CZECH MANAGEMENT INSTITUTE PRAHA
Faculty of Management
ESCUELA SUPERIOR DE MARKETING Y
ADMINISTRACIÓN BARCELONA
Doctoral Thesis
Corporate Social Responsibility in Small and MediumSized Companies in the Czech Republic
Doctoral Thesis in the Doctor of Business Administration Programme
Doctoral Candidate:
David Polášek, M.B.A.
Doctoral Advisor:
Dr. Cesar Duch, Ph.D.
2010
Table of Contents
LIST OF TABLES ............................................................................................................................ v
LIST OF FIGURES ........................................................................................................................ viii
ABSTRACT ...................................................................................................................................... x
DECLARATION .............................................................................................................................. xi
ACKNOWLEDGEMENTS .............................................................................................................. xii
INTRODUCTION ........................................................................................................................... 1
CHAPTER 1.
CORPORATE SOCIAL RESPONSIBILITY CONCEPT ................................... 4
1.1 DEFINITION OF CORPORATE SOCIAL RESPONSIBILITY ....................................................................... 4
1.1.1
Defining Corporate Social Responsibility ............................................................................... 4
1.1.2
Corporate Social Responsibility from Broader Perspective .................................................... 7
1.2 HISTORICAL DEVELOPMENT OF THE CORPORATE SOCIAL RESPONSIBILITY CONCEPT ....................... 8
1.2.1
Era Preceding Current Concept of Corporate Social Responsibility ...................................... 8
1.2.2
Modern History of Corporate Social Responsibility ............................................................. 10
1.3 WHAT CORPORATE SOCIAL RESPONSIBILITY IS NOT ....................................................................... 14
1.3.1
Corporate Social Irresponsibility .......................................................................................... 15
1.3.2
Misuse and Sole Usage of Some Corporate Social Responsibility Tools .............................. 16
1.4 DEFINITION OF THE STAKEHOLDER CONCEPT AND ITS RELATION TO CORPORATE SOCIAL
RESPONSIBILITY............................................................................................................................... 17
1.5 CURRENT DEVELOPMENT IN CORPORATE SOCIAL RESPONSIBILITY................................................. 20
CHAPTER 2.
PERSPECTIVES OF CORPORATE SOCIAL RESPONSIBILITY ................. 24
2.1 ROLE OF THE GOVERNMENT IN CORPORATE SOCIAL RESPONSIBILITY CONCEPT ............................. 24
2.2 CORPORATE SOCIAL RESPONSIBILITY IN GLOBAL DIMENSIONS ...................................................... 28
2.2.1
Role of Small and Medium-Sized Companies in Global Corporate Social Responsibility .... 30
2.3 CORPORATE SOCIAL RESPONSIBILITY IN EUROPE ............................................................................ 31
2.3.1
General Aspects of Sustainable Development and Corporate Social Responsibility in Europe
............................................................................................................................................. 31
2.3.2
Corporate Social Responsibility in Europe ........................................................................... 32
2.4 CORPORATE SOCIAL RESPONSIBILITY IN THE CZECH REPUBLIC ...................................................... 39
2.4.1
Situation in the Czech Republic Regarding Corporate Social Responsibility and Ethics in
1990s .................................................................................................................................... 39
2.4.2
Development of Corporate Social Responsibility in the Czech Republic .............................. 41
2.4.3
Latest Development of Corporate Social Responsibility in the Czech Republic ................... 43
2.5 CORPORATE SOCIAL RESPONSIBILITY FROM SMALL AND MEDIUM-SIZED COMPANIES´ PERSPECTIVE
AND MAJOR DIFFERENCES BETWEEN SMES AND LARGE COMPANIES IN THE CONTEXT OF CSR ..... 45
2.5.1
Definition of Micro, Small and Medium-Sized Enterprises ................................................... 45
2.5.2
General Features and Statistics of Micro, Small and Medium-Sized Enterprises ................. 47
2.5.3
Corporate Social Responsibility in Small and Medium-Sized Enterprises ............................ 51
CHAPTER 3.
ESSENTIAL ASPECTS OF CORPORATE SOCIAL RESPONSIBILITY ....... 55
3.1 LEVELS OF CORPORATE SOCIAL RESPONSIBILITY ............................................................................ 55
3.2 DIMENSIONS OF CORPORATE SOCIAL RESPONSIBILITY .................................................................... 56
3.2.1
Internal Dimension of Corporate Social Responsibility ........................................................ 56
3.2.2
External Dimension of Corporate Social Responsibility ....................................................... 61
3.3 SIX FORMS OF CORPORATE SOCIAL RESPONSIBILITY INITIATIVES ................................................... 65
3.3.1
Corporate Philanthropy ........................................................................................................ 66
3.3.2
Cause Promotions ................................................................................................................. 67
3.3.3
Cause Related Marketing ...................................................................................................... 68
3.3.4
Corporate Social Marketing .................................................................................................. 70
3.3.5
Community Volunteering ....................................................................................................... 72
3.3.6
Socially Responsible Business Practices ............................................................................... 73
3.4 MEASURING, EVALUATING AND REPORTING ON CORPORATE SOCIAL RESPONSIBILITY .................. 75
3.4.1
Measuring and Evaluating Corporate Social Responsibility ................................................ 75
3.4.2
Corporate Social Responsibility Reporting ........................................................................... 76
ii
CHAPTER 4.
SURVEYS ON CORPORATE SOCIAL RESPONSIBILITY CONDUCTED IN
THE CZECH REPUBLIC, EUROPE AND WORLDWIDE .............................. 80
4.1 GLOBAL SURVEYS ........................................................................................................................... 80
4.1.1
Survey of Small and Medium Enterprises in the Global Compact (2004) ............................. 80
4.2 EUROPEAN SURVEYS ....................................................................................................................... 81
4.2.1
Survey on European SMEs and Social and Environmental Responsibility (2002) ................ 81
4.2.2
Study of Sustainable Competitiveness in Global Value Chains (2006) ................................. 83
4.2.3
Survey on Corporate Social Responsibility, Management Standards and Corporate
Governance (2006) .............................................................................................................. 83
4.2.4
Survey on Corporate Social Responsibility in SMEs in Berlin (2007) .................................. 84
4.3 SURVEYS IN THE CZECH REPUBLIC .................................................................................................. 85
4.3.1
Corporate Social Responsibility – Complete Guide of the Topic and Conclusion of the
Survey in the Czech Republic (2004) ................................................................................... 85
4.3.2
Study of Social Responsibility as One of the Conditions for Entrepreneurial Success of the
Company (2006) .................................................................................................................. 86
4.3.3
Survey on Utilization of Corporate Social Responsibility by Small and Medium-Sized
Companies in the Czech Republic (2006) ............................................................................ 86
4.3.4
Study of Utilization of Corporate Social Responsibility by Small and Medium-Sized
Companies in the Czech Republic (2007) ............................................................................ 87
4.3.5
Survey on Corporate Social Responsibility – A New Factor of Corporate Competitiveness
(2008)................................................................................................................................... 88
CHAPTER 5.
METHODOLOGY AND GENERAL RESULTS OF OWN RESEARCH .......... 89
5.1 BASIC FACTS ABOUT RESEARCH AND METHODOLOGY .................................................................... 89
5.1.1
Objective of the Research ...................................................................................................... 89
5.1.2
Timing of the Research .......................................................................................................... 89
5.1.3
Methodology of the Research ................................................................................................ 90
5.1.4
Questionnaire Form .............................................................................................................. 91
5.1.5
Software Tools Used for Processing and Analysis ................................................................ 91
5.2 BASIC FACTS ABOUT SURVEYED SMES – NUMBER, SIZE, REGION, AGE, OWNERSHIP STRUCTURE,
LINE OF BUSINESS, AND HIERARCHICAL LEVEL OF RESPONDENTS .................................................. 92
5.2.1
Number of Surveyed SMEs and Their Division According to Size ........................................ 92
5.2.2
Region of the Seat of Surveyed SMEs .................................................................................... 93
5.2.3
Classification of Surveyed SMEs According to Years of Operation ...................................... 93
5.2.4
Ownership Structure of Surveyed SMEs ................................................................................ 94
5.2.5
Classification of Surveyed SMEs According to Their Line of Business ................................. 94
5.2.6
Hierarchical Level of Respondents ....................................................................................... 95
5.3 GENERAL RESULTS OF THE RESEARCH ............................................................................................ 96
5.3.1
General Awareness of Corporate Social Responsibility........................................................ 97
5.3.2
Acceptance of Corporate Social Responsibility Principles ................................................... 99
5.3.3
Measurement of Corporate Social Responsibility ............................................................... 103
5.3.4
Degree of Involvement of SMEs in Socially Responsible Activities towards Internal
Community ......................................................................................................................... 104
5.3.5
Degree of Involvement of SMEs in Socially and Environmentally Responsible Activities
towards External Community ............................................................................................ 106
CHAPTER 6.
6.1
6.2
6.3
6.4
6.5
DESCRIPTION OF INTERNAL DIMENSION OF SOCIALLY RESPONSIBLE ACTIVITIES USED BY SMES 113
CHARACTERISTICS OF SMES´ INTERNAL DIMENSION OF SOCIALLY RESPONSIBLE ACTIVITIES ..... 118
REASONS FOR INVOLVEMENT IN INTERNAL DIMENSION OF SOCIALLY RESPONSIBLE ACTIVITIES . 122
BENEFITS IDENTIFIED BY SMES FROM THEIR PARTICIPATION ON INTERNALLY TARGETED SOCIALLY
RESPONSIBLE ACTIVITIES .............................................................................................................. 125
BARRIERS TO THE PARTICIPATION ON INTERNALLY TARGETED SOCIALLY RESPONSIBLE ACTIVITIES
126
CHAPTER 7.
7.1
SPECIFIC RESULTS OF OWN RESEARCH: INTERNAL DIMENSION OF
CORPORATE SOCIAL RESPONSIBILITY .................................................. 112
SPECIFIC RESULTS OF OWN RESEARCH: EXTERNAL DIMENSION OF
CORPORATE SOCIAL RESPONSIBILITY .................................................. 129
DESCRIPTION OF EXTERNAL DIMENSION OF SOCIALLY AND ENVIRONMENTALLY RESPONSIBLE
ACTIVITIES USED BY SMES ........................................................................................................... 130
iii
7.1.1
Involvement in Wide-Ranging Activities of External Dimension of Corporate Social
Responsibility ..................................................................................................................... 130
7.1.2
Forms of Support of Socially and Environmentally Responsible Activities......................... 131
7.1.3
Forms of Public Support of External Dimension of CSR Realized by SMEs ....................... 134
7.2 CHARACTERISTICS OF SMES´ EXTERNAL DIMENSION OF SOCIALLY AND ENVIRONMENTALLY
RESPONSIBLE ACTIVITIES .............................................................................................................. 135
7.3 REASONS FOR INVOLVEMENT IN EXTERNAL DIMENSION OF SOCIALLY AND ENVIRONMENTALLY
RESPONSIBLE ACTIVITIES .............................................................................................................. 143
7.4 BENEFITS IDENTIFIED BY SMES FROM THEIR PARTICIPATION ON EXTERNAL DIMENSION OF
SOCIALLY AND ENVIRONMENTALLY RESPONSIBLE ACTIVITIES .................................................... 147
7.5 BARRIERS TO THE PARTICIPATION ON EXTERNALLY TARGETED SOCIALLY AND ENVIRONMENTALLY
RESPONSIBLE ACTIVITIES .............................................................................................................. 151
7.6 FUTURE EXPECTATIONS ON INVOLVEMENT OF SMES IN EXTERNAL DIMENSION OF SOCIALLY AND
ENVIRONMENTALLY RESPONSIBLE ACTIVITIES ............................................................................. 153
CHAPTER 8.
RECOMMENDATIONS FOR SMALL AND MEDIUM-SIZED COMPANIES
HOW TO IMPLEMENT CORPORATE SOCIAL RESPONSIBILITY CONCEPT
....................................................................................................................... 155
8.1 SCOPE OF CORPORATE SOCIAL RESPONSIBILITY INVOLVEMENT ................................................... 155
8.1.1
Marketplace ......................................................................................................................... 157
8.1.2
Workplace............................................................................................................................ 158
8.1.3
Community .......................................................................................................................... 159
8.1.4
Environment ........................................................................................................................ 160
8.2 TEN STEPS HOW TO ADOPT AND IMPLEMENT CORPORATE SOCIAL RESPONSIBILITY CONCEPT IN
SMALL AND MEDIUM-SIZED COMPANIES ...................................................................................... 161
8.2.1
Planning Phase ................................................................................................................... 163
8.2.2
Execution Phase .................................................................................................................. 174
8.2.3
Evaluation Phase................................................................................................................. 175
8.2.4
Improvement Phase ............................................................................................................. 181
CHAPTER 9.
CONCLUSIONS ............................................................................................ 182
9.1 CONCLUSIONS - THEORETICAL PART ............................................................................................. 182
9.1.1
Defining Corporate Social Responsibility ........................................................................... 182
9.1.2
Dimensions of Corporate Social Responsibility and Corporate Social Responsibility
Initiatives ........................................................................................................................... 182
9.1.3
Aspects of Corporate Social Responsibility ......................................................................... 183
9.1.4
Corporate Social Responsibility in the Czech Republic ...................................................... 183
9.2 CONCLUSIONS - SUMMARY OF THE AUTHOR’S OWN RESEARCH.................................................... 184
9.2.1
General Aspects of Corporate Social Responsibility in Czech SMEs .................................. 184
9.2.2
Internal Dimension of Corporate Social Responsibility in Czech SMEs ............................. 186
9.2.3
External Dimension of Corporate Social Responsibility in Czech SMEs ............................ 188
9.3 CONCLUSIONS - GENERAL STEPS HOW TO IMPLEMENT CORPORATE SOCIAL RESPONSIBILITY IN
CZECH SMES ................................................................................................................................. 191
9.3.1
Considering Strategic Approach to Corporate Social Responsibility in Czech SMEs ........ 191
9.3.2
Proposal of Ten Steps How to Implement Corporate Social Responsibility in Czech SMEs ....
........................................................................................................................................... 192
BIBLIOGRAPHY ....................................................................................................................... 193
APPENDIX
....................................................................................................................... 204
APPENDIX I: GLOSSARY OF TERMS ...................................................................................................... 204
APPENDIX II: EXAMPLE OF THE QUESTIONNAIRE ON CORPORATE SOCIAL RESPONSIBILITY DESIGNED FOR
SMALL AND MEDIUM-SIZED COMPANIES ...................................................................................... 209
APPENDIX III: EXAMPLES OF COMPANY VALUES AND PRINCIPLES ........................................................ 216
iv
List of Tables
Table 2.1: Principal public sector roles in relation to Corporate Social Responsibility ................ 25
Table 2.2: Political development and milestones in CSR area at the European level................. 33
Table 2.3: Main indicators of European non-financial business economy broken down by size of
a company (2004; % share of total) ............................................................................ 48
Table 2.4: Key indicators for enterprises in the non-financial business economy in the EU-27 .. 50
Table 2.5: Detail information on number and value added of SMEs in the Czech Republic ....... 50
Table 5.1: Absolute and relative number of surveyed companies in the analysed sample, sorted
by size of the company ............................................................................................... 93
Table 5.2: Absolute and relative number of surveyed SMEs in the analysed sample, sorted by
region of the seat and size of the company ................................................................ 93
Table 5.3: Absolute and relative number of surveyed SMEs in the analysed sample, sorted by
age (years of operation) and size of the company ..................................................... 94
Table 5.4: Absolute and relative number of surveyed SMEs in the analysed sample, sorted by
ownership structure and size of the company ............................................................ 94
Table 5.5: Absolute and relative number of surveyed SMEs in the analysed sample, sorted by
line of business and size of the company ................................................................... 95
Table 5.6: Absolute and relative number of persons who filled out the questionnaire, sorted by
hierarchical level and size of the company ................................................................. 96
Table 5.7: Knowledge of Corporate Social Responsibility concept by the company (respondent),
sorted by size of the company .................................................................................... 97
Table 5.8: Knowledge of Corporate Social Responsibility concept by the company (respondent),
sorted by hierarchical level of the person who filled out the questionnaire and size of
the company ............................................................................................................... 98
Table 5.9: Knowledge of Corporate Social Responsibility concept by the company (respondent),
sorted by region of the seat of the company .............................................................. 98
Table 5.10: Acceptance of basic idea of Corporate Social Responsibility concept by the company
(respondent), sorted by size of the company ............................................................. 99
Table 5.11: Acceptance of basic idea of Corporate Social Responsibility concept by the company
(respondent), sorted by region of the seat of the company ...................................... 100
Table 5.12: Acceptance of basic idea of Corporate Social Responsibility concept by the company
(respondent), sorted by hierarchical level of the person who filled out the
questionnaire ............................................................................................................ 100
Table 5.13: Acceptance of basic idea of Corporate Social Responsibility concept by the company
(respondent), sorted by ownership structure of the company .................................. 101
Table 5.14: Knowledge of documents or organizations (particularly non-profit) dealing with CSR
by the company (respondent), sorted by size of the company ................................. 101
Table 5.15: Need for generally accepted and transparent methodology how to implement CSR in
the company, sorted by size of the company ........................................................... 102
Table 5.16: Overview of company’s personnel authorized/responsible for the coordination of CSR
activities, sorted by size of the company .................................................................. 103
Table 5.17: Measurement and evaluation of CSR by the company, sorted by size of the company
.................................................................................................................................. 103
Table 6.1: Percentage of SMEs involved in wide-ranging activities of internal dimension of CSR
in 2008, sorted by size of the company and including an average for all SMEs ...... 114
v
Table 6.2: Percentage of SMEs involved in supporting of employees and/or family members in
various activities of internal dimension of CSR in 2008, sorted by size of the company
and including an average for all SMEs ..................................................................... 116
Table 6.3: Forms of further education of employees supported by SMEs, sorted by size of the
company and including an average for all SMEs ..................................................... 117
Table 6.4: Comparison of SMEs with/without strategy for internal dimension of CSR and
with/without corporate strategy in 2008 including an average for all SMEs ............. 119
Table 6.5: Degree of importance of socially responsible and ethical behaviour towards
employees for SMEs, sorted by size of the company and including an average for all
SMEs ........................................................................................................................ 120
Table 6.6: Analysis of SMEs for which socially responsible and ethical behaviour towards
employees was very important, sorted by ownership structure and line of business121
Table 6.7: Major drivers for implementing of socially responsible and ethical behaviour towards
employees, sorted by size of the company and including an average for all SMEs 123
Table 6.8: Major benefits for SMEs arising from implementing socially responsible and ethical
behaviour towards employees, sorted by size of the company and including an
average for all SMEs ................................................................................................ 125
Table 6.9: Major barriers for SMEs for implementing socially responsible and ethical behaviour
towards employees, sorted by size of the company and including an average for all
SMEs ........................................................................................................................ 127
Table 7.1: Percentage of SMEs involved in wide-ranging activities of external dimension of CSR
in 2008, sorted by size of the company and including an average for all SMEs ...... 130
Table 7.2: Forms of support of socially responsible activities used by SMEs in terms of external
dimension of CSR, sorted by size of the company and including an average for all
SMEs ........................................................................................................................ 132
Table 7.3: Forms of support of environmentally responsible activities used by SMEs in terms of
