Measuring the perceived importance of
ethics and social responsibility in financial
services: a narrative-inductive approach
Musa Obalola and Ismail Adelopo
Abstract
Purpose – This paper aims to reflect the argument that the impetus to engage in socially responsible
actions is ultimately reinforced by the perceived belief that doing so will be beneficial to the corporation
in the long run.
Design/methodology/approach – The paper uses a narrative-inductive approach to make important
contributions to the corporate social responsibility-organizational effectiveness literature. Data were
collected through a semi-structured interview, and analyzed using qualitative analysis strategies.
Findings – The study reports a profound perceived usefulness of ethics and social responsibility for
business in the insurance industry in Nigeria. Furthermore, the study presents evidence that indicates
that consciousness about the role of ethics and social responsibility in organizational effectiveness in
this context is low, but, nevertheless suggests a positive posture towards the constructs. This positive
posture seems to have been driven by the negative image of the industry and the need to remedy the
situation. It suggests that this can be achieved through a show of genuine concern for the needs of the
consumers, and the need to reinforce their trust and confidence in insurance as a loss mitigating
mechanism.
Practical implications – While shareholders’ value maximization was shown as one of the
considerations for ethical and social responsible behavior compromise, findings from the study also
suggest that stakeholders’ value maximization would be an effective consideration for the industry to
improve the present low market penetration. The paper draws out the need to amend short-term goals
for long-term goals by sacrificing short-term profits for long-term profits and survival.
Originality/value – Although the strategic importance of ethics and social responsibility has been
investigated using the deductive approach in other industries, this work provides an alternative to this
existing bulk of positivist investigations by using an inductive approach with subjects drawn from the
insurance industry. The study also seems to the authors’ knowledge, the first to investigate the strategic
importance of this construct in a developing and apathetic market such as Nigeria.
Keywords Ethics, Social responsibility, Organizational effectiveness, Insurance industry, Inductive,
Shareholders, Stakeholders, Nigeria
Paper type Research paper
Introduction
There is ample evidence to suggest that social responsibility is increasingly gaining
acceptance in the corporate world. It has now become fashionable for organizations of
different sizes and concern; from profit to non-profit organizations to paint a picture of being
ethical and socially responsible. This is evidenced, at least, in the manners in which social
activities are being reported in corporate websites and annual reports (Crowther, 2004).
There is no doubt that CSR has become truly global. Empirical evidence has also shown that
social responsible behavior is associated with certain advantages (Fombrum et al., 2000;
Turban and Greening, 1997; Maignan, 1997; Dawkins, 2004). For example, Maignan (1997)
suggest that customers are likely to keep buying from companies that are perceived as
doing the right thing (ethical), and do associate positive images with their products.
Furthermore, Dawkins (2004) reported that customers were more willing to support
PAGE 418
j
SOCIAL RESPONSIBILITY JOURNAL
j
VOL. 8 NO. 3 2012, pp. 418-432, Q Emerald Group Publishing Limited, ISSN 1747-1117 DOI 10.1108/17471111211247992
Musa Obalola is Senior
Lecturer in the Department
of Actuarial Science and
Insurance, University of
Lagos, Lagos, Nigeria.
Ismail Adelopo is based in
the Department of
Accounting and Finance,
De Montfort University,
Leicester, UK.