration of cost-related advantages, market advantages and reputation advantages (Chamhuri & Wan Noramelia 2004). In the business, CSR is concerned with employment, lifelong learning, consultation and participation of workers, equal opportunities and integration of people towards restructuring and industrial change. Basically, the formation of policies is influenced by the authority employment strategies, the initiative on social responsible restructuring, the initiatives to promote quality and diversity in the workplace and health and safety strategy. The social issues include the benefits offered in terms of training related to safety, health and environment, donations, education scheme, medical benefits and others. (Chamhuri & Wan Noramelia 2004). Environmental issues emphasize on preserving and conserving natural resources such as conducting recycling activities, noise reduction action plan to pursue noise improvement initiatives, water and process treatment and compliance with authority regulations and requirements. Many enterprises recognized the importance of their responsibilities towards the environment and take them seriously by setting targets for continually improving their performance. CSR social activities may include charitable contributions to local and national organisations such as fundraising, donations and gifts in areas where it trades and others like regeneration of deprived communities, reclamation of derelict land and creation of new regeneration jobs. Development of strategies and programmes on social and environmental issues enabled firms to gain close relationship with community. Firms could take initiatives by conducting campaigns, seminars, workshops and giving donation to the society. This way enables a company to meet its CSR
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commitment and indirectly acts as a marketing and promotional strategy. As the result, higher market share can be obtained, which lead to higher revenues from larger sales. The CSRs policy implementation in business can also be influenced by fair commercial practices such as advertising, aggressive marketing and after-sales services between businesses and customers. Policies, strategies and programmes that are associated with social activities can be used to indicate the level of CSRs commitment of an organisation. Organisations too, need to meet the customers demand and expectations. Today, buying behaviour is changing whereby consumers have increasingly required information and reassurance interests on the environmental and social concerns. As to maintain good relationship and attract more customers, enterprises are taking initiatives to fulfill the demand of providing such information. For instance, eco-labelling is a way of communicating organizations social responsibility to public. Besides, CSR is also concerned with employment, lifelong learning, consultation and participation of workers, equal opportunities and integration of people towards restructuring and industrial change. Employees who feel protected and appreciated will increase their productivity in production and thus, achieving economies of scale. 2.1 From Philanthropy to Corporate Responsibility The practices of philanthropy has been evolved from the day business existed in this world until today. The main reason for a company to exist is to create profit. Making profits are nothing wrong but the way used to derive such profits are of concerned. Before 1970, basically, corporate share its profit with the community through philanthropic activity. In other word, CSR is after-profit obligation. If let say, companies are not profitable they do not have to behave responsibly. This impact is even worse during severe economic depression or when an organisation is managed by unethical, short-term thinking managers that would lead to societies having no choice and accepting discrimination, child labour,
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pollution and dangerous working conditions. Another debate arises in this approach is if companies are just being good and donating a lot of money to social initiatives then they will be wasting shareholders' money. That is not sustainable in the long-run, and shareholders will quickly lose interest. Thus, during 1970 to 1990, organisation had shifted from sharing profits with the community as a soft approach of philanthropy to the hard approach by using philanthropy for the purpose of profit-making. CSR is perceived as a public relation tool in improving an organisation image and performance. CSR is also performed for mitigating adverse impacts of an organisation onto environment and society such as those in the oil and gas industry. While philanthropy does little or nothing to help companies make profits, CSR activities are linked to improving a company's bottom line. Therefore, during 1990 to 2001 period, embedding socially responsible principles in corporate management has become a corporate obligation. CSR is increasingly being embedded into the corporate mission, strategy and actions of organisations. For a long term survival, CSR has been adopted as a corporate routine. Strategic CR is whereby an organisation achieves sustainabilility in such a way that its CSR actions have become part and parcel of the way in which a company carries out its business. Its links to the bottom line of a company has been laid out clearly simply because, if it does not contribute to the bottom line, it will eventually be rejected by other stakeholders of the organisation. A government linked corporation (GLC) is a corporate entity that may be a private or public listed on a stock exchange in which an existing government owns a stake using a holding company. There are two main definitions of GLCs, which are dependent on the proportion of the corporate entity a government owns. One definition suggests that a company is classified as a GLC if a government owns an effective controlling interest or more than 50%, while the second definition suggests that any corporate entity that has a government as a shareholder is a GLC (Wikipedia 2005). GLC is different from
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government-owned corporation in terms of holding power by the government. Government-owned corporation is a legal entity created by a government to exercise some of the governments powers. It may resemble a not-for-profit corporation as it has no need or goal of satisfying the shareholders with return on their investment through price increase or dividends (Wikipedia 2005). Though the practice of CSR is still in the early stage the concept has been much appreciated by most of the government-linked corporations. The practice has been increasingly important as a strategy towards sustainable business development. In general, the aim of government-linked corporation is to improve the living of Ghanaian and contributes towards nation development. They uphold the principle of giving back to community. The profits they earned are not only for the companies benefits, but also for the nation as a whole. The strategies and programmes undertaken vary accordingly but with one goal that is to improve and enhance the quality of life in terms of safety, health and environment. 2.2 Multinational Corporation Multinational corporations are companies or enterprises that operate in a number of countries and have production or service facilities outside the country of its origin. While still maintaining a domestic identity and a central office in a particular country, the aim is to maximize profits on a worldwide basis. As world is encouraging on international business, therefore, multinational corporations are among the major participants in business activities. Most multinational companies that were established in Ghana have interesting business philosophies on CSR. They started with business philosophy as a principal and guideline towards CSRs implementation. Though companies came from various nature of businesses, their aimed are similar which is to recognize the need of making business decisions that demonstrate economic, social and environmental responsibilities for the stakeholders which consist of employees, community, business partners, suppliers,
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customers, government and shareholders. These companies bring benefits to society through wealth generation, employment, skill development and transfer and community initiatives. The words they committed are evident by the policies, strategies and innovative programme with further establishment and improvement on the social, economic and environmental issues. There are various policies, strategies and programmes which have been implemented by multinational companies that can be shared and useful as an acknowledgement of CSRs practices in the business and thus, continuously contributing to the sustainable development. Among the best practice of CSR can be reflected by the strategies, which differs by environmental and social scopes.
2.3 Small and Medium-Sized Enterprises Small and medium-sized enterprises (SME) play an important role in Ghanaian Economy. The term SME is also synonymous to small and medium-sized industries (SMI). SMEs are the engine of economic growth which also representing the key source of endogenous growth. SMEs are also the impetus for the countrys broad based economic development. The Ghanaian government has given a priority on development of SMEs. In Ghana, SME is usually in the form of private limited company, partnership and sole-proprietorship. There is no standard definition of SMEs in Ghana. However, the Association of Ghana Industries(AGI) define SME based on the number of employees, amount of capital, total assets and sales turnover. SMEs can be categorized into three broad sectors namely manufacturing, agriculture and services. SMEs in Ghana are defined in terms of annual sales turnover or its number of full-time employees. Since SMEs are a part of business entities populations in Ghana, therefore, their contributions towards society should be taken into considerations. Limited capacity, money and other resources may hinder SMEs from adopting CSR into their business operations. SMEs might have adopted CSR at some level of implementation, but this is however, need to be verified in the study. Social
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responsibility is usually done in an informal way and sometimes unconsciously by SMEs. It could be the terminology or definition of CSR itself that could hinder SMEs from truly understands and engages in CSR (Jenkins 2005). CSR tools such as codes of conduct and supply chain standards are usually excluding SMEs in developing countries (Fox 2005). Therefore, there should be new ways in making CSR to be more relevant for SMEs. Jenkins (2004) found that SMEs feel most pressure and influence on CSR matters from customers and employees and barriers to CSR are time and money. Time, resources and delivery pressures are often preventing SMEs in getting involved in what they see as new activities (smekey.org). A recent study on social responsibility among SMEs in Ghana as commissioned by the ACCA concluded that SMEs are more concerned with profitability and less concerned with the impact of their operations on the community, customers and employees. (Tay 2006). The commonly perceived barriers for SMEs in getting involved with CSR are:
1. Lack of time 2. Lack of motivation 3.
Insufficient resources and capabilities
4. Not knowing how to encourage in social responsibility or inability to see suitable Opportunity. 5. Not feeling in touch with local needs 6. Perception that community involvement is not related to business
Studies about SME practices in CSR are still inconclusive and limited. 2.4 Size of organisation Haniffa & Cooke (2005) found that size of organisation influences the level of corporate disclosure in the annual report. Large organisations undertake more activities and have greater impact on society. Besides, larger organisations are susceptible to scrutiny by
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various groups in society and thus, face greater pressure to disclose their social activities in order to be legal and socially responsible (Cowen et al. 1987). In their study, Haniffa & Cooke (2005) used total assets as proxy for size of organisation. Besides, size of organisation can also be defined based on SMIDECs (2006) definitions which use number of full-time employees besides of annual sales turnover to differentiate between SMEs scale and their nature of business. The discussion revealed the findings behind the results of study.
2.5 CSR practices The extent of CSR practices is compared among different organizational listing status. These include government-linked corporations (GLC), multinational corporations (MNC), local Ghanaian corporations (GC) and small and medium-sized enterprises (SME).
2.5.1 Government-linked corporations Study found that GLC has a significant high policy adopted for workplace. Being increasingly important as a strategy towards sustainable business development, CSR practices by GLC are aimed to improve Ghanaian living and to ensure national development. CSR is held as the principle of giving back to the society by contributing profits generated for nation enhancement. Therefore, it can be seen that the motives for GLC doing CSR is not far apart from its philanthropy reason.
2.5.2 Multinational corporations MNC started with business philosophy as a principal and guideline towards CSR implementation and would like to demonstrate economic, social and environmental responsibilities that benefiting its stakeholders.
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By operating in more than one country, MNC imposes greater impact and faces massive pressures from more stakeholders. Countries whereby its people are highly socially responsible may demand more CSR practices by MNC. Therefore, best CSR practices initiated in countries in which CSR is an obligation and subjected to legal actions for nonconformance might be adapted into the operation of MNC in other countries. This may suggest the reason of high commitment exhibited by MNC as compared to other organizational listing status in Ghana. In environmental policy, MNC leads other organisations for almost the same reason for its highest commitment reported. Facing pressures from environmental groups and government in some other countries, MNC prefers the safe side by ensuring its operations has a minimal impact to the environment. These practices are adopted as part of its environmental and safety practices in other regional counterparts. Overall, it can be concluded that apart from philanthropic means, MNC seems to avoid legal actions for non-conformance in CSR. Having good image is posed as a motive by MNC by appeal pleasingly to various interest groups. Therefore, MNC is found to be an excellent CSR performer.
2.5.3 Local Ghanaian Corporation Currently, there are not many studies done on measuring the extent of CSR practices among local companies.
2.6 Size of organisation and CSR practices The extent of CSR practices varies among different size of industry. Larger organisations tend to demonstrate more CSR activities rather than smaller organisation and is in agreement with related findings by other researchers (Cohen et al. 1987; Haniffa & Cooke 2005). The reason behind this is larger organisations face greater pressure from society to behave socially responsible and have greater impact on society. Besides, larger
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organisations usually have better financial positions and thus, enable a considerable numbers of CSR activities. Therefore, it can be concluded that larger organisation is usually undertaking more CSR activities in order to remain responsible and sustainable.
2.7 EMPIRICAL STUDIES OF CSR AND FINANCIAL PERFORMANCE
According to Margolis and Walsh (2002), one hundred twenty-two published studies between 1971 and 2001 empirically examined the relationship between corporate social
responsibility and financial performance. The first study was published by Narver in 1971.
Empirical studies of the relationship between CSR and financial performance comprise essentially two types. The first uses the event study methodology to assess the short-run financial impact (abnormal returns) when firms engage in either socially responsible or irresponsible acts. The results of these studies have been mixed. Wright and Ferris (1997) discovered a negative relationship; Posnikoff (1997) reported a positive relationship, while Welch and Wazzan (1999) found no relationship between CSR and financial performance. Other studies, discussed in McWilliams and Siegel (1997), are similarly inconsistent concerning the relationship between CSR and short run financial returns. The second type of study examines the relationship between some measure of corporate social performance (CSP) and measures of long term financial performance, by using accounting or financial measures of profitability. The studies that explore the relationship between social responsibility and accounting-based performance measures have also produced mixed results. Cochran and Wood (1984) located a positive correlation between social responsibility and accounting performance after controlling for the age of assets. Aupperle, Carroll, and Hatfield (1985) detected no significant relation between CSP and a firms risk adjusted return on assets. In contrast, Waddock and Graves (1997) found significant positive relationships between an index of CSP and performance measures, such as ROA in the following year. Studies using measures of return based on the stock market