external dimension of CSR, sorted by size of the company ..................................... 133
Table 7.4: Forms of public support the SMEs* have received during last 3 years (2005 – 2008)
for their external dimension of CSR, sorted by size of the company ........................ 135
Table 7.5: Degree of importance of socially responsible and ethical behaviour towards
environment and community for SMEs, sorted by size of the company and including
an average for all SMEs ........................................................................................... 136
Table 7.6: SMEs´ strategic approach to socially and environmentally responsible activities
(external dimension of CSR), sorted by size of the company and including an average
for all SMEs ............................................................................................................... 136
Table 7.7: European SMEs´ strategic approach to socially and environmentally responsible
activities (external dimension of CSR), sorted by size of the company and including
an average for all SMEs ........................................................................................... 137
Table 7.8: Percentage of SMEs with and without strategy for external dimension of CSR* in
2008, sorted by size of the company and including an average for all SMEs .......... 138
Table 7.9: Manner, how SMEs carry out socially and environmentally responsible activities
(external dimension of CSR), sorted by size of the company and including an average
for all SMEs ............................................................................................................... 138
Table 7.10: Acceptance of idea that SMEs can more effectively apply CSR on a local level than
large and multinational corporations, sorted by size of the company and including an
average for all SMEs ................................................................................................ 140
Table 7.11: Awareness of local issues and willingness of SMEs to offer help in solving these
issues, sorted by size of the company and including an average for all SMEs ........ 140
Table 7.12: The most influenced groups by SMEs´ CSR activities*, sorted by size of the company
and including an average for all SMEs ..................................................................... 141
vi
Table 7.13: Degree how SMEs provide information about company’s CSR activities*, sorted by
size of the company and including an average for all SMEs .................................... 142
Table 7.14: Major drivers for implementing socially responsible activities* towards external
community, sorted by size of the company and including an average for all SMEs 144
Table 7.15: Major drivers for implementing environmentally responsible activities* towards
external community, sorted by size of the company and including an average for all
SMEs ........................................................................................................................ 146
Table 7.16: Major benefits for SMEs arising from the support of socially responsible activities*
aimed at external community, sorted by size of the company and including an
average for all SMEs ................................................................................................ 148
Table 7.17: Major benefits for SMEs arising from the support of environmentally responsible
activities* aimed at external community, sorted by size of the company and including
an average for all SMEs ........................................................................................... 150
Table 7.18: Major barriers for SMEs for implementing CSR activities (both social and
environmental) towards external communities, sorted by size of the company and
including an average for all SMEs ............................................................................ 152
Table 7.19: Future involvement of SMEs in external dimension of socially and environmentally
responsible activities, sorted by size of the company and including an average for all
SMEs ........................................................................................................................ 154
vii
List of Figures
Figure 1.1: Pyramidal Structure of Corporate Social Responsibility ............................................. 12
Figure 1.2: The Continuum of Business Behaviour, from Corporate Social Irresponsibility to
Corporate Social Responsibility .................................................................................. 15
Figure 1.3: Stakeholder Model ...................................................................................................... 19
Figure 2.1: Two contrasting models of Corporate Social Responsibility ...................................... 26
Figure 2.2: Division of enterprises in the EU according to their size (in % from total) .................. 47
Figure 2.3: Division of enterprises in the EU according to number of employed persons, sorted
according to their size (in % from total) ...................................................................... 49
Figure 3.1: Three Fundamental Levels of Corporate Social Responsibility .................................. 55
Figure 3.2: Relations among cause related marketing, marketing, corporate community
investment, philanthropy, and Corporate Social Responsibility ................................. 69
Figure 5.1: Hierarchical level of the person who filled out the questionnaire (in relative value) ... 96
Figure 5.2: Percentage of SMEs involved in internal dimension of CSR in 2008, sorted by size of
the company including an average for all SMEs ...................................................... 105
Figure 5.3: Percentage of SMEs involved in internal dimension of CSR in 2008, sorted by region
of the seat of the company including an average for all SMEs ................................ 105
Figure 5.4: Percentage of European SMEs involved in external dimension of CSR in 2001, sorted
by size of the company including an average for all SMEs ...................................... 106
Figure 5.5: Percentage of SMEs involved in external dimension of CSR in 2008, sorted by size of
the company including an average for all SMEs ...................................................... 107
Figure 5.6: Percentage of SMEs involved in external dimension of CSR in 2008, sorted by region
of the seat of the company including an average for all SMEs ................................ 107
Figure 5.7: Percentage of SMEs involved in external dimension of CSR in 2008, sorted by sector
of the company including an average for all SMEs .................................................. 108
Figure 5.8: Percentage of SMEs involved in external dimension of CSR in 2008, sorted by
age/years of operation of the company including an average for all SMEs ............. 109
Figure 5.9: Percentage of SMEs involved in external dimension of CSR in 2008, sorted by
ownership structure of the company including an average for all SMEs .................. 109
Figure 5.10: Percentage of SMEs involved in external dimension of CSR in 2008 based on ISO
Certification, sorted by size of the company and including an average for all SMEs 110
Figure 5.11: Percentage of SMEs involved in external dimension of CSR in 2008 based on defined
corporate strategy and including an average for all SMEs ....................................... 111
Figure 6.1: Percentage of SMEs with and without strategy for internal dimension of CSR in 2008,
sorted by size of the company and including an average for all SMEs .................... 118
Figure 7.1: Percentage of SMEs that have received public support (incentive/subsidy) for their
external dimension of CSR during last 3 years, sorted by size of the company ...... 134
Figure 7.2: SMEs´ plans regarding participation in external dimension of CSR for the next three
years, percentage of all SMEs .................................................................................. 154
Figure 8.1: Three levels and four areas of corporate social responsibility ................................. 156
Figure 8.2: Diagram how to implement corporate social responsibility concept in SMEs in ten
steps ......................................................................................................................... 162
viii
Figure 8.3: Example of a list of stakeholders associated with four different areas of corporate
social responsibility ................................................................................................... 164
Figure 8.4: An explanation and overview of the roles played by the stakeholders throughout the
four stages of the CSR implementation process ...................................................... 166
Figure 8.5: Stakeholder influence and dependency matrix (the so-called Stakeholder Matrix) . 167
Figure 8.6: Examples of interests of different types of key stakeholders in corporate social
responsibility key issues ........................................................................................... 169
Figure 8.7: Examples of tools and techniques a company can use for stakeholders´ engagement
.................................................................................................................................. 170
Figure 8.8: Examples of key company (corporate) values .......................................................... 172
Figure 8.9: Examples of company’s corporate social responsibility objectives categorized into
four CSR areas ......................................................................................................... 173
Figure 8.10: Examples of specific corporate social responsibility activities that are related to the
accomplishment of planned corporate social responsibility objectives .................... 174
Figure 8.11: Examples of indicators used for the evaluation of results of a company’s corporate
social responsibility activities .................................................................................... 175
Figure 8.12: Examples of reported results of the company’s corporate social responsibility
activities .................................................................................................................... 177
Figure 8.13: Examples of improvement measures for the company’s corporate social responsibility
activities .................................................................................................................... 181
ix
Corporate Social Responsibility in Small and Medium-Sized
Companies in the Czech Republic
Doctoral Candidate: David Polášek
Doctoral Advisor: Dr. Cesar Duch, Ph.D.
CZECH MANAGEMENT INSTITUTE PRAHA
Faculty of Management of
ESCUELA SUPERIOR DE MARKETING Y ADMINISTRACIÓN BARCELONA
Abstract
This dissertation paper focuses on corporate social responsibility (CSR) in small and
medium-sized enterprises (SMEs) operating in the Czech Republic. Theoretical part
provides an overview on CSR including definition of CSR, history and development of
CSR in the Czech Republic, Europe, and in other parts of the World, characteristics of
CSR in SMEs, levels and dimensions of CSR, CSR initiatives, and essentials of
measurement and reporting on CSR. This part also summarizes recent global, European
and Czech surveys on CSR. Practical part was motivated by the ambition to extend the
present research outcomes on CSR through the author’s own survey exclusively oriented
on SMEs operating in the Czech Republic. Author’s own research explores specifics of
internal and external dimensions of CSR in SMEs operating in the Czech Republic and
presents interesting and valuable conclusions. The paper concludes that CSR in SMEs
operating in the Czech Republic has been well rooted, nevertheless it lacks strategic
dimension. The practical part also provides a general guide to responsible business
(introduction of engagement concept, how to implement CSR in Czech SMEs), which
includes steps, how to identify and apply principles of corporate social responsibility in
micro, small, and medium-sized companies.
Key words:
corporate social responsibility (CSR), external dimension of corporate
social responsibility, internal dimension of corporate social responsibility,
small and medium-sized company (SME), stakeholders
x
Declaration
I declare that this thesis is my own work and has not been submitted in any form for
another degree or diploma at any university or other institute of tertiary education.
Information derived from the published and unpublished work of others has been
acknowledged in the text, and a list of references is given. Used information sources and
background materials are quoted in the enclosed list of bibliography.
_______________________________
David Polášek, M.B.A.
10 October, 2009
xi
Acknowledgements
At the beginning, I would like to express my appreciation to Dr. Cesar Duch, PhD. for his
great advice during my doctoral research endeavour for the past one and a half year. As
my doctoral advisor and supervisor, he has constantly forced me to remain focused on
achieving my goal. His observations and comments helped me to establish the overall
direction of the doctoral paper and to move forward with investigation in depth.
Sincerely I would like to thank to Prof. Ing. Jiří Dvořáček, CSc., a former dean of the
Czech Management Institute Praha - Faculty of Management of Escuela Superior de
Marketing y Administración Barcelona, who helped me to start my doctoral dissertation
and provided me with insight into managerial finance and business management during
his courses of these subjects.
I also thank to all teachers and staff from the Czech Management Institute Praha for their
support during my doctoral study.
Last, but not least, I would like to dedicate this thesis to my family, my fiancée Jaroslava
Pibilová and son Adam, for their love, patience, understanding, and for allowing me to
spend most of the time on this thesis.
xii
Introduction
Businesses worldwide are increasingly worried about the impact of their business
activities on society. They also recognize that the world they live in presents a growing
array of demands, pressures and risks that are not signalled through markets or the
traditional political processes on which they have relied for a very long time. Thus, many
have implemented into their operation the so-called corporate social responsibility
(hereinafter also CSR) that aim to balance their operations with the concerns of internal
and external stakeholders such as employees, customers, suppliers and business
partners, labour unions, local communities, non-governmental organizations (hereinafter
also NGOs) and governments. By its very nature CSR is a complex, multiform
phenomenon emerging as the interface between enterprises and society. Social and
environmental consequences have started to being weighed against economic gains and
short-term profit against long-term prosperity by the businesses in order to maintain longterm sustainable growth and development.
With growing sensitivity towards social and environmental issues and shareholder and
owner concerns that can be effectively addressed through internal and external
dimension of CSR, businesses are increasingly striving to become better “corporate
citizens”, i.e. appropriately grasping and implementing CSR concept.
But whilst many agree that CSR is the right thing for businesses to implement and follow,
proponents often grow uncomfortable when explaining the business case for “doing
good”. The costs associated with CSR programmes are clear but the positive correlation
with better financial performance is often hard to prove. In any case, proponents may
argue and are finding a solid ground that the objectives of CSR go beyond short-term
economic gains and are mainly focused on a long-term prosperity and sustainability of
enterprises.
It is also important to mention a significant role of governments in fostering social justice
and environmental protection and ensuring social development. Hence, we have to avoid
a tendency to replace role of the government with role of companies. In this respect CSR
should be seen as extra opportunity for companies in competitive markets. On the other
hand also companies can, and in the author’s opinion should, undeniably complement
and supplement the efforts of governments at social and environmental development
because these matters concern all – citizens, governments, entrepreneurs, companies,
and all kinds of organizations.
For Czech people as well as Czech companies, ethical and corporate social
responsibility issues are relatively new, when as less than two decades ago Czechs
1
made the first half-hearted attempts in order to set up their own private businesses and
build their own careers as entrepreneurs after a fall of the communist regime at the end
of the year 1989. Since then corporate social responsibility has made a great progress
and found a solid ground amongst Czech companies and entrepreneurs.
This doctoral paper is focused on issues of corporate social responsibility in micro, small,
and medium-sized companies (hereinafter also SMEs) operating in the Czech Republic.
SMEs took the center of attention in this study since they form a backbone of the
European Union’s economy, employ 67 % of European employees and create 57 % of
European value added. According to the Eurostat, there was registered around 23 million
enterprises in the European Union in 2005, of which 91,4 % formed micro, 7,3 % small,
1,1 % medium, and only 0,2 % large companies. According to the CEVRO Institute1,
SMEs in the Czech Republic employed more than 62 % of all employees and made more
than 53 % of value added in 2007.
Despite SMEs´ eminent position in the European economy, a majority of research and
professional literature were focused on CSR concept as such and on activities and
relations of large and multinational companies. This paper was motivated by the ambition
to extend the present research outcomes on CSR through an own survey exclusively
oriented on SMEs operating in the Czech Republic.
The investigations into the practice of SMEs utilizing to various degrees CSR concept
may serve, among others, as a rich source of information and suggestions for other, in
this respect, less developed SMEs that might decide to adopt or increase their
involvement in CSR. The paper did not attempt to provide SMEs with a detailed and
guaranteed list of CSR activities that would suit to each and every individual SME
company, since it is almost impossible to comprehend all specifics of each and every
company. Rather the paper concentrates on general principles and tried-and-true
approaches to CSR concept that can be grasped and used by Czech SMEs as a
springboard towards excellence in CSR. The paper also provides a guide to responsible
business, which includes ten steps how to identify and apply principles of corporate
social responsibility in micro, small, and medium-sized companies. The author believes
the introduced CSR implementation concept can enrich Czech SME business community
and bring also competitive advantages for those SMEs, which would like to engage
themselves strategically in CSR or have already been involved.
The paper is divided into eight main chapters and each of them is further divided into
several subchapters. The theoretical background of CSR including a summary of recent
1
CEVRO Institute is part of the CEVRO - Liberal Conservative Academy, officially registered in Prague in 1999. The
Institute is focused on education and lifelong enhancement of the knowledge and skills, free exchange of experience and
knowledge on domestic and international levels, breaking through the barriers between political, academic,
entrepreneurial, media and civil spheres as well as among various groups of the population.
2
surveys on this topic forms the content of the first four chapters. The following four
chapters are focused on summarizing results of the author’s own research and
introduction of engagement concept how to implement CSR in Czech SMEs.
The more detail structure of the paper is as follows. Chapter 1 consists of five main
subchapters and it defines concept of CSR including its historical and current
development, defines stakeholder concept and its relation to CSR and tries to explain
what CSR is not. Chapter 2 is divided into five main subchapters and it elaborates on
perspectives of CSR, particularly role of government in CSR, global dimension of CSR,
characteristics of CSR in Europe and Czech Republic, and corporate social responsibility
from SMEs´ perspective. Chapter 3 is composed of four principal subchapters, which
deal with three fundamental levels of CSR, internal and external dimension of CSR, and
six forms of corporate social responsibility initiatives, and provide general information on
evaluating and reporting on CSR. Chapter 4 consists of three main subchapters and it
presents a brief overview of surveys on CSR that were conducted in the Czech Republic,
Europe and worldwide between years 2002 and 2008. It has to be stressed that this
overview is not exhaustive and does not include all surveys that were executed in these
years. Chapter 5 is composed of three main subchapters, which describe methodology of
the author’s own research on corporate social responsibility in Czech SMEs that forms
the pivotal part of this paper, and present general results of this research. Chapter 6 is
divided into five principal subchapters and it provides specific results of the author’s own
research focused on internal dimension of CSR. Chapter 7 consists of six key
subchapters and it provides specific results of the author’s own research focused on
external dimension of CSR. Chapter 8 is divided into two main subchapters and provides
a guide to responsible business including steps how to identify and apply principles of
corporate social responsibility in micro, small, and medium-sized companies. Finally,
Chapter 9 provides conclusions of the whole dissertation paper. At the end of the
dissertation paper part Bibliography offers a review of used information sources and
enclosed Appendix provides necessary supporting materials and information including a
glossary of selected terminology.
3
Chapter 1.
Corporate Social Responsibility Concept
1.1 Definition of Corporate Social Responsibility
1.1.1 Defining Corporate Social Responsibility
Defining Corporate Social Responsibility (hereinafter also CSR) has not been and will not
be an easy task as there the most likely will not be a generally agreed definition. There
seems to be an infinite number of definitions of CSR, ranging from the simplistic to the
complex ones, and a range of associated terms and ideas. In some cases the definition
has been distorted by researchers so much that the concept becomes morally vacuous,
conceptually meaningless, and utterly unrecognizable or CSR may be regarded as the
panacea, which will solve the global poverty gap, social exclusion and environmental
degradation.2
One of the key challenges in studying and implementing responsible business practices
has been the lack of commonly agreed definition of CSR. The term CSR is often used
interchangeably with others, including corporate responsibility, corporate citizenship,
business in society, social enterprise, sustainability, sustainable development, triple
bottom line, societal value-added, strategic philanthropy, corporate ethics, and in some
cases also corporate governance.3 There are also clear links between these terms and
those relating to socially responsible investments, community investing, social capital,
and collaborative governance. In the business community, CSR is alternatively referred
to as corporate citizenship, which essentially means that a company should be a “good
neighbour” within its host community. The experts in each of these areas can offer sound
reasons, why their term is different from the others. However, it is not within the scope of
this dissertation to review all these different definitions and their mutual connections, but
to provide a summarized opinion on CSR’s definition and its “synonyms”.
A solid ground for a modern definition of CSR can provide the United Nations Global
Compact's ten principles in the areas of human rights, labour, the environment and anticorruption. These principles enjoy universal consensus and basically have been derived
from the Universal Declaration of Human Rights, the International Labour Organization's
Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on
Environment and Development4, and the United Nations Convention against Corruption.
2
Thomas, G., Nowak, M. (2006), GSB Working Paper No.62, Corporate Social Responsibility: A definition, available at:
http://www.cbs.curtin.edu.au/files/GSB_Working_Paper_No._62_Corp_Social_Resp_A_definition_Thomas___Nowak.pdf
3
Nelson, J. (2004), The Public Role of Private Enterprise: Risks, Opportunities, and New Models of Engagement,
available at: http://www.hks.harvard.edu/m-rcbg/CSRI/publications/workingpaper_1_nelson.pd
4
A short document produced at the 1992 United Nations Conference on Environment and Development and informally
known as the Earth Summit. The Rio Declaration consisted of 27 principles intended to guide future sustainable
development around the world.
4
The Global Compact asks companies to embrace, support and enact, within their sphere
of influence, a set of following core values in the following areas:

