Ethics And Social Responsibility In The Nigerian Insurance Industry A Multi-Methods Approach

See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/266494227 ETHICS AND SOCIAL RESPONSIBILITY IN THE NIGERIAN INSURANCE INDUSTRY A MultiMethods Approach Article CITATIONS READS 170 2 authors, including: Musa Adebayo Obalola University of Lagos 16 PUBLICATIONS 35 CITATIONS SEE PROFILE All content following this page was uploaded by Musa Adebayo Obalola on 13 March 2015 The user has requested enhancement of the downloaded file ETHICS AND SOCIAL RESPONSIBILITY IN THE NIGERIAN INSURANCE INDUSTRY A Multi-Methods Approach MUSA ADEBAYO OBALOLA THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS OF DE MONTFORT UNIVERSITY, LEICESTER, FOR THE DEGREE OF DOCTOR OF PHILOSOPHY SEPTEMBER 2010 i ABSTRACT The concern about how business should behave as one of the dominant institutions in society, widely referred to as corporate social responsibility, has been a subject of interest among academics and practitioners all over the world The increasing global outlook of business activities and the need to understand environments in most parts of the globe have also made this concept relevant for all time This thesis therefore relates to a study, which assesses the perceived role of ethics and social responsibility for organisational effectiveness in a developing and African country It was argued that ethics and social responsibility must first be perceived to be important for business success, before managers‘ behaviour can become ethical and reflect greater social responsibility Using a mainly qualitative approach and aided by some quantitative analysis, the study explored the perceived importance of this construct (ethics and social responsibility) for organisational effectiveness among insurance managers in the Nigerian insurance industry This exploration and the analysis are based on the theoretical assumptions that personal and situational factors influence managers‘ perception of the importance of ethics and social responsibility and its business assumption These, therefore, constitute major outcomes of the study Given that the study is the first of its kind in the insurance industry, and Nigeria, a developing economy, its outcomes further aids our understanding of how managers in an African socio-economic context perceive the construct and their readiness to translate it into business practice Above all, the thesis demonstrates that the perceived importance of ethics and social responsibility for organisational effectiveness is a function of industry and product nature, individual moral values, corporate ethical values and organisational commitment The findings suggest that meeting customers‘ expectations reinforce trust-relationship, which in turn is moderated by some other personal-situational factors The findings also indicate that highly idealistic managers were more sympathetic towards the welfare of others, and have higher perception of the important role of ethics and social responsibility for business success ii ACKNOWLEDGEMENTS Man as a being is characterised by insufficiency and dependence on others for accomplishment of goals and objectives Mine has not been an exception On this note, therefore, I acknowledge those who have contributed to making this thesis a success Foremost, I express my profound gratitude to God for His immense and immeasurable favour on me I am equally greatly indebted to my supervisors Professor David Crowther and Professor Elaine Harris for their guidance and support from the inception of the programme through to its end From each of them I have learnt useful lessons about academic life The invaluable assistance received from Professor Martyn Denscombe, Professor Ian Worthington, Dr Kumba Jallow, other members of the Accounting & Finance Department, the entire Business School, the Research Office, and my fellow research students are also recognised and appreciated I also acknowledge the great assistance rendered by L Baruwa, F K Lawal, W Fatoyinbo, I Muslim, M F Apampa, T Sekoni, K I Ishola (late), W Banire, E Anikibe, Segun Balogun, O Chilekezi, A Ajibowo, S, Olalere, F Asenuga, Yinka Akintayo, T Shotonade, M Adeduro, K A Bello, B Adedigba, M Akinwunmi, and others, in facilitating my access to their organisations during the field work of the study