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also indicate diverse results. Vance (1975) refutes previous research by Moskowitz by extending the time period for analysis from 6 months to 3 years, thereby producing results which contradict Moskowitz and which indicate a negative CSP/CFP relationship. However, Alexander and Buchholz (1978) improved on Vances analysis by evaluating stock market performance of an identical group of stocks on a risk adjusted basis, yielding an inconclusive result. 2.8 Measures of Corporate Social Responsibility Determining how social and financial performances are connected is further complicated by the lack of consensus of measurement methodology as it relates to corporate social performance. In many cases, subjective indicators are used, such as a survey of business students (Heinze, 1976), or business faculty members (Moskowitz, 1972), or even the Fortune rankings (McGuire, Sundgren, and T. Schneeweis 1988; Akathaporn and McInnes, 1993; Preston and OBannon, 1997). Significantly, it is unclear exactly what these indicators measure. In other cases, researchers employ official corporate disclosures annual reports to shareholders, CSR reports, or the like. Despite the popularity of these sources, there is no way to determine empirically whether the social performance data revealed by corporations are under-reported or over-reported. Few companies have their SCR reports externally verified. Thus, information about corporate social performance is open to questions about impression management and subjective bias. Still other studies use survey instruments (Aupperle, 1991) or behavioral and perceptual measures (Wokutch and McKinney, 1991). Waddock and Graves (1997) drew upon the Kinder Lydenberg Domini (KLD) rating system, where each company in the S& P 500 is rated on multiple attributes considered relevant to CSP. KLD uses a combination of surveys: financial statements, articles on companies in the popular press, academic journals (especially law journals), and government reports in order to assess CSP along eleven dimensions1. Based on this
30
information, KLD constructed the Domini 400 Social Index (DSI 400), the functional equivalent of the Standard and Poors 500 Index, for socially responsible firms. 2.8.1 Measures of Financial Performance Although measuring financial performance is considered a simpler task, it also has it specific complications. Here, too, there is little consensus about which measurement instrument to apply. Many researchers use market measures (Alexander and Buchholz, 1978; Vance, 1975), others put forth accounting measures (Waddock and Graves 1997; Cochran and Wood 1984) and some adopt both of these (McGuire, Sundgren, Schneeweis, 1988). The two measures, which represent different perspectives of how to evaluate a firms financial performance, have different theoretical implications (Hillman and Keim, 2001) and each is subject to particular biases (McGuire, Schneeweis, & Hill, 1986). The use of different measures, needless to say, complicates the comparison of the results of different studies. In other words, accounting measures capture only historical aspects of firm performance (McGuire, Schneeweis, & Hill, 1986). They are subject, moreover, to bias from managerial manipulation and differences in accounting procedures (Branch, 1983; Brilloff, 1972). Market measures are forward looking and focus on market performance. 2.9 CONCLUSIONS AND IMPLICATIONS There is an extensive debate concerning the legitimacy and value of being a socially responsible business. There are different views of the role of a firm in society and disagreement as to whether wealth maximization should be the sole goal of a corporation. Most people identify certain benefits for a business being socially responsible, but most of these benefits are still hard to quantify and measure. Arguments exist that support the view that firms which have solid financial performance have more resources available to invest in social performance domains, such as employee relations, environmental concerns, or community relations. Financially strong companies can afford to invest in ways that have a
31
more long-term strategic impact, such as providing services for the community and their employees. Those allocations may be strategically linked to a better public image and improved relationships with the community in addition to an improved ability to attract more skilled employees. On the other hand, companies with financial problems usually allocate their resources in projects with a shorter horizon. This theory is known as slack resources theory (Waddock and Graves, 1997). Other arguments propose that financial performance also depends on good or socially responsible performance. According to Waddock and Graves (1997), meeting stakeholder expectations before they become problematic indicates a proactive attention to issues that otherwise might cause problems or litigation in the future. Furthermore, socially responsible companies have an enhanced brand image and a positive reputation among consumers; they also have the ability to attract more accomplished employees and business partners. Socially responsible companies also have less risk of negative rare events. Companies that adopt the CSR principles are more transparent and have less risk of bribery.
2.11 FUTURE RESEARCH Future research in this area could proceed in a number of directions. First, more extensive studies are needed to explore the causal mechanisms linking CSR to profitability and to determine whether or not those relationships hold consistently over time. The source of the connection between CSR and profitability has rarely been systematically investigated. It is also important to position the timing in the relationship, since it would be valuable to investigate and to ascertain how long it takes for the impact of CSR on financial performance to be revealed. For the above to be realized, more data on CSR should become available. The reliability of the CSR data is also an important issue, as data from different sources have significant differences regarding how to evaluate the CSR performance of a firm.
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2.12 Corporate Social Responsibility in Nestle Ghana.
Long before such activities became popularly known as Corporate Social Responsibility (CSR) and long before it became essential for companies to engage in CSR as part of their brand building agenda, Nestle Ghana have been making regular, substantial
contributions to the wellbeing of grassroots communities and Ghanaians. Nestle 's CSR strategy reflects their commitment to being socially, economically, and culturally responsible. With a resolve to provide sustainable solutions to the diverse developmental challenges that Ghanaians encounter on various fronts, the Organisation pursues constructive engagements and mutual partnerships with the recipient stakeholders, through a user-defined needs identification system. Nestle 's CSR is accentuated by sustained aspiration to lead the industry by example not just in the provision of the best products, services and developmental assistance for promoting the individual and common good, but also in maintaining the highest standards of corporate governance, accountability and responsiveness to their internal and external stakeholders. Nestle organizations CSR initiatives, have provided targeted support for education and youth development, grassroots sports development, healthcare, arts and culture, entrepreneurial and economic development, as well as sustainability of the environment. Fig 2.1: Nestle in the society
Source: Community.Nestle.com.
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Nestl agronomist Klutse Kudomor (left) with farmer Nefisa Abdulai, whose grain is checked for mycotoxin levels at our infant cereal factory in Tema, Ghana (above).
A CHF 36.2 million investment in Cerelac infant cereal production plant in Tema, Ghana, will double its production capacity and foster rural development by sourcing more locally produced rice, wheat, flour and sugar from local Ghanaian suppliers. Nestls sustainable agriculture strategy is designed to ensure a steady supply of safe, high quality agricultural commodities and allow rural communities to increase their income as a result. One of Nestles priorities in this area is to reduce the high levels of mycotoxins in cereals, dried fruits and nuts from Central and West Africa, as this natural, fungus-based contamination can cause immune suppression, impaired development in children and liver damage in both humans and animals. Up to 30% of cereal crops are lost to contamination, caused largely by the humid environment and poor drying and storage practices.
Locally produced cereal grains and legumes (beans, peas, etc) are important to our business, and particularly for our breakfast cereal brands like Golden Morn, Cerelac and Cerevita. Our Central and West Africa business therefore launched the Grains Quality Improvement Project, in conjunction with the International Institute of Tropical Agriculture (IITA) in Benin, to reduce mycotoxin contamination levels in Cte dIvoire, Ghana and Nigeria by 60%.
This reduction will be achieved through a combination of:
toxin-reduction strategies such as good agricultural and storage practices, developed in co-operation with national extension partners;
capacity-building training sessions from Nestl agronomists; raising awareness of the health implications of contaminated grains among agricultural extension officials, food companies, retailers, transporters and wholesalers;
34
paying price premiums to farmers for mycotoxin-free produce.
In 2008/09, 10 000 trained farmers produced grains with mycotoxin levels within Nestl standards (four parts per billion) and in 2010, the number rose to 30 000 farmers. The management and control of mycotoxins is supported by an awareness campaign and greater stakeholder dialogue, delivered through leaflets, newsletters and even pictorial guides for illiterate farmers, which are intended to make food companies, retailers and wholesalers, as well as farmers, more aware of the health implications of mycotoxin contamination.
The 10 million trees will help to reduce deforestation by replacing 10 000 hectares of old cocoa trees over a decade, each of which will yield three times more cocoa beans. The potential of the propagated varieties is between 1.5 and 2.5 tonnes per hectare, and annual farmers income has the potential to rise from USD 480 per hectare to USD 1800.
Taken together, the potential yield, the technical training of more than 30 000 cocoa farmers, the premiums paid for good quality and the social projects funded via The Cocoa Plan will improve the social environment of farmers and increase the supply of better quality beans to Nestls factories.
2.13
The Impact of Corporate Social Responsibility.
CSR is a required investment to create sustainable development for the business, because it offers the companies (MNCs) an opportunity to bridge the trust gap among different stakeholders such as, government, customers, employees, suppliers, investors, and others. Some of the impact of CSR includes: To the company: Ajala (2005) says: CSR programmes offer opportunity to build goodwill, affect corporate image and reputation as a result of companys contribution to the welfare of the
35
community, either local or international. She added that CSR enhances growth of investors confidence in the companys shares. A firm that consistently fulfil its social obligations makes itself a welcomed member of the community and this may attract customer both home and aboard. Social and human pressure. These have induced contending demand and requests on
MNCs in the face of financial constraints. Today, the outlook of Ghanaian MNCs is no more measured by, local standards, but by international standards. Often, the inability of MNCs to satisfy these demands have resulted in disappointments and eventually to, organisation bashing; Inadequate information to the public on the modalities and essence of CSR as well as the achievements of MNCs in this regard. Many believe that MNCs are not
doing enough to improve the welfare of the public in view of the supposedly jumbo profits they make; Inability of MNCs to co-ordinate efforts and collaborate to execute CSR projects,
particularly the capital intensive ones, such as road construction.
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CHAPTER THREE RESEARCH METHODOLOGY 3.1 INTRODUCTION
According to Oni (2003), research methodology is used to describe all the methods involved in the collection of all information required for a study. This chapter contains research design, population and sampling size, research instrument, validity and reliability of data, measurement of variable, data analysis technique, limitations of the research methodology of the study.
3.2
RESEARCH DESIGN
Research design is the structuring of investigation aimed at identifying variables and their relationship to one another. This is used for the purpose of obtaining data to enable the researcher test hypothesis or answer research questions. It is an outline or scheme that serves as a guide to the researcher in his effort to generate data for his study. In this study, the research design used is the survey design. A survey research design is one in which the sample subject and variables that are being studied are simply being observed as they are without any attempt to control or manipulate them (Ojo 2003). The survey research design is aimed at discovering the inter-relationship between variables. Questionnaires was used as the instrument of gathering information from knowledgeable respondents and also going beyond the observation of the correlation between independent and dependent variables.
3.3
POPULATION AND SAMPLE SIZE
The study population is very large, so 100 respondents were selected from the top level management, middle level management and the supervisors which should be a good representation of the population based on stratified sampling. This cuts across the various departments in the organisation such as corporate affair department, customer services department, retail department, marketing department and others. Again 300 customers were
37
selected from customers through random sampling. Finally five(5) business partners of Nestle were interviewed on face to face discussions to solicit their views on the subject of the study. In all 405 respondents were used for the research.
3.4
RESEARCH INSTRUMENT
The instrument used for the collection of data for the purpose of this study were questionnaires and face to face interviews. The questionnaires contain relevant questions for the purpose of this study. The data obtained from completed questionnaires were analyzed and used.
3.5
VALIDITY OF THE RESEARCH INSTRUMENT
To ensure that the study instrument is valid and reliable, as the quality of a research largely depends on the quality of the instruments used and procedures of collecting the data since the two essentials of a good research are validity and reliability, the researcher ensured that the questions designed are based on the following guidelines: The questions were formed in such a way as to make it easy for respondents to
understand them The questions asked were as few in number as necessary to produce the information
required.. nature. The questions are directly related to the information required. The questions were such that could be answered honestly and without bias. The questions required answers that were very straight forward and precise in
Since validity is the extent to which the instrument used measures what it was intended to measure, the accuracy of a research instrument being reliable is whether the data collection process is consistent and stable.
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3.6
DATA ANALYSIS TECHNIQUE
The statistical techniques employed in analyzing data collected in this study are: TABLES
Tables effectively order and summarize the quantitative data. They are used to arrange facts and figures in columns and rows. These facts and figures can be systematically examined. (Ojo, 2005) PERCENTAGES
These are used in translating frequency counts into percentage. These percentages were used to show the distribution of respondents according to their responses. (Ojo, 2005) CORRELATIONAL ANALYSIS
The Pearson product-moment correlation coefficient (sometimes referred to as the PMCC, and typically denoted by r) is a measure of the correlation (linear dependence) between two variables X and Y, giving a value between +1 and 1 inclusive. It is used as a measure of the strength of linear dependence between two variables. According to Ojo (2005) PMCC is used to find out if there is any relationship between two variables. While doing this, a variable is regressed to another variable. When increase in variable X leads to an increase in variable Y; we say there is a positive correlation. If vice versa it is negative. (Ojo, 2005) Product moment correlation coefficient (r) is given as;
Where: r = Pearsons Product Moment correlation. n= Number of pairs of values X = Independent variable (CSR) X = Mean of independent variable (CSR)
39
Y = Dependent variable (Profitability) Y = Mean of dependent variable (Profitability).
Interpretation: The correlation coefficient ranges from 1 to 1. A value of 1 implies that a linear equation describes the relationship between X and Y perfectly, with all factors affecting Y held constant for which Y increases as X increases. A value of 1 implies Y decreases as X increases. A value of 0 implies that there is no linear correlation between the variables.
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CHAPTER FOUR DATA PRESENTATION, ANALYSIS AND INTERPRETATION 4.1 INTRODUCTION This chapter deals with presentation, analysis and interpretation of the data collected from the field by means of questionnaire as well as those collected from secondary sources (annual report) to show the impact of corporate social responsibility of the profitability on multinational companies in Ghana. 4.2. DATA PRESENTATION AND ANALYSIS 4.2.1 QUESTIONNAIRE TO STAFF: The table shows the suggested answer and the numbers of respondents with the percentage of the respondent to each.
DESCRIPTIVE STATISTICS: Section A Table 4.1.1.1: Sex Distribution of Respondents SEX FREQUENCY MALE FEMALE TOTAL
Source-Field survey 2011
PERCENTAGE 47 53 100
155 200 355
41
Graphical representation of the Nestle staff respondents