Human Rights:
o
Principle 1:
Businesses should support and respect the protection of
internationally proclaimed human rights; and
o

Principle 2:
make sure that they are not complicit in human rights abuses.
Labour Standards:
o
Principle 3:
Businesses should uphold the freedom of association and the
effective recognition of the right to collective bargaining;
o
Principle 4:
the elimination of all forms of forced and compulsory labour;
o
Principle 5:
the effective abolition of child labour; and
o
Principle 6:
the elimination of discrimination in respect of employment and
occupation.

The Environment:
o
Principle 7:
Businesses should support a precautionary approach to
environmental challenges;
o
Principle 8:
undertake
initiatives
to
promote
greater
environmental
responsibility; and
o
Principle 9:
encourage the development and diffusion of environmentally
friendly technologies.

Anti-Corruption:
o
Principle 10:
Businesses should work against corruption in all its forms,
including extortion and bribery.5
Often quoted definition of CSR provides Philip Kotler. In his view, “CSR is a commitment
to improve community well-being through discretionary business practices and
contributions of corporate resources”6. A key element in his definition is the word
discretionary, which refers to a voluntary commitment a business makes in choosing and
implementing
socially
and
environmentally
responsible
practices
and
making
contributions. The term community well-being, according to Kotler, includes human
conditions as well as environmental issues. Kotler also uses the term corporate social
initiatives to describe efforts under the CSR umbrella and offers the following definition:
“Corporate social initiatives are major activities undertaken by a corporation to support
social causes and to fulfil commitments to corporate social responsibility”.6 Causes that
5
The United Nations Global Compact Office (2008), Corporate Citizenship in the World Economy, available at:
http://www.unglobalcompact.org/docs/news_events/8.1/GC_brochure_FINAL.pdf
6
Kotler, P., Lee, N. (2005), Corporate Social Responsibility – Doing the Most Good for Your Company and Your Cause,
New Jersey, USA, page 3-4
5
can be supported through these initiatives are those that contribute to: (a) community
health, safety, education, and employment; (b) the environment; (c) community and
economic development and other basic human needs.
Sir Geoffrey Chandler, a former Shell executive, defined CSR as “transparent business
practices that are based on ethical values, compliance with legal requirements, and
respect for people, communities, and the environment.”7 Thus, beyond making profits,
companies are responsible for the totality of their impact on people and the planet.
People in Chandler’s definition constitute the company’s stakeholders.
The International Labour Organization (ILO) described on its website CSR as “a way in
which enterprises give consideration to the impact of their operations on society and
affirm their principles and values both in their own internal methods and processes and in
their interaction with other actors” and further specified CSR as “a voluntary, enterprisedriven initiative, which refers to activities that are considered to exceed compliance with
law”8.
The European Union drew up its own definition of CSR. The Green Paper of the
European Commission published in 2001 provides basically two definitions of CSR. In
the introduction it is stated that “corporate social responsibility is essentially a concept
whereby companies decide voluntarily to contribute to a better society and a cleaner
environment”. Further in the Paper CSR is described as “a concept whereby companies
integrate social and environmental concerns in their business operations and in their
interaction with their stakeholders on a voluntary basis”.9
Whereas moral philosophers such as for instance Scot David Hume, Immanuel Kant, A.
J. Ayer tend to approach term responsibility as a quality of human conduct, the EU´s
concept of CSR can be understood as an attempt to reconcile the freedom of companies
with the quest for social, economic and environmental welfare. This approach is
supposed to contribute to sustainable development as defined by the Brundtland
Commission.
In European perspective CSR strengthens mutual trust and confidence between
business and society. The relationship between both can be qualified as a symbiotic.
Moreover, being socially responsible means not only fulfilling legal expectations, but also
going beyond compliance and investing more into human capital, the environment and
the relations with stakeholders.9
7
U.S. Agency for International Development (2002), What is Corporate Social Responsibility? 8 Questions and Answers,
available at: http://www.rhcatalyst.org/site/DocServer/CSRQ_A.pdf?docID=103
8
International Labour organization (2007), Corporate Social Responsibility, available at: http://www.ilo.org/public/english
/employment/multi/corporate/index.htm
9
European Commission Directorate General for Employment and Social Affairs (2001), Promoting a European framework
for corporate social responsibility, Green Paper (COM(2001) 366 final), available at: http://ec.europa.eu/employment_
social/soc-dial/csr/greenpaper_en.pdf
6
The European approach finds ground in real life. The experience with investment in
environmentally responsible technologies and business practice has suggested that
going beyond legal compliance can contribute to companies’ competitiveness. Going
beyond basic legal obligations in the social area, e.g. training, working conditions,
management-employee relations, can also have a direct impact on productivity. It opens
a way of managing change and of reconciling social development with improved
competitiveness. Nevertheless, CSR should not be seen as a substitute to regulation or
legislation concerning social rights or environmental standards, including the
development of new and appropriate legislation.
1.1.2 Corporate Social Responsibility from Broader Perspective
Closely related to corporate social responsibility and often quoted as its final objective is
the idea of sustainable development. The principle of sustainable development isn’t too
old. In 1987 the Brundtland Commission10 offered its initial definition of “Sustainable
Development”, which is: "Development that meets the needs of the present, without
compromising the ability of future generations to meet their needs."11 In general terms,
sustainable development refers to large global problems, like population control, global
climate change, pollution of the environment, water shortage, and human rights issues.
Essentially, it's about systems and limits. Sustainability in the corporate context refers to
what corporations can contribute to solving these global problems. And one of the most
important means that a company can utilize in fighting global issues and directing
company to sustainable development is CSR concept.
Shortly after the idea of sustainable development became more rooted in the business
environment, the idea of sustainable growth has emerged. Today business world does
not speak about quantitative or qualitative growth, but rather about sustainable growth.
Lets quote Chad Holliday’s, former Chairman and CEO of DuPont corporation, definition
of sustainable growth: “As we think about the new century, we have determined that our
central focus must be on sustainable growth. By this I mean, we must create both
shareholder and societal value while we reduce our environmental footprint. And, this
must be viewed along the entire value chains in which we operate. Sustainable growth is
our operational definition of sustainable development. However, we believe business
10
The Brundtland Commission, formally the World Commission on Environment and Development, named by its Chair
Gro Harlem Brundtland, was convened by the United Nations in 1983. The Commission was created to address growing
concern about the accelerating deterioration of the human environment and natural resources and the consequences of
that deterioration for economic and social development. In establishing the Commission, the UN General Assembly
recognized that environmental problems were global in nature and determined that it was in the common interest of all
nations to establish policies for sustainable development.
11
World Commission on Environment and Development (1987), Report of the World Commission on Environment and
Development: Our Common Future, available at: http://www.un-documents.net/ocf-02.htm
7
growth is every bit as essential in this equation as is sustainability. In the 21st century,
we will not have one without the other. Economic growth will remain a central element of
successful corporations and successful societies, but the environmental aspect of growth
in the future must be different than in the past.”12
Anthony Corsano, holder of the Ernst & Young Metro New York Entrepreneur of the Year
2008 Award, sees corporate responsibility in part of every business decision the
company makes. Corsano argues, “Whether it’s analyzing energy consumption to reduce
carbon footprint, or simply improving the communities in which employees work,
behaving like a good corporate citizen is critical to creating a sustainable business
model”. Regarding benefits, he adds: “It saves money, it engenders employee loyalty, it
attracts better employees and in every way it makes us a better business.”13 According to
Corsano, business managers have to include into their decision-making process CSR
aspects as well in order to make their business sustainable, i.e. survive in constantly
changing, developing and sometimes hostile business environment.
Some authors use instead of the term Corporate Social Responsibility the collocation
“triple bottom line” to describe CSR from a broader perspective. However, in my opinion
and in opinion of other authors, the phrase triple bottom line relates more or less to
reporting only than to the whole CSR agenda. According to John Elkington, author of the
book Cannibals With Forks and the inventor of the term, “triple bottom line” (or in other
words "People, Planet, Profit") captures an expanded spectrum of values and criteria for
measuring organizational (and societal) success: economic, environmental and social. In
practical terms, triple bottom line accounting means expanding the traditional reporting
framework to take into account environmental and social performance in addition to
financial performance.14
1.2 Historical
Development
Responsibility Concept
1.2.1 Era Preceding
Responsibility
Current
of
the
Concept
Corporate
of
Corporate
Social
Social
The desire to create positive social change in the corporate world is not necessarily a
new phenomenon, although current social, political, economic, and ideological conditions
inflect it in specific ways today. Questions regarding the nature, scope, and impact of
12
Chad Holliday (2000), Business Growth and Sustainability – Challenges for the New Century, Chairman and CEO of
DuPont, at the Nikkei Ecology Magazine Anniversary Symposium of the Global Roundtable on Environment and Business,
Tokyo, available at: http://www.wbcsd.ch/includes/getTarget.asp?type=d&id=ODg5NQ
13
Anthony Corsano (2008), Speech: On the Right Thing to Do, CEO of Anvil Knitwear, Inc., Available at:
http://www.bsr.org/resources/BW_2008CSRSection.pdf
14
Brown, D., at al. (2006), Triple Bottom Line: A business metaphor for a social construct, Document de Treball núm.
06/2, available at: http://www.recercat.net/bitstream/2072/2223/1/UABDT06-2.pdf
8
organizations have been present in various forms for centuries, ranging across the
classical, medieval, mercantile, industrial, and corporate eras. Although seldom
acknowledged, the corporate form and the modern labour union both grew out of late
medieval guilds.15
An important milestone in the history of CSR was an Industrial Revolution (late 18th and
19th centuries) and industrialization in 19th and 20th century generally. In that time largescale corporations began to emerge with their activities increasingly affecting their
communities, society, and environment. This fact evocated and intensified debates on
the appropriateness of their actions. As the result of these debates new legislations
became enacted – regulating formation of trusts, use of child labour, labour safety, etc.
As the reaction to the public critics on system of factory labour, industrialists developed
“industrial welfare programmes” that provided education, recreation, and socialization of
workers, and were seeking to produce simultaneously good workers and good citizens.
One such pioneer was Robert Owen, who in the early 1800s set up a series of social
villages around his textile mills in Scotland. These villages catered for the education of
employees and their children as well as providing health care, food cooperatives,
banking facilities and leisure activities. The doctrine of “Owenism” became so popular
that it was soon exported across the Atlantic to the USA where similar practices were
introduced in a number of cotton farms.16
Together with origins of CSR was also striving for its place in everyday business the
philosophical study of moral values and rules - ethics. The idea of ethics in business is
not new. It can be traced back to 19th century philanthropists, such as the early socialist
entrepreneur Robert Owen, as already mentioned, and various Quaker-owned
businesses.17, 18
In 1920s Henry Ford believed he ought to pay his workers enough to afford to buy the
cars they produced. That policy appeared to place him at disadvantage, since the wages
and job security at his plants were well in excess of the norm in the auto industry at the
time. But his decision ultimately benefited Ford Motor Company by making it an attractive
employer and by stimulating demand for its products.19 Nevertheless, what is more
important, at the same time, Ford’s move benefited wider society by raising the bar for
15
May S., Cheney G., Roper J., (2007), The debate over corporate social responsibility, Oxford University Press, Oxford,
page 4
16
Kreis, S. (2004), Lectures on Modern European Intellectual History (Robert Owen), available at:
http://www.historyguide.org/intellect/owen.html
17
The Religious Society of Friends is a movement that began in England in the 17th century. Members of this movement
are informally known as Quakers.
18
Hopkins, M. (2003), The Planetary Bargain – Corporate Social Responsibility Matters, Earthscan Publications, Ltd.,
London, page 24
19
Martin, R. (2002), The Virtue Matrix: Calculating the return on Corporate Responsibility, in Harvard Business Review on
Corporate Responsibility (2003), Boston, page 89
9
pay and labour practices across the auto industry. Thus, perhaps unwittingly, Henry Ford
used simple CSR tools without ever knowing anything about CSR concept.
Hand in hand with the above mentioned development, economic theories also moved
forward from Adam Smith’s rule of invisible hand of the market and preference of “profit
above people” via the Alfred Marshall’s theory categorizing economics as a moral
science enrooted in ethics20 to Elton Mayo emphasizing social and psychological factors
and their impact on work and also to Peter Drucker stating that profit is not the primary
goal, but rather an essential condition for the company's continued existence. The
business theorist of Norwegian origin, Thorsten Veblen, wrote about the concept of
enterprise accountability back in the 1920s in his widely quoted book, The Engineers and
The Price System.21 Another father of early corporate social responsibility theory was the
German economist Karl William Kapp who published his most acclaimed work, The
Social Costs of Private Enterprises in the 1950s, in which he openly criticised the lack of
social and environmental conscience of American enterprises.22
1.2.2 Modern History of Corporate Social Responsibility
Even though CSR has to be understood and explained as a compact complex
encompassing both internal and external dimensions and social and environmental
aspects, for a better understanding this subchapter is divided into two streams – social
and environmental. Such separation finds also support in an underlying fact that social
and environmental issues had a little different historical development and they were not
always seen as two sides of the same coin.
1.2.2.1 Social Aspects of Corporate Social Responsibility
The 1950s saw the start of the modern era of CSR when it was more commonly known
as social responsibility. In 1953, Howard Bowen published his book, Social
Responsibilities of the Businessman, and is largely credited with coining the phrase
corporate social responsibility and is perhaps the father of modern CSR. Bowen
advocated that CSR was “industry’s obligation to pursue those policies, to make those
decisions, or to follow those lines of actions which are desirable in terms of objectives
and values of society”.23 Bowen took a broad approach to business responsibilities,
20
Perrieni F., et al., (2006), Developing Corporate Social Responsibility – A European Perspective, Edward Elgar
Publishing, Inc., Northampton, page 1-2
21
Meštrović, S.G. (2003), Thorstein Veblen on Culture and Society, e-book by Google, available at:
http://books.google.com/books?id=-EcqVNbTfIEC&hl=cs
22
On-line (2008), Biographical Information K. William Kapp, available at: http://www.kwilliam-kapp.de/index.html
23
Bowd, R., et al. (2003), CSR – A Schools Approach to an Inclusive Definition: Setting the Scene for Future Public
Relations and Communications Research, Centre for Corporate and Public Affairs, Manchester Metropolitan University,
available at: http://www.cipr.co.uk/groups/special/csrnetwork/special16e_3.htm
10
including
responsiveness,
stewardship,
social
audit,
corporate
citizenship
and
fundamental stakeholder theory.24
Another thinker, management guru Peter Drucker was one of the first to explicitly
address CSR, including public responsibility as one of the eight key areas for business
objectives developed in his 1954 book, The Practice of Management. While Drucker
believed that management’s first responsibility to society involved making a profit, he felt
it was also most important that management consider the impact of every business
policy and action upon society.25
Bowen’s and Ducker’s as well as others´ conceptions were based on classical Greek
philosophy represented by Socrates and Plato. Particularly relevant is Socrates´ opinion
that managers should treat with entrusted property, as it was their own.26
A landmark in modern CSR was 1971 when the Committee for Economic Development27
(hereinafter also CED) in the USA published the report Social Responsibilities of
Business Corporations. As a code of conduct, the CED outlined a three-tiered model of
CSR:

The inner circle: the basic responsibilities an organisation has for creating profit
and growth;

The intermediate circle: an organisation must be sensitive to the changing social
contract that exists between business and society when it pursues its economic
interests; and

The outer circle: the responsibilities and activities an organisation needs to
pursue towards actively improving the social environment.28
Theoretical improvement of CSR concept ensured economist Carroll. He categorised
CSR along four layers, which he labelled economic, legal, ethical and discretionary
responsibilities. The four classes reflect that the history of business suggests an early
emphasis on the economic and then legal aspects and a later concern for the ethical and
discretionary aspects. In 1991, Carroll first presented his CSR model as a pyramid, as
shown in Figure 1.1: Pyramidal Structure of Corporate Social Responsibility” on the
following page. It was suggested that, although the components are not mutually
exclusive, it helps the manager to see that the different types of obligations are in a
24
Thomas, G., Nowak, M. (2006), GSB Working Paper No.62, Corporate Social Responsibility: A definition, available at:
http://www.cbs.curtin.edu.au/files/GSB_Working_Paper_No._62_Corp_Social_Resp_A_definition_Thomas___Nowak.pdf
25
Thomas, G., Nowak, M. (2006), GSB Working Paper No.62, Corporate Social Responsibility: A definition, available at:
http://www.cbs.curtin.edu.au/files/GSB_Working_Paper_No._62_Corp_Social_Resp_A_definition_Thomas___Nowak.pdf
26
Xenophon (380 BC), Economics, available at: http://www.perseus.tufts.edu/cgi-bin/ptext?doc=Perseus%3Aabo%3Atlg%
2C0032%2C003&query=init.
27
The Research and Policy Committee of the Committee for Economic Development was a consortium of business
leaders, academics, consultants, and government leaders who called for re-examination of business’s role in society.
28
Sbarcea, K. (2007), The evolution of CSR, available at: http://thinkingshift.wordpress.com/2007/03/27/the-evolution-ofcsr/
11
constant tension with one another.29 Very important is that the model has been
empirically tested and largely supported by the findings and that it incorporates and gives
top priority to the economic dimension as an aspect of CSR.
Even though CSR is well rooted in today’s business environment, CSR had in its modern
history and still has opponents. One of the most influential opponents was famous
economist Milton Friedman who advocated “that there is one and only one social
responsibility of business - to use its resources and engage in activities designed to
increase its profits, so long as it stays within the rules of the game, which is to say,
engages in open and free competition without deception or fraud”.30
Figure 1.1: Pyramidal Structure of Corporate Social Responsibility
Source: Figure based on lecture of Bakhsheshy, A. (2007), Corporate Citizenship, Social Responsibility,
Responsiveness, and Performance, available at: http://home.business.utah.edu/mgtab/BS-02.ppt
Even though Friedman was a strongly against CSR concept, today, we can extend his
famous opinion on CSR and in this way transform his disapproving view. Important
words in his definition of “staying within the rules of the game” in 1970 extended only to
the basic free market principles, but nowadays the list of rules of the game would be
much longer. Society’s expectations of business increase every year, and no firm can
hope to be successful without taking into account of those expectations - whether it is a
reduction in pollution, detailed contents labelling, or additional health benefits.31 The
frameworks that have built up around CSR can help companies to make sense of these
29
Visser, W. (2005), Revisiting Carroll’s CSR Pyramid: An African Perspective, available at: http://www.waynevisser.
com/chapter_wvisser_africa_csr_pyramid.pdf
30
Friedman, M. (1970), The Social Responsibility of Business is to Increase its Profits, The New York Times Magazine,
available at: http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
31
Cooper, S. (2007), CSR – Milton Friedman was right, available at: http://www.bathconsultancygroup.com/documents
/CSR%20-%20Milton%20Friedman%20was%20right.pdf
12
expectations, and achieve a balanced approach to their responsibilities. A lot has
changed since Friedman wrote his article. Today, companies are learning they can
increase profits as a result of their CSR efforts, not despite them.
1.2.2.2 Environmental Aspects of Corporate Social Responsibility
Human beings do not only assimilate with their surroundings but actively adjust them
according to their needs. The intensity and kind of such an influence followed the
development of civilization (e.g. invention of iron enabled to make tools enabling
agriculture in less convenient areas). These human beings´ actions had both positive
and negative impact. Thomas Robert Malthus (1766-1834) ranks among the pioneers
investigating the disproportion between the growth of population and available natural
sources. With growth of pollution, extinction of some species, and appearance of other
environmental problems more scientists and politicians started paying attention to the
problematic and realized, the problems are not only on the local level but have global
character (e.g. R. Carson in book Silent Spring (1962), General Secretary of the United
Nations U Thant).
The establishment and work of the association called “the Club of Rome” in 1968 meant
a significant step in the environmental problematic, crossing boundaries by including
more than 30 scientists from 10 countries into the project. Foundation stone to the
environmental politics was laid in 1972 in Stockholm at the 1st United Nations
Conference on the Human Environment (also known as the Stockholm Conference).32
The formulation of the idea of sustainable development is considered as the most
important conclusion of United Nations´ activities in 1970th and 1980th. The United
Nations was aware that the global progress cannot be stopped but must “meet the needs
of the present without compromising the ability of future generations to meet their own
needs.”33 Sustainable development can be conceptually broken into three constituent
parts:
environmental
sustainability,
economic
sustainability
and
socio-political
sustainability. Further United Nations´ summits concluding in more or less successful
results followed:

