Posted by Kathryn Schwartz on January 08, 2014


The first stage in adopting appropriate and effective CSR measures is to identify the key stakeholder group with which to engage. The examples above demonstrate that this may incorporate not only those within the supply chain and customers, but also ‘neighbours’ and other localised clusters which may be interested in or affected by the business’ output and/or operations. Not always as obvious for SMEs as their corporate counterparts, for example, large corporations in third world locations are presented with a clear CSR agenda, perhaps clean water, poverty eradication, schooling and so forth. Where SMEs are concerned, the process of connecting with the full range of possible stakeholders is limited by financial restraints as well as competing interests, within which there may be difficulties in deciding the merit of each ones. However SMEs often have an advantage over larger corporations in that the business manager is closer to, and has more knowledge of, the local needs of the community. By contrast the individual store managers of large chains such as Tesco may be rather ‘emasculated’ in that they have little or no discretion over initiatives such as local CSR, whilst the head office managers who do determine such matters are in distant, remote Cheshunt. Juvenile Delinquency

CSR remains a loosely defined and often misunderstood idea, yet a useful definition is provided by the World Business Council for Sustainable Development, “the commitment of business to sustainable development, working with their employees, their families, the local community and society at large to improve their quality of life” (Dunning J, 2003). While profit maximisation is a legitimate goal for SMEs, engaging in proactive socially responsible behaviour whilst making money ensures that everybody connected with or affected by the business’ activities is able to benefit. Also not all CSR initiatives need vast sums of financial backing because, generally operating at a local level in response to local needs or concerns, the small trader is likely to find a ready-at-hand group of willing supporters; as evidenced in the abovementioned examples. Although larger companies are better able to adopt the full range of CSR policies (and being incentivised by the desire to enhance their already pervasive brand reputations), a great number of SMEs are already contributing to local socio-environmental concerns and looking for ways to improve employee relationships, for example where funds are available for skills and training, SMEs are keen to apply. So although large companies have the ability and resources to achieve ‘big things’ they are constrained by the need for economies of scale, buying power, and efficiency. They may be less able to innovate; for this we must look to the nimbler SME. Large corporations can help themselves therefore by incorporating SMEs in their value chains. In turn, SMEs can benefit from the extra investment by being in a superior position to adopt perhaps a range of policies which address local community concerns and help to alleviate poverty, assimilating social responsibility into all core business activities.

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