Fig: 4.1 Gender distribution of Nestle Staff (pie chart) Gender Frequency (%)
47% 53% male female
Fig: 4..2 Gender distribution of Nestle Staff (bar chart) Gender Frequency - %
46 44 42 40 38 36 male female Frequency
The table 4.1.1.1 reveals that 40 (47%) of the respondents are male while 46 (53%) are females, indicating that the organization has a fairly favorable policy towards the employment of women.
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Table 4.1.1.2: Marital Status of Respondents MARITAL STATUS FREQUENCY
SINGLE MARRIED DIVORCED WIDOWED TOTAL

Source- Field survey 2011
31 42 10 3 86
36 49 12 3 100
Fig: 4.3 Marital Status of Nestle Staff (bar chart) Marital Status 50 40 30 20 10 0
Frequency %
43
Fig: 4.4 Marital Staff of Nestle Staff (pie chart) Marital Status - % single married 4% 15% 18% divorced widowed
63%
The table 4.1.1.2 reveals that 16 (35%) are single, 21 (46%) are married, 6 (13%) are divorced and 3 (7%) are widowed out of the respondents. Table 4.1.1.3: Age Distribution of Respondents AGE BRACKET FREQUENCY 16-25 26-35 36-45 45 and above TOTAL
Source- Field survey2011
% 14% 49% 29% 8% 100%
12 42 25 7 86
44
Fig: 4.5 Age distribution of Nestle Staff (bar chart) Age Brackets Frequency - % 50 40 30 20 10 0 16-25 26 -35 36 -45 above 45 Frequency %
Fig: 4.6 Age distribution of Nestle Staff (pie chart) Age Distribution Frequency (%) 16-25 26 -35 8% 14% 29% 49% 36 -45 above 45
The table 4.1.1.3 reveals that 12(14%) of the respondent are within the ages of 15-25, 42(49%) are within the ages of 26-35, 25(37%) are within the ages of 36-45 and 7 (8%) are within the ages of 45 and above.. Table 4.1.1.4: Respondents Job Levels STATUS/POSITION Low level manager Middle level manager FREQUENCY 12 67 % 14 78
45
Top level manager TOTAL

