10 Reasons why Corporate Social Responsibility (CSR) Means Very Little to Most Small to Medium-Sized Enterprises (SMEs)

SME Engagement with Corporate Social Responsibility

There are many good examples of Corporate Social Responsibility (CSR) practices being implemented across all levels and sectors of business however the extent to which small to medium-sized enterprises (SMEs) actively incorporate CSR into their core business operations remains unclear.

It is suggested by many commentators that there is a lack on engagement from SMEs and micro-enterprises in social responsibility activities.

As SMEs make up 98-99% of the total UK economy this is obviously of huge concern for those championing the CSR agenda.

This article aims to explore some potential reasons why this lack of engagement may exist.

Some of my observations are fairly generalised and summative so please excuse this and bare this in mind as there will always be exceptions to the rule.

1. Even the Experts Can't Define CSR

If you Google ‘Corporate Social Responsibility’ you will find a wide range of definitions.

These vary in opinion from being the single most important aspect of modern business which should be incorporated into the core operation of business, right down to CSR being dead and no longer valid.

If the so called experts can’t agree on a single definition how are SME owners supposed to adopt CSR in a clear and meaningful way.

2. The Term 'Corporate Social Responsibility' is not very relevant to SMEs

Firstly, the term CSR includes the word ‘corporate’.

This immediately results in many SMEs dismissing the concept as irrelevant as they do not consider themselves to be a ‘corporation’.

The thought of being a corporation is alien to them and in turn the notion of CSR is also alien.

A more palatable term needs to be used, not to replace CSR but to make the concept more relevant to SMEs.

Perhaps the newer concepts of ‘responsible entrepreneurship’, ‘social entrepreneurship’ or ‘stakeholder entrepreneurship’ could be used as their underlying principles are closely aligned to CSR.

3. Exemplary Practices are Always Associated with Large Corporations

Whenever CSR practices are publicised in the media they are usually associated with companies such as Microsoft, Starbucks or Nike.

Most SMEs on the local high street find it difficult to relate to these examples as they do not have the financial capital or infrastructure to replicate them.

More examples of CSR within local communities needs to be publicised in order to model appropriate behaviour for SMEs and micro-businesses.

4. SMEs Are Not Always Aware of the Benefits

Many SME owners are unaware of the benefits of incorporating CSR practices within their core operations.

Instead CSR is often regarded as a distraction from business activities and just another financial and time consuming burden.

It is often viewed as ‘doing the right thing’ and not ‘doing the best thing for business’.

However, if implemented correctly CSR will result in increased reputation and improved stakeholder engagement leading to a return in financial gains.

This key principle needs to be better understood by more SME owners.

5. CSR if Often Considered to be Nothing More Than Philanthropy

Firstly, let’s not for one minute imply that philanthropy is a bad thing.

If a business generates vast amounts of profit and wishes to donate a percentage of it to charitable causes that can only be a good thing.

However, it is not the only way businesses can engage in CSR.

A lack of understanding coupled with the public celebration of famous philanthropists had led to this notion and as many SMEs do not have the level of profit that is required to be philanthropic they are at risk of discarding CSR activities altogether.

6. Regulatory Policies are Predominantly Focused Around Large Public Sector Organisations

Much of the European and UK policy on CSR is directed towards large public sector organisations and although they aim to reach private sector SMEs the structure and terminology are not overly applicable.

The requirements and guidelines outlined in such policies do not do enough to meet the differing needs of SMEs.

I am not suggesting strict measures should be implemented, as CSR needs to be a voluntary and self-regulated process, but I do believe more needs to be done on a regulatory level to motivate, enthuse and educate SMEs in this area.

7. Not All SMEs Are The Same

It would be nice if there was a straightforward programme or framework that SMEs could follow to implement CSR.

Sadly this is not the case due to the differing nature of each individual SME.

What would work for one SME would not work for the next and vice versa.

This complicates matters and further mystifies the concept of CSR.

8. CSR Continues to be Absent from Many Formal Educational Programmes

For CSR to be effective it must be holistically and grossly incorporated into the overall business model.

However, the majority of educational programmes covering business and management topics either exclude this subject completely or include CSR as a single module of study indicating CSR as being nothing more than an add-on to traditional business topics.

It is therefore largely the educators’ duty to embed CSR topics throughout their course delivery which often results in a lack of consistency.

Even when CSR is incorporated into a curriculum it typically focuses around large corporate programmes and little attention is given to the SMEs and micro-businesses.

9. Lack of Platforms for SMEs to Collaborate on Corporate Social Responsibility

Many SMEs are too isolated and often sit out on a limb with little support and guidance.

The is a large pool of research which has evidenced that SMEs who are engaged in networks or supply chains are significantly more likely to also engage in CSR practices.

By working collaboratively with other SMEs and larger businesses within your region, or within your business sector, you will have a greater scope to achieve more.

Collective influence and collaboration is critical to the future of CSR and more intermediaries need to exist to initiate and support this process.

10. SMEs Are Too Passive in their CSR Practices

Many SMEs actually incorporate CSR activities in their everyday operations – they just don’t know they’re doing it.

Their lack of awareness fuels this passive action.

You could argue that just because the business owner is unaware of their actions it doesn’t matter as they are still conducting their business in a socially responsible way.

I would agree to a certain extent however an active engagement is far more beneficial as it invokes a completely different mind-set.

An active mind-set actively seeks new ways of doing things rather than accidentally incorporating them without purpose.

Passive engagement if fine but active engagement has many more long-term benefits to both business and society.

Final Thoughts on SMEs Engaging with Corporate Social Responsibility

It is actually ironic that the people who are most likely to possess a desire to take an active social responsibility are the SMEs and micro-businesses.

They are more in touch with their staff, customers and communities than larger organisations and will be much more reliant on their local communities for custom.

If SME owners we better informed and better supported to actively pursue CSR objectives they could collectively generate a vast amount of value for themselves and the wider society.

CSR needs to be broken down into a more usable concept that is applicable to every business regardless of size and scope.

It needs to evolve into a position where small but significant advances are made by a large number of businesses, rather than striving for complicated and sophisticated CSR policies and auditing amongst an elite few.

It is the collective power of SMEs that will drive the CSR movement forwards and not the isolated CSR pursuits of larger corporations.

You should check out the Organisation for Responsible Business, based in the UK, for more information on responsible business practices.

Jonathan Sandling

I have an interest in humour and how it can enhance teaching, learning and leadership. I am a senior leader within the higher education sector in the UK and an EdD candidate at the University of Cambridge.