Small Business Social Responsibility

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Comparative Perspectives on CSR Among SMEs

Date: 30 April 2014

Venue: Middlesex University, London

 

What can we agree on and what’s missing from the debate? 

 

CSR and sustainability research on SMEs remains one of the final frontiers of research and learning in the field of social responsibility. In this seminar, we explored some of the common understandings, as well as taboos, forgotten aspects and conundrums related to Small Business Social Responsibility (SBSR – this is the term we prefer to use instead of CSR), which we feel require more attention. In particular, we were keen to compare developing and developed country perspectives on our topic. Happily, being part of a series of events, we are able to feed some of these ideas into our future events. Watch this space for some real contributions and learning which we hope will considerably move the debate forward!

A number of themes emerged consistently.  Firstly, the idea of ‘context’ was mentioned by every speaker.  It was argued that SMEs should be looking at the context other than the standard Western perspective which continues to be prevalent in SBSR research.  Exploring context in terms of institutional structures and the market; understanding of strong and weak institutional contexts is critical.

Secondly, ideas around categorisations were mentioned:- categorisations in terms of types of SMEs in developing countries, and the types of CSR/SBSR. We have a lot of work to do to find clear expressions of social responsibilities. Soeren Jeppesen in his presentation on “SMEs and CSR in developing countries: The need for context-based perspectives and contrasting our knowledge on developed countries” touched on the lack of consumer pressure as a driver for SBSR. If there is no consumer pressure, the business case for CSR/SBSR collapses at least for small business social responsibility in developing countries. Finally we can debunk the myth of the business case.

Thirdly, ideas around organisation and collective activity of SMEs emerged the idea that SMEs are not properly organised in developing countries. Perhaps this might be something that differentiates the developing world perspectives where you would expect trade associations, employee federations or the chambers of commerce to act as representatives on behalf of small businesses and give SMEs a voice. If this is not happening in developing countries then this is distinctively different – in many sectors at least – from developed countries.  The discussion pointed towards NGOs acting as the voice of SMEs.  Given the talk that we heard from Bobby Banerjee in his presentation on “Microfinance and the Business of Poverty Reduction: critical perspectives from Rural Bangladesh” perhaps that voice is a flawed one because some NGOs in developing nations may be unrepresentative of the local community, primarily profit-maximising or even outright fraudulent. This is a hugely interesting area of study that will help us to better understand the context.

Fourthly, there are common things that exist in the European perspective on small business social responsibility around language understood at multiple levels. For example, we learned about the idea of Africapitalism, and the meaning of sustainability being a westernised concept as discussed by Kenneth Amaeshi in his presentation on “CSR in micro and small enterprises in Africa: problems, prospects and paradoxes”.   The importance of language and cognition was explored in detail by Andrea Werner in her presentation on “How do SME owner-managers think about CSR and related concepts?”  While drawing insights from six European country study, Andrea asked how do we translate these words into different languages and make sure we maintain some notion of consistent inner meaning. Similarly, using the developing-developed terminology could imply that the prior group has solved a problem and the latter should look to the same approach. This again imposes a westernised lens on the world which is less than helpful and likely to be inaccurate.

As with existing research in Europe on small business social responsibility, we can seek to better understand the informal practices, and the drivers and motivation in developing country contexts. Some of the aspects are the same, around creating employment for yourself and your family, but others have a distinctive flavour, such as the idea of patriotism as a driver of social responsibility in Nigeria. This is something new that has not been published before so we are opening up new avenues for research. Other drivers around culture and religion were also discussed.

Those were the themes that were discussed but there are other aspects that did not come up – the kind of non-themes – which left rather a big question-mark and which ought to be explored further in the remaining seminar workshops:

  • Gender – in both Dima Jamali’s presentation on “CSR in developing countries: A critical review and synthesis”, and also in Bobby Banerjee’s discussion we were briefly introduced to the perspective of women entrepreneurs and the relevance of gender inequalities. Much more needs to be said on this topic.
  • Race and racism – is another aspect which we did not dwell upon, yet at our first seminar in Botswana, it emerged as a continuing fundamental issue especially in South Africa which has to be relevant to social responsibility.
  • The informal economy – much of the discussion remains around informality within organisations and looking at the importance of understanding legal compliance as equalling SBSR.  But in many of the developing and emerging economies businesses are not registered, they are not paying tax – and that is a normal practice.  It would be meaningless to exclude these from our discussions, hence we have to be able to construct an understanding social responsibility in the informal economy.
  • Family business embedded in their community – certainly an important theme to explore as most businesses mentioned are family businesses located in local communities. The family business literature has explored ethics and social responsibility, but primarily in developed countries. Other stakeholders were also conspicuous by their absence, not least workers rather than just the owner-manager perspective and the role of governments, NGOs and all their variants. Supply chain pressure is often the entry point for discussions about SBSR in developing countries, but these only hold for internationally engaged businesses, the implications for purely domestic organisations not exposed to the pressures and demands of the international market are somewhat of an unknown quantity.
  • Impact of organisations – There is a need to explore in greater detail small businesses particularly in relation to the impact of their social responsibility activities, not least in terms of poverty alleviation, environmental degradation, social justice, and social inclusion which have heightened importance in a developing country context.
  • Implementation – This is another final frontier topic in CSR research in general, and the question from an SBSR perspectives is how do firms implement social responsibility, and how can we support them to implement sustainability in the long-term.
  • A sector-based analysis of SBSR research – looking at the difference and similarities in social responsibility practices is required, since we would expect to see similar problems in for example extraction industries which contrast with, for instance, service firms.

 

Where is the theory?

As academics, the big question was where is theory? A few theories were mentioned such as institutional theory, critical realism, and political theory. One of our missions in this seminar series is to try and help develop theories that are relevant to the local context we are looking at.  We were all in agreement that we need to take a critical stance in the way we apply theory; and in our understanding of structures and frameworks we regularly see in the public literature.  We ought to try and make sure we apply those in a critical way to the context we are looking at.

What are the practical implications?

As topics emerge from a scholarly perspective we can begin to understand the enormous task of making meaningful practical contributions to the study of small business social responsibility. Much of what we are learning leads to negative realisations, and confronts some of the received wisdom. Non-governmental organisations may not be the best representatives for small businesses, and yet they are not usually in a condition to organise themselves. Trade associations which in developing countries might fill this role are most likely to be working on behalf of large firms. Governments with their own challenges of governance are less likely to be able to offer support to small businesses. How are we to understand small business social responsibility in informal contexts where the ‘usual suspects’ of the business case, supply chain pressure, and legal compliance are removed from the equation. It is high time to turn these negatives in to positives, since it is not the case that as a result of all these privations, there is no small business social responsibility.  What can be done to support SBSR in the wildly diverse set of contexts which constitute developing and emerging economies? We do not yet have the answers, but are looking forward to comments and feedback and future events to help us tackle such an important question.

The program for the day can be found here.

Participants at our seminar
Participants at our seminar
Bobby Banerjee speaking about micro-finance and critical perspectives on CSR
Bobby Banerjee speaking about micro-finance and critical perspectives on CSR
Kenneth Amaeshi speaking about SBSR in Africa
Kenneth Amaeshi speaking about SBSR in Africa