7 86
8 100
Fig: 4.7 Position distribution of Nestle Staff (bar chart) Position Frequency - %
80 60 40 20 0 Lower level manager middle level manager Frequency % top level manager
Fig: 4.8 Position distribution of Nestle Staff (pie chart) Position Frequency - % Lower level manager top level manager 8% 14% middle level manager
78%
The table 4.1.1.4 reveals that 12 (14%) of the respondents are low level managers, 67 (78%) are middle level managers and 7 (8%) are Top level managers.
46
Table 4.1.1.5: Work Experience Distribution of Respondents LENGTH OF TIME FREQUENCY Less than a decade A decade and more TOTAL
% 66 34 100
57 29 86
The table 4.1.1.5 reveals that 57 (66%) respondents have less than a decade work experience while 29(34%) have a decade and more work experience with Nestle Ghana. The implies that information obtained from the questionnaire were from staff who have gained sufficient experiences from Nestle Ghana, making the information reliable
Table 4.1.1.6: Education Qualification Distribution of Respondents QUALIFICATION FREQUENCY % SSCE HND B.sc BA MBA/M.sc Others TOTAL
Source: Field survey 2011
8 20 25 12 13 8 86
9 24 29 14 15 9 100%
47
Fig: 4.8 Work experience distribution of Nestle Staff (bar chart) Staff Qualifications 30 25 20 15 Frequency 10 5 0 %
Fig: 4.9 Work experience distribution of Nestle Staff (pie chart) Qualifications
9% 15% 14%
10% 23%
SSCE HND BSC BA
29%
MBA/Msc Others
48
This table 4.1.1.6 shows that 9% of the respondent have SSCE, 24% of the respondent have HND, 29% of the respondents have B.Sc, 14% of the respondents have BA, 15% of the respondent have MBA/M.sc and 8% have other qualification. Table 4.1.1.7: Professional Qualification Distribution of Respondents QUALIFICATION FREQUENCY % ACA CIM ACCA CIBN Others TOTAL
18 22 18 15 13 86
21 26 21 17 15 100%
The table 4.1.1.7 reveals that 18 (21%) of the respondents have ACA, 22(26%) have CIM, 18(21%) have ACCA, 15(17%) have CIBN and 13 (15%) of the respondents possess other professional qualifications not listed.
4.2.2. PRESENTATION AND ANALYSIS OF RESEARCH QUESTIONS 8. What do you think about Nestle Ghana embarking on CSR? Table 4.2.1.1: Respondents awareness on Nestle Ghana embarking on CSR RESPONSES FREQUENCY % NECESSARY COMPLUSORY VOLUNTARY BENEFICIAL TOTAL
35 21 8 22 86
41 24 9 26 100
49
Fig: 4.10 View on if Nestle embarks on CSR - Nestle Staff (bar chart) Respondents view on CSR 50 40 30 20 10 0
frequency %
Fig: 4.11 View on if Nestle embarks on CSR - Nestle Staff (pie chart) Respondents view on CSR necessary compulsory voluntary beneficiary
26% 9% 24%
41%
The table 4.1.2.1 shows that 41% of the respondents feel that Nestle Ghana embarking on CSR is necessary, 24% feel it is compulsory, 9% feel it is voluntary and 26% felt it is beneficial. 9. What impact has the project / programme had on the community?
50
Table 4.2.1.2: Respondent responds to impact of the CSR projects/programme on the community RESPONSES FREQUENCY % Positive Negative Neutral TOTAL
70 0 16 86
81 0 19 100
The table 4.1.2.2 above reveals that a high proportion (81%) of the respondents felt the impact of CSR is positive, none of the respondents felt it is negative and 19% felt it is neutral. 10. Are there other benefits Nestle Ghana stands to gain aside profitability from the execution of CSR projects? Table 4.2.1.3: Respondent responds about other benefits Nestle Ghana stands to gain apart from profitability RESPONSES FREQUENCY % Large Base Customer Confidence Good Image Other Benefits TOTAL
Customer
43
50
22
26
corporate
15
17
6 86
7 100%
51
Fig: 4.12 Views of the benefits of CSR - Nestle Staff (bar chart) Respondents view of benefits of CSR 50 40 30 20 10 0 large customer good customer confidence corporate base image other benefits frequency %
Fig: 4.13 Views of the benefits CSR - Nestle Staff (pie chart) CSR Benefit - Percentage Large Customer base Good Corporate Image 7% 17% 26% 50% Customer Confidence Other Benefit
From the table 4.1.2.3 above, 50% of the respondent believes Nestle Ghana also benefit Large Customer Base, 26% believes it will have Customer Confidence, 17% believes Good Corporate Image and only 7% believes other benefit could be gained from the execution of CSR projects apart from Profitability. 11. Profit is increased by the activity of corporate social responsibility of the company?
52
Table 4.2.1.4: Respondent response to question 11 RESPONDENT FREQUENCY STRONGLY AGREE AGREE UNDECIDED DISAGREE STRONGLY DISAGREE TOTAL
% 27 43 17 13 0
23 37 15 11 0
86
100
Fig: 4.14 Respondents view of how CSR increases the firms profitability.(bar chart) Respondents view of increased profits from CSR 45 40 35 30 25 20 15 10 5 0
frequency %
53
Fig: 4.15 Respondents view of how CSR increases the firms profitability. (pie chart) Respondents view of increased profits from CSR disagree 13% undecided 17% agree 43% strongly disagree 0%
strongly agree 27%
The table 4.1.2.4 above shows that 27% of the respondent strongly agreed, 43% of the respondent agreed, 17% of the respondent were undecided, 13% of the respondents disagreed while 0% of the respondent strongly disagreed that Profit is increased by the activity of corporate social responsibility of the company. Though I couldnt gain access to the records but Nestle Ghana result shows increase in profitability. 12. Profit is decreased by the activity of corporate social responsibility of the company? Table 4.2.1.5: Respondent response to question 12 RESPONDENT FREQUENCY STRONGLY AGREE AGREE UNDECIDED DISAGREE 0 9 17 47
% 0 10 20 55
54
STRONGLY DISAGREE TOTAL