To all the respondents to the interviews and questionnaires I also say, thank you I acknowledge the support of my parents Alh Ganiyyu Obalola and Fadhillah Obalola, my siblings, Sulayman, Lukman, Bilqis, Dawud, A/Hakeem, and Maryam, my brother-in-law, Deji Mustapha, and his wife, my friends; I Ibrahim, K Omoteso, I Adelopo, A Mobolaji, T Yusuf, S Elegbede, U Adeyemi, A Yusuf, M Adeyoola, Elfatih Ibrahim, M Kadri, S Olagunju, M Tijani, H Thani, A Adenowo, I Akosile, A Husein, A A/Salaam, A Atitebi, A Sulaimon, O Kuye, S Shitta, I Badmus, D Shafi, A Abebefe, Y A/Rahman, S Ogunmuyiwa, A Oyeniku, A Ajibade, S Alimi, A Agbelekale, D Arogundade, A, Shua‘ib, A Amida, A A/Yakeen Madan, and other friends whom I am constrained by space to mention I am profoundly grateful to my former head of Department, Dr K Ojikutu, for his encouragement to pursue a PhD degree and his unflinching support since I joined the academia, and my immediate past HOD, Dr J Mojekwu, the current HOD, Dr Ibiwoye for their support, as well as my colleagues in the Department (Professor Ayorinde, Dr Hamadu, Dr Adeleke, Obiwuru, Aduloju, Falade, Olowokudejo, Ndubusi, Isimoya, Ajijola, Akinbami, Shokoya etc) and the entire Faculty of Business Administration I also want to say a big thank you to Dr G Gbadamosi for his incalculable and invaluable support during the course of this programme A special appreciation also goes to Olayiwola Baruwa and Poly Emenike, Dr Dabo, Isegen, Hon Abdul-Hakeem, Wasiu Fatoyinbo for their moral and financial support in the course of the programme Lastly, I would like to acknowledge my debt to my darling wife, Fatimah for her unflinching love, support, patience, and care for the children, and my children Mus‘ab, Khalid, Muhammad, and Khadijah for bearing my absence from home with patience, and love iii CONTENTS ABSTRACT ii ACKNOWLEDGEMENTS .iii CONTENTS iv LIST OF TABLES x LIST OF FIGURES .xii LIST OF ABBREVIATIONS xiii CHAPTER 1: 1.1 INTRODUCTION AND BACKGROUND INFORMATION Introduction 1.1.1 Background Information 1.1.2 Ethics and Social Responsibility: Construct Definition 1.2 Aims of the Study 1.3 Objectives of the Study 1.3.1 Research Questions 1.3.2 Research Propositions 1.4 Scope of the Study 1.5 Relevance of the Study 1.6 Contribution to Knowledge 1.7 The Nigerian Insurance Industry 10 1.8 Conclusion 12 CHAPTER 2: NATURE OF INSURANCE SERVICES AND THE NIGERIAN INSURANCE INDUSTRY 14 2.1 Introduction 14 2.1.1 Insurance as a Concept and Practice 14 2.1.2 How Does Insurance Work? 16 2.1.3 Insurance and the Law 17 2.1.4 Insurance as a Contract and its Complexity 22 2.2 Insurance and Information Asymmetry 23 2.2.1 The Effect of Information Asymmetry on the Consumers of Insurance 24 2.3 The Role of Insurance Intermediaries 26 2.4 The Nigerian Insurance Market 27 2.5 The Insuring Culture in Nigeria 30 iv 2.6 Business Practice in the Nigerian Insurance Industry 30 2.7 Beyond Mere Good Business Practice 33 2.8 Conclusion 35 CHAPTER 3: ETHICS AND CORPORATE SOCIAL RESPONSIBILITY 37 3.1 Introduction 37 3.2 Overview of Ethics and Social Responsibility 37 3.2.1 Business and Society: what is the relationship? 38 3.2.2 Defining Corporate Social Responsibility (CSR) 40 3.2.3 Competing Concepts of Business-Society Relationship 50 3.2.4 Schools of Thought and Theories on Corporate Social Responsibility 51 3.2.5 Competing theories of CSR 53 3.2.6 Classifying the Array of Definitions 59 3.2.7 The Position of this Study 62 3.3 Strategic Dimension of Social Responsibility 63 3.3.1 Ethics and Social Responsibility, and Organisational Effectiveness 64 3.3.2 The Perceived Role of Ethics and Social Responsibility 68 3.4 Theoretical Framework 75 3.4.1 Deontology and Teleology 75 3.4.2 Relativism and Idealism 80 3.4.3 Organisational Environment and Ethical Decision-making 84 3.4.4 Organisational Commitment and Ethical Decision-making 85 3.4.5 Culture and Ethical Decision-Making 87 3.5 The Gap in the Literature 92 3.6 Conclusion 93 CHAPTER 4: THE RELEVANCE OF ETHICS AND SOCIAL RESPONSIBILITY IN INSURANCE 94 4.1 Introduction 94 4.1.1 Financial Services Sector and Ethical Issues 94 4.2 The Insurance Industry 95 4.3 Ethics and Trust 96 4.4 Trust Relationship and Insurance 98 4.5 The Regulation of Financial Services 104 v 4.6 Empirical Evidence of Ethical Dilemma in the Insurance Industry 105 4.7 State Regulation