CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Business ethics refers to the moral principles and standards that guide conduct within an organisation, encompassing how it treats employees, deals with suppliers, communicates with customers and relates to the wider community in which it operates. Freeman's (1984) stakeholder theory offers a foundational lens for understanding why ethical conduct matters to organisational outcomes, arguing that a firm's long-term success depends on managing its relationships with the full network of groups that affect or are affected by its operations, including employees, customers, suppliers, communities and regulators, rather than shareholders alone. Because reputation is, in essence, the accumulated judgement these stakeholders form about an organisation over time, ethical lapses toward any one stakeholder group have the potential to damage the trust built with the wider network.

Nigerian empirical evidence lends support to this reasoning. Ezeanyim and Ezeanolue (2021) found that business ethics significantly influenced organisational performance among manufacturing firms in South-East Nigeria. Eze and Chukwu (2023), examining community engagement as a form of corporate social responsibility, found that it significantly enhanced corporate reputation. Most directly, Olatunji (2025), studying manufacturing firms in Delta State, found that both fair labour practices and community engagement significantly enhanced corporate reputation, with community engagement showing a particularly strong effect, underscoring the reputational value of demonstrably ethical conduct toward workers and host communities.

Unilever Nigeria Plc offers a compelling context in which to examine this relationship. Established in 1923 as Lever Brothers (West Africa) Limited and renamed Unilever Nigeria Plc in 2001, the company is widely regarded as Nigeria's longest-serving manufacturing organisation, a milestone it marked with a centenary celebration in 2023. Listed on the Nigerian Exchange and operating manufacturing sites in Oregun, Lagos State, and Agbara, Ogun State, the company manufactures and markets well-known nutrition, beauty and wellbeing, and personal care brands as a subsidiary of the multinational Unilever Plc. At the parent-company level, Unilever has embedded ethics and sustainability into its global strategy through initiatives such as the Unilever Sustainable Living Plan launched in 2010 and its successor Compass strategy (Leelawati et al., 2025), yet the group has also faced reputational setbacks, including a widely publicised 2018 controversy after a viral exposé of unethical practices within its supply chain, which prompted the company to strengthen its supply chain transparency commitments.

As a century-old multinational subsidiary, Unilever Nigeria's reputation is shaped both by its own long-standing local conduct and by the ethical standing of its global parent, making the relationship between business ethics and organisational reputation a matter of continuing relevance to the company. It is this concern that motivates the present study.

1.2 Statement of the Problem

Unilever Nigeria Plc has built a long-standing local reputation as Nigeria's longest-serving manufacturing organisation, reinforced by its centenary celebration in 2023. However, as a subsidiary of a multinational group, its reputation is also exposed to risks originating beyond its direct control, including parent-level controversies such as the 2018 supply chain scandal that affected Unilever globally. In addition, the company continues to navigate demanding local operating conditions, including foreign exchange volatility that has pressured multinational consumer goods firms in Nigeria, alongside major corporate restructuring at the parent level, such as Unilever Plc's 2026 agreement to merge its global foods business with McCormick & Company, a development that will directly affect Unilever Nigeria's largest revenue-generating segment (The Cable, 2026). Such developments could raise stakeholder uncertainty about the company's continuity and commitments, even where the company's own local ethical conduct remains strong.

A further difficulty is that existing Nigerian evidence on the relationship between business ethics and corporate reputation has tended to focus on manufacturing firms in specific regions, such as Delta State (Olatunji, 2025) and South-East Nigeria (Ezeanyim & Ezeanolue, 2021), rather than on a single, long-established multinational subsidiary such as Unilever Nigeria that must simultaneously satisfy local ethical expectations and manage reputational spillover from its global parent. Consequently, it remains unclear which specific business ethics practices, such as fair labour practices, transparency and accountability, community engagement, or product and consumer safety, most strongly shape organisational reputation within a firm of Unilever Nigeria's particular profile. It is this gap that the present study seeks to address.

1.3 Objectives of the Study

The broad objective of this study is to examine the relationship between business ethics and organisational reputation at Unilever Nigeria Plc. The specific objectives are to:

1. examine the effect of fair labour practices on organisational reputation at Unilever Nigeria Plc;

2. determine the effect of transparency and accountability on organisational reputation at Unilever Nigeria Plc;

3. assess the effect of community engagement on organisational reputation at Unilever Nigeria Plc; and

4. evaluate the effect of product and consumer safety practices on organisational reputation at Unilever Nigeria Plc.

