Corporate Social Responsibility (CSR) and Small Firms Theory and by hcj


									Corporate Social Responsibility
(CSR) and Small Firms: Theory
and Reality

    Dr. Athanasios Hadjimanolis
        Associate Professor
   European University of Cyprus
Definitions of CSR and SME
n   Corporate social responsibility: “continuing
    commitment by business to contribute to
    economic development, while improving
    quality of life of workforce and their families
    as well as of the community and society at
    large”. (World Business Council for
    Sustainable Development)
n   SMEs: firms with less than 250 employees
Nature of CSR
n   Voluntary action / Connection with business
n   Societal demands/expectations from firms
n   Obligations of business: economic (be
    profitable), legal (obey the law, ethical (follow
    morality principles), discretionary (be a good
    corporate citizen, e.g. engage in
n   Stakeholders: groups of people affected by
    business and affecting business
CSR focus

n   People (employees, community)
n   Planet (natural environment)
n   Profit (value to shareholders)
n   The triple bottom line (profit can not be the
    only performance criterion has to be
    supplemented with social and environmental
    performance criteria)
The stakeholder theory
n   Makes CSR practical and comprehensible
n   Main stakeholders:
    primary, i.e. directly affected (employees,
    shareholders, customers, suppliers)
    secondary (neighbors, communities,
n   Main stakeholder analysis: Interest in your
    company, importance, power, urgency of
    their demands, quality of contact.
The SME perspective
CSR in small firms (informal, based on personal
CSR: Maybe the wrong term! Enterprise social
  responsibility (ESR) is probably a better term.
Motivation for CSR:
n external pressures (customers, government,
  expectations of local communities)
n internal motives (efficiency gains e.g. through
  staff motivation and retention, must do
  because it is the right thing)
SME differences

n   Micro firms: less than 10 employees
n   Small firms: up to fifty employees
n   Medium size firms: (51-250 employees)
n   Size of firm matters! CSR activities more
    visible in medium size firms
n   Sector of economy important
Barriers to CSR adoption in SME
n   Resource constraints
n   Lack of time
n   Simple structure (concentration of activities
    and powers to hands of owner/manager)
n   Management style (autocratic)
n   Focus on short term
Enablers of CSR adoption in SME
n   Flexibility
n   Adaptability to changing society and
    stakeholder demands
n   SMEs closer to stakeholders
n   Flatter hierarchy/ faster decisions
Nature of CSR in Cyprus
n   Large firms: types of CSR activities in Cyprus
    (e.g. banks involved in large scale
    philanthropic activities, large oil firms taking
    road safety support initiatives). CSR activities
    carried on a systematic basis and widely
n   SMEs: (several CSR activities types like
    employee training, employee welfare
    initiatives, environmental measures), but
    usually not planned and on ad hoc basis.
CSR and Strategy
n   CSR integrated into strategic plans
n   CSR and financial performance
n   Benefits: opportunities (e.g. in green
    products), competitive gains, trust in
    enterprise, corporate reputation, goodwill as
    insurance cover in periods of crisis
n   Costs (Managerial and personnel time,
    expenditure on specific activities)
n   Budget for CSR/Cost-effect ratio of measures
CSR: Knowledge gaps in SME
n   Confusion over exact meaning of CSR
n   Lack of appreciation of its importance
n   Belief that only large firms can undertake it
n   Poorly understood and implemented
n   Cost considerations, underestimation of
n   Lack of employee involvement in CSR
The role of owner/manager
n   Central role of SME owner/manager in human
    resource management
n   Personal involvement of O/M in relationships
    with suppliers and customers
n   Undertakes usually the role of managing CSR
    activities among many other tasks since SMEs
    can not afford to employ CSR manager.
n   Acceptance of CSR depends on personal
    attitude of owner/manager
The environmental dimension
n   Environmental initiatives
n   Waste management
n   Recycling
n   Energy saving
n   Pollution prevention and reduction strategies
n   Eco-efficiency (reduction of consumption of
    packaging, etc. )
n   Design and marketing of green products
Public authorities and collective
n   Role of government (legislation, support and
    promotion of CSR)
n   Role of NGOs (Non-governmental
    organizations) – advocates of societal
n   Role of business associations (dissemination
    of CSR awareness among members)
n   Role of local authorities (supporters &
n   CSR is essential for SMEs
n   Appreciation of CSR & Better implementation
    knowledge are required
n   Integration of CSR in strategy
n   Interest/commitment of owner/manager
    crucial for CSR
n   Self-test for current CSR performance
n   Best practice of others (especially SMEs)
n   Timetable and budget for implementation
n   Monitoring CSR activities/ measuring CSR
n   Start from existing actions & adapt CSR
    activities to nature, needs of particular SME

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