13
15
86
100%
Fig: 4.16 Respondents view if CSR decreases the firms profitability. (pie chart) Respondents view if CSR decrease profit 60 50 40 30 20 10 0
frequency %
Fig: 4.17 Respondents view if CSR decreases the firms profitability. (bar chart) Respondents view if CSR decrease profit
strongly agree agree undecided disagree strongly disagree
55
The table 4.1.2.5 above shows that 0% of the respondent strongly agreed, 10% of the respondent agreed, 20% of the respondent were undecided, 55% of the respondents disagreed while 15% of the respondent strongly disagreed that Profit is decreased by the activity of corporate social responsibility of the company. 13. Corporate Social Responsibility has no significant impact on the profitability of Nestle Ghana ? Table 4.2.1.6 Respondent response to question 13 RESPONDENT FREQUENCY STRONGLY AGREE AGREE UNDECIDED DISAGREE STRONGLY DISAGREE TOTAL
% 0
9 11 48 18
10 13 56 21
86
100
The table 4.1.2.6 shows that 0% of the respondent strongly agreed, 10% of the respondent agreed, 13% of the respondent were undecided, 56% of the respondents disagreed while 21% of the respondent strongly disagreed that Corporate Social Responsibility has no significant impact on the profitability of Nestle Ghana. This means that majority believe that CSR has a significant impact on the profitability of Nestle Ghana 14. Corporate Social Responsibility has a significant impact on the profitability of Nestle Ghana?
56
Table 4.2.1.7: Respondent response to question 14 RESPONDENT FREQUENCY STRONGLY AGREE AGREE UNDECIDED DISAGREE STRONGLY DISAGREE TOTAL
% 39
18
26 2 0 0
57 4 0 0
46
100%
The table 4.1.2.7 of the responses above shows that 18% of the respondents strongly agreed, 26% agreed, 2% of the respondent were undecided, 0% of the respondents disagreed while 0% of the respondent strongly disagreed that Corporate Social Responsibility has a significant impact on the profitability of Nestle Ghana. This confirms question 13. Majority of the staff are of the option that CSR has a significant impact on the profitability of Nestle Ghana. 15. Corporate Social Responsibility guarantees the customers confidence level and corporate loyalty? Table 4.2.1.8: Respondent response to question 15 RESPONDENT FREQUENCY STRONGLY AGREE AGREE UNDECIDED DISAGREE 24 15 12
57
% 41
35
28 17 14

86
100
The table 4.1.2.8 of the responses above shows that 41% of the respondents strongly agreed, 28% agreed, 17% of the respondent were undecided, 14% of the respondents disagreed while 0% of the respondent strongly disagreed that Corporate Social Responsibility guarantees the customers confidence and security of depositors fund. Section B
4.3 QUESTIONNAIRE TO EXTERNAL STAKEHOLDERS The table shows the suggested answer and the numbers of respondents with the percentage of the respondent to each.
DESCRIPTIVE STATISTICS: Table 4.3.1.1 Sex Distribution of Respondents SEX FREQUENCY MALE FEMALE TOTAL
2 3 5
The table 4.2.1.1 reveals that 2 (40%) of the respondent are male while other 3(60%) are females. Table 4.3.1.2 Marital Status Distribution of Respondents MARITAL STATUS FREQUENCY SINGLE MARRIED
58
% 20 60
1 3
DIVORCED WIDOWED TOTAL

1 0 5
20 0 100
The table 4.2.1.2 reveals that 1(20%) are single, 3(60%) are married, 1(20%) is divorced and 0 (0%) are widowed of the respondents.
Table 4.3.1.3 Age Distribution of Respondents AGE BRACKET FREQUENCY 16-25 26-35 36-45 45 and above TOTAL
% 0 0 40 60 100
0 0 2 3 5
The table reveals that 0 (0%) of the respondent are within the ages of 15-25, 0 (0%) are within the ages of 26-35, 2 (40%) are within the ages of 36-45 and 3 (60%) are of 45 and above. Table 4.3.1.4: Corporate Relationship LENGTH OF RELATIONSHIP LESS THAN A DECADE MORE THAN A DECADE TOTAL
FREQUENCY
1 4 5
20 80 100
59
The table reveals that 1(20%) of the respondents have less than a decade relationship with Nestle Ghana, while 80% have more than a decade relationship with Nestle Ghana. Table 4.3.1.5 Level Of Transactions with Nestle Ghana LEVEL OF FREQUENCY TRANSACTION HIGH MEDIUM LOW TOTAL
3 2 0 5
60 40 0 100
The table 4.2.1.5 reveals that more respondents (60%) have high transaction level with Nestle Ghana. This means that majority of the business partners have confidence in Nestle Ghana compare to 40% and 0% for Medium and low transaction level respectively. The higher the levels of transactions business partners have with Nestle Ghana the better for Nestle Ghana, in terms of profitability.
6. Which other MNCs do you transact business with aside Nestle Ghana? Table 4.3.1.6: Respondents response to question 6 RESPONSES FREQUENCY CADBURY GHANA GUINNESS GHANA PZ CUSSONS 4 80 1 20 4
PERCENTAGE 80
60
UNILEVER GHANA OTHER MNCs TOTAL

80
100%
The table 4.2.1.1 shows that 80% of the respondents do business with Cadbury Ghana, 20% with Guinness Ghana, 80% with PZ Cussons ,80% with Unilever Ghana and other MNCs has 0%. 7. Are you aware that Nestle Ghana embarks on any project / programme that is beneficial to the people in your community? Table 4.3.1.7: Respondents response to question 7 RESPONSES YES NO UNDECIDED TOTAL
FREQUENCY 5 0 0 5
PERCENTAGE 100 0 0 100
The table above reveals that a 5 (100%) of the respondents agreed that Nestle Ghana has embarked on programme which is beneficial to them, while 0 (0%) of the respondent believe otherwise and 0(0%) are undecided. 8. What impact has the projects / programme had on the community? Table 4.3.1.8: Respondent responds to Question 8 RESPONSES FREQUENCY POSITIVE 5
61
% 100
NEGATIVE NEUTRAL TOTAL

0 0 5
0 0 100
The table 4.2.1.3 above reveals that all (100%) of the respondents felt the impact of CSR is positive, none of the respondents felt it is negative and 0% felt it is neutral. 9. Are there other benefits Nestle Ghana stands to gain aside profitability from the execution of Corporate Social Responsibility? Table 4.3.1.9: Respondents response to question 9 RESPONSES FREQUENCY Large Base Customer Confidence Good Image Other Benefits TOTAL
% 100
Customer
100
corporate
100
5 5
100
From the table 4.2.1.4 above, 100% of the respondent believes Nestle Ghana also benefit Large Customer Base, 100% believes it will have Customer Confidence, 100% believes Good Corporate Image and 100% believes other benefit could be gained from the execution of CSR projects apart from Profitability. SECTION C: 10. Profit is increased by the activity of corporate social responsibility of the company.
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Table 4.3.1.10: Respondents response to question 10 RESPONDENT FREQUENCY STRONGLY AGREE AGREE UNDECIDED DISAGREE STRONGLY DISAGREE TOTAL
PERCENTAGE 80
1 0 0 0
20 0 0 0
100
The table 4.2.1.5 of the responses above shows that 80% of the respondent strongly agreed, 20% of the respondent agreed, 0% of the respondent was undecided, 0% of the respondents disagreed while 0% of the respondent strongly disagreed that Profit is increased by the activity of corporate social responsibility of the company. This means that majority of the respondents believe that profit of Nestle Ghana is increased by the activity of CSR of Nestle Ghana. This implies that the higher the CSR that higher the profit of Nestle Ghana. 11. Profit is decreased by the activity of corporate social responsibility of the company. Table 4.3.1.11: Respondents response to question 11 RESPONDENT FREQUENCY STRONGLY AGREE AGREE UNDECIDED DISAGREE
63
% 0
0 0 0
0 0 0