Earth Summit in Rio de Janeiro in 1992 concluding Rio Declaration on
Environment and Development, Agenda 21, Convention on Biological Diversity,
Forest Principles, Framework Convention on Climate Change.34
32
United Nations Environment Programme (1972), Report of the United Nations Conference on the Human Environment,
available at: http://www.unep.org/Documents.Multilingual/Default.asp?DocumentID=97
33
United Nations General Assembly Resolution 42/187 (1987), Report of the World Commission on Environment and
Development, available at: http://www.un.org/documents/ga/res/42/ares42-187.htm
34
Kvasničková, D., et al. (1998), Environment, Complementary Text to Basics of Ecology, Fragment, Havlíčkův Brod,
page 6-7
13

Earth Summit in Johannesburg in 2002 adopting the Johannesburg Declaration
that built on earlier declarations made at Stockholm in 1972, and in Rio de
Janeiro in 1992.
Traditionally, environmental protection has been considered to be in the public interest
and external to private life. Governments have assumed principal responsibility for
assuring environmental management, and have focused on creating and preserving a
safe environment. They have directed the private sector to adopt environmentally sound
behaviour
through
regulations,
sanctions
and
occasionally,
incentives.
When
environmental problems have arisen, the public sector has generally born the
responsibility for mitigation of environmental damage. In this approach, some have
contended that unrestricted private sector behaviour has been considered as presenting
the environmental problem. However, the roles of sectors have been changing, with the
private sector becoming an active partner in environmental protection. Many
governments and businesses are now realizing that environmental protection and
economic growth are not always in conflict.
An earlier emphasis on strict governmental regulations has ceded ground to corporate
self-regulation and voluntary initiatives. As a result the environmental aspect of CSR can
be defined as “duty to cover the environmental implications of the company’s operations,
products and facilities; duty to eliminate waste and emissions; duty to maximize the
efficiency and productivity of used resources; and duty to minimize practices that might
adversely affect the enjoyment of the country’s resources by future generations”.35
Today in the global economy, where the Internet, the news media and the information
revolution shine light on business practices around the World, companies are more
frequently judged on the basis of their environmental stewardship. Increasingly business
partners, governments and consumers want to know what is inside a company. This
transparency of business practices means that for many companies, environmental
aspects of CSR, are no longer a luxury but a requirement.
1.3 What Corporate Social Responsibility Is Not
What CSR is has already been stated above and in a more detail is further elaborated in
subsequent chapters. However, sometimes CSR is misconstrued or wrongly understood
or mistaken for sole corporate philanthropy or elementary compliance with the law. An
important question in this respect is what CSR is not. What CSR is not can be grouped
35
Mazurkiewicz, P. (2004), Corporate Environmental Responsibility: Is a common CSR framework possible?, available at:
http://siteresources.worldbank.org/EXTDEVCOMSUSDEVT/Resources/csrframework.pdf
14
into two main areas or clusters: social irresponsibility and misuse or sole usage of some
CSR tools (or initiatives).
1.3.1 Corporate Social Irresponsibility
As CSR is sometimes difficult to define, business managers some while looked at the
problem in terms of what companies should not to do, i.e. corporate social
irresponsibility. According to J. S. Armstrong’s definition, “a socially irresponsible act is a
decision to accept an alternative that is thought by the decision maker to be inferior to
another alternative when the effects upon all parties are considered. Generally this
involves a gain by one party at the expense of the total system.”36
As Armstrong suggested, a key element of corporate social irresponsibility is the
exploitation of negative externalities. The externality is situation in which the private costs
or benefits to the producers or purchasers of a good or service differs from the total
social costs or benefits entailed in its production and consumption. An externality exists
whenever one individual's actions affect the well-being of another individual, and can be
either positive or negative.37 Innovation is an example of a positive externality, fitting
within notions of CSR that focus on benefits of commercial activity accruing to society.
But negative externalities are also an inevitable reality of commercial activity. Negative
externalities effectively transfer company’s costs to unwilling or unwitting recipients,
benefiting the company at the expense of the total system.
Figure 1.2: The Continuum of Business Behaviour, from Corporate Social Irresponsibility to
Corporate Social Responsibility
Source: Based on Clark, T. S. (2008), What CSR is not: Corporate Social Irresponsibility, Critical Management Studies
Conference of University of Southern California, available at: http://group.aomonline.org/cms/Meetings/Los_Angeles
/Workshop08/tsc.doc
36
Armstrong, J. S. (1977), Social Irresponsibility in Management, Journal of Business Research, (September, 1977),
available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=649087#
37
Johnson, P. M. (2005), Externality, A Glossary of Political Economy Terms, available at:
http://www.auburn.edu/~johnspm/gloss/externality
15
It has to be stressed that a border between CSR and corporate social irresponsibility is
vague. On the other hand a border between legal and illegal actions and behaviour can
be defined usually precisely.
However, as Figure 1.2:
The Continuum of Business Behaviour, from Corporate
Social Irresponsibility to Corporate Social Responsibility” on the previous page depicts,
behaving in accordance with the law does not necessarily mean behaving responsibly. It
only means behaving legally. Corporate social responsibility is more as it goes beyond
the common framework of the law.
Another example of social irresponsibility is insistently sticking to stockholder model
without considering any other interest groups and environment. The stockholder role
advocates that the manager distributes rewards to maximize the returns to the
stockholder. Since the market is generally imperfect, decisions to maximize the benefits
to the stockholder can often be accomplished at the expense of the other interest groups.
Consider the case of air pollution; the local community provides a resource (clean air) to
the company and, in return, it receives dirty air. The stockholder gains in this transaction,
and the local community loses. As a result, the manager following the stockholder role is
encouraged to take action that will reduce the effectiveness of the free market. The
stockholder role encourages the manager to create situations where one party gains at
the expense of another.
In contrast to the stockholder role, the stakeholder role suggests that the manager
serves more masters, more interest groups. The manager is responsible not only to
shareholders but to more interest groups. Thus market imperfections can be overcome
and a company can behave responsibly not only to shareholders but to a specific set of
interest groups and environment.
1.3.2 Misuse and Sole
Responsibility Tools
Usage
of
Some
Corporate
Social
Similarly as irresponsible behaviour pure philanthropy is not CSR. Corporate
philanthropy is an integral part of CSR but definitely not CSR as such. Companies that
are generous in their giving, in their philanthropic activities do not necessarily have to be
also socially responsible. CSR goes beyond philanthropy as it is a part of corporate
strategy defined by the top management and implemented throughout the whole
company. Even sometimes corporate philanthropy can be considered as irresponsible
when it is misused by the management to tax evasion purposes. Similar applies to
commercial sponsorship – it is a tool but not CSR itself.
Even more difficult is to distinguish CSR from public relations (hereinafter also PR).
Public relations are a type of marketing communication that is used to project the
16
company’s image to the outside world. The objective of a PR campaign is to represent
the company in the media and to communicate the company’s perspective. Effective PR
is a less way to popularize a company as compared to other marketing methods such as
advertising. Importantly, CSR is not an element of PR even though there exists a certain
overlapping of these two. PR can and should be used as a tool for providing
stakeholders with the true information about a company and its CSR activities. That’s all.
Spending more money on publishing a great CSR report than on CSR itself can be
regarded as irresponsible and counterproductive. According to Alan VanderMolen,
President of Edelman Asia Pacific, CSR is not a good PR. Mistaking CSR for good PR
can actually be counterproductive and potentially damaging for a company's reputation.38
Also using CSR cynically as a smokescreen to avoid having to take serious actions to
improve the social and environmental performance of company’s operations or mask its
lobbying activities does not have anything common with true CSR.
CSR is not a one-size-fits-all policy. Companies have to assess how vulnerable they are
to customer criticism before deciding which CSR measures to adopt. Usually companies
that sell to the general public tend to be more vulnerable if they are not being socially
responsible. These companies that do rely on custom of the general public to make a
profit, have to think hard about their impact on society and the environment.39
CSR will not save the world as there are limitations of CSR. Basically, there are no
material incentives for companies, either legal or financial, to go more than marginally
beyond competitors in their CSR activities. The CSR framework does not address those
who breach principles. And, current legal systems do not give stakeholders the right to
enforce CSR.
Finally, CSR is not and never has been about making money. It is about treating the
people who work for a company, the community within which it operates, and other
stakeholders with respect. Money only comes into it because businesses have, by
definition, to be able to cover their costs. So CSR should not result in a company making
a loss. That is different to CSR making a profit.
1.4 Definition of the Stakeholder Concept and its Relation to
Corporate Social Responsibility
The stakeholder concept is a theory of organizational management and business ethics
that addresses morals and values in managing an organization. It was originally detailed
38
Writer, S. (2008), CSR is not good PR: study, available at: http://www.marketing-interactive.com/news/5441
39
Martin, K. (2008), CSR is not one-size-fits-all, available at: http://www.edie.net/news/news_story.asp?id=14526
17
by R. Edward Freeman in the book “Strategic Management: A Stakeholder Approach”.40
The concept identifies and models the groups, which are stakeholders of a company and
describes and recommends methods by which management can give due regard to the
interests of those groups. According to Freeman’s definition “a stakeholder in an
organization is any group or individual who can affect or is affected by the achievement
of the organization’s objectives”. 41
In the traditional view of the company, the shareholder view (usually the only one
recognized in business law in most countries), the shareholders or stockholders are the
owners of the company. The company has a binding fiduciary duty to put their needs first
- to increase value for them. In older models of the company, the enterprise converts the
inputs of investors, employees, and suppliers into usable outputs which customers buy,
thereby returning some capital benefit to the enterprise. By this model, companies only
address the needs and wishes of those four parties: investors, employees, suppliers, and
customers. However, stakeholder theory argues that there are other parties involved,
including governmental bodies, political groups, trade associations, trade unions,
communities, various interest groups (e.g. non-profit organizations), associated
companies, prospective employees, prospective customers, and the public at large.
Sometimes even competitors are counted as stakeholders.
Company’s stakeholders can be grouped, for example, in the following four categories,
as portrayed in Figure 1.3:

Authorizers
–
Stakeholder Model” on the following page:
this
group
includes
government,
regulatory
authorities,
shareholders, and the Board of Directors. These are the stakeholders who have
authority over the company and authorize its decisions;

Business partners – employees, suppliers, trade associations, and service
providers are all business partners. These stakeholders help company in
reaching its objectives;

Customer groups – all kind of customers fall within this stakeholder group; and

External influences – community members, media, and issue advocates also
influence company’s decision-making process.
The stakeholder concept is highly relevant for CSR, as without it would be difficult to
identify various groups (stakeholders) that can be, and actually in practice are, highly
influential for company’s success. Further, also many modern definitions of CSR
40
Walsh, J.P. (2004), Taking Stock of Stakeholder Management, University of Michigan, available at:
http://www.si.umich.edu/ICOS/Jim%20WalshICOS.pdf
41
Mitchell, R., et al. (1997), Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and
What Really Counts, available at: http://www.solvaymba.com/FR/Programmes/Desmap/documents/police/docs/maw97.pdf
18
incorporate stakeholder theory (e.g. Chandler, the European Commission), for detail see
subchapter Defining Corporate Social Responsibility.
Also, using stakeholder concept can help in measuring CSR. Clarkson proposed that
corporate social performance can be analysed and evaluated more effectively by using a
framework based on the management of a corporation’s relationships with its
stakeholders than by using models and methodologies based on concepts concerning
CSR.42
Figure 1.3: Stakeholder Model
Source: Based on Dell (2007), Dell's Sustainability Report for fiscal year 2006, available at: http://www.dell.com/downloads
/global/corporate/environ/2006_sustainability_report.pdf
Relationships with stakeholders are not static but evolve over time. These relationships
often go through the following stages:

Awareness – at this stage stakeholders know that the company exists;

Knowledge – stakeholders have begun to understand what the company does, its
values, strategy, and mission. During this stage companies provide stakeholders
with relevant information to make knowledgeable decisions;

Admiration – in this stage trust between companies and stakeholders is being
developed; and
42
Clarkson, M. B.E. (1995), A Stakeholder Framework for Analyzing and Evaluating Corporate Social Performance,
available at: http://www.gsb.tt/academic/uploads/A_stakeholder_framework_for_analysing_and_evaluating_CSP.pdf
19

Action – companies collaborate further with stakeholders. Customers refer
business, investors recommend the stock, and employees are willing to take
greater responsibility.43
Similarly as CSR, stakeholder concept has also its critics. One of their arguments is that
“stakeholderism aims to take rights away from the owners, who can be assumed to
constitute a single body with a common purpose, and to give those rights to a plurality of
groups, which would include shareholders but in a much diminished role.”44 Surely, this
claim has a lot true in it, but stakeholder concept does not want to take rights away from
shareholders, only to increase a number of groups, which has to be taken into account
when making decisions in the company.
1.5 Current Development in Corporate Social Responsibility
Recent theories of CSR assert that firms engage in “profit-maximizing” CSR.45 That is,
companies are assumed to be socially responsible because they anticipate a benefit
from these actions. Examples of such benefits might include reputation enhancement,
the ability to charge a premium price for its output, or the use of CSR to recruit and retain
high quality workers. These benefits are presumed to offset the higher costs associated
with CSR, since resources must be allocated to allow the company to achieve adequate
CSR status, i.e. adequate level of CSR.
Despite the lack of a commonly agreed definition of CSR, as has already been
mentioned in the subchapter Definition of Corporate Social Responsibility, there can be
identified a consensus among academics and business professionals about key trends in
the CSR area. Three key trends are the following:

Beyond philanthropy to more integrated approaches in the mainstream business.
For a growing number of companies, the concept of CSR has moved beyond
traditional
philanthropy,
although
philanthropy
remains
important.
Also
philanthropy became more strategic, i.e. aligned with the company’s strategy and
operation.

Beyond public relations to a greater accountability and stakeholder engagement.
For more than a decade there exists a growth in demands by stakeholders,
including shareholders, for companies to demonstrate greater accountability,
43
Epstein, M.J. (2008), Making Sustainability Work – Best Practices in managing and Measuring Corporate Social,
Environmental and Economic Impacts, Greenleaf Publishing, page 42-43
44
Barry, N. (2002), The Stakeholder Concept of Corporate Control is Illogical and Impractical, The Independent Review,
volume VI, no. 4, Spring 2002, available at: http://www.independent.org/pdf/tir/tir_06_4_barry.pdf
45
Baron, D. (2001), Private politics, corporate social responsibility and integrated strategy, Journal of Economics and
Management Strategy, 10, page 7-45; and McWilliams, A., Siegel, D. (2001), Corporate social responsibility: A theory of
the firm perspective, Academy of Management Review, 26, page 117-127
20
transparency and integrity and not only in terms of their financial accounts and
statements, but also in terms of their wider social, economic and environmental
impacts.

