In pursuance of a bachelor’s degree in administrative management and business, and communication, I have developed a particular interest in the issue of sustainable practices among organizations. Knowledge in administrative management and business has triggered my interest in the way companies operate, and the impact of their activities on the environment and the communities in which they operate. Notably, I have come to appreciate the fact that a significant fraction of the global multinational organizations participates in corporate social responsibility, either voluntarily or as a requirement by regulatory bodies. However, the question is whether CSR is a viable practice among SMEs, particularly given the nature of their operations and financial capacity. As such, this research has been dedicated to identifying whether CSR can be incorporated in small and medium-sized firms successfully.
Notably, addressing the issue of CSR in SMEs is vital because, just like large corporations, small firms conduct activities that directly affect the environment. In fact, reports by government organizations reveal that SMEs generate 60% of commercial waste, which are environmental pollutants (“Better Business Journey,” n.d). Such practices can easily lead to climate change and adversely affect residents, especially considering the large numbers of SMEs operating within a single nation. Hence, it is of great importance to establish whether socially responsible practices can be instilled in the ventures to curb such adversities.
Furthermore, it has been proven that SMEs are some of the significant sources of job opportunities across the world, which implies that their activities have direct effects on their employees. Thus, around 90% of businesses and 60% of employment opportunities globally are created by SMEs through their labor-intensive processes (Jamali, Lund-Thomsen & Jeppesen, 2017). The business approaches that SMEs choose to integrate can significantly affect several groups because these ventures create employment for thousands of people. For instance, proprietors that disregard the value of human rights can employ tactics that disadvantage vulnerable groups such as women and children. Therefore, addressing the issue of CSR in SMEs is among the ways of understanding whether the entities can embrace ethical policies that promote the welfare of their workers.
Existing literature proves that CSR is a viable practice among SMEs. Scholars agree that today, a substantial number of the ventures participate in social, philanthropic, and ethical practices (Jain, Vyas & Roy, 2017; Mayr, 2015). For instance, a study by Jain et al. (2017) conducted in India showed that the majority of the small and middle-sized firms that operate in the country indulge in community projects and charity donations. Unlike before, SMEs are incorporating CSR in their strategic business plans in order to meet the needs of their surrounding communities and to create a sustainable environment.
However, it is also evident from current research that successful implementation of CSR in SMEs is dependent on several internal and external factors. While scholars agree on this prevalent theme, they are divided on the specific micro-environmental factor that determines the viable adoption of CSR in firms. Some of the researchers believe that consumers and members of the public are the chief determinants of the success of CSR (Nagypal, 2014). Therefore, they suggest that the opinion of SMEs’ clients should be considered when developing CSR initiatives. On the other hand, some believe that employees greatly influence CSR practices (Mayr, 2015). As such, workers who value ethical practices can facilitate the implementation of CSR tools.
Regardless of the significant points of disagreement among researchers concerning CSR in SMEs, one issue remains clear. Failure of SMEs to indulge in CSR due to internal and external constraints can prominently affect vulnerable and disenfranchised groups, including people living with disabilities, children and women, individuals living in poverty, and people who are considered as “minorities” within a given country (Schmidt et al., 2018; Muruviwa, Nekhwevha & Akpan, 2018; Jamali et al., 2017). For instance, if SMEs that operate in underdeveloped areas fail to indulge in charitable activities, such as building social centers, it would be challenging for people living in poverty to enhance their living standards. Unfortunately, some of these adversities may not be felt uniformly by all residents of a nation, especially dominant groups, which are financially stable, and those who possess great influence in the country’s administration.
While efforts to promote CSR among SMEs are underway, the practice is subject to multiple ethical issues because of the diverse cultural dimensions that exist in contemporary society and differing views among corporate stakeholders. As research shows, customs vary across different cultures, which means that similar CSR approaches may have varying effects in various communities (Russell, 2018). For instance, drawn from the ethical theory of rights and moral reasoning, it is suggested that practices are correct when endorsed by the larger portion of the population (Khalid, Eldakak & Loke, 2017). However, this may not always be the case, especially in a situation where the large population comprises dominant groups while the rest constitutes vulnerable and disenfranchised persons. Differing values among stakeholders may also pose an ethical dilemma among SMEs on whether to participate in CSR, considering their commitment to maximizing shareholders’ wealth (Khalid et al., 2017). Therefore, firms that plan to implement successful CSR initiatives may need to strike a balance between what is right and acceptable among different cultures and stakeholders.
After an in-depth analysis of the existing literature, including prevalent themes, diversity and ethics, and ethical issues in addressing CSR among SMEs, I believe that the solution to a successful implementation of the practice in small-scale ventures lies in the strategic integration of government action and enhancement of SMEs’ business plans to include stakeholder dialogues. In my opinion, while the participation of SMEs in CSR ought to be a voluntary practice, granting such firms the independence to choose socially responsible initiatives is an inequitable solution, as some may dismiss significant issues that affect vulnerable and disenfranchised populations.
Overall, concerned governments should develop standard regulations to govern all SMEs that operate in a country. For instance, an administration may choose to formulate uniform ethical standards to guide the relationship between workers and their employees to protect vulnerable groups against unethical acts, such as harassment and the aspects of being overworked. Besides, SMEs managers should be willing to enhance their business plans to include stakeholder dialogue. Without communication, small and medium-sized ventures may not understand the needs of the communities in which they operate. Besides, they may indulge in practices that lack buy-in from shareholders and employees. Hence, it may be critical for the management of SMEs to ensure that open dialogues become part of their business approach. In the face of government regulation and stakeholder dialogue, CSR practices can be implemented in SMEs effectively.
References
“Better business journey” (N.d). Federation of Small Businesses. Retrieved from https://www.fsb.org.uk/docs/default-source/fsb-org-uk/policy/assets/better-business-journey.pdf
Jain, P., Vyas, V., & Roy, A. (2017). Exploring the mediating role of intellectual capital and competitive advantage on the relation between CSR and financial performance in SMEs. Social Responsibility Journal, 13(1), 1-23.
Jamali, D., Lund-Thomsen, P., & Jeppesen, S. (2015). SMEs and CSR in developing countries. Business and Society, 56(1), 11-22.
Khalid, K., Eldakak, S., Loke, S. (2017). A structural approach to ethical reasoning: The integration of moral philosophy. Academy of Strategic Management Journal, 16(1), 81-113.
Mayr, S. (2015). Corporate social responsibility in SMEs: The case of an Austrian construction company. International Journal of Business Research, 15(2), 61-72.
Muruviwa, A., Nekhwevha, F., & Akpan, W. (2018). Corporate social responsibility as a drive to community development and poverty reduction: A stakeholder approach to development in Zimbabwe. The Journal for Transdisciplinary Research in Southern Africa, 14(1), a440. doi:10.4102/td.v14i1.440
Nagypál, N. C. (2014). Corporate social responsibility of Hungarian SMEs with good environmental practices. Journal for East European Management Studies, 327-347.
Russell, L. (2018). Ethical issues of small business owners: A regional perspective and a conceptual framework. The Transforming Power of the Entrepreneurship and Innovation Ecosystem: Lessons Learned, 93-99. doi:10.18502/kss.v3i10.2887.
Schmidt, F., Zanini, R., Korzenowski, A., Junior, R., & Nascimento, K. (2018). Evaluation of sustainability practices in small and medium-sized manufacturing enterprises in Southern Brazil. Sustainability, 10(2460), 1-11.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