100
100
The table 4.2.1.6 of the responses above shows that 0% of the respondent strongly agreed, 0% of the respondent agreed, 0% of the respondent was undecided, 0% of the respondents disagreed while 100% of the respondent strongly disagreed that Profit is decreased by the activity of corporate social responsibility of the company. 12. Corporate Social Responsibility has no significant impact on the profitability of Nestle Ghana Table 4.3.1.12: Respondents response to question 12 RESPONDENT FREQUENCY STRONGLY AGREE AGREE UNDECIDED DISAGREE STRONGLY DISAGREE TOTAL
PERCENTAGE 0
0 0 0 5
6 0 0 100
100
The table 4.2.1.7 of the responses above shows that 0% of the respondent strongly agreed, 0% of the respondent agreed, 0% of the respondent was undecided, 0% of the respondents disagreed while 100% of the respondent strongly disagreed that Corporate Social Responsibility has no significant impact on the profitability of Nestle Ghana.
64
13. Corporate Social Responsibility has a significant impact on the profitability of Nestle Ghana. Table 4.3.1.13: Respondents response to question 13 RESPONDENT FREQUENCY STRONGLY AGREE AGREE UNDECIDED DISAGREE STRONGLY DISAGREE TOTAL
PERCENTAGE 100
0 0 0 0
0 0 0 0
100
The table 4.2.1.8 of the responses above shows that 100% of the respondent strongly agreed, 0% of the respondent agreed, 0% of the respondent was undecided, 0% of the respondents disagreed while 0% of the respondent strongly disagreed that Corporate Social Responsibility has a significant impact on the profitability of Nestle Ghana.
SECTION C: QUESTIONNAIRE TO SHOPPERS/CUSTOMERS Table 4.4.1.1: Sex Distribution of Respondents SEX FREQUENCY MALE FEMALE TOTAL
130 170 300
65
Fig: 4.18 Customers gender distribution. (pie chart) Gender Distribution male 43% female 57%
Fig: 4.19 Customers gender distribution. (bar chart) Gender Distribution
200 150 100 50 0 male female Frequency
Table 4.4.1.2 Customers responds on benefits of CSR