Beyond legal compliance to a greater clarity of principles and values. There has
been a growing recognition of the need to balance rules with values and for
companies to have greater clarity, both internally and externally, in terms of their
purpose, principles and values, backed up by penalties and remediation when
these are not met.46 Effective CSR is more than a response to external
stakeholder expectations, or an effort to manage social and environmental risks
and harness new business opportunities. It is a statement about what a company
stands for and would stand by, even if this sometimes incurs additional costs or
results in a lost business opportunity. It requires that business owners, business
managers, and employees not only comply with the law, or undertake actions that
they can directly link to financial gain, but also aim to do the right thing.
Since the last decade of 20th century a great number of manufactures, retailers and
service companies all around the World, but particularly in developed countries, has
adopted voluntary standards for labour conditions, environmental practices and human
rights. Often these new commitments have been incorporated into corporate and industry
codes, multi-stakeholders initiatives and private standard setting bodies, frequently with
reporting and monitoring requirements. This complex of soft laws has helped to create
new social and environmental norms for several important dimensions of business
conduct. Globally, civil regulation represented by CSR movement has produced
important changes in business practices, including:

Reduction in the employment of child labour and improvement in health and
safety conditions in many companies;47

An increase in the prices some agricultural producers in developing countries –
notably coffee growers – received for their products;48

A reduction in the quantity of wood products sold in the United States and Europe
produced from tropical, old–growth, and endangered forests;

A decrease in greenhouse gas emissions or in their rate of growth;

The withdraw of many companies from countries, where exist strong violation of
human rights, where local government are corrupt and impoverish its citizens;49
46
Nelson, J. (2004), The Public Role of Private Enterprise: Risks, Opportunities, and New Models of Engagement,
available at: http://www.hks.harvard.edu/m-rcbg/CSRI/publications/workingpaper_1_nelson.pdf
47
Robins, N., Humphrey, L. (2000), Sustaining the Rug Trade, International Institute for Environment and Development,
available at: http://www.iied.org//bookshop
48
Zadek, S., et al. (1998), Social Labels: Tools for Ethical Trade, New Economics Foundation for the European
Commission, available at: http://www.oit.org/dyn/basi/docs/F126/social_labels_tools.pdf
21

An improvement of some of the negative environmental and social impacts of
natural resource development in the developing countries.
Even though CSR movement has done a lot of good things and still is developing further,
some academics predict its decline; and not because of the financial crisis or recession.
Stefan Stern has claimed, “In the inevitable life cycle of management, CSR is now
heading for the exit. Customers are generally unconvinced by the hype. And social
responsibility was always too flimsy concept to gain serious traction with business
leaders. That gives us a clue as to the identity of the next Big Thing in management:
“sustainability”. Unlike CSR, this concept has some meat and commercial potential to it.
Innovations that make money while helping to reduce carbon emissions are actually
worth pursuing.”50
Personally, I disagree with Mr. Stern. Sustainability cannot replace CSR concept, as
“sustainability” actually is part of CSR. Sustainability is only a small part in much bigger
CSR mosaic. On my side is also the European Commission, which commends
companies to go beyond minimum legal requirements to address societal needs. Also
CSR concept has been strongly supported by Patrick Cescau, Unilever’s Chief
Executive. He said, “Companies’ commitment should go further than philanthropy,
although that still had its place.” He also said that companies and non-governmental
organisations were no longer automatic adversaries. In many cases, they worked
together. Most important, Mr. Cescau said, “CSR involved understanding that many of
the big social and environmental challenges of our age, once seen as obstacles to
progress, have become opportunities for innovation and business development.”51
These days CSR field is becoming more crowded. The early lead in CSR enjoyed by
Europe based companies is now being challenged both by US businesses and by
enterprises in China and India. Sustainable and ethical practices are fast becoming basic
requirements for doing business, nationally and globally. This reality means the question
is no longer about whether a business case can be made for CSR – it's about how to
maximize the return on the investment. There are many ways to look at returns from
CSR but the most significant result from the power of CSR is an improvement in
company’s performance. Here is one example from real life by Tim Smart, President of
BT Global Services UK: “Action to cut waste and consumption may reduce carbon
emissions, but in the process can also deliver significant cost savings. These savings
49
Vogel, D. (2006), The Market for Virtue, The Potential and Limits of Corporate Social responsibility, Washington, D.C.,
Brookings Institution Press, page 150-152
50
Stern, S. (2008), Goodbye to corporate social responsibility?, available at: http://www.johnelkington.com
/activities/ideas.asp
51
Skapinker, M. (2008), Corporate responsibility is not quite dead, available at: http://www.ft.com/cms/s/0/7990a3ec-d8a911dc-8b22-0000779fd2ac.html?nclick_check=1
22
can be immediate – for instance, in the form of reduced energy costs – or they can result
from subtler, longer-term improvements in human resource management.”52
Finally, eminent role in current development of CSR, similarly as in its history, plays
profit. Profit, in good times and bad, is where any discussion of companies’
responsibilities should start. Without profit, there is no future for shareholders,
employees, customers, business partners or in other words for stakeholders. Without
profit, there is no future for CSR.
52
Smart, T. (2007), Accelerating commercial performance through CSR, available at: http://www.businessgreen.com
/business-green/comment/2203823/accelerating-commercial
23
Chapter 2.
Perspectives of
Responsibility
Corporate
Social
2.1 Role of the Government in Corporate Social Responsibility
Concept
From the industrial revolution to recent years, social objectives have been almost entirely
the responsibility of government. Social movements, non-profit organizations´ activities
and pressure groups during the 1970s and 1980s led to the mobilisation of public opinion
demanding from corporations to demonstrate a socially responsible stance. Since the
earlier twentieth century, European as well as other countries all around the globe have
developed legislation to control the relationship between employee and the company,
health and safety at work, issues of environmental interest, discrimination and equal
opportunities at workplace. In Europe, state owned companies were created to pursue
commercial and social objectives, whereas private sector companies were allowed to
pursue their commercial objectives almost exclusively.
Legislation, regulation and taxation have been the favourable tools employed by
governments to promote and protect social objectives. In the area of the environment,
command and control techniques have been favoured by the European countries since
the 1970s whereas a shift towards shared responsibility between government and
industry is another favourable policy approach since the mid 1990s.
For instance in the United Kingdom, the government’s privatisation programme of the
1980s shifted public expectation of the private sector. Whilst until then, social objectives
had been mainly the responsibility of government, the privatisation of gas, water and
electricity introduced a new paradigm. It created public companies owned by
shareholders pursuing the same kind of financial returns as in any other public company,
but the companies had also clear social objectives. In the case of the privatised utilities,
these social objectives were managed through the regulatory regime, but the existence
of the companies as stock market vehicles demonstrated that financial and non-financial
objectives could co-exist.53
A question of interest therefore is, whether government should assist business to exceed
its legal obligations and hence commit itself to socially responsible behaviour, as defined
in current terms. Interestingly, recently published studies [Fox 2002, Bichta 2003],
suggested that government might play a role to encourage and promote the social
53
Bichta, C. (2003), Corporate Social Responsibility - A Role in Government Policy and Regulation?, Research Report No.
16, University of Bath School of Management, available at: http://www.bath.ac.uk/cri/pubpdf/Research_Reports
/16_Bichta.pdf
24
responsibility of business. As Table 2.1:
Principal public sector roles in relation to
Corporate Social Responsibility” shows, researchers from the World Bank have identified
four principal public sector roles in relation to CSR that are mandating, facilitating,
partnering and endorsing roles.
Table 2.1:
Principal public sector roles in relation to Corporate Social Responsibility
Mandating role
Defining command and
control legislation
Establishing regulators and
inspectorates
Defining and enforcing
legal and fiscal penalties
and awarding rewards
Facilitating role
Enabling legislation
Creating incentives
Capacity building
Funding support
Raising awareness
Stimulating markets
Partnering role
Combining resources
Promoting and supporting
stakeholder engagement
Endorsing role
Political support activities
Supporting and mediating
constructive dialogue
Publicity and praise of
achievements
Source: Based on Fox, T., Ward, H., Howard, B. (2002), Public Sector Roles in Strengthening Corporate Social
Responsibility: A Baseline Study, Corporate Responsibility for Environment and Development Programme - International
Institute for Environment and Development, available at: http://www.fias.net/ifcext/economics.nsf/AttachmentsByTitle/CSRCSR_interior.pdf/$FILE/CSR-CSR_interior.pdf
Four principal public sector roles in strengthening CSR are the following:

Mandating role: In their mandating role, governments at different levels define
minimum standards for business performance embedded within the legal
framework. Examples include establishment of emission limit values for particular
categories of industrial installations, or requirements for company directors to
take particular factors into account in their decision-making. Even mandating
activity can drive industrial innovation and best practice. For example, the familiar
notions that enterprises should apply the best available techniques, best available
technology, or the best practicable environmental option to manage industrial
emissions allow for the fact that what is best will change over time with
technological innovation and technology transfer.

Facilitating role: Setting clear overall policy frameworks and positions to guide
business investment in CSR, development of nonbinding guidance and labels or
codes for application in the marketplace, laws and regulations that facilitate and
provide incentives for business investment in CSR by mandating transparency or
disclosure on various issues, tax incentives, investment in awareness raising and
research, and facilitating processes of stakeholder dialogue.

Partnering role: Combining public resources with those of business and other
actors to leverage complementary skills and resources to tackle issues within the
CSR agenda, whether as participants, convenors, or catalysts.
25

Endorsing role: Showing public political support for particular kinds of CSR
practice in the marketplace or for individual companies; endorsing specific award
schemes or non-governmental metrics, indicators, guidelines, and standards; and
leading by example, such as through public procurement practices.54
The theoretical debates and the political discussions around the notion of government’s
role in CSR suggest that there are two prevailing perspectives of CSR, which
consequently facilitate the development of two competing CSR models. Figure 2.1:
Two contrasting models of Corporate Social Responsibility” provides a schematic
overview of the two models.
Figure 2.1:
Two contrasting models of Corporate Social Responsibility
Stakeholder Model
Principle
 Avoid undertaking socially
unacceptable practices
 Stakeholder interests to be
represented at company level
Practice
 CSR is integral part of
decision-making
 Proactive approach that goes
beyond the law
Business Case Model
Principle
 Self-interest,
commercial
priorities
Practice
 Voluntary action, CSR best
practice, compliance with and
beyond legal standards
Revised corporate law
Government
Company
Minimum legal standards, tax
incentives
Corporate law
Government
Company
Source: Bichta, C. (2003), Corporate Social Responsibility - A Role in Government Policy and Regulation?, Research
Report No. 16, University of Bath School of Management, available at: http://www.bath.ac.uk/cri/pubpdf/Research_Reports
/16_Bichta.pdf
The first perspective of CSR is derived from the stakeholder model and contains the
commitment of the firm not to undertake socially unacceptable practices e.g. using
suppliers who employ child labour. This approach is more in line with the ethical and
social norms of the rest of society and of individual managers. Corporate responsibility is
interpreted proactively; the company has a positive responsibility to adopt, rather than
avoid, certain norms of behaviour in relation to communities. This approach also
assumes that this proactive behaviour will not be static. As social trends and attitudes
evolve, so will the proactiveness of the company. CSR issues correspond to the mission
and vision of the company and hence become an integral part of daily decision-making.
54
Ward, H. (2004), Public Sector Roles in Strengthening Corporate Social Responsibility: Taking Stock, International
Institute for Environment and Development, available at: http://www.iied.org/pubs/pdfs/16014IIED.pdf
26
The second perspective supports the widely cited business case for developing and
monitoring sustainable relationships with key stakeholders including employees,
suppliers and local communities. These relationships are used to provide companies with
legitimacy and trust, which constitutes a source of competitive advantage. Consequently,
there is no long-run trade-off between the interests of stakeholders and shareholders.55
The first approach requires firms to practice CSR proactively as CSR is embedded in
organisational values, and firms are required to demonstrate behaviour that goes beyond
legal requirements. The second approach expects companies to adhere to best practice
standards developed either voluntarily by industry or jointly developed by industry and
government. There is a place and role for government under both perspectives in that
the stakeholder model of the company expects government to revise corporate law and
make it obligatory for firms to have the interests of stakeholders represented in board
meetings and the decision-making of the company. The business case for CSR
recognises two sets of corporate legal standards: the corporate law i.e. the promotion of
interests of the company’s shareholders and the setting of legal standards e.g.
environmental protection, labour practices, human rights, discrimination etc. Government
may also intervene through tax incentives and subsidies under the business case for
CSR.56
According to Cowe and Porritt, the important thing for business and society at large is to
understand the limit to voluntary action, which is the point where government need to
intervene. If humankind is to live within the Earth’s capacity and share its resources
equitably, economies must be transformed. And that cannot be done by business
alone.57
Finally, according to the author of the dissertation, governments all around the globe
should play an important and active role in promoting and mainstreaming CSR.
Governments should be helping business to achieve corporate social responsibility
through regulation (i.e. setting appropriate legal framework), control and enforcement
environment, subsidies and tax incentives. Especially governments should be the first to
apply CSR standards within their operations, e.g. within their procurement policies, and
in this way also promote CSR practices. Substantial progress in this respect have made
European countries, which are today at the forefront of CSR movement.
55
Grayson, D. (1996), The Community as a Stakeholder, Corporate Governance and Competitiveness, Institute for Public
Research, London, in Bichta, C. (2003), Corporate Social Responsibility - A Role in Government Policy and Regulation?,
Research Report No. 16, University of Bath School of Management, available at: http://www.bath.ac.uk/cri/pubpdf
/Research_Reports/16_Bichta.pdf
56
Reich, R. B. (1998), The New Meaning of Corporate Social Responsibility, California Management Review, Volume 40,
page 8-17
57
Cowe, R, Porritt, J. (2002), Government’s Business – Enabling Corporate Sustainability, Forum for the Future, page 3
27
2.2 Corporate Social Responsibility in Global Dimensions
21st century’s world is more interconnected, more globalized than ever. It has to be noted
that ongoing globalization will not cease but it is expected the globalization will go
forward as well as national borders will slowly be pushed to the background as free
movement of capital, persons, information and liberalization of trade take a step forward.
It would be foolish to think the CSR concept and CSR movement will stay aside this
global trend. Recent history of CSR proved the CSR is as globalized as all other areas of
human activity.
Globalization of CSR has been further driven by global problems and issues such as for
example global climate change, lack and contamination of fresh and drinking water,
pollution of environment, decrease of biodiversity, decrease of arable land, and hunger
and extreme poverty. As solving of these highly complex issues would be inefficient at a
local level, global approach and involvement of profit and non-profit sectors and
governments all around the world is needed. Similarly global approach in CSR and
carried out at a global level is more efficient than CSR conducted only locally; and CSR
can and as recent history has already proved is helping tackle above-mentioned issues.
Due to these and also various other reasons global CSR is growing and should not be
overlooked. To say that much of the world differs from the Europe in this area is like
saying that there is one set of rules for the world and one for the Europe. Actually, it is
more a question of global harmonization. A company's social behaviour at home and
abroad should be a reflection of itself no matter what. If a company behaves well as a
good corporate citizen in its parent company but is guilty of social misbehaviour in other
countries then there is a corporate hypocrisy that could come back to haunt this
company. A reputable company operating in more countries should have a code of ethics
and CSR policy that govern its employees and subsidiaries world-wide. To say that at
home country a company will do things one way, but in a third world country the same
company will do something else because the laws are less stringent is simply wrong. For
CSR to add positive value it must be practiced everywhere, regardless of jurisdiction or
national borders. If an enterprise operates in more countries, to simply write a CSR
policy for the home country is not sufficient.58
The recent movement of CSR to a proactive orientation is not only a result of increased
knowledge but also mirrors and works within a context of evolving global standards of
human rights and the increased collaboration of corporate, non-governmental and
governmental organizations in the development, monitoring, and implementation of
58
Thomas, C. (2001), Global governance, development and human security: exploring the links, Third World Quarterly,
Volume 22, page 159–175, available at: http://people.cas.sc.edu/coate/Readings/Thomas.pdf
28
human rights and environmental protection standards. Especially practical connections
between human rights and CSR are very powerful. Both human rights and CSR are
concerned, among other freedoms, with the freedom of speech, freedom of movement
and the right to earn a living wage for a day’s work.
The emerging generation of CSR carries with it the recognition that a global framework is
important for all organizations, both large and small. A global CSR is responsive to the
multiple cultures, value sets, and communicative practices of different nations while
recognizing that organizational contexts are no longer bounded by the nation state.
Fundamental changes are emerging within the new generation of CSR. This
transformation is strongly associated with dynamic processes of globalization including:

The intensification and deepening of material, political, and cultural exchange;

The development of global consciousness thorough processes of reflexivity;

The disembedding of events and institutions which permits new realignments and
restructuring of social interaction across time and space;

