Corporate social responsibility strategies in Nigeria: a tinged shareholder model

DOIhttps://doi.org/10.1108/CG-12-2019-0389
Pages797-820
Date13 May 2020
Published date13 May 2020
AuthorEmmanuel Adegbite,Kenneth Amaeshi,Franklin Nakpodia,Laurence Ferry,Kemi C. Yekini
Subject MatterCorporate governance,Strategy
Corporate social responsibility strategies
in Nigeria: a tinged shareholder model
Emmanuel Adegbite, Kenneth Amaeshi, Franklin Nakpodia, Laurence Ferry and
Kemi C. Yekini
Abstract
Purpose This paper aims to examine two important issues in corporate social responsibility (CSR)
scholarship. First, the study problematises CSR as a form of self-regulation. Second, the research
explores how CSR strategies can enable firms to recognise and internalise their externalities while
preservingshareholder value.
Design/methodology/approach This study uses a tinged shareholder model to understand the
interactions betweenan organisation’s CSR approach and the effect of relevant externalitieson its CSR
outcomes. In doing this, the case study qualitative methodology is adopted, relying on data from one
FidelityBank, Nigeria.
Findings By articulating a tripodal thematic model governance of externalities in the economy,
governance of externalitiesin the social system and governance of externalities in the environment, this
paper demonstrates how aneffective combination of these themes triggers the emergence of a robust
CSR culturein an organisation.
Research limitations/implications This research advances the understanding of the implication of
internalisingexternalities in the CSR literaturein a relatively under-researched contextNigeria.
Originality/value The data of this study allows to present a governance model that will enable
managers to focuson their overarching objective of shareholdervalue without the challenges of pursuing
multiple and sometimes conflicting goals that typically create negative impacts to non-shareholding
stakeholders.
Keywords Nigeria, Corporate social responsibility (CSR), Shareholder primacy,
Corporate externalities, Tinged shareholder theory
Paper type Research paper
1. Introduction
The growing traction of corporate social responsibility (CSR) derives from the long-term
benefits it offers to firms and societies (Moir, 2001;McWilliams and Siegel, 2001). While
these gains underpin the shareholder and stakeholder discourse in the CSR literature
(Jamali, 2008), businesses that ignore CSR run a risk to their bottom-line andreputation, as
poor social and environmental practicestrigger severe negative impacts on firm profitability
(Adegbite et al., 2019). The shareholderstakeholder controversy is fuelled by the growing
awareness of customers who, because of increased access to information, engage with
companies that are not only ethical but also sympathetic to environmental and societal
causes (Rao et al.,2012). However, myriad of problems relating to the operating
environments of firms (Amaeshi et al.,2016), and the contestation that profit maximisation
as the primary reason for corporate existence can no longer hold good (Jensen, 2001),
have intensified consciousnessin the CSR concept (Johnston et al., 2019).
Given the many challenges confronting CSR, this paper seeks to draw attention to the
voluntary (self) governance role of CSR, which could be effective in curtailing the excesses
Emmanuel Adegbite is
based at the Nottingham
University Business School,
University of Nottingham,
Nottingham, UK and
Business School, James
Cook University,
Singapore.
Kenneth Amaeshi is based
at the University of
Edinburgh Business
School, The University of
Edinburgh, Edinburgh, UK
and Graduate School of
Business, University of
Cape Town, Cape Town,
South Africa.
Franklin Nakpodia is based
at the Leeds University
Business School, University
of Leeds, Leeds, UK.
Laurence Ferry is based at
the Durham University
Business School, Durham
University, Durham, UK.
Kemi C. Yekini is based at
the School of Finance and
Management, SOAS
University of London,
London, UK.
Received 27 December 2019
Revised 25 February 2020
1 April 2020
14 April 2020
14 April 2020
Accepted 16 April 2020
The authors are grateful for the
research funding received from
The British Academy for this
project. The authors also thank
Fidelity Bank, Nigeria, for the
data access granted.
