1.1 BACKGROUND TO THE STUDY
At an earlier point in history, societal expectations from business organizations did not go beyond official resources allocation and its maximization. In recent time, modern businesses think beyond profit maximization towards being at least socially responsible to its society. Today’s heightened interest in the role of business in society has been promoted by increased sensitivity to the awareness of environment and its ethical issues. However, there is no agreement on the literature concerning definitions of corporate social responsibility (CSR) that would comprise all the aspects this term involves (Hopkins, 2003).
According to Ejiwunmi, (2005), Corporate Social responsibility is the degree to which a company recognizes what being a good community and global citizen means and act accordingly.
Little (2006) maintained that corporate social responsibility initiatives in many business organizations can lead to innovations through the use of social, environmental, or sustainability drivers to create new products and services.
Many Corporations around the world are struggling with this role, which is to meet the needs of the present generation without compromising the ability of the next generations to meet their own needs (Babalola, 2012). Organizations are being called upon to take responsibility for the ways their operations impact societies and the natural environment. They are also being asked to demonstrate the inclusion of social and environmental concerns in business operations and in interactions with stakeholders (Van Marrewijk & Verre, 2003). Organizations have developed a variety of strategies for dealing with this intersection of societal needs, the natural environment, and corresponding business imperatives with respect to how deeply and how well they are integrating social responsibility approaches into both strategy and daily operations worldwide.
According to Babalola (2012), a firm cannot ignore the problems of the environment in which it operates. Therefore, there is a need to examine the impact of corporate social responsibility on firm’s profitability in Nigeria. In its stronger form, the concept of Corporate Social Responsibility (CSR) asserts that corporations have an obligation to consider the interests of customers, employees, shareholders, communities, as well as the ecological ”footprint” in all aspects of their operations (Babalola, 2012).
Corporate social responsibility (CSR) is an established and interesting topic in the developed world (i.e. Europe, America, Canada and recently Asia and South America). However, the next place to pick a lot of interest would be Africa and Nigeria precisely. Many firms in Nigeria engage in CSR and spend lot of money in their commitment to the society (Achua, 2008).
No doubt, corporate social responsibility is not only limited to when company achieve their corporate goals or complies with the law, but when it (company) makes efforts to anticipate likely societal problems and to respond timely to prevent them.
There is great scope of expanding the amount of research on CSR in Nigeria as well as improving the diversity of its content. The study picked interest in the topic having read a lot of journals, articles and observed issues of CSR in Nigeria banks. Much as there have been researches carried out on CSR in the country, scholars seemed tended to focus on what CSR is, the trend of CSR in Nigeria, public perception and relevancy of established CSR models in Nigeria. To the researcher’s knowledge, very few studies have focused on CSR and its impact on profit maximization of commercial banks in Nigeria.
1.2 STATEMENT OF PROBLEM
The concept of corporate social responsibility can make a positive contribution to the development of society and businesses. However, most businesses exist solely to make profit in the short run and maximize value in the long run. A socially responsible bank should supersede the main objective of maximizing its shareholder’s wealth. It should extends its mandate by undertaking social and environmental activities in society within which it carries out its operation through initiative such as environment conservation, improving the quality of life of its employees and society in general. However, a careless spending without understanding the future returns expenditure generates for an organization could cumulatively put an organization into financial mess. Thus, CSR expenditure should rather improve the profitability position of organization not otherwise.