CSR and SMEs theory:
From large to small organizations
Laura J. Spence
Thomas
Holloway
• Classic
MNC
• Classic
Small Business
• (C)SR in
SMEs?
Ownership
and
control
Shareholder
principal
CEO agent
Owner-manager as
principal and agent
Personal and family
influence
Discretionary
SR implicit.
Responsibility
to family and
self
Governance
and
reporting
Formalized
and codified.
Professionali
zation of mgt
Informal and personal
No language
or codification
for SR
Transactions
(internal
and
external)
Contract
based.
Profit &
shareholder
value max.
Relationship based in
embedded community
networks.
Reputation, status and
legacy
Personal trust
Integrity
Honesty
Power
structures
Hierarchical
Role
orientated
Flat, flexible, multitasking.
O-M
responsibility
for and
reliance on
employees
CSR Theory 1: CSR Pyramid
Philanthropic
Ethical
Legal
Economic
Be a good corporate citizen. Contribute
resources to the community; improved quality
of life
Be ethical. Obligation to do what is right, just
and fair. Avoid harm.
Obey the law. Law is society’s codification of
right and wrong. Play by the rules of the game.
Be profitable. The foundation on which all
others rest.
Carroll’s (1991) Pyramid of Corporate
Social Responsibility
Phil-
Phil-
anthropic
anthropic
Ethical
Personal integrity
Ethical
Survival
Survival
Personal Integrity
To selfand
and family
(1) To(a)self
family
Personal
Four-part
model of SME
social
responsibility
integrity
employees
(2)(b)
ToTo employees
Philanthropic
Survival
Ethical
Philanthropic
Personal integrity
Ethical
(c) To the local community
(3) To the local community
Survival
To business partners
(4)(d)To
business partners
CSR Theory 2: Stakeholder theory
Financiers
Customers
Employees
Firm
Communities
Suppliers
7
Stakeholder
Theory:
Lge firm
customer
SMEs
Employees
Small local
competitors
X
Ownermanager(s)
Family
Business
Partners
Supplier
‘The self’
Local
community
Explaining the SME
Difference: An ethic of care
People are relational
and interdependent
Valuing
emotions
Inclusion of the private
sphere as territory for morality
Accepts
impartiality
Source: Derived from Held (2006:10-13)
Meeting the needs of others
for whom we take responsibility
Masculinist
Interpretation of SHT
Feminist
Interpretation of SHT
1) Corporations as autonomous entities
are bounded off from their external
environment
SMEs as webs of relations among
stakeholders
2) Corporations control their external
environment
SMEs should thrive on chaos and
embrace environmental change
3) The language of competition and
conflict best describes the character of
managing a firm
Communication and collective action
should describe the character of
managing an SME
4) Objective thinking is needed to generate
strategy
Strategy as solidarity with decisions
based on responsibilities and
relationships
5) Corporations structure power and
authority within strict hierarchies
Structure power and authority
through decentralization and
empowerment.
(Derived from Wicks, Gilbert and Freeman ,1994)
Policy implications
Cost rather than profit
Personal rather than compliance-based
responsibility
Supply Chain Responsibility rather than
customer pressure and codes
Acknowledge care as part of business practice
Importance of mentors, family, peers, networks
and social capital
Sector approaches
Role for Regulation?
Entreprenurs vs ownermanager
Family firms
Sectors
Transition economies
Ecopreneurs
Franchises
Virtual firms
Informal economy
Partnerships
Social enterprises
Venture capital owned
Entrepreneurial type
Sole traders/no employees
Remember, SMEs are:
• different in nature, not just size
from large firms
• often unfamiliar with corporate
jargon
• often led by people who do not
want someone else telling them
what to do
• characterised by multi-tasking
and fire-fighting
• deserve our respect
• should not be underestimated
& can teach a lot to large firms
13
Professor Laura J. Spence
Royal Holloway, University of London, UK
Laura.Spence@rhul.ac.uk
www.rhul.ac.uk/cris