Building a Corporate Social Responsibility (CSR) culture within a Small to Medium Enterprise (SME) is possible, regardless of their size and business model. CSR is an ever evolving and contentious paradigm. There exists a plethora of perspectives with regards to its content, rationale and implementation. In broad terms, CSR policies focus on organisations contributing to the welfare of society and the environment broadly. These policies exceed their remit as simply the provider of goods and services.
CSR and its potential benefits within large multinational corporations have been well documented. However, with regards to Small to Medium Enterprises (SMEs), CSR is not as widely publicised.
Organisations can adopt CSR policies and create a ‘CSR Culture’ irrespective of their size or business model. In this blog, I highlight that SMEs can implement successful CSR polices and that creating a ‘CSR Culture’ can effectively benefit their business.
‘Pure’ CSR Implementation
There is considerable literature which endorses the view that CSR policies must be embedded within an organisation’s core product or service whether this is through developing a more environmentally sustainable supply chain or through greater focussing their services on building social capital.
The concept of the ‘Social Enterprise’ has also risen to prominence. This is where the organisation’s primary goals are focused on building social capital or environmentalism. For many organisations these types of objectives are not entirely appropriate and therefore building ‘pure’ CSR strategies can be difficult to achieve. There is also a body of literature which argues that CSR cannot be ad hoc in nature. However, these perspectives should not negate or detract from the need for organisations to engage in CSR in some capacity particularly SMEs.
So how can a Small to Medium Enterprise (SME) engage in successful CSR activities? …..
Unlike large corporations, most SMEs understandably do not have resources dedicated to CSR activities. The scope and scale of CSR activities will naturally fluctuate across different organisations and will be contingent on the business model, size, resources etc.
What is most important for SMEs is to instil a strong culture of CSR from the top-down where all personnel become engaged and involved in CSR initiatives. There is a distinction between embedding CSR in company culture comparably with couching CSR in core services/products. Integrating CSR into organisational culture will therefore be heavily influenced by leaders/employees’ values, attitudes and behaviours. It is these intangibles that will drive the development of CSR strategies, tactics and operations.
Depending on their business model an SME may incorporate CSR in its core business or product, or have CSR as an addition to company activities and employee benefits. This may include things such as dedicated paid volunteering days, flexible work arrangements that accommodate for volunteering during work hours, a ‘CSR calendar’ which includes initiatives across the company, ‘donation matching’ or a range of other activities for example pro bono consulting services. Philanthropy, albeit a popular CSR mechanism, should not be the only focus of CSR policies. In order to have the greatest value it is imperative that SMEs select initiatives that resonate with their business and key stakeholders. These types of initiatives can generate several benefits as discussed below.
The importance/benefits of CSR for SMEs
Quantifying the financial benefits of CSR activities can be problematic particularly in the short-term. Many organisations engage in CSR activities but without profitability on a corporate level it is not sustainable. This becomes even more critical for SMEs who naturally do not possess the same level of financial clout or resources of large corporations. It is important not to take a myopic view of CSR investment. The benefits of CSR practices whether they are reputational or ethical, will emanate at several levels and frequently at fluctuating points in time. In the medium to long term, an effective CSR strategy can help transform company culture and how the firm see its role in the world. Company culture and CSR are at the essence of value creation and therefore engender several benefits.
There is significant empirical research which substantiates the impact of CSR activities on an organisation’s reputation and competitive advantage. This can have a direct impact on attracting and retaining skilled employees. Employee attitudes and behaviours drive organisational culture and climate and therefore CSR activities can play an integral function in this context. Motivation and commitment to helping others can enhance employees’ affinity to their employer.
CSR programmes can help stimulate a culture of innovation within SMEs. Where a culture is conducive to helping other people and benefiting society, employees may feel more inclined to be creative which can have a knock-on effect for other areas of their output. CSR activities can facilitate both personal and professional development for employees. For example, when employees volunteer for team based CSR activities this may subsequently create bonds and improve working relationships and therefore enhance their ability to work more effectively on other business projects. This is perhaps even more pertinent for SMEs where employees work in smaller, more intimate environments.
SMEs must establish the case for CSR by defining the social and environmental practices that are most relevant and important to the nature of their business and their key stakeholders (Loucks et al, 2010). CSR has both an internal and external focus. Externally, CSR initiatives focus on benefiting society and the environment more broadly. Internally, an engaged company culture which promotes wellbeing can improve job satisfaction, productivity and reduce turnover. These benefits to organisational culture, performance and subsequently ‘bottom line’ effectively reinforce the concept of ‘The business case for CSR’ for SMEs.
Loucks, E.S., Molson, J., Martens, M.L. and Cho, C.H. (2010). Engaging small- and medium-sized businesses in sustainability. Sustainability Accounting, Management and Policy Journal, 1 (2):178-200.