CSR Perceptions and Activities of Small and Medium Enterprises (SMEs) in seven geographical clusters . The entrepreneur, regardless of firm size, is driven mainly by personal values, which determine the scope and scale of any...
moreCSR Perceptions and Activities
of Small and Medium Enterprises (SMEs)
in seven geographical clusters .
The entrepreneur, regardless of firm size, is driven mainly by personal values, which determine
the scope and scale of any intervention. From internal ESR, the entrepreneur expects mainly
economic returns; therefore, actions focus on improving business performance or securing orders
with international buyers. External charity driven ESR activities are dominated by the ‘feel-good’
factor, offering emotional returns. At the same time, entrepreneurs do not seek publicity for their
benevolence; therefore, many of their actions remain unknown.
The position of SMEs in the value chain shapes their activities and their financial size. In some
instances, markets and more so buyers put pressure on suppliers, which impacts internal ESR
activities such as worker education or improvement of health and safety conditions. External
pressure raises awareness and forces the implementation of improvements as prescribed by local
law or code of conduct; even when combined with other interventions, these do not guarantee
compliance. Regardless of market demands, some clusters developed their own ESR agenda
respecting the outside pressure, and designed bottom-up solutions to persistent problems.
We observed that virtually all SME activities discussed in the interviews were sustained by
financial contributions, and that the absolute monetary contribution towards ESR increased
with the size of the enterprise. However, as a percentage of turnover, the contribution towards
ESR was essentially pegged below 1% of turnover, and thus decreased with an increase in
enterprise size. Enterprise position in the value chain also shaped spending and allowed medium
sized enterprises, often represented by exporters, to diversify their spending across all
categories.
The interviewed cluster SMEs pointed out limited collective engagement, and repeatedly
stressed that ESR is predominantly an enterprise internal activity, and that when selecting
partners for cooperation, religious organisations topped the list, largely due to the trust bestowed
to their mission. Some collective ESR activities were initiated by the financially stronger
enterprises; with their dominant position in the cluster, they were more competent in designing
programmes and negotiating with local institutions.
The prevalence of social institutions facilitates the implementation of collective ESR activities.
Partnering demands the definition of common objectives and the development of programmes
that, once successfully implemented, may yield even the smallest of successes and contribute
towards the building of trust. Trust is vital for the collective ESR; however, it does not guarantee
effective implementation of agreed activities or directly translate into mutual benefits.
The survey findings indicate that an imposed ESR agenda provides a stimulus for change;
however, home-grown activities that address the problems from the inside may in the long term
guarantee sustainability of the interventions. SMEs unanimously responded that they will
continue their ESR activities, despite any negative changes in their company performance.
Essentially they will not abandon their ESR agenda, but will change scope, scale and form of its
implementation.
In conclusion, for SMEs, the sustainability of their economic business performance is the
foundation for their ESR engagement. Indisputably, compliance with local laws must be reinforced
if any additional ESR actions are to be developed. Further growth, however, is also governed by
the strength of linkages within the supply chain, so that SMEs can consciously engage in building
the supplier environment rather than outsourcing their problems up the supply chain.
Approaching the issue from the development prospective, a shift from pressure to appropriation is
required. Fostered by trust-building mechanisms, the current ad-hoc approach of implementing of
ESR activities must be formalised and become an integrated part of strategic business planning.
Consequently, building on small successes, SMEs can scale up their engagement slowly, gaining
confidence while learning about the multiple impacts of their ESR actions.
SMEs acting alone will bring upon a limited impact on the ESR agenda of the cluster, and
therefore multi-stakeholder or public–private partnerships are instrumental in the development of
comprehensive programmes. In addition, partnering along the supply chain or with international
buyers may bring the twofold benefit of improving business performance and increasing
emotional returns through increased social engagement for both parties.