CSR Among SMEs: What Researchers Can Agree On and What’s Missing from the Debate

NBS Topic Editor Dr. Laura Spence and colleagues report on the evolving research agenda for CSR and SMEs.

Sustainability and corporate social responsibility (CSR) in small and medium sized enterprises (SMEs) is arguably a final frontier of research and learning in sustainability. More knowledge is needed, with important aspects hidden under metaphorical scholarly rocks.

In London UK in April, researchers tried to identify common understandings, as well as taboos, forgotten aspects and conundrums deserving more attention.

Our meeting, “Comparative perspectives on CSR among SMEs”, is part of a series funded by the UK’s Economic and Social Research Council. The first meeting was at the African Academy of Management conference in Botswana in January 2014.

These seminars should advance understanding of what we call “Small Business Social Responsibility (SBSR): Global Perspectives.” The particular focus is comparison of developing and developed country perspectives. We’re delighted to hear from potential participants. Series co-organisers are George Frynas and Jyoti Navare (Middlesex University) and Judy Muthuri (University of Nottingham).

Here, I describe take homes from our London seminar.

Key Themes

• Context matters, as every seminar speaker noted. The Western perspective dominates CSR and SME research, but researchers should understand SMEs in context (e.g. institutional structures, markets), strong and weak institutional contexts). Soeren Jeppesen (Copenhagen Business School), presenting on “SMEs and CSR in developing countries: The need for context-based perspectives and contrasting our knowledge on developed countries,” identified lack of consumer pressure as a CSR driver. Without consumer pressure, the CSR business case collapses — at least for SBSR in developing countries.

• Categorisation is needed, regarding types of SMEs in developing countries, and the types of CSR. These concepts don’t necessarily have common definitions in developed countries, and a global orientation multiplies perspectives. We need to ask: what constitutes a small firm? What does social responsibility comprise given multiple complex social and environmental problems?

• SMEs in developing countries have different organisation and collective activity. In the developed world, SMEs are represented by trade associations, employee federations and chambers of commerce. Session participants saw NGOs acting as the voice of SMEs in developing countries. But Bobby Banerjee’s (Cass Business School) presentation on “Microfinance and the business of poverty reduction: critical perspectives from rural Bangladesh” suggested that the NGO voice may be a flawed one.

• Language matters. European researchers have found language to be an important perspective on SBSR; it is significant in developing countries as well. Kenneth Amaeshi (University of Edinburgh), in his presentation on “CSR in micro and small enterprises in Africa: problems, prospects and paradoxes,” shared the ideas of Africapitalism and of sustainability being a westernised concept. Presentating on “How do SME owner-managers think about CSR and related concepts,” Andrea Werner (Middlesex University) drew on a study of six European countries. She asked how to translate CSR-related words into different languages while maintaining meaning. Similarly, Kenneth noted that the developed/ developing terminology can imply that the prior group has solved problems and the latter should use the same approach. This westernised lens is unhelpful and likely inaccurate.

What’s missing?

Despite broad discussions, some themes identified in our Botswana event or in development literature were absent. We hope to explore these in our future events and welcome any comments. “Absent themes” included:

• Gender: Brief exposure to gender inequalities and women entrepreneurs’ perspectives came in Dima Jamali’s (American University of Beirut) presentation on “CSR in developing countries: A critical review and synthesis” and Bobby Banerjee’s discussion, but much more likely needs to be said.

• Race and racism: Our first seminar in Botswana identified this emerged as a continuing fundamental issue, especially in South Africa.

• The informal economy: Researchers discuss informality within organisations, and legal compliance as equalling CSR. But in many developing and emerging economies, businesses are not registered and do not pay tax — and that is a normal practice. We must understand social responsibility in the informal economy, without prejudging businesses for non-compliance when that may be the only basis on which they can operate.

• Family business embedded in their community: Most SMEs are family businesses in local communities. The family business literature has explored ethics and social responsibility, but primarily in developed countries.

• Other stakeholders: Stakeholders not adequately considered include workers (rather than owner-managers) and the role of governments and NGOs. Supply chain pressure can initiate SBSR in developing countries, but only for internationally-engaged businesses. What might we expect in terms of CSR from small firms in purely domestic markets?

• Organisational impact: How do SBSR activities affect poverty alleviation, environmental degradation, social justice and social inclusion? These issues have heightened importance in developing countries.

• Implementation: How do firms implement social responsibility, and how can we support them to implement sustainability in the long-term?

• Sector-based analysis: Extraction industries and service firms will likely face different problems, for example.

Where is the theory?

The big question at the session was “where is theory?” Speakers raised institutional theory, critical realism and political theory as starting points. One purpose of the seminar series is to develop theories relevant to local contexts. We agreed that we need to take a critical stance in applying theory; and in our understanding of structures and frameworks in the CSR and small business literature. We should apply those critically to the context studied.

Practical Implications

Identifying these topics highlights the enormous task of making meaningful practical contributions to the study of SBSR. Much of what we are learning leads to negative realisations and confronts received wisdom. For example:

• Non-governmental organisations may not be the best representatives for small businesses, and yet SMEs usually cannot organise themselves collectively. In developing countries, trade associations which might fill this role are most likely to be working on behalf of large firms. Governments with their own governance challenges are less likely to be able to offer support to small businesses.

• How are we to understand SBSR in informal contexts without the “usual suspects” of the business case, supply chain pressure and legal compliance?

We must turn such negatives to positives, since clearly despite these privations, SBSR exists everywhere. What can be done to support SBSR in the wildly diverse set of contexts which constitute developing and emerging economies?
We don’t yet have the answers, but are looking forward to comments and feedbackand future events to help us tackle such an important question. Please do contact us via the website. Future events include 19th November 2014 on governance and SMEs, and three events in the UK in 2015 on SMEs and supply chains, social entrepreneurship and finance.

About the Seminar Series

Twitter: #sbsrGlobal
First meeting in Botswana
Elgar Research Handbook on Small Business Social Responsibility: Global Perspectives (call for submissions now open)

About the Authors

Dr. Laura J. Spence is Professor of Business Ethics at Royal Holloway, University of London (UK), where she directs the Center for Research Into Sustainability (CRIS). She is a Topic Editor for NBS and tweets at @Prof_LSpence.

Dr. Judy Muthuri is Lecturer in Corporate Responsibility at Nottingham University (UK).

Dr. George Frynas is Professor of CSR and Strategic Management at Middlesex University (UK).

Dr. Jyoti Navare is Head of Department for Marketing and Enterprise at Middlesex University (UK).