1.4 Research Questions

The study is guided by the following research questions:

1. What effect do fair labour practices have on organisational reputation at Unilever Nigeria Plc?

2. What effect does transparency and accountability have on organisational reputation at Unilever Nigeria Plc?

3. What effect does community engagement have on organisational reputation at Unilever Nigeria Plc?

4. What effect do product and consumer safety practices have on organisational reputation at Unilever Nigeria Plc?

1.5 Research Hypotheses

The following null hypotheses are formulated to guide the study:

Ho1: Fair labour practices have no significant effect on organisational reputation at Unilever Nigeria Plc.

Ho2: Transparency and accountability have no significant effect on organisational reputation at Unilever Nigeria Plc.

Ho3: Community engagement has no significant effect on organisational reputation at Unilever Nigeria Plc.

Ho4: Product and consumer safety practices have no significant effect on organisational reputation at Unilever Nigeria Plc.

1.6 Significance of the Study

Theoretically, the study extends Freeman's (1984) stakeholder theory to a century-old multinational FMCG subsidiary operating in Nigeria, complementing regional Nigerian evidence on business ethics and reputation (Ezeanyim & Ezeanolue, 2021; Eze & Chukwu, 2023; Olatunji, 2025) and parent-level evidence on Unilever's global ethical decision-making (Leelawati et al., 2025) with firm-specific, dimension-level findings from the Nigerian subsidiary itself.

Practically, the findings will assist the management of Unilever Nigeria Plc in identifying which business ethics practices most strongly influence organisational reputation, thereby guiding investment in ethical governance and stakeholder engagement. Other multinational subsidiaries operating in Nigeria, regulators such as the Securities and Exchange Commission and the Nigerian Exchange, investors, and consumer protection bodies may also draw on the findings. The study will further serve as a reference for future researchers examining business ethics and organisational reputation among multinational firms in Nigeria.

1.7 Scope of the Study

This study is delimited in content to business ethics, measured through fair labour practices, transparency and accountability, community engagement, and product and consumer safety practices, and organisational reputation, measured from the perspective of staff of the case study organisation. Geographically, the study is confined to employees of Unilever Nigeria Plc at its Lagos corporate head office and Oregun manufacturing site. The study is further limited to a defined recent period during which primary data will be collected through the administration of structured questionnaires, and does not extend to a comparative assessment of Unilever's global parent company or its other subsidiaries.

1.8 Definition of Terms

Business Ethics: the moral principles and standards that guide the conduct of an organisation and its members in their dealings with employees, customers, suppliers and the wider society.

Organisational Reputation: the collective perception and judgement that stakeholders hold about an organisation based on its past conduct and communications.

Fair Labour Practices: employment practices that ensure fair wages, safe working conditions, non-discrimination and respect for workers' rights.

Transparency and Accountability: the openness with which an organisation discloses relevant information to stakeholders and its willingness to be answerable for its decisions and actions.

Community Engagement: the deliberate efforts an organisation makes to interact with, support and involve the communities in which it operates.

Product and Consumer Safety Practices: the measures an organisation takes to ensure that its products are safe for use and that consumers are protected from harm.

Stakeholder Theory: a theoretical perspective holding that organisations should manage their operations in the interest of all groups that affect or are affected by them, not shareholders alone (Freeman, 1984).

Multinational Subsidiary: a locally incorporated company that is owned or controlled by a parent corporation headquartered in another country.

References

Eze, C., & Chukwu, M. (2023). Corporate social responsibility and corporate reputation: A case of community engagement in Nigeria. Nigerian Journal of Business and Management, 20(2), 88–104.

Ezeanyim, E. E., & Ezeanolue, E. T. (2021). Business ethics and organizational performance in manufacturing firms in South-East, Nigeria. International Journal of Business & Law Research, 9(1), 1–10.

Freeman, R. E. (1984). Strategic management: A stakeholder approach. Pitman.

Leelawati et al. (2025). Unilever's ethical decision-making in CSR and sustainable business practices. International Journal of Environmental Sciences, 11(4).

Olatunji, E. A. (2025). Ethical sourcing and corporate reputation: Evidence from manufacturing firms in Delta State, Nigeria. African Journal of Management and Business Research, 20(1), 56–74. https://doi.org/10.62154/ajmbr.2025.020.01014

The Cable. (2026, April 9). Unilever Nigeria to lose foods business as parent company moves to sell segment. https://www.thecable.ng/unilever-nigeria-to-lose-foods-business-as-parent-company-moves-to-sell-segment/