2.1.

REVIEW OF LITERATURE

ESR practices by MSEs are still in evolutionary stage. But still quite a number of

literature on different aspects of ESR particularly on issues like environment, society,

employee relations, gender balance, conservation of Bio-diversity, etc are being conducted.

Dey, Nikhil Bhusan (2013) conducted a study and concluded that concerted efforts at

all levels are needed with all seriousness to translate the idea of Enterprise Social

Responsibility by Indian MSMEs into reality. MSMEs in India, being a very important

stakeholder of the society, must come forward with a positive attitude towards societal and

environmental issues and introduce all modern and safe technologies which will ensure

reduction of anxieties from the societies.

Gupta and Khanna (2011) pointed out that there is no homogeneous definition of the

term Enterprise Social Responsibility, it is taking care of the labour as an enterprise internal

action and externally infer as involving in community welfare.

The idea of social responsibility supposes that the enterprise has not only economic

and legal obligations, but also certain responsibilities to society which extend beyond these

obligations (McGuire, 1963).

In recent years, the concept of Enterprise Social Responsibility has emerged as an

increasingly important feature of the business philosophy. No longer is business seen as

basing its decisions solely on economic criteria. Businesses are now expected to consider the

ethical, moral and social impact of its actions and decisions. A corporate that is sensitive to

the surroundings and to the needs and aspirations of the community in which it operates not

only creates goodwill and a strong market for its business, but also helps support a

sustainable neighbourhood (Chahoud et al., 2007).

As argued by Hatten (2006), ethical and social responsibility issues in smaller firms

should go hand in hand with the strategic planning of the firms because the entrepreneurs’

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decisions of “what to do and how to go about doing it” are largely influenced by their ethical

and socially responsible values.

The varying commercial interests, distinct cultural perspectives, and historically

distinct skill and trades could provide a rich perceptual framework for understanding the

ethical and socially responsible practices in commercial settings (Ahmad et.al. 2012)

The present environment most certainly has a number challenges facing SMEs, but, in

the future, if SMEs want to survive, they will need to make a step towards being more

responsible. If one looks at the spread of CSR amongst MNCs there exists a continuum from

deeply integrated CSR to CSR “lite”. In this same vein, there will inevitably be some SMEs

that are more aware than others when it comes to taking the initiative towards CSR and good

governance (Ramesh, 2004)

Yoon et al (2006) found that, ESR activities improve an enterprise's image when

consumers attribute sincere motives, are ineffective when sincerity of motives is ambiguous,

and hurt the enterprise's image when motives are perceived as insincere.

Many large MNCs have formulated a ESR policy, which they make public, but ESR

is not at all institutionalised yet in MSEs. This distinction is caused by several factors

(CREM- report, 2004):

− Limited resources of MSEs;

− MSEs are mainly concerned with quality and see less benefit in ESR;

− Limited definition of ESR by MSEs;

− Less public pressure from NGOs and other stakeholders;

− Less or no ESR requirement of clients of SMEs.

Hopkins (2005) argued that Enterprise Social Responsibility is concerned with

treating the stakeholders of the firm ethically or in responsible manner.

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 MSMEs are the mainstay of most economies, particularly in terms of employment and

development impacts. In many sectors, their cumulative social and environmental impacts are

greater than those of large enterprises. With the continued emergence of the ‘business

linkages’ theme within the ESR agenda, there are signs that large companies operating in

developing countries will increasingly be expected to expand their sourcing from MSMEs, as

part of what it means to be a responsible company. This is to be welcomed and supported.

But it is not enough. For real progress towards sustainable development, there is a need to

view MSMEs as ESR actors themselves, with their own social and environmental impacts.

The argument that ESR is unaffordable or irrelevant for MSMEs should not be used as a veil

behind which to hide or ignore poor social and environmental practices (Fox, 2005).

Teixido et al. (2002) noted three ways that MSMEs can engage with ESR–as

providers of employment, in their relations with the public, and as providers of goods and

services to large companies. The first two could be regarded as ‘independent’ ESR, with the

primary actor being the MSME itself. But the entry point for most formal attempts to bring

MSMEs into the ESR agenda has been through the third mechanism-the supply chain

requirements of large companies, particularly in export sectors in which approaches to ethical

trade have been pioneered, such as garments, toys and food. This could be described as

‘dependent’ ESR–the primary focus is on the responsibilities of the large company and hence

the ethical issues within its supply chains. In response, the large company seeks to identify

and mitigate negative social and environmental impacts by introducing requirements of its

suppliers, and in some cases of its suppliers’ suppliers, and so on.

In developing countries, Leutkenhorst, 2004 argued the contribution of MSME’s

towards employment generation is significant because they:

 tend to use more labour intensive production processes than large enterprises,

boosting employment and leading to more equitable income distribution;

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  Provide livelihood opportunities through simple, value adding processing activities in

agriculturally based economies;

 Nurture entrepreneurship; and

 Support the building up of systemic productive capacities and the creation of resilient

economic systems, through linkages between small and large enterprises.

Most MSME owners significantly complement the work of the Government and the

NGO’s in the towns/villages/cities they operate in. In a report on CSR in SME’s done in the

Pune Industrial belt by the NGO Business Community Foundation, it was found that the

general impression among SME's is that following mandatory Government laws makes them

socially responsible. A lot of SME's are of the opinion that philanthropy and CSR are one and

the same. Since many of the SME's are at a stage where they are struggling to establish

themselves and do not have the manpower or resources to address these issues, they tend to

ignore them (Srinivasan et.al, 2008).

SMEs recognise ESR as being predominantly an internal activity for the enterprise.

Driven by the entrepreneur, the ESR activities focus mainly on labour welfare and healthcare,

and reflect the entrepreneurs’ emotional satisfaction by extending their responsibility beyond

being mere employment providers ( Sachdeva and Panfil, 2008).

Social Responsibility of business refers to what business does over and above the

statutory requirement for the benefit of the society. The word “responsibility” emphasizes

that the business has some moral obligations towards the society (Arvind, 2008)

According to Kabir (2011) the major reasons for involving CSR practices by

companies are to create and maintain a favourable corporate image where companies should

be viewed as social organizations and in terms of CSR practices, community involvement is

higher than the other categories of CSR.

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 Gupta and Khanna (2011) conducted a study and identified ESR as “taking care of the

labour”, referred to making timely wage payment, providing workers with interest free loans,

awarding bonus and sometimes just providing basic minimum wages. For the micro units, the

term implies provision for workers with tea and snacks in addition to paying timely wages

and personal loans.

2.2. Rationale of the work:

ESR is very important for every walk of life whether it is an individual or an enterprise for

sustainability and for sustainable development. Enterprises use the assets of society, environment,

government, etc for its survival, so it becomes the responsibility of the enterprises to give in return

the reward to all the stakeholders. Common property may be forest, air, water, road, education

system of the society, etc. which may be hampered by the enterprises, the study of ESR helps the

enterprises to protect the common property and these leads to protection of environment and

prosperity in the society.

To the best of my knowledge, such study of ESR of micro enterprises of Karimganj

town has not been initiated before. This study helped me to know the awareness level of

ESR and also to impart the basic ways to fulfil the fact by the enterprises.

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