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CORPORATE SOCIAL RESPONSIBILITY PERFORMANCE: A STUDY OF SHELL PETROLEUM DEVELOPMENT COMPANY LIMITED (SPDC) IN SELECTED AREAS OF OPERATION (SOKU OIL FIELD)

Business Administration & Management Project Topics

CHAPTER ONE

                                        INTRODUCTION

1.1    BACKGROUND OF THE STUDY

It is traditionally believed that behind the establishment of any business concern is the profit motive. It is the intention to recoup any fund committed or invested in any business that keeps the enterprenuer to be motivated in entrepreneurial capability.  This traditional view of business orientation was succinctly put by the father of modern economics, Adam Smith, (1776) when he declared that “It is not out of the benevolence of the butcher that we eat meat but out of his desire to make profit”.  Kotler (1988) while agreeing with Adam Smith submitted that if enterprenuers (individual or Corporate) are not motivated by the primary motive of making profit, enterprenual skill will die and society may not move forward.

Overtime, management scholars, researchers and some welfare economist have submitted that the primary objective of a business concern need not be profit only but that business should be made to relate with their environment and be seen to be responsive to compensate environmental exploration.  The idea of exploitation by business organisations is fast becoming unpopular as communities are becoming  conscious of their rights.  The idea became more prominent in the late 40s when oil exploration activities led to a great pollution in United State of America.  Management Scholars and Welfare Economists carried out researches,  conferences and submitted that while profit is still a central theme of business concern, business organisation need to be socially responsive to their environment to create harmony and thereby making room for more profit and continuity.

Thus, Druker (1956), formally propounded the concept of social responsibility in business.  He argued that any business that is not socially alive to its environment is bound to experience  conflict, lower profit, and is not expected to live long.  This explanation stems from the likely negative reaction of the host community in which the business organisation operates.  Rostow (1958) while agreeing with Drucker opined that the welfare of the host community should be very important.  He equated the relationship as being “mutual” where one depend on the other.  Rostow’s work on “tax” further gave credence to the issue of social responsibility as he argued for compensation to production process which interfere with community life.

In the U.S.A and Britain increased individual and societal consciousness had made many companies to include programmes such as “Social Audit”, “Social Action Report”, “Social Balance Sheet”in their annual reports.  Also independent environmental bodies and the media are becoming restive of the negative impacts of the production process on the environment.

The issue of Social Responsibility and Corporate performance in the modern era has even become explosive as enlightenment bring in awareness of the people’s rights in oil producing areas.  Shell Petroleum Development Company of Nigeria Limited (SPDC) is by far the biggest oil prospecting and operating company in Nigeria. It activities started in 1937.  Oil Consortium owned by the Royal Dutch Shell and British Petroleum was given in November, 1938 oil Exploration Licence (OEL) covering all of Nigeria.  The outbreak of World War II necessitated the suspension of prospecting activities which were not resumed until 1946.  Following geological and geophysical tests, Shell British Petroleum (then) in 1957 reduced its concession area from 925,380 square kilometers to only 103,648 square kilometers in the Niger Delta which indicated the greatest promise for Crude Oil find.  According to Amu (1983) after many years of search and an initial investment of over N30 million commercial discovery of petroleum was recorded at Olobiri (in the present Bayelsa State) in 1956.  In 1958, Shell started oil production and exported from Olobiri field at a rate of 5100 barrels per day thereby ushering Nigeria into the international oil stage. Since then, oil has been the predominant source of revenue, energy, and raw material to the entire economy.  According to Pearson Scott (1970) “Oil is money, power, energy” without it industrial civilisation and scientific discoveries may never rotate.  Shell Petroleum Development Company (SPDC) since 1956 had discovered several oil fields in the Soku Oil field, Ekulema oil field etc.

Due to the nature of oil exploratory activities, a lot of environmental degration may have been experienced in their areas of operation.  Also with frequent clashes with host communities which threaten their very survival, it is very pertinent to study how Shell Petroleum Development Company (SPDC) is socially responsive to their host communities in terms of air, water, noise and land pollution, human rehabilitation, health care, economic empowerment and post exploratory activities in its areas of operation.  The proper handling of the Corporation’s Social responsibility will for a long time determine their profit, reduce conflict and wastages and build good will.

 

1.2    STATEMENT OF THE PROBLEM

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