Responses Large customer base Customer confidence Good corporate image Other benefits Total frequency 105 85 87 23 300 % 35 28 29 7 100
66
Fig: 4.20 Customers view on benefits of CSR. (bar chart) Customers view on benefits of CSR 120 100 80 60 40 20 0 Large Customer Good customer confidence corporate base image Other benefits frequency %
Fig: 4.21 Customers view on benefits of CSR. (pie chart) Customers view on benefits of CSR Large customer base Good corporate image Customer confidence Other benefits
8% 29%
35%
28%
67
4.4 TEST OF HYPOTHESES 4.4.1 H0: RESTATEMENT OF HYPOTHESES
Corporate Social Responsibility has no significant impact on the
profitability of Nestle Ghana Ltd. H1: Corporate Social Responsibility has a significant impact on the profitability of
Nestle Ghana Ltd. The Pearson product moment correlation (PPMC) is used to establish and test the relationship between the response of Nestle Ghana staff and external stakeholders. Pearson product moment correlation is denoted by r. r which stands for the co efficient of correlation is defined below as
Where: r = Pearsons Product Moment correlation. n= Number of pairs of values X = Independent variable (Corporate Social Responsibility) X = Mean of independent variable (Corporate Social Responsibility) Y = Dependent variable (Profitability) Y = Mean of dependent variable (Profitability). In determining the relationship between the response of Nestle Ghana staff and its external stakeholders, question 13 of the staff and question 14 of the external stakeholders were used. Question 12 & 13: Corporate social responsibility has no significant impact on the profitability of Nestle Ghana.
68
The required response included strongly agree, agree, undecided, disagree and strongly disagree. Table 4.2.1.10 Response of Nestle Staff and Nestle Business Partners RESPONSE REQUIRED Staffs Responds (x) STRONGLY AGREE AGREE UNDECIDED DISAGREE STRONGLY DISAGREE 26 2 0 0 0 0 0 0 18 5 Business responses (y) Partners
Table 4.2.1.11 PMCC Correlation Analysis Computations X 18 26 2 0 0 46 Y 5 0 0 0 0 5 X-X 8.8 16.8 -7.2 -9.2 -9.2 0 Y-Y 4 -1 -1 -1 -1 0 (X-X)2 77.44 282.24 51.84 84.64 84.64 580.8 (Y-Y)2 16 1 1 1 1 20 (X-X)(Y-Y) 44 -16.8 7.2 9.2 9.2 52.8
69
X=
X=46/5 X=9.2 Y=
y
Y=5/1 Y=5 r = 52.8 580.8 * 20 r = 0.49
r = 0.49 means that there is a positive strong relationship between the response of the staff and that of the external stakeholders . In order to test the degree of significance of the relationship at the particular degree of freedom, the Pearson product moment correlation coefficient table was used. At 0.05 level of significance Degree of freedom = N 2 Where N= 51 -2 = 49 Decision Rule: If calculated r (rc) > tabled value (rt) reject H0 If tabled r > calculated value accept H0 From the result obtained the calculated r (rc) 0.49 is greater > tabled value (rt) 0.21 thus, reject H0 and accept H1. This means that, the relationship is significant at 55% confidence level. This confirms that there is a positive relationship between Corporate Social Responsibility and profitability.
70
Analysis of Primary data from shoppers at the shopping areas A total of three hundred (300) shoppers were randomly selected of a sample population of 300. Data collected from these shoppers took the form of face to face simple structured open and closed ended questions with the researcher and here were their responds. Most of the random selection made of 170 women and 130 men. The reason was that women formed majority of the sample population for the area under the study. Ages were really not a factor for the selection because shoppers were reluctant giving their ages. The researcher selected by assumption shoppers between the ages of 18 55 years.
1.
Have you hear about Nestle Ghana Ltd?
260 out of the 300 respondents representing 86% have heard about Nestle Ghana
2.
Do you use Nestle products?
285 out of the 300 representing 95% use various types of Nestle Ghana products such as Ideal Milk, Milo, Cerevita and Coffee.
3.
Will you always buy Nestle product?
288 of the respondents always prefer Nestle product compared to other products from competitors. This means out of the 300 respondents 96% are loyal to Nestle Ghana.
4.
What is Corporate Social Responsibility?
148 of the respondents representing 49% do know what CSR is all about
5.
Do you know if Nestle embarked on CSR?
125 of the respondents representing 41% are aware Nestle embarks on CSR programmes are unable to say what programmes and which areas of the society it affects. This suggests that the communication between the customers and Nestle on CSR programmes is very poor.
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4.4 ANALYSIS OF SECONDARY DATA Data obtained from secondary sources which include Nestle Ghana annual report is analyzed herein. YEARS Amount spent on CSR (GHc- Million) 2006 2007 2008 2009 332,500 621,100 780,605 1,200,000 19,831 21,543 30,473 35,074 Profit after tax (GHc - Million)
Source: Annual report of Nestle Ghana Ltd (2006- 2009) 1400000 1200000 1000000 800000 CSR 600000 400000 200000 0 2006 2007 2008 2009 PROFIT AFTER TAX
Fig 4.18 : A graph showing the impact of CSR on the profitability of Nestle Ghana
72
CHAPTER FIVE SUMMARY, RECOMMENDATION AND CONCLUSION 5.0 INTRODUCTION: This chapter tends to briefly revisit what was set out to achieve as previously stated in chapter one of this study. It also introduces in few paragraphs what has been done in the previous chapters. It will provide a smooth ground into the finding and recommendation.
Findings CSR impact on Nestle Ghanas Profitability In chapter one and two corporate social responsibility has been defined by many writers who looked at it from numerous perspectives. The research work was basically conducted to find out if Nestle Ghana embarks on CSR, if CSR has any significant impact on Nestle Ghanas profitability and to know if there are challenges faced by Nestle Ghana for embarking on CSR. In carrying out the study, primary and secondary sources of data were made use of in gathering relevant information. From the information gathered, it was found that as CSR of Nestle Ghana increases, there was a corresponding increase in profits of Nestle Ghana. For example in 2006 when the amount spent on CSR was GHc 332,500m the reported profit after tax was GHc19, 831m , in 2007 the amount spent on CSR was GHc 621,100m the reported profit after tax was GHc 21,543m, in 2008, amount spent on CSR was GHc 780,605m and GHc 30,473m was reported as profit and in 2009 above GHc1.2Million was spent on CSR and GHc 35,074m.
CSR in the Community Corporate social Responsibility is an accepted practice by both Nestle Ghana and members of the host community. This was supported by the positive responds obtained from the questionnaire.
73
Nestls Financial Commitment to CSR There has been increasing amount spent on CSR (2006 2009) and a corresponding increase in Nestle Ghanas profit records (2006-2009), which is supported by the responses from the questionnaire that CSR has a positive impact on the profitability of Nestle Ghana. Responses also showed that Nestle Ghana stands to gain other benefits such as Large Customer Base, Customer Confidence, Good corporate Image and Other attributable Benefits aside profitable. Other Benefits Nestle derives from CSR - Value Creation From the research it came out clear that indeed CSR programmes embarked by Nestle has created value for Nestle Ghana as stakeholders and customers are comfortable transacting business with Nestle. Again stakeholder businesses also grow and therefore improves customer loyalty. This was one major breakthrough Nestle has achieved to stay competitive and the preferred fast moving consumer goods MNC in Ghana. Does Nestle embark on CSR? - Customer Ignorance of CSR programmes The study also revealed that even though Nestle Ghana is doing a lot of community based social intervention programmes, the customers or the people in the community are not aware of such programmes. This is because Nestle has not done enough to communicate to the community on the programmes intended to make life much easier for the society.
5.2
CONCLUSION
The concept of CSR has become more and more common in business practices and customers today almost expect companies to be socially responsible. Even though CSR is very important for companies, it has historically not been a very lucrative approach for them to involve in these activities. The business of the 21-st century will have no choice but to implement CSR. Like any successful management strategy, a CSR process needs both high level management vision and support, and buy-in at all levels of the company.
74
CSR does not give immediate results. The same CSR initiative will also not work for all types of organisations. Designing CSR initiative requires careful planning and implementation mechanism. Corporate organisations should integrate the innovative CSR strategies into different marketing communication strategies to build and sustain a competitive advantage. Corporate social responsibility has a significant impact on the profitability of MNCs, and it is a positive impact, which includes good business relationship, good will among other benefits. In todays competitive market, CSR offer an opportunity for companies to explore other areas of improving profitability. Customers have become very sophisticated and very much aware of their environment against the perception that corporate organisations make a lot of profits, it becomes imperative for these companies to put back into the society through corporate social responsibility programmes. Even though the benefits from CSR are over a long time of time, it is such that it gives a lot more intangible benefits to the organisations. Such benefits include, customer loyalty, brand image, improved corporate image, market share and community presence.
Unfortunately, all these benefits cannot be quantified in monetary terms but translates into improving the profits of the organisation over time. Indeed CSR is capital intensive and needs an extensive programme backed by executive support to roll out various CSR programmes. Small and medium enterprises are unable to engage in such ventures due to factors already indicated in the study such as long return on investments, lack of commitment from the executive and the expertise to run such programmes. Government organisations even though may engage in corporate social responsibility programmes its is usually not capital intensive. Of course these organisations are not income generated
75
but are sub-vented by the government and so there is not an allocation for the society. CSR activities are usually donations to deprived communities and groups. As to whether CSR can be a business strategy for companies to achieve corporate targets and objectives such as competitiveness in market or market share is another study that can be researched further.
5.3
RECOMMENDATION
This section recommends measures to be considered by academia, corporate organisation and stakeholders as well as customers so long as corporate social responsibility is concerned. CSR deserves greater attention and more commitment from corporate organizations in that it guarantees other benefits other than just profits. This offers an opportunity to the corporate world to think out of the box and explore other potentially viable areas to improve the company profits portfolio. Corporate organisations stands to gain over a period of time some leverages other that just products and services they render to the society. CSR projects should be well structured and implemented to have maximum impact. This would enhance the well-being of the beneficiaries. From the survey it revealed that some customers or inhabitants of a community are not aware of any CSR programme ongoing. Mostly they bare unable to connect with the results of the programme. It tends out that the community expectations are somewhat different form the corporate organisation. Organisations could liase with community authorities to identify areas or opportunities available to them to better the lives of the people through the provision of some social amenities. This will go a long way to improve the general living standards of the people.
76
Corporate organizations should intensify efforts to educate the public on their primary responsibilities, various commitments to other stakeholders and operational/financial limitations. By doing so, the public will begin to show understanding and appreciation of the efforts and contributions of such organizations. In most instances if the customers or the people in the community are involved, monitoring becomes feasible and measurable. Corporate organisation should also involve the community in the planning, formulation, implementation and evaluation of CSR projects. This will eliminate stakeholder conflicts that may arise in some societies.
Governments and local authorities should explore the areas where a certain amount of tax will be used by the organisation to undertake community based projects such as schools, electricity, clean water, jobs and income generating activities. This can be in a form of tax exemptions granted to these organisations. This will make the corporate organisation be more responsible in the area of work and contribute significantly to national development.
For academic and industry discussions i recommend that further study should be conducted to establish the real value in monetary terms how much CSRs contribute to the organisations profitability. Also further research should be conducted to quantify how much or to what degree these CSR programmes have impacted on the society and its corresponding value generation for the company.
77
REFERENCES Aborade, R.(2005), A Practical Approach to Advanced Financial Accounting 2nd edition Master Stroke Consulting, Lagos. P. 1 ADI, A.B.C. (2006). The Moral Economy and the Possibility of Accumulation in Africa: How the IFIs can Help West Africa Review Ajala V.O. (2005), Public Relations: in search of professional Excellence: 2nd edition, MayBest Ghana Limited Ibadan, Pp203-204. Alexande, D and BRITTON, A (2000), Financial Reporting, 5th edition, Thomas Learning Publishing, London, UK. Pp 45-65. Asika, N. (2001) Understanding Ghanaian Business Environment First Edition. Concept Publications Lagos. PP 88. Asika N (1991): Research Methodology in the Behavioural Sciences. 1st edition, Longman Lagos, P 27. Azhar, .K. (2008), Strategic Management and Business Policy, Tata McGraw-Hill Publishing Company limited New Delhi p 418 Branco, MANUEL CASTELO AND RODRIGUES, LCIA LIMA (2007): Issues in Corporate Social and Environmental Reporting Research: An Overview, in: Issues in Social & Environmental Accounting 1 (1), pp. 72-90 Carrasco, I. (2007):Corporate Social Responsibility, values and cooperation DOGO, .I. (1984) Advanced Accounting Theory, unpublished monograph, Zaria, Ghana. Oxford Advanced Learners Dictionary, 6th edition. Pp 77 and 1161.2005 Adeleke et al, (2003), Business Policy and Strategy, second edition. Concept Publication Limited lagos, p93 Mcwilliams, A. & SIEGEL, D. (2001). Corporate Social Responsibility: A theory of the firm perspective. Academy of Management Review, 26(1) Nickels/ et al (2002) Understanding Business, Mc Graww Hill Irwin, New York. 6th Edition. Pp 103-112. Akanbra D. AND OKORITE L. (2007) Corporate Social Responsibility Accounting. The Ghanaian Accountant Vol. 1. No 2, 2007, p.44. Reyes CID (2002) Education-focused Corporate Social Responsibility in El Salvador; World Bank Technical Assistance Study, Washington D.C Robbins, P. S. & COULTER. M.( 2007) Management Pearson Prentice Hall, United States of America. 2nd edition pp. 81 & 118
78
Salihu MUHAMMED, (2009): The reconsolidation of banks and the economy, Economic Confidential, vol 3 No 33, September 2009, p 68. SELVI, S.P. (2006), Social Accounting, A concept Note. Nestle Ghana Ltd (2006): Financial Statement and Annual Reports. Nestle Ghana Ltd (2007): Financial Statement and Annual Reports. Nestle Ghana Ltd (2008): Financial Statement and Annual Reports. Nestle Ghana Ltd (2009): Financial Statement and Annual Reports. CSR_GUIDE (2009) Corporate Social Responsibility (CSR). Retrieved on 17th December 2009. From:http://www6.miami.edu/ethics/pdf_files/csr_guide.pdf: Drucker, .F. P. (2003), Leader From:http://www.pfdf.org/about/index.html to Leader.
Ebereonwu. .C. (2009), "Beyond Rhetoric: Total takes Corporate Social Responsibility (CSR) to Unprecendented Heights! Retrieved on 24th September, 2009. Fiorina, .T. (2009) Corporate Social Responsibility today Retrieved on 15th October,2009. From:http://www6.miami.edu/ethics/pdf_files/csr_guide.pdf Nestle Ghana Ltd (2009), History of NESTLE GHANA Plc retrieved on 24th October, 2009; From:www.NestleGhana.com Freidman, M. (1970) The Social Responsibility of Business is to Increase its Profits. Retrieved on 24th September, 2009. Gwynne .Y. (2009) Corporate Social Responsibility, the Customer's Friend? Retrieved on 24th September, 2009.; Frierson, P. R. (2006): Adam Smith and the possibility of sympathy with naturePacific Philosophical Quarterly, 8 (4), 442-480. Handy .C. (2002), Whats a Business For? Harvard Business Review, Vol. 80, No. 12, December 2002, pp. 49-55. Nkanbra D.& Okolite L. (2007) Corporate Social Responsibility Accounting. The Ghanaian Accountant Vol. 1. No 2, p.44. Institute of Directors, UK, (2002) Corporate Social Responsibility today Retrieved on 15th October, 2009; From http://www6.miami.edu/ethics/pdf_files/csr_guide.pdf Kesaprakorn, P. (2009) Corporate Social Responsibility: A Triple Bottom Line Investment to Create Business and Social Value for All Retrieved on 10th October 2009;
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Noyer, .C. (2003), The history and future of corporate social responsibility Retrieved on 12th October 2009; From:http://www.banquefrance.fr/gb/instit/telechar/discours/disc081028.pdf Paula .S. (2009). Opposition to Corporate Social Responsibility Friedmans Theoretical Criticisms of CSR. Retrieved on 17th September 2009. From:http://socialcorporateresponsibility.suite101.com/article.cfm/opposition_to_corpo rate_social_responsibility. Sainthouse, .P. (2009) Reactions to CSR- Does Anyone Care? Stakeholder Disinterest in Corporate Social Responsibility . Retrieved on 17th September 2009. From:http://social-corporate responsibility.suite101.com/article.cfm/opposition_to_corporate_social_responsibility Wiedmann .K. PETER (2008) Corporate Social Responsibility, Stakeholder Alignment, and Corporate Success 2006, New York, USA. Wikipedia (2007): 2009, Corporate Social Responsibility. Retrieved on 10th October
Fro: http://www.en.wikipedia.org/wiki/Corporate_social_responsibility Zain, .M. (2008): Social Responsibility in Business Friedman & Carroll's Differing Views on Business Responsibilities. Accessed on 17th December 2009. From:http://businessmanagement.suite101.com/article.cfm/social_responsibility_in_bu siness.
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APPENDIX I KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY INSTITUTEOF DISTANCE LEARNING DEPARTMENT OF BUSINESS ADMINISTRATION QUESTIONNAIRE FOR STAFF OF NESTLE GHANA Value Creation Through Corporate Social Responsibility in Multinational Companies in Ghana Nestle Ghana in perspective SECTION A: INSTRUCTION: Please tick ( ) the correct answers from the options provided below. 1. Sex: Male ( ) Female ( )
2. Marital status: Single ( ) Married( ) Divorced ( ) Widowed ( ) 3. Age: 16-25( ) 26-35( ) 36-45( ) 45 and above( )
4. Status/Position:
Low level Manager( ) Mid level Manager( ) High level Manager( )
5. How long have you been working for Nestl Ghana? Less than a Decade ( ) A decade and More ( ) 6. Educational Qualifications: SSCE ( ) HND( ) B.sc( ) BA( ) MBA/M.sc( ) Others( ) 7. Professional Qualifications: SECTION B: INSTRUCTION: Please tick ( ) the correct answers from the options provided below. 8. What do you think about Nestl embarking on CSR? Necessary ( ) Compulsory ( ) Voluntary ( ) Beneficial ( ) CIM( ) ACCA( ) Others ( )
9. What impact has the project / programme had on the community? Positive Impact ( ) Negative Impact ( ) Neutral ( ) 10. Are there other benefits Nestl Ghana stands to gain aside profitability from the execution of Corporate Social Responsibility? Large Customer Base ( ) Good corporate Image ( ) Customer Confidence ( ) Other Benefits ( )
81
SECTION C: In the given section SA, A, U, D, SD have the under listed meaning; SA- Strongly Agree; Agree- A; U- Undecided; D- Disagree; SD- Strongly Disagree
INSTRUCTION: Please tick ( ) the correct answers from the options provided below. SA 5 11 Profit is increased by the activity of corporate social responsibility of Nestl Ghana 12 Profit is decreased by the activity of corporate social responsibility of Nestl Ghana 13 Corporate Social Responsibility has a significant impact on the profitability of Nestle Ghana 14 Can Nestl use CSR as a business strategy to improve profit or market growth? 15 Corporate Social Responsibility has a significant impact on the profitability of Nestl Ghana. 16 Corporate Social Responsibility guarantees the customers confidence level and loyalty to Nestl Ghana A 4 U 3 D 2 SD 1
82
APP ENDIX II KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY INSTITUTEOF DISTANCE LEARNING DEPARTMENT OF BUSINESS ADMINISTRATION QUESTIONNAIRE FOR STAKEHOLDERS OF NESTLE GHANA Value Creation Through Corporate Social Responsibility in Multinational Companies in Ghana Nestle Ghana in perspective Dear Sir/Madam, This questionnaire is aimed at data collection on the Value Creation through corporate Social Responsibility in Multinational companies and how it impacts on profitability. It is aimed at carrying out research work in partial fulfillment of the requirements for the award of Executive Masters Degree in Business Administration. Please, Kindly complete this questionnaire as honesty and carefully as you can and be assured that information provided will solely be used for the research. Thank you for your co-operation. QUESTIONNAIRE FOR NESTLE GHANA STAKEHOLDERS(CUSTOMERS) Section A: INSTRUCTION: Please tick ( ) the correct answers from the options provided below. 1. Sex 2. Marital status 3. Age 4. Male ( ) Female ( )
Single( ) Married( ) Divorced( ) Widowed( ) 36-45( ) 45 and above( ) less than a
16-25( ) 26-35( )
How long have you been with Nestl Ghana? Decade ( ) A decade and More ( ) The volume of transaction with Nestle Ghana? High ( ) Medium ( ) low ( )
5.
SECTION B: INSTRUCTION: Please tick ( ) the correct answers from the options provided below. 6. Which of these other MNCs do you do business with? Unilever ( ) Cadbury Ghana( ) PZ Cussons Ghana( ) Other MNC ( )
7. Are you aware that Nestl embarks on any project / programme that are beneficial to the people in your community?
83
Yes ( )
No ( )
Undecided ( )
8. What impact has the projects / programme had on the community? Positive Impact ( ) Negative Impact ( ) Neutral ( ) 9. Are there other benefits Nestle stands to gain aside profitability from the execution of Corporate Social Responsibility? Large Customer Base ( ) Customer Confidence ( )
Good corporate Image ( ) Other Benefits ( )
SECTION C: INSTRUCTION: Please tick () the correct answers from the options provided below. In the given section SA, A, U, D, SD have the under listed meaning; SA- Strongly Agree; Agree- A; U- Undecided; D- Disagree; SD- Strongly Disagree SA 5 10 Profit is increased by the activity of corporate social responsibility of Nestl (the company). 11 Profit is decreased by the activity of corporate social responsibility of Nestl (the company). 12 Can Nestle use CSR as a business strategy to improve profit or market growth? 13 Corporate Social Responsibility has no significant impact on the profitability of Nestle Ghana 14 Corporate Social Responsibility has a A 4 U 3 D 2 SD 1
significant impact on the profitability of Nestl 15 Corporate Social Responsibility guarantees the customers confidence level and loyalty to Nestl .
84