vs Self Regulation: The Case for Social Responsibility 109 4.8 Conclusion 111 CHAPTER 5: 5.1 THE INDUCTIVE PROCESS 113 Introduction 113 5.1.1 Philosophical Discourse 113 5.1.2 Competing Paradigms in Management and Organisational Research 115 5.1.3 Multiple Approach to Research 122 5.2 Research Questions and Propositions 126 5.2.1 Research Questions 126 5.2.2 Research Propositions 127 5.3 Research Design 127 5.3.1 The Subjects 130 5.3.2 Interview Questions 131 5.3.3 Data Collection 132 5.4 Data Analytic Procedures 134 5.4.1 5.5 Qualitative Data: Interviews 134 Validity and Reliability of the Instrument 135 5.5.1 The Qualitative Data 135 5.6 Limitations of the Methodology 136 5.7 Conclusion 137 CHAPTER 6: THE ROLE OF ETHICS AND SOCIAL RESPONSIBILITY IN INSURANCE BUSINESS: THEORY AND DATA EVIDENCE 138 6.1 Introduction 138 6.1.1 Re-statement of Research Questions and Propositions 139 6.1.2 Instrumentation 140 6.1.3 Descriptive Characteristics of the interviewees 140 6.2 The Interviewees‘ Organisations 142 6.2.1 Analysis of Interviewees‘ Companies in the Industry 142 6.2.2 Critical Success Factors (CSFs) 143 6.3 Meaning of Ethics and Social Responsibility 145 6.4 The Perceived Role of Ethics and Social Responsibility 150 vi 6.5 Important Role of Ethics and Social Responsibility: ‗Why‘ and ‗How‘ 152 6.5.1 Comparison of Ethics and Social Responsibility to other Measures of Effectiveness 160 6.6 Moderating Factors of the Perceived Importance of Ethics and Social Responsibility 169 6.7 Summary 177 6.8 Conclusion 179 CHAPTER 7: THE DEDUCTIVE PROCESS 180 7.1 Introduction 180 7.2 Further Research Questions and Propositions 180 7.2.1 Research Questions 180 7.2.2 Research Propositions 181 7.3 The Population and Samples 184 7.3.1 7.4 Selection of Samples 186 The Measuring Instruments 189 7.4.1 PRESOR 189 7.4.2 Ethics Position Questionnaire (EPQ) 192 7.4.3 Corporate Ethical Value (CEV) 194 7.4.4 Organisational Commitment Scale 195 7.5 The Survey Questionnaire 196 7.6 The Research Variables 197 7.6.1 Dependent Variables 197 7.6.2 Independent Variables 198 7.7 Data Collection 199 7.8 Procedures for Data Analysis 200 7.9 Validity and Reliability of the Instrument 202 7.10 Limitations of the Deductive Process 203 7.11 Conclusion 205 CHAPTER 8: PERSONAL-SITUATIONAL FACTORS AND THE PERCEIVED ROLE OF ETHICS AND SOCIAL RESPONSIBILITY 206 8.1 Introduction 206 8.2 Data Cleaning and Descriptive Statistics 206 vii 8.2.1 8.3 Demographic Characteristics of the Sample 209 Factor Analysis 211 8.3.1 PRESOR 211 8.3.2 EPQ 213 8.3.3 CEV 216 8.3.4 Organisational Commitment Scale 218 8.4 Reliability Analysis 219 8.4.1 PRESOR 219 8.4.2 EPQ 220 8.4.3 CEV 220 8.4.4 Organisational Commitment Scale 221 8.5 Correlation Analysis 221 8.6 Regression Analysis 225 8.6.1 Moral Values and the Perceived Role of Ethics and Social Responsibility- Model 226 8.6.2 Moral Values, Corporate Ethical Values, Organisational Commitment, and PRESOR – Model 232 8.6.3 Validating the Results of the Regression Models and 236 8.6.4 Model Parsimony 238 8.6.5 The Effect of Demographic and Job Characteristics on PRESOR 240 8.7 Summary 241 8.8 Conclusion 245 CHAPTER 9: SUMMARY, DISCUSSION AND CONCLUSIONS 246 9.1 Introduction 246 9.2 Summary of the Chapters 248 9.3 Discussion of Findings 251 9.3.1 Business Performance and Critical Success Factors 251 9.3.2 Meaning of Ethics and Social Responsibility 252 9.3.3 The Perceived Role of Ethics and Social Responsibility 255 9.3.4 Short-term Profitability vs Long-term Profitability and Survival 256 9.3.5 Individual Moral Values as Drivers of Ethics and Social Responsibility 258 viii 9.3.6 Corporate Ethical Values and the Perceived Importance of Ethics and Social Responsibility 260 9.3.7 Organisational Commitment and the Perceived Importance of Ethics and Social Responsibility 262 9.4 Implications of Findings for the Insurance Industry 263 9.5 Beyond the Study Samples 268 9.6 The Contribution of the Thesis 268 9.6.1 A Developing Economy Context of the Perceived Role of Ethics and Social Responsibility 269 9.6.2 Determinants of the Perceived Role of Ethics and Social Responsibility 270 9.6.3 Methodological Robustness 271 9.7 Reflecting on the Research Process 272 9.8 Limitations of the Study 273 9.9 Direction for Future Research 274 9.10 Conclusion 275 REFERENCES 277 BIBLIOGRAPHY 321 APPENDICES 323 ix