Abstract: This paper provides an overview of the contemporary debate on the concepts and definitions of Corporate Social Responsibility (CSR) with a special focus on small and medium-sized enterprises (SMEs). Conclusions are based on historical perspectives as well as surveys showing why there are still huge divergences whether to implement a proper concept of CSR in SMEs or not. In contrast to multi-national companies (MNCs), which not uncommonly abuse this vogue word, many SMEs struggle to establish an appropriate CSR strategy. This paper will provide an overview of the merits and drawbacks of this highly controversial and elastic term CSR and suggest solution approaches for SMEs in order to stay competitive.
Keywords: Corporate Social Responsibility, Components, Origins, Tendencies, SMEs
As small and medium-sized enterprises make up to 90 percent of all businesses worldwide and employ between 50 and 60 percent of all workforce (Australian Center of Corporate Social Responsibility, 2007), it is an incredibly important assignment to keep improving the structure of these companies.
Furthermore, a relatively new method in order to increase the efficiency, especially in the long term, is the so-called corporate social responsibility (CSR) (Lawrence & Weber, 2008). Since the late 1960s, firms of all industries have implemented CSR. Back then, according to Murillo and Lozano (2006), usually only large companies saw the need to invest in special treatment for their shareholders.
However, during the last two decades also SMEs put emphasis on adopting CSR. This paper will figure out whether CSR is worth introducing, and in particular for SMEs. Moreover, the various problems of implementation of CSR in SMEs will be explained more closely and how the procedure differs from large corporations. Different industries of SMEs will be analyzed concerning the impact CSR had on them.
The paper will start with providing basic knowledge about CSR, which includes its history and approaches, in order to enable the reader to follow the next steps. Furthermore, the different components of CSR will be listed and the main tendencies in the sphere of responsibility will be shown. Following, the paper will refer to the question if CSR is worth spending time and money on. Enumerating and analyzing reasons therefore and against it will answer this question.
2. Corporate Social Responsibility (CSR)
This main sector deals with necessary background knowledge like definitions, origins and approaches of CSR. Following, the main components and impacts of CSR will be revealed. Finally, the tendencies of CSR will be analyzed and last but not least the central point of this paper, namely the importance of CSR in SMEs will be dissected.
2.1 Definition, Origins and Approaches of CSR
CSR is a highly discussed topic in today´s world of business. Nevertheless, most managers do not know what actually is CSR or how it is defined. This is probably due to the fact that the definitions of CSR offer a broad spectrum. Basically, CSR can be understood as a tool ‘changing relationship between business and society’ (Szegedi, 2010, p. 72). However, she argues that the way this goal is usually reached depends on where the company has its origins. In America the general understanding of CSR is based on external caritative activities, e.g. charity events, whereas in Europe CSR aims at implementing a socially responsible work process within the company.
Moura-Leite and Padgett (2011) found out that in the 1950s and 1960s, when CSR was in the early stages of development, the emphasis was put on businesses’ responsibilities to society. Moreover, they mention that the relationship between CSR and corporate financial performance gained in importance. In the 1970s and 1980s, due to social changes, managers realized that they should put the primary focus on the probably most important components of a company’s stakeholders, namely employees. Nevertheless, customer relations as well as philanthropy still played an important role. During the 1990s and the early 2000s, CSR became a core strategic issue.
In any case, CSR is not a synonym for Public Relations (PR) (Szegedi, 2010). Certainly, for reasons of the increased positive reputation gained through CSR a competitive advantage is gained. However, it is necessary to differentiate between stakeholder issues and social issues. (Clarkson, 1995, as cited in Moura-Leite & Padgett, 2011). A social issue which is often required by the law cannot be a stakeholder issue.
As The European Commission (2002, p. 9) clearly states that there is ‘broad consensus among businesses about the expectation that CSR will be of strategic importance to ensure long-term business success.’ Szegedi (2010) explained it as follows
- Quote paper
- Mario Schuler (Author), 2012, Corporate Social Responsibility in SMEs, Munich, GRIN Verlag, https://www.grin.com/document/206267