Compression of time and space; and

The rapid diffusion of ideas and knowledge enabled through new information
technologies.59
Globalized CSR no longer distinguishes “out there” from “in here”. One of the most
important features is that it embodies dynamic, intense, and extensive communicative,
economic, cultural, and political exchanges and practices. In its early conceptualizations,
CSR represented an individual’s freedom from organizational wrongdoing by virtue of the
corporation not violating the legal mandates of a particular society at a particular time.
Those who fell outside the purview of a particular law or context were not included within
the corporation’s responsibilities. Boundaries between nation states were strictly adhered
to, and acceptable corporate behaviours were widely variable. On the other hand today,
modern corporations with operations scattered around the globe are different animals
from its predecessors. Principles of CSR and sustainable development have become
more widely recognized by corporations around the world and increasing numbers of
them are publicly discussing their activities.60
As already has been stated above, the growth of CSR also has an important global
dimension frequently reflecting perceived governance shortcomings. The growth of
private, market-based, non-state regulation that has emerged to govern a number of
59
Stohl, M., Stohl, C. (2006), A New Generation of Global Corporate Social Responsibility, Department of Communication
University of California Santa Barbara, available at: http://www.allacademic.com//meta/p_mla_apa_research_citation
/0/9/2/4/3/pages92436/p92436-3.php
60
Rondinelli, A. D. (2006), Globalization of Sustainable Development: Principles and Practices in Transnational
Corporations, Center for International Business Education and Research Georgia Tech, available at:
http://www.ciber.gatech.edu/workingpaper/2007/023-07-08.pdf
29
sectors, most notably forestry, energy, minerals and mining, and textiles, is that global
CSR standards represent a response to the failures of national and international
business regulation. According to Moon and Vogel’s analysis, economic globalization, as
measured by the growth of international trade and the expansion of international
investment, has created a governance deficit. Much of the growth of global civil
regulation is rooted in the perception that economic globalization has created a structural
imbalance between the size and power of global firms and markets, and the capacity,
willingness, and ability of governments to regulate them. Transnational corporations
appear to wield power without responsibility. They are often as powerful as states and
yet unaccountable.61 Non-governmental organizations have sought to step into the
regulatory vacuum created by the inadequacies of both national governments and
international institutions to regulate multinational corporations by forging alliances with
consumers, institutional investors and companies. While they cannot replace the role of
the state, these social movements have created new mechanisms of global business
regulation.62
63
Professor Lipschutz from the University of California argues that global
CSR represents an effort to counter or challenge the increasing reluctance or
unwillingness of national governments to impose regulations on global firms due to their
fear that such regulations will discourage domestic investment and make their
economies less competitive. Accounts of the origins of various mechanisms of global
private governance often specifically situate them in the context of the shortcomings of
international business regulation.64
2.2.1 Role of Small and Medium-Sized Companies in Global
Corporate Social Responsibility
Regarding a role of SMEs in global CSR, SMEs are similarly as large companies
involved in global CSR. However, they are usually not the key players but rather they are
followers and those who are influenced by large and multinational companies as a
consequence of them being incorporated into global production and value chains of
these corporate giants. Because of great number of SMEs in national economies, their
61
Moon, J., Vogel, D. (2008), Corporate Social Responsibility, Government, and Civil Society, Oxford University Press,
page 309-311, available at: http://www.haas.berkeley.edu/faculty/pdf/vogel_oxford_chapter.pdf
62
Newell, P. (2001), Environmental NGOs, TNCs, and the Question of Governance, in Stevis, D., Assetto, J. V. (2001),
The International Political Economy of the Environment: Critical Perspectives, Lynne Rienner Publishers, page 85-106,
available at: http://books.google.com/books?hl=cs&lr=&id=FlaA0HpxkZoC&oi=fnd&pg=PA85&dq=environmental+ngos+
and+globalization+%22Newell%22&ots=DMQIyll8Wl&sig=v6gyb3RQRC3hx1timh5ZjG4ZnX0#PPA104,M1
63
Weyzig, F. (2006), Local and global dimensions of corporate social responsibility in Mexico, Journal of Corporate
Citizenship, available at: http://goliath.ecnext.com/coms2/gi_0199-6339646/Local-and-global-dimensions-of.html
64
Lipschutz, R. D., Rowe, K. J. (2005), Globalization, Governmentality and Global Politics: Regulation for the Rest of Us?,
Routledge Publishing, page 44-46, available at: http://books.google.com/books?id=4zobBSphdYcC&hl=cs
30
role in global CSR is also significant. Nevertheless, as stated below, their role in global
CSR does not have to be always a positive one.
According to findings of Danish researchers SMEs are less likely than larger companies
to act as change agents for sustainable production in global value chains. Hence, the
increased presence of SMEs in global supply chains is likely to have a negative effect on
the pervasiveness of sustainability requirements in the value chain.65 This may have
implications for both businesses and policy for two reasons. First, if SMEs fail to pass on
social and environmental requirements to sub-suppliers in low-wage countries, lead firms
may in turn face increasing risks of supplier failure in the subordinate tiers of the value
chain. If SMEs lack the ability to perform rule-keeping functions66 in relation to
sustainable supply chain management they may in time face rising barriers to entry into
global value chains. Second, from a policy perspective, SMEs are important as change
agents in global value chains in order to ensure the pervasiveness of sustainability
standards. Increasing numbers of SMEs trade in global business-to-business markets for
semi-manufactured goods. It is therefore important that SMEs are able to perform
governance functions associated with sustainable production in global value chains.
2.3 Corporate Social Responsibility in Europe
2.3.1 General Aspects of Sustainable Development and Corporate
Social Responsibility in Europe
Over the recent years the debate about CSR has spread very rapidly across Europe,
particularly as a part of the intense discussion about sustainability and globalization.
Discussion on sustainability and sustainable development to a certain degree preceded
debate about CSR nevertheless today both these immensely important topics are
discussed and dealt with hand-in-hand.
As far as sustainable development is concerned, it has been a fundamental objective of
the European Union since 1997 and also it was enshrined as article 2 of the EU Treaty67.
65
Jorgensen, A., Knudsen, J. (2006), Sustainable competitiveness in global value chains: how do small Danish firms
behave?, The Copenhagen Centre for Corporate Responsibility, available at: http://ec.europa.eu/enterprise/csr/documents
/mainstreaming/ms_sme_topic6_jorgensen.pdf
66
Rule keeping in sustainable supply chain management: once standards are adopted, they have to be implemented and
enforced throughout the value chain. Rule keeping may entail applying sanctions against suppliers that do not comply with
the standards that have been adopted. Sanctions may range from fines to a termination of business. However, rule
keeping may also involve more positive steps such as capacity building, including transfer of technology and technical
assistance to suppliers, in order to raise standards.
67
Treaty on European Union, Article 2, The Community shall have as its task, by establishing a common market and an
economic and monetary union and by implementing common policies or activities referred to in Articles 3 and 4, to
promote throughout the Community a harmonious, balanced and sustainable development of economic activities, a high
level of employment and of social protection, equality between men and women, sustainable and non-inflationary growth,
a high degree of competitiveness and convergence of economic performance, a high level of protection and improvement
of the quality of the environment, the raising of the standard of living and quality of life, and economic and social cohesion
and solidarity among Member States. Available at: http://eur-lex.europa.eu/en/treaties/dat/11992M/htm/11992M.html#0001
000001
31
It is supposed to underpin all EU policies and actions as an over-arching principle. The
EU first formulated its Sustainable Development Strategy during the 2001 Gothenburg
European Council. Although sustainable development was embedded in the EU Treaty,
its implementation remained a problem.68 In February 2005, the EU Commission took
stock and confirmed that a number of unsustainable trends continue to worsen. The
updated EU Sustainable Development Strategy was adopted by the European Council in
June 2006. It is an overarching strategy for all EU policies which sets out how can be
met the needs of present generations without compromising the ability of future
generations to meet their needs. The Sustainable Development Strategy deals in an
integrated way with economic, environmental and social issues and lists the following
seven key challenges:

Climate change and clean energy;

Sustainable transport;

Sustainable consumption and production;

Conservation and management of natural resources;

Public health;

Social inclusion, demography and migration; and

Global poverty.69
It is not accidental that above-mentioned seven key challenges of sustainable
development are also challenges for CSR. Despite the fact that CSR is not the same as
sustainable development and cannot be used interchangeably, they are so mutually
interconnected that achieving one without involvement of the other is impossible and
would certainly fail. That is also the reason why the EU put the accent on both –
sustainable development as an objective to be achieved and a way of life and CSR as an
appropriate tool and standard for entrepreneurs and organizations.
2.3.2 Corporate Social Responsibility in Europe
When in 1992 unemployment rate in Europe exceeded average of 10% in different
countries, Europe was under pressure of advises by different multinationals to reduce the
social safety net benefits, to reduce employer social security contributions, and strict
employment-protection rules.70 These actions did not contribute to CSR as it treated
CSR as an inefficient tool in global market and a limit to survival of European
68
European Commission, The European Portal on Sustainable Development (2008), Sustainable Development, available
at: http://ec.europa.eu/sustainable/welcome/index_en.htm
69
EurActive – Web Portal of the EU (2008), Sustainable Development: EU Strategy,
http://www.euractiv.com/en/sustainability/sustainable-development-eu-strategy/article-117544
70
Korten, C. D. (1995), When Corporations Rule the World, Kumarian Press, Inc., USA, page 57-59
32
available
at:
businesses. This provoked the affected groups to respond. The approach was slightly
different. Role of corporation was examined in terms of their importance for society and
future Europe as economic power. Accordingly, governments in Europe contributed to
CSR more than any non-governmental and civil society organizations. At European level,
various policy initiatives related to CSR were undertaken either by European
Commission or by some other body. In December 1999, the European Commission
published its Communication on Fair Trade focusing on trade liberalization and
protection for social and environmental standards. Then, European Commission
organized two symposia in collaboration with US Department of Labour and the
European Commission Directorate General for Employment held a workshop for
monitoring codes of conduct and social labels. All these events were organized and
initiatives were launched with an intention to promote the EU as sensitive and highly
aware of social and environmental concerns. From the very beginning CSR has been
seen in the EU as a key element of sustainable development.71
In July 2001 the European Commission issued a Green Paper entitled Promoting a
European Framework for Corporate Social Responsibility. The Paper was prepared by
the Directorate General for Employment and Social Affairs. It focused on companies´
responsibilities in the social fields. The term Corporate Social Responsibility (CSR)
emerged from talks and statements delivered by companies reflecting upon, even
praising, their own functioning. The EU´s concern with the topic has been rooted in the
expressed conviction that CSR can be a positive contribution to the strategic objective
set in Lisbon72 to become the most competitive and dynamic knowledge-based economy
in the world, capable of sustainable growth with more and better jobs and greater social
cohesion.73 The following Table 2.2: Political development and milestones in CSR area at
the European level” provides a summarized overview of political development and
milestones that have been reached in the field of corporate social responsibility at the
European level from the year 1993 to the year 2008.
Table 2.2:
Year
June 1993
Political development and milestones in CSR area at the European level
Name of the document or
event
The Appeal of President
Jacques Delors to
business on CSR
Summarized description
In June 1993, President of the European Commission
Jacques Delors made an appeal to businesses' talents and
solutions to address Europe's structural problems of
unemployment, restructuration and social exclusion. He
71
European Commission (2005), CSR Europe response to the European Commission, Green Paper “For a European
Framework on CSR”, available at: http://europa.eu.int/comm/employment_social/soc-dial/csr/csr_europe_eu_
en011218.htm
72
The European Council Summit in Lisbon, March 2000.
73
Dorssemont, F. (2004), Corporate social responsibility, what’s in a name? A critical appraisal of the Green Paper,
Utrecht University, available at: http://trade-unions.org/research_fr/content/download/798/5291/version/1/file/DORSSEM
ONT.pdf
33
Year
Name of the document or
event
Summarized description
invited enterprises to adopt a European Declaration against
Social Exclusion.
January 1995
European Business
Declaration against Social
Exclusion
On 10 January 1995, 20 business leaders and European
Commission President Jacques Delors adopt and
announce the European Business Declaration against
Social Exclusion. Signatories call for the development of a
European network for the exchange of information and
experience.
In October 1998, business leaders together with the
President of the European Commission Jacques Santer
launched the European Resource Centre on CSR (now
CSR Europe's website).
October 1998
Launch of CSR Europe's
Online Resource Centre
November 1998
Gyllenhammar Report
At the European level, the High Level Group on the
economic and social consequences of industrial change,
the Gyllenhammar Group (set up as a result of the
Luxembourg Jobs Summit in November 1997), suggested
in its final report that enterprises with more than 1.000
employees should publish a report on the management of
change on an annual basis in order to give an account of
the impact of their social activities.
March 2000
European business leaders
present plans for
promoting CSR
Top European business leaders meet with Prime Minister
Antonio Guterres on 8 March 2000. Twenty CEOs address
to all Heads of State and Governments and propose 12
concrete ways to: build an entrepreneurial and inclusive
knowledge society; develop a culture of communication
and multiplication of best practices; expand teaching of
corporate social responsibility, corporate citizenship and
business ethics; invest in public-private partnerships for
effective responses to economic and social challenges. For
business leaders, the Lisbon Summit is the right moment
for governments and the European Commission to
recognise that businesses can successfully combine
economic competitiveness and social responsibility.
March 2000
European Summit in
Lisbon
At the European Council Summit in Lisbon, March 2000,
the European Union set itself a new strategic goal for the
next decade: to become the most competitive and dynamic
knowledge-based economy in the world, capable of
sustainable economic growth with more and better jobs
and greater social cohesion. Underlining the important
contribution of the private sector in achieving this goal, for
the first time the European Council addressed businesses
directly in a special appeal to companies' corporate sense
of social responsibility regarding best practices on lifelong
learning, work organisation, equal opportunities, social
inclusion and sustainable development.
June 2000
European Council in Feira
The European Council in Feira, June 2000, re-iterated the
appeal made in Lisbon, applauded the ongoing follow-up
and welcomed the initiation of a process to establish a
network for European dialogue encouraging companies'
corporate sense of social responsibility.
June 2000
European Social Policy
Agenda
Adopted in June 2000, the Social Policy Agenda stresses
the importance of Corporate Social Responsibility
essentially in terms of the employment and social
consequences of economic and market integration and the
adaptation of working conditions to the new economy.
Consequently, the Commission will be issuing a
communication in 2001 to support initiatives related to
corporate social responsibility and the management of
34
Year
Name of the document or
event
Summarized description
change.
March 2001
European Council in
Stockholm
The European Council in Stockholm in March 2001
welcomed the initiatives taken by businesses to promote
corporate social responsibility and made reference to its
Green Paper in preparation to encourage a wide exchange
of ideas with a view to promoting further initiatives in this
area.
July 2001
Green Paper Promoting a
European framework for
Corporate Social
Responsibility
The Green Paper aimed to launch a wide debate on how
the European Union could promote corporate social
responsibility at both the European and international level,
in particular on how to make the most of existing
experiences, to encourage the development of innovative
practices, to bring greater transparency and to increase the
reliability of evaluation and validation. It suggested an
approach based on the deepening of partnerships in which
all actors (stakeholders) have an active role to play.
November 2001
CSR on the EU social
policy agenda
In the closing debate of the Belgian EU Presidency
Conference on CSR, and in reply to the European Trade
Union Confederation's request to negotiate a European
Directive on CSR Transparency, was proposed to set up a
European Multi-Stakeholder Platform on CSR and to
implement supportive tools and activities. Those included:
preparation of managers through the European Academy
of Business in Society; helping SMEs to evaluate and
strengthen their social responsibility by using the SME
toolkit; equipping the European investment community with
an online reference guide to all 285 green and ethical funds
in Europe.
July 2002
First European
Commission
Communication on CSR
In response to the Lisbon Appeal on CSR and on the basis
of a wide consultation (Green Paper), the European
Commission released its first Communication on CSR
(Commission’s
White
Paper:
Corporate
Social
Responsibility). Highlights include: a European definition of
CSR (CSR is a concept whereby companies integrate
social and environmental concerns in their business
operations and in their interaction with stakeholders on a
voluntary basis); the principle of a European Multistakeholder Forum on CSR; and the way in which the
European Commission relates CSR to specific European
policies.
October 2002
EU Forum on CSR
The European Multi-Stakeholder Forum on Corporate
Social Responsibility (CSR EMS Forum), chaired by the
Commission, brings together European representative
organisations of employers, business networks trade
unions and NGOs, to promote innovation, convergence,
and transparency in existing CSR practices and tools.
December 2002
Resolution of the
Employment and Social
Policy Council on CSR
The Council Resolution of 3 December 2001 on follow-up
to the Commission's Green Paper, which recognised that
CSR can contribute to reaching the objectives laid down by
the European Council in Lisbon, for the European Union to
become the most competitive and dynamic knowledgebased economy in the world fostering social integration and
sustainable development.
June 2004
Final results and
recommendations of the
European Multistakeholder
A Final Report was presented and agreed at the final
meeting of the Multistakeholder Forum including common
principles and values. The Forum made a number of
35
Year
Name of the document or
event
Forum on CSR
Summarized description
recommendations in the areas of raising awareness and
improving knowledge of CSR, developing the capacities
and competences to help mainstreaming CSR, and
ensuring an enabling environment for CSR.
March 2006
Commission's
Communication
Implementing the
Partnership for Growth and
Jobs: Making Europe a
Pole of Excellence on
Corporate Social
Responsibility
Building upon the outcomes of the European Multistakeholder Forum and further consultations with business
leaders, the European Commission renews its policy on
CSR through a communication to the European
Parliament, the Council and the European Economic and
Social
Committee.
The
communication
entitled
"Implementing the partnership for growth and jobs: making
Europe a pole of excellence on CSR" proposed: the
integration of CSR within relevant European policies with a
strong focus on development and trade. The
Communication appealed to enterprises to undertake
socially
and
environmentally-responsible
activity
voluntarily, and to place CSR at the centre of their business
strategies. The Communication revitalised support for the
European Alliance for CSR.
2007
Three high level meetings
in light of the European
Alliance for CSR
The objectives of the meetings were the following: to
review progress of the Alliance and to have an open
debate on the linkages between CSR and competitiveness,
in support of the European Strategy for Growth and Jobs;
together explore how to better link some CSR priority
issues - as set in the Alliance in 2006 and currently being
addressed in CSR Laboratories with specific European
policies and initiatives.
December 2007
Conference on Corporate
Social Responsibility: CSR
at the global level: what
role for the EU?
The Conference aimed to: contribute at the European level
to the current debate on CSR principles and instruments at
the global level; outline the achievements and challenges
in promoting sustainable production, consumption and
decent work; and to consider perspectives which would
ensure the value added of European action in CSR at the
global level.
October 2008
Conference on corporate
social responsibility
“Partnership and
transparency at the heart
of European Corporate
Social Responsibility”
A conference organised jointly by the European
Commission, the European Economic and Social
Committee, and the French Economic, Social and
Environmental Council addressed the following questions:
the transparency and reliability of information on the
responsible actions of European companies (this mainly
concerned reporting); performance evaluation and
measurement requirements; and capacity of the
stakeholders.
Source: The table is based on available public information from the following sources: CSR Europe (2008),
Milestones: 15 Years of Business-Policy Interaction Driving the Corporate Social Responsibility Movement,
available at: http://www.csreurope.org/pages/en/history.html; CSR Europe (2008), Political Milestones at EU
Level, available at: http://ec.europa.eu/employment_social/soc-dial/csr/csr_commissionsact.htm; web pages
of the European Commission's Directorate General for Employment, Social Affairs and Equal Opportunities,
available at: http://ec.europa.eu/social/main.jsp?catId=331&langId=en&furtherEvents=yes; (2008), European
Industrial Relations Observatory: CSR Basic Search Results, available at: http://search.eurofound.europa.eu
/search?q=csr&site=EIRO&btnG=Search&ie=&output=xml_no_dtd&client=default_frontend&lr=&proxystyles
heet=default_frontend&oe=UTF-8&getfields=DC%252EDate%252Emodified&curent_date=2008-12-14;
Perrini, F.,Pogutz, S., Tencati, A. (2006), Developing Corporate Social Responsibility – A European
Perspective, Edward Elgar Publishing Limited, Cheltenham, UK, page 14-15
36
Halfway through the ten-year plan, the European Commission reviewed and relaunched
the Lisbon strategy in 2005 in a new “partnership for Growth and Jobs”. It stressed that
Europe needed a dynamic economy to preserve and develop its social and
environmental model in the context of a growing global economy. As the EU approaches
the 2010 target, the consensus in Europe remains that, in the long term, economic
growth, social cohesion and sustainable development must go hand in hand. In terms of
CSR, the focus is on implementing partnership for Growth and Jobs and making Europe
a pole of excellence. In its 2006 Communication, the EU Commission proposed actions
to promote the further uptake of CSR practices, underlining the importance of cooperation between EU Member States.74
There exists a broad agreement in the EU on the definition of CSR as a concept whereby
companies integrate social and environmental concerns on a voluntary basis into their
business operations as well as their interaction with stakeholders. Nevertheless, the
precise nature and characteristics of CSR vary between different national and cultural
contexts. In some countries, it is more and more integrated into a wide range of policies
whereas in others, awareness raising initiatives are mostly being developed.74
Generally,
objectives
of
the
European
Commission
and
individual
European
Governments regarding CSR can be summarized as follows:

Promote CSR as a business opportunity creating win-win situations for
companies through forming new partnerships among CSR promoters and
establishing a basis for mobilizing the resources and capacities of businesses
and stakeholders;

Raising awareness and improving knowledge on CSR through exchange and
dissemination of best practices and tools, promotion of multi-disciplinary research
on CSR at European level, and integration of CSR related topics in the university
curricula;

Ensuring an enabling environment for CSR through taking advantage of alliances
developed at national level and supporting the organization of review meetings
with all stakeholders to evaluate the progress on CSR and of other trends,
developments and innovations in that respect;