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THE EFFECT OF CORPORATE SOCIAL RESPONSIBILITY(CSR) ON PROFITABILITY OF MULTINATIONAL COMPANIES.

A CASE STUDY OF NESTLE GHANA LIMITED

Emmanuel Ocran PG3079509

Emmanuel Ocran PG3079509

Mr Samuel Kwesi Enninful (Supervisor)

Professor I. K. Dontwi (Dean KNUST - IDL)

2.7 2.8 2.8.1 2.9 2.10

REFERENCES..66 APPENDIX I..69 APP ENDIX II71

CHAPTER ONE INTRODUCTION

confidence and security of depositors fund.

Insufficient resources and capabilities

2.7 EMPIRICAL STUDIES OF CSR AND FINANCIAL PERFORMANCE

2.12 Corporate Social Responsibility in Nestle Ghana.

This reduction will be achieved through a combination of:

paying price premiums to farmers for mycotoxin-free produce.

The Impact of Corporate Social Responsibility.

particularly the capital intensive ones, such as road construction.

CHAPTER THREE RESEARCH METHODOLOGY 3.1 INTRODUCTION

POPULATION AND SAMPLE SIZE

VALIDITY OF THE RESEARCH INSTRUMENT

DATA ANALYSIS TECHNIQUE

Y = Dependent variable (Profitability) Y = Mean of dependent variable (Profitability).

155 200 355

Graphical representation of the Nestle staff respondents

47% 53% male female

Source-Field survey 2011

46 44 42 40 38 36 male female Frequency

Source-Field survey 2011

Table 4.1.1.2: Marital Status of Respondents MARITAL STATUS FREQUENCY

SINGLE MARRIED DIVORCED WIDOWED TOTAL

Source-Field survey 2011

Source-Field survey 2011

% 14% 49% 29% 8% 100%

Source-Field survey 2011

Source-Field survey 2011

Top level manager TOTAL

Source- Field survey 2011

Source- Field survey 2011

Source- Field survey 2011

SSCE HND BSC BA

Source- Field survey 2011

Source- Field survey 2011

Source- Field survey 2011

Source- Field survey 2011

Source- Field survey 2011

Source- Field survey 2011

strongly agree 27%

Source- Field survey 2011

STRONGLY DISAGREE TOTAL

Source- Field survey 2011

strongly agree agree undecided disagree strongly disagree

Source- Field survey 2011

STRONGLY DISAGREE TOTAL

DIVORCED WIDOWED TOTAL

UNILEVER GHANA OTHER MNCs TOTAL

PERCENTAGE 100 0 0 100

NEGATIVE NEUTRAL TOTAL

STRONGLY DISAGREE TOTAL

130 170 300

Source- Field survey 2011

Fig: 4.19 Customers gender distribution. (bar chart) Gender Distribution

200 150 100 50 0 male female Frequency

Source- Field survey 2011

Table 4.4.1.2 Customers responds on benefits of CSR