Corporate Social Responsibility for Small and Medium Enterprises

Corporate Social Responsibility is a collective duty that aims changes in the society, but it is not actions to replace government operations and policies like poverty eradication. CSR has issues and concerns worldwide. A wide spread number of enterprises including Small and Medium Enterprise, are developing their business globally, as they take advantage of market liberalization, trade integration, and sourcing opportunities from subsidiaries and suppliers in developing count.

On the other hand companies meet pressure from external stakeholders as well, to include moral consideration in addition to financial aspects in their investment decision. Investing in CSR funds investors must consider moral issues in portfolio management and derive financial utility from their investment. It’s quite contrary that SME’s are influenced by general value system which dominates social networks in the value chain in which they control. Pressures from employees and the community influences SME’s competitiveness and can drive social equity related to CSR. Once SME’s are able to improve financial performance it gains a ground towards CSR. In response to the government action to promote CSR has stopped focusing exclusively on large firms and for the first time it has begun to concentrate on the majority group of SME’s. These enterprises have been influenced by all the other larger firms and hence find it difficult to work on their problem and they often find it difficult to get funds because of the competition from larger firms.

CSR agenda is overwhelming and it’s emerged from the globalization debates fuelled by revelations of environmental, labor and human rights. Furthermore it means recognizing where business activities are currently aligned with development goals applying all the policy elements. While allocation of these funds, CSR has to look into the aspects of labor standards, human rights, education, health, child labor, conflicts and transparency in relation to government’s natural resource revenue.

The contemporary CSR agenda is failing to fulfill its potential contribution to development. In a critical way the CSR agenda is nothing but a backbone for business. It can be modified around the core principles of sustainable and equitable development. SME’s lack resources to assign employees to work on CSR, even part time. They can be baffled by the corporate responsibility reports of large multinationals seeing them as simply public relation exercise. These enterprises do a great deal of good in their local communities but this is often done in an instinctive way. This leads to important hypotheses, existing CSR policy will have little impact on most manufacturing SMEs unless their market-based decision-making frames change. Our evidence suggests that without such a change, the main driver of activities in manufacturing SMEs will be the existing regulatory structures that provide minimum standards for many activities covered by CSR.

The basic and budgetary confinements of SMEs, their local involvement and the important role played by the human capital, directly affect the prioritization process used by managers to develop specific socially responsible activities. For these reasons, rarely SMEs use CSR as a ‘marketing tool’ to improve external positioning of the corporation.