Mainstreaming CSR and developing coalitions of cooperation through:
o Fostering innovation and entrepreneurship in sustainable technologies,
products and services addressing societal needs;
74
European Commission´s Directorate General for Employment, Social Affairs and Equal Opportunities (2007), Corporate
Social Responsibility: National public policies in the European Union, Luxembourg, Office for Official Publications of the
European
Communities,
available
at:
http://ec.europa.eu/employment_social/soc-dial/csr/pdf/csrnationalpolicies
2007_en.pdf
37
o Assisting enterprises to integrate social and environmental considerations
in their business operations in supply chains;
o Improving working conditions;
o Promoting innovation in the environmental field;
o Enhancing pro-active dialogue;
o Addressing the transparency and communication challenges;
o Operating outside the borders of the European Union;

Promoting CSR amongst SMEs75 as one of the priority areas of EU policy on
CSR.76
Today, Europe stands at the forefront of promoting and implementing CSR into everyday
life of enterprises and the whole European society. It can be said that CSR is more
rooted into the real life through help of various European institutions, reasonable
legislation,
the
European
Commission,
national
governments
and
non-profit
organizations than in the USA and other non-European states. However when discussing
CSR in the USA and Europe, it is important to consider the aspects of American
individualism versus European collectivism. In the USA, a culture of individualism
suggests that individuals are responsible for their own success and, hence, if there is
demand for solving ethical questions, it is the individual who is responsible for making
the right choices (Trevino and Nelson in Managing Business Ethics, 1999).77 In Europe,
however, it is traditionally not the individual businessperson, nor even the single
company, that is seen as primarily responsible for solving ethical dilemmas. Rather, it is
a collective and overarching institution, nominally the state.78 As CSR concept is also
based on good and well-balanced relations among government, profit and non-profit
organizations and public, thus it is not surprising a fast, intensive, and more-or-less
smooth implementation of CSR in Europe. Nonetheless it is just the beginning, and
hopefully, much more of CSR will come in the future.
75
The European Commission’s Green Paper on CSR highlighted the need to involve SMEs in the debate and to promote
CSR among those enterprises throughout Europe. This strategic direction has also been important to countries that are
interested in joining the EU.
76
Boesenh, M. (2007), CSR in the European Union, Recent
http://www.unido.org/fileadmin/import/68791_4_CSR_SMEs_EU_Ms.Minic.pdf
Developments
and
Future
Plans,
77
Husted, W. B. (2001), The Impact of Individualism and Collectivism on Ethical Decision Making by Individuals in
Organizations, Instituto Tecnológico y de Estudios Superiores de Monterrey and Instituto de Empresa, Mexico, available
at: http://egade.itesm.mx/investigacion/documentos/documentos/4egade_husted.pdf
78
Matten, D., Moon, J. (2005), Implicit and Explicit CSR: A conceptual framework for understanding CSR in Europe, Royal
Holloway University of London - School of Management, available at: www.rhul.ac.uk/Management/News-and-Events
38
2.4 Corporate Social Responsibility in the Czech Republic
2.4.1 Situation in the Czech Republic Regarding Corporate Social
Responsibility and Ethics in 1990s
In comparison with old Western democracies such as states of Western Europe or the
United States of America, the Czech Republic has been an open democracy for less
than 20 years – since the end of 1989 when so-called Velvet Revolution took place.
However, a free market economy with standard market mechanisms the Czech Republic
became yet for a few years later after implementation of fundamental structural economic
reforms and privatization of majority of to that time state owned enterprises. For these
and various other reasons CSR has not been an issue in the Czech Republic until the
end of the second millennium, when the Czech Republic more strategically and
systematically started its preparation for joining the European Union.
During early nineteen-ninetieth, sometimes appropriately called “time of gold rush” for its
sometimes savage and unscrupulous privatization, both the general public and
companies were very critical when expressing their opinion on morals and ethics in the
country. Many entrepreneurs sought to get rich quickly and to take advantage of new
opportunities while they lasted. But the underdeveloped markets that would provide
profits also brought with them a lot of bureaucracy (red tape), outdated laws and lack of
personnel with experience in a market economy. To make the path to profit smoother,
many businessmen were willing to pay bribes. While cases of bribery were quite clear,
opinion about corruption varied. Prosecutors and judges emphasized that they knew a lot
of cases, but none was willing to come forward and testify. With law enforcement slow in
coming, entrepreneurs who accepted bribery as a part of doing regular business, and
politicians who, for the most part, considered corruption as a small price for a fast
transition to market economy, corruption was likely to continue. The phenomena of bribe
seeking and racketeering were viewed by some as side effects of the implementation of
capitalism into a situation of economic underdevelopment.
At that time people and entrepreneurs saw the severest ethical problems in the field of
legislation, jurisdiction, political life, the functioning of police, and state administration.
CSR agenda and sustainable development were not fashionable at that time as they
were not directly associated with quick profit maximization, which was the prevailing topic
for new businessmen then. People as well as companies were convinced that current
ethical problems would not disappear automatically with growing market experience, but
would necessitate governmental action. Unfortunately, the more strategic action in this
respect came slowly and too late – came after the Czech Social Democratic Party
39
strengthen its position in the Czech Parliament and got posts in the Czech Government
at the end of 1990s.
On the other hand a broad survey conducted by the Czech Statistical Office in 1994
clearly revealed economic motivation to behave ethically. Unethical practices were seen
as a source of significant or substantial problems by 71 % of companies. Additional
company costs due to these problems were reported by 68 % of companies. The
importance of business ethics in the company strategy was stressed by 97 % of
companies, of which 76 % saw this as very important.79
The severest problems at company level revealed by entrepreneurs in the abovementioned survey were:

Maintaining payments;

Maintaining quality of products and services;

Fair negotiation and bidding processes; and

Adhering to verbal promises and contracts.
However, the challenges to enhance ethical behaviour were seen not only in business
but also in public administration. Public sector issues, due to their impact on the society
as a whole, were viewed by some people as even more urgent. Two problems were
considered crucial at that time:

Transparency in public procurement; and

Political party funding.80
There were many debates on the public service, its quality, prestige and requirements,
but no special laws on public service were passed until the year 2000.
Unfortunately in the first half of the 1990s many people in the Czech Republic,
particularly government politicians who had a real influence on future development and
legislation, as well as in other post-communist countries did not realize that a well
functioning market economy required:

Appropriate forms of legal regulation;

Substantial level of trust between contractors and economic agents;

A constituted and solid system of moral values;

Guarantee of physical protection; and

A framework, which assumes a certain level of responsible autonomy among
social actors - entrepreneurs, citizens, trade unions and public and state
authorities.
79
Bohatá, M. (2005), Discovering a New Concept of Authority, in Habisch, A. et al. (2005), Corporate Social Responsibility
Across Europe, Springer Berlin Publishing, Berlin, page 151-152
80
Bohatá, M. (2005), Discovering a New Concept of Authority, in Habisch, A. et al. (2005), Corporate Social Responsibility
Across Europe, Springer Berlin Publishing, Berlin, page 153-154
40
2.4.2 Development of Corporate Social Responsibility in the Czech
Republic
Despite belated start of more proactive, systematic and government-supported CSR
initiatives, the first pioneers in the field of CSR emerged relatively very soon after the
Velvet Revolution. Civic organizations, which faced many obstacles and little support,
have developed in many cases particularly due to various international resources.
Tradition also played an important positive role, however, faster dissemination of CSR
and corporate philanthropy as one of its part was hampered by expectations of some
people and entrepreneurs that the state was there to take care of these activities.81
Perhaps the most important non-governmental organization almost entirely focused on
CSR has been the Business Leaders´ Forum. The Business Leaders´ Forum, which has
been operating in the Czech Republic since 1992, started from scrap and over the time
has become influential. It is the Czech affiliate of the Prince of Wales Business Leaders´
Forum, which among others, acts as a National Partner of CSR Europe. This initiative
commenced with a small handful of companies in the Czech Republic aiming at creating
a business culture that subscribed to responsible business practices to benefit business
and society. At the beginning the impulse of most companies involved was to focus
purely on philanthropic donations. Over the time, a number of companies has steadily
been growing and companies are engaged in a remarkable range of activities, for
instance from the protection of the environment to the promotion of equal opportunities,
from building the capacity of small and medium-sized companies to creating business
and education linkage programmes and employee engagement in the community.
Today, Business Leaders´ Forum’s mission is promotion and enforcement of CSR in line
with European methodology and best standards. In this respect the Forum closely
cooperates with the European Commission and European Commission's DirectorateGeneral for Employment, Social Affairs and Equal Opportunities. 82
In 1996 a National Contact Point (hereinafter also NCP) for the Implementation of the
Organization for Economic Cooperation and Development (hereinafter also OECD)
Directive for Supranational Companies was established, with the aim of monitoring the
conduct of these companies and resolving any disputes that may arise, especially in
employment relations, collective bargaining and consumer protection. Several years later
the NCP organized national seminars about CSR.
In 1997, the Czech Council for Economic and Social Accord was established as an
institutional platform for social dialogue between the government, the unions and
81
Bartošová, Z. (2006), Guidebook of Corporate Philanthropy (Průvodce firemní filantropií), Fórum dárců, Praha
82
Business Leaders´ Forum (2008), History and General Information, available at: http://www.blf.cz/about.htm
41
employers. Its goal is to achieve agreement on central issues of economic and social
development, and in the preparation of legislative measures and relevant norms. The
establishment of tripartite structures in the regions can be seen as beneficial for creating
the sound and responsible relations of a social partnership. The government has paid
special attention to overseeing adherence to the applicable norms in employment
relations, and in the protection of the work environment and the environment in general,
including customer and consumer protection.
Another positive development was initiated by some enlightened companies in 1999. The
Czech Institute of Directors was set up to enhance local standards of corporate
governance. In cooperation with the Czech Securities Commission and referring to the
OECD Principles of Corporate Governance, a code of conduct for listed companies was
elaborated and enforced in 2001. A definition of best practice as well as training
programmes for board members have also been developed.83
The harmonisation of Czech law with EU legislation, and the Czech Republic's accession
to the European Union, contributed to major advances in the promotion of CSR. As long
ago as 1998 the Czech Republic adopted, among other things, rules for the introduction
of Eco-Management and Audit Scheme (hereinafter also EMAS), and prepared the first
National EMAS Programme. The programme was updated in 2002 and is currently
governed by EC Regulation no. 761/2001. In order to fully participate in this programme,
companies must, among other things, introduce an environmental management system
which contributes to the continuous improvement of their environmental conduct. In 2007
there were 17 Czech organisations registered in the EMAS Registry, and another 1.500
in the EMS system (ISO 14001).84
Important milestone in building foundations of CSR was August 2003, when the
Sustainable Development Council of the Czech Government (hereinafter also SDCG)
was established as a standing advisory body of the Government for sustainable
development and strategic management. Its main tasks include the coordination and
implementation of the overarching strategic plan for sustainable development - the
Sustainable Development Strategy of the Czech Republic. This strategy was approved
by the Czech Government in December 2004. The SDCG elaborates, coordinates and
monitors the application of the principles of sustainable development, while maintaining a
dynamic balance of its economic, social and environmental aspects. The general
objective of the Strategy is to ensure as high a quality of life as possible for the country's
inhabitants, while creating favourable conditions for a good quality of life for future
83
The Czech Institute of Directors (2008), About the Czech Institute of Directors (O Institutu členů správních orgánů, o.s.),
available at: http://www.ciod.cz/o-ciod/
84
Czech Environmental Information Agency – CENIA (2008),
http://www.cenia.cz/__C12571B20041E945.nsf/$pid/MZPMSFGSEV4B
42
About
EMAS
(O
EMAS),
available
at:
generations. The strategy responds to the need for coordinated development, and a
balance of the social, economic and environmental pillars of sustainable development.
The Strategy also includes programmes to support SMEs in implementing CSR and
programmes to support the development of entrepreneurial activities by women. These
programmes should be deployed especially in areas with greater unemployment rates, in
the industry, trade and services sectors. The programmes comprise, above all, advisory
services, assistance in putting together business plans and financial subsidies.85
Even though CSR and debate about it was not in the Czech Republic as popular as in
older Western democracies, CSR topic has steadily becoming more and more popular
and also a group of involved companies has been growing. Today many companies,
particularly the large ones, present their achievements in CSR and other related
documents on their web pages as well as on pages of organizations promoting CSR.
Increasing interest in CSR and a trend in implementation of CSR reflect also surveys of
the Business Leaders´ Forum. In 2004 in the survey 76 % of surveyed companies
claimed to be involved at least in one CSR activity (the most frequently towards
employees); in 2007 it was almost 90 %. CSR awareness has also been increasing
thanks to international corporations operating in the country as they belong among main
supporters of CSR and have brought essential know-how from their homelands.
2.4.3 Latest Development of Corporate Social Responsibility in the
Czech Republic
As CSR gaining its popularity among entrepreneurs, some non-governmental
organizations have been focusing on building partnership between profit and non-profit
organizations in the area of corporate philanthropy, corporate volunteerism, social
marketing, environmental protection and others (e.g. HESTIA86, AISIS87, Czech Donors
Forum88, Environmental Law Service89, Business Leaders´ Forum, etc). These non85
European Commission´s Directorate General for Employment, Social Affairs and Equal Opportunities (2007), Corporate
Social Responsibility: National public policies in the European Union, Luxembourg, Office for Official Publications of the
European
Communities,
available
at:
http://ec.europa.eu/employment_social/soc-dial/csr/pdf/csrnationalpolicies
2007_en.pdf
86
The mission of HESTIA is to support and further develop positive interpersonal relationships. HESTIA actively engages
in research, training, and educational programmes for non-profit organizations, organizes and hosts international and
national conferences, and also works as a broker for international and local businesses by organizing corporate
volunteering projects.
87
The mission of AISIS is to create, further develop and realize publicly beneficial programmes, which enable people to
develop key social skills, help building equal opportunities and support sustainable development of organizations.
88
Czech Donors Forum (CDF) is a civil association of corporate donors, foundations and non-endowed foundations. It was
established in 1996 and provides support and leadership to the donor community in the Czech Republic. Its mission is to
support the development of organized philanthropy and to serve the Czech donor community. It acts as a platform for the
regular exchange of ideas, information and expertise. CDF activities are aimed at creating favourable conditions for giving
on individual, institutional, community and company levels.
89
The Environmental Law Service (EPS) is a non-governmental, non-profit, and non-political public interest law
organization that gathers together lawyers and law students. The EPS contributes to the protection of the public interest
and human rights. The main aim of its GARDE Program is to make multinational corporations behave responsibly and it
tries to achieve this mainly through strategic litigation. It is thanks to such missions that it not only provide legal aid to
43
governmental organizations also developed and have been operating interesting web
portals full of information on CSR and some of them publish their own newsletters. The
promotion of CSR is aided by the country's cooperation with international organisations,
especially the International Labour Organization (hereinafter also ILO) and OECD. The
new Employment Act, which took effect in October 2004, and the new Labour Code
enabled the ratification of the eight so-called basic ILO principles, which contain
foundational principles and rights for the workplace. In March 2007 the Ministry of Labour
and Social Affairs created a new website on CSR, to inform users about the concept of
CSR in the European Union. The website also provides references to different projects
and activities concerning the promotion of CSR.90
Despite of non-profit and profit organizations´ and government’s efforts in promoting
CSR, there still is a lot of companies, which consider as satisfactory CSR involvement
only providing financial and non-financial means for philanthropy and do not concentrate
on more deeper integration of CSR into company’s structure and operation. According to
the Environmental Law Service also majority of people in the Czech Republic thinks that
CSR is the same as corporate philanthropy.91
In spite of state and government’s effort in promoting CSR, conducted surveys
discovered that this effort was not efficient and probably missed its target. According to
the respondents of the Business Leaders´ Forum’s survey among entrepreneurs in 2004,
the state has not been playing any important role in promoting CSR. The only
governmental body paying some attention to CSR has been the Council for Sustainable
Development. Entrepreneurs would welcome communication of the CSR concept and
strategies how to achieve and implement it by the state to the general public, awards to
socially responsible companies, and information directed to consumers, who on all
accounts play an important role in adopting CSR practices. Lack of CSR information has
been manifested in other surveys as well. For example, the STEM92 survey in 2003 for
Philip Morris conducted among Czech citizens revealed that information about
companies´ CSR activities was hardly accessible. Only one fifth of the population was
sufficiently informed about social, environmental and ethical aspects of corporate
behaviour.93 94
citizens who suffer from the irresponsible and reckless behaviour of corporations who cooperate with state institutions, but
it also open social debates over such issues.
90
Czech Ministry of Labour and Social Affairs (2008), Corporate social responsibility (Sociální odpovědnost podniků),
available at: http://www.mpsv.cz/cs/3893
91
Franc, P. (2008), Debate on Corporate Social Responsibility (Společenská zodpovědnost korporací – rozhovor s
Pavlem Francem z EPS), available at: http://zpravodajstvi.ecn.cz/index.stm?x=1963939
92
STEM is the Czech Centre for empirical research.
93
Based on Bohatá, M. (2005), Discovering a New Concept of Authority, in Habisch, A. et al. (2005), Corporate Social
Responsibility Across Europe, Springer Berlin Publishing, Berlin, page 164 and web pages of the Business Leaders´
Forum, available at: http://www.csr-online.cz/NewsDetail.aspx?p=3&id=584
44
In author’s opinion, CSR is seen as a viable concept in the Czech Republic. However,
some important factors fostering this modern philosophy of doing business as well as an
appropriate institutional framework are still not sufficient. Among these factors, pressure
of investors and banks may be considered crucial. Socially responsible investments are
not yet an option for Czech citizens, as there has not been a tradition in investing in stock
market. But pension and other funds may play some role in this respect. Also the role of
the media should increase. Last but not least governmental incentives, mainly fiscal, but
also various other tools and awards should be developed to promote CSR in an
organized and systemic way. Organizations promoting CSR should also be more
supported.
2.5 Corporate Social Responsibility from Small and MediumSized Companies´ Perspective and Major Differences
between SMEs and Large Companies in the Context of CSR
2.5.1 Definition of Micro, Small and Medium-Sized Enterprises
Definition of an Enterprise
According to a European definition, an enterprise is considered to be any entity engaged
in an economic activity, irrespective of its legal form. This includes, in particular, selfemployed persons and family businesses engaged in craft or other activities, and
partnerships or associations regularly engaged in an economic activity.95
Definition of Micro, Small and Medium-Sized Enterprises
What exactly an SME or small to medium-sized enterprise is, depends on who’s doing
the defining. For example Canada uses the term SME to refer to businesses with fewer
than 500 employees, while classifying firms with 500 or more employees as large
businesses. Breaking down the SME definition, Canada defines a small business as one
that has fewer than 100 employees (if the business is a goods-producing business) or
fewer than 50 employees (if the business is a service-based business). A firm that has
more employees than these cut-offs but fewer than 500 employees is classified as a
medium-sized business. A micro business is defined as a business with fewer than five
employees.96
94
Pavlů, D. et al. (2002), Final Paper on Research of Corporate Social Responsibility in the Czech Republic (Závěrečná
zpráva z výzkumu společenská odpovědnost firem v České Republice), available at: http://www.amasia.cz/sluzby
/data/spolecenska-odpovednost-firem-2002.pdf
95
Commission of the European Communities (2003), Commission Recommendation of 6 May 2003, concerning the
definition of micro, small and medium-sized enterprises, (2003/361/EC), available at: http://www.euresearch.ethz.ch
/docs/SME.pdf
96
Ward, S. (2008), Definition of SME, Small business in Canada, available at: http://sbinfocanada.about.
com/od/businessinfo/g/SME.htm
45
There are no standard United States definitions for small or medium enterprises,
although a small business generally is described as one with fewer than 100 employees.
An enterprise with fewer than 10 employees is generally classified as a small office/home
office or a micro business. A large business enterprise is larger than a medium
enterprise, which is defined as having less than 500 employees.97
However for the purposes of this dissertation and probably the best available definition of
European businesses, the author of this paper decided for a definition of the European
Commission. According to this definition the category of micro, small and medium-sized
enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and
which have an annual turnover not exceeding EUR 50 million, and/or an annual balance
sheet total not exceeding EUR 43 million. A small enterprise is defined as an enterprise
which employs fewer than 50 persons and whose annual turnover and/or annual balance
sheet total does not exceed EUR 10 million. And finally a micro enterprise is defined as
an enterprise which employs fewer than 10 persons and whose annual turnover and/or
annual balance sheet total does not exceed EUR 2 million.98
Validity of the European definition of SMEs verified in his research H-E. Hauser, who
came to the conclusion that the size limits of SMEs as defined in the Commission
Recommendation of 6 May 2003 concerning the definition of micro, small and mediumsized enterprises correspond to the relations in reality.99
Nevertheless, Hauser also pointed some issues that slightly undermine European
definition. In his opinion in many Business Registers enterprise group’s links are still not
fully implemented100 and thus:

when a legal unit is part of an enterprise, or

when an enterprise is controlled by another enterprise
and has for e.g. less than 250 employees, European SME statistics assigns such units to
the group of small and medium sized enterprises. Main problem of such a politics is not
only those legal units are counted as enterprises but also that enterprises are treated
equal even if they have completely different types of ownership and arising from that are
of completely different character. Main difference between independent enterprises and
97
Your Dictionary.Com (2008), SME Definition, available at: http://www.yourdictionary.com/sme
The Commission of the European Communities (2003), Commission Recommendation of 6 May 2003, concerning the
definition of micro, small and medium-sized enterprises, (2003/361/EC), available at: http://www.euresearch.ethz.ch
/docs/SME.pdf
99
Hauser, H-E. (2005), A qualitative definition of SME, Institute für Mittelstandsforschung, Bonn, Germany, in OECD,
Statistics Directorate (2005), SBS Expert Meeting “Towards better Structural Business and SME Statistics”, available at:
http://www.oecd.org/dataoecd/32/14/35501496.pdf
100
In many European Business Registers enterprise group’s links are still not fully implemented and the groups are not
profiled. Thus it is not possible to find out, which legal units form together an enterprise.
98
46
enterprises belonging to an enterprise group is the way of decision making, in particular
when strategic issues are decided. 101
2.5.2 General Features and Statistics of Micro, Small and MediumSized Enterprises
Number of Micro, Small and Medium-Sized Enterprises in Europe
SMEs account for a large proportion of Europe’s economic and professional activity. In
practice in 2007, more than 99 % of businesses in the European Union were SMEs, and
they provided two-thirds of all private sector jobs. So, SMEs have been, in fact, the real
giants of the European economy. Micro-businesses (those with fewer than 10
employees) have been dominating employment in countries such as Italy (47 %) and
Poland (41 %). In real numbers, there were around 23 million SMEs in the EU, which
provided over 125 million jobs, and in some sectors accounted for more than three
quarters of all jobs. SMEs therefore make up the backbone of Europe’s economy. 102
Their relative importance was, however, lower in terms of their contribution to providing
jobs and wealth, as 67,1 % of the non-financial business economy workforce in the EU27 was employed in SMEs, while 57,6 % of the non-financial business economy’s value
added was generated by SMEs (see Table 2.3 and Table 2.4).
Figure 2.2: Division of enterprises in the EU according to their size (in % from total)
Medium
1,1%
Large
0,2%
Small
7,3%
Micro
91,4%
Source: Eurostat (2005), Introduction to annual structural business statistics (SBS), available at: http://epp.eurostat.ec.
europa.eu/portal/page?_pageid=2293,59872848,2293_68195486&_dad=portal&_schema=PORTAL#first
101
Hauser, H-E. (2005), A qualitative definition of SME, Institute für Mittelstandsforschung, Bonn, Germany, in OECD,
Statistics Directorate (2005), SBS Expert Meeting “Towards better Structural Business and SME Statistics”, available at:
http://www.oecd.org/dataoecd/32/14/35501496.pdf
102
European Union SME Portal (2008), Facts and figures – SMEs in Europe, available at: http://ec.europa.eu/enterprise
/entrepreneurship/facts_figures.htm
47
SMEs in the EU-27 employed, on average, 4,3 persons in 2005. This figure varied
considerably between Member States from highs of 12 persons per SME in Slovakia and
upwards of 7 in Estonia, Ireland, Latvia and Germany, to less than 3 in the Czech
Republic (2004) or Greece.103
According to the Eurostat, from the total of around 23 million enterprises in the European
Union in 2005, 91,4 % formed micro, 7,3 % small, 1,1 % medium, and only 0,2 % large
companies (please, see, .Figure 2.2 on the previous page).
Table 2.3 highlights principal indicators of the EU´s non-financial business economy
broken down by enterprise size into SMEs and large enterprises. Comparing the Czech
Republic with the European average, all three indicators – number of enterprises, value
added, and number of persons employed – almost identically copy European average.
Table 2.3:
Main indicators of European non-financial business economy broken down by size of a
company (2004; % share of total)
Number of
enterprises
EU-27(1)
Value added
Number of persons
employed
SMEs
Large enterprises
SMEs
Large enterprises
SMEs
Large enterprises
99,8
0,2
56,9
43,1
66,7
33,0
BE
:
BG
99,7
0,3
49,5
50,5
71,7
28,3
CZ
99,8
0,2
56,7
43,3
68,9
31,1
DK
99,7
0,3
:
:
:
DE
99,5
0,5
:
:
60,1
EE
99,6
0,4
:
:
:
:
:
:
:
:
:
IE
:
:
:
:
:
:
:
39,9
EL
:
ES
99,9
0,1
68,1
31,9
79,1
20,9
FR
99,8
0,2
53,7
46,3
60,9
39,1
IT
99,9
0,1
70,3
29,7
81,2
18,8
:
:
:
:
:
CY
:
:
:
:
:
LV
99,7
0,3
:
:
75,0
25,0
LT
99,4
0,6
56,7
43,3
71,3
28,7
LU
:
HU
99,9
MT
:
NL
99,7
0,3
60,4
AT
99,7
0,3
:
PL
99,8
0,2
47,8
PT
:
RO
99,5
0,5
44,5
SI
99,7
0,3
:
SK
98,6
1,4
42,4
:
0,1
:
:
:
:
51,9
48,1
:
:
39,6
:
52,2
:
:
55,5
:
57,6
103
:
72,2
:
67,4
:
70,3
:
58,2
:
51,2
:
:
27,8
:
32,6
:
29,7
:
41,8
:
48,8
Eurostat, Schmiemann, M. (2008), Industry, trade and services: Enterprises by size class - overview of SMEs in the
EU, Statistics in focus 31/2008, available at: http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-SF-08-031/EN/KSSF-08-031-EN.PDF
48
Number of
enterprises
SMEs
Number of persons
employed
Value added
Large enterprises
SMEs
Large enterprises
SMEs
Large enterprises
FI
99,7
0,3
:
SE
99,8
0,2
56,5
43,5
64,2
35,8
UK
99,6
0,4
50,7
49,3
53,9
46,1
:
:
:
(1) Rounded estimates based on non-confidential data.
Source: Eurostat (2008), Small and medium-sized enterprises (SMEs), available at: http://epp.eurostat.ec.europa.eu
/portal/page?_pageid=2293,59872848,2293_68195655&_dad=portal&_schema=PORTAL
The only more visible deviation from the European average in the Table 2.3 represents
Italy and Spain, where both the value added by SMEs and the number of employed
persons by SMEs is approximately 15 % greater than EU-27 average.
The following Figure 2.3 provides an overview of allocation of private sector employees
sorted according to the size of a company they were engaged in. Generally, about 67%
of EU’s private sector jobs were in SMEs in 2005 and the remaining 33 % were in large
companies.
Figure 2.3: Division of enterprises in the EU according to number of employed persons, sorted
according to their size (in % from total)
Micro
29,6%
Large
32,9%
Small
20,7%
Medium
16,8%
Source: Eurostat (2005), Introduction to annual structural business statistics (SBS), available at:
http://epp.eurostat.ec.europa.eu/portal/page?_pageid=2293,59872848,2293_68195486&_dad=portal&_schema=PORTAL
#first
Table 2.4 on the following page provides additional information on key indicators for
companies in the EU non-financial business economy. From the table is apparent that
even though large companies form minority of total companies (0,2 %), their
proportionate value added and apparent labour productivity are much higher than those
of SMEs.
49
Table 2.4:
Key indicators for enterprises in the non-financial business economy in the EU-27
Indicator
Total
SMEs
Micro
Small
Medium
Large
Number of enterprises (millions)
Share in total (%)
Persons employed (millions)
Share in total (%)
Value added (EUR billion)
Share in total (%)
Apparent labour productivity
(EUR 1 000 per person employed)
Relative to total (%)
19.65
100.0
126.7
100.0
5 360
100.0
19.60
99.8
85.0
67.1
3 090
57.6
18.04
91.8
37.5
29.6
1 120
20.9
1.35
6.9
26.1
20.6
1 011
18.9
0.21
1.1
21.3
16.8
954
17.8
0.04
0.2
41.7
32.9
2 270
42.4
42.3
100.0
36.4
86.1
29.9
70.7
38.7
91.5
44.8
105.9
54.4
128.6
Note: Including rounded estimates based on non-confidential data; 2005.
Source: Schmiemann, M.(2008), Industry, trade and services: Enterprises by size class - overview of SMEs in the EU,
Eurostat – Statistics in Focus 31/2008, available at: http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-SF-08031/EN/KS-SF-08-031-EN.PDF
The following Table 2.5 provides some perspective on number of enterprises and value
added in SMEs and large companies in the Czech Republic broken down into individual
lines of business. In SMEs category, the biggest number of companies is in “Other
Services” (32 %) and in “Trade” (25 %). The greatest value added on one employee
generates “Financial Services” and “Other Services”, while in large company category it
is “Financial Services” and “Industry”. According to Professor Veber, financial
performance and value added have recorded positive development for last five years.
Table 2.5:
Detail information on number and value added of SMEs in the Czech Republic
Line of Business
SME
Individual
SMEs
Company Entrepreneur Total
Number of Entities in Ths
Proportion
of SMEs
on Total
(%)
Value Added on
an Employee in
SMEs
Value Added on
an Employee in
Large Company
(Ths)
(Ths)
Industry
26
132
157
16%
389
640
Building Industry
7
89
95
10%
369
566
Trade
55
195
250
25%
479
397
Hotel and Catering Industry
5
48
52
5%
215
343
Transportation
5
41
46
5%
496
596
Financial Services
1
29
30
3%
1 232
1 734
Other Services
47
269
316
32%
524
539
Agriculture
4
39
43
4%
247
294
149
840
989
100%
422 (Average)
641 (Average)
Total
Note: Based on Ministry of Trade and Industry data for the year 2003.
Source: Veber, J., Srpová, J., et al. (2005), Entrepreneurship and Small and Medium-Sized Companies (Podnikání malé a
střední firmy), Grada Publishing, Praha, page 23-24
50
2.5.3 Corporate Social Responsibility in Small and Medium-Sized
Enterprises
General Aspects of CSR in SMEs
It is sometimes argued that CSR is difficult for small and medium-sized enterprises. It
needs to be clarified that a socially responsible approach to business is not difficult for
SMEs with an interest in long-term profitability and sustainability. However, reporting
such approaches can be for SMEs more problematic than for large players. This is
because it can be costly to capture and provide the relevant information to demonstrate a
company’s responsible approach towards its society and environment, especially if that
company is not already capturing such information for its management purposes. SMEs
are less able to apply dedicated internal resources to the reporting of any responsible
approaches they may take than large organisations. Usually SMEs´ owner-managers are
already participating in responsible approaches, although they may not describe them as
being part of CSR. Ongoing public discussion of the CSR concept, mentioned in the
subchapter 1.1 “Definition of Corporate Social Responsibility”, should lead in turn to
greater familiarity with the concept and can be seen as useful to assist owners,
managers and employees in all sizes of enterprise to clarify what constitutes CSR. Such
clarity assists SMEs to make informed decisions as to which approaches they believe to
be most appropriate to them and in communication with key stakeholders using a shared
language. Important role in spreading CSR agenda in life of SMEs play also large
companies as they are beginning to encourage SME suppliers, through their supply
chains, to become more active in CSR.
Specifics of CSR in SMEs and Differences Compared to Large Companies
It is said that SMEs often think locally and act locally and also seek to develop and foster
their own approaches to CSR. The question of whether the particular sector or industry in
which an organisation operates has implications for companies’ CSR approaches goes
to the heart of the need to maintain choice in socially responsible approaches. This is
because different industry sectors face unique sustainability issues. For example, while
the extractive industry is more likely to have a far greater impact on the environment than
the financial services sector, the latter does have an environmental impact and must
consider the sustainability issues it faces in that regard. Looking at what the extractive
industry is doing on this front will not necessarily assist the financial services sector to
devise CSR approaches suitable to it.104
104
Sheehy, T. (2006), Corporate Social Responsibility, Chartered Secretaries Australia, available at:
http://www.csaust.com/AM/Template.cfm?Section=Submissions&Template=/CM/ContentDisplay.cfm&ContentID=5881
51
The nature of CSR in SMEs can be significantly different from CSR in large companies.
For example, many multinational companies report against variety of international
reporting initiatives that were developed specifically for large organisations with a global
footprint. A large organisation operating in multiple jurisdictions is concerned with the
organisation’s impact, both direct and indirect, on the economic resources of its
stakeholders and on economic systems at the local, national, and global levels, including
such matters as employee wages, financial arrangements with customers and suppliers,
and taxes. Environmental impacts include the organisation’s products and services;
energy, material and water use; greenhouse gas and other emissions; waste generation;
impacts on biodiversity; use of hazardous materials; recycling, pollution, waste reduction
and other environmental programmes; and the cost of non-compliance with
environmental regulation. Social indicators concern an organisation’s impacts on the
social systems within which it operates, which can include labour practices (for example,
diversity, employee health and safety), human rights (for example, child labour,
compliance issues), and broader social issues affecting consumers, communities, and
other stakeholders (for example bribery and corruption, community relations). It has to be
stressed that it is a challenge for SMEs to adapt and narrow the broad CSR concept
used by large and multinational companies and incorporated in the global reporting
initiatives so that it has relevance for the CSR agenda of those SMEs with either a less
significant global operation or none at all.
According to the Forum of Private Businesses105 the relationships between SMEs and
their key stakeholders – notably employees and customers – are qualitatively different
from those of large businesses, characterized by a high level of informality. Customer
relationships are often based on personal knowledge of the customer’s needs, while
employee relationships are more family-like, with greater cordiality and social integration.
Such relationships, by virtue of their intimate nature, are seen as inherently more
responsible as the more impersonal relationships associated with big businesses.
Therefore, SMEs may consider themselves to be “responsible businesses”, even though
it may not be formally recognized.106 This opinion was reinforced by the research
project107, which showed that 96 percent of SMEs felt they have responsible business
practices.
105
The Forum of Private Business (FPB) was established in 1977. It is a non-party political organisation and represents
25,000 UK-based private businesses, which in turn employ more than 600,000 people. The FPB fights for fair treatment of
private businesses by decision-makers and supports the profitable growth of its members.
106
Southwell, C. (2004), Engaging SMEs in Community and Social Issues, in Spence, J. L., Habisch, A., Schmidpeter, R.
(2004), Responsibility and Social Capital – The World of Small and Medium Sized Enterprises, Palgrave Macmillan
Publishing, New York, page 97 - 98
107
The Research Project “Engaging SMEs in Community and Social Issues” was a consortium research study on behalf of
the UK Department of Trade and Industry, led by Business in the Community, with the British Chamber of Commerce, and
the Institute of Directors and Accountability conducted in 2002.
52
Uniqueness of SMEs in their approach to CSR agenda and difference of their approach
from large companies can also be demonstrated on their inherent strengths and
weaknesses. Strengths of SMEs that should facilitate CSR implementation and reinforce
their CSR can be found in the following:

Lean organization structure that brings lower costs on management of the
company, lower level of internal bureaucracy, and in this way more can be spend
on CSR activities.

Flexibility that can improve action time in individual CSR activities (SME can
quickly act in urgent situations – e.g. can provide help to citizens after natural
disasters).

SMEs generate great number of innovations of lower rank, which can significantly
improve their CSR either directly or indirectly.

Personal and informal relationship of owner-managers or managers with
employees and customers can both foster CSR in the company and assure
credibility of CSR activities in the eyes of customers and employees.

Usually SMEs represent local capital and local proprietary relations and results of
undertaking often stay in respective community or region. Entrepreneurs are less
anonymous to their community and quite frequently have personal, sometimes
emotional, relationship to the community they live in and operate. These factors
can positively influence implementation of CSR in the company and attitude of
community towards the respective company.
Despite many strong points, there are also weaknesses that can hamper SMEs´ efforts
in implementing of CSR into their operation. They can be following:

Lack of financial resources that can be invested in CSR.

Due to the financial constraints SMEs cannot employ top professionals who in
turn could bring to the company unique and valuable know-how, e.g. also in the
field of CSR.

SMEs are often excessively burdened with state bureaucracy and frequent
changes in legislation and do not have spare time and resources for engagement
in CSR.

SMEs have worse access to information and consultancy services than large
companies, which can play important role when implementing CSR in the
company for the first time without previous experience.
One of the reasons, one of the stimuli for SMEs in engaging in CSR can be scarcity of an
appropriate workforce. According to the Czech business server Podnikatel more than
half of SME managers said that they have recruitment problems. A primary problem is
53
the availability of an appropriate workforce, while excessive wage demands are a