DOI 10.1108/CG-12-2019-0389 VOL. 20 NO. 5 2020, pp. 797-820, ©Emerald Publishing Limited, ISSN 1472-0701 jCORPORATE GOVERNANCE jPAGE 797
of the shareholder model of the firm. These excesses relate to the firm’s ability to create
enormous negative corporate externalities (Cuervo-Cazurra, 2018;Chen et al.,2018;Chen
et al.,2020
). For instance, the 2010 BP oil spill disaster in the Gulf of Mexico (Heflin and
Wallace, 2017), and the near-collapseof the global financial system in 2008/2009 (Mishkin,
2011;Lauesen, 2013) highlight the enormous and far-reaching consequences of negative
corporate externalities on society.While the harmful effects of the BP oil disaster were borne
by wildlife, small businesses and people’s livelihoods, taxpayers (who prevented the banks
from collapse) and investors (who lost their investments and earnings) endured substantial
losses during the global financial recession, attributed to banks in shareholder-oriented
economies. In both cases, there were negative externalities experienced by stakeholders
that had no input in creating the problems. As such, both cases raise concerns about
economic actors and their leaning towards shareholder primacy (von Kriegstein, 2016)
without responsibility for externalities. Besides, there are various instances of unethical
pursuit for profit a proxy for shareholder value which dominates the shareholder model
of the firm (Davies, 2002).
While criticisms of the shareholder model thrive (Lazonick, 2010;Baden and Harwood,
2013;Queen, 2015), this paper focuses predominantly on the issue of externalities.
Externalities create a governance challenge given the inability of the state and other
governance actors to curtail the excesses of firms because of information asymmetry(Healy
and Palepu, 2001;Cui et al.,2018). Arguably, one way to address this challenge is through
self-regulation, which includes CSR as a mechanism for the governance of externalities
(Crouch, 2006). Windsor (2006) describes this approach as the “expansive public policy”
role of CSR. This governance perspective of CSR, often neglected in the literature and
practice (Windsor, 2006;Amaeshi et al.,2013), is particularly crucial for firms operating in
environments characterised by weak public regulatory enforcement and governance. Such
business environments often offer more incentives for businesses to externalise negative
impacts than to behave responsibly(Bakre, 2007;Amaeshi et al.,2016).
Furthermore, the prevalence of externalised social/environmental costs is intense in weak
institutional contexts owing to reasons that include corruption, extreme competition, the
weak rule of law, inefficient markets,etc. (Campbell, 2007;Kaufmann et al.,2009;Adegbite,
2015). In such contexts, the nature of market competition, for example, is exposed to
more negative than positive externalities, given the “free-riding” disincentives associated
with the latter. In turn, “free-riding” encourages a race to the bottom-line and promotes the
pursuit of self-interest at the expense of others’ interests (Campbell, 2007). This is the
situation in developing economies,such as Nigeria.
Drawing from the unique case of Fidelity Bank [1], Nigeria, and guided by the Global
Reporting Initiative (GRI) criteria [2] for financial institutions in relation to externalities, we
explore the CSR strategies that Fidelity Bank uses in addressing potential externalities to
different stakeholder groups. Our approach encapsulates the peculiar dynamics of CSR in
the banking sector (Macey and O’Hara, 2003;Herzig and Moon, 2013) and reflects peculiar
perspectives of governance and management in sub-Saharan Africa (Seny Kan et al.,
2015). Relying on a qualitative approach that includes in-depth interviews, focus group
discussions and documentary analysis (Archel et al., 2011), we contribute to the literature
by presenting CSR as a governance mechanism for addressing the excesses of the
shareholder value model of the firm. Our discussions depart from the mainstream
characterisations of CSR, which provide overly broad and possibly unbounded societal
responsibilities to managers. Instead, we set a minimum responsibility standard for firms to,
at least, internalise the negative externalities, which they generate in the pursuit of
shareholder value maximisation(Daudigeos and Valiorgue, 2011).
The rest of this paper is structured as follows. First, we present our theoretical framework
and subsequently review the literatureon the limitations of shareholder primacy in relation to
market failures and corporate externalities, while examining the potential of CSR as a
PAGE 798 jCORPORATE GOVERNANCE jVOL. 20 NO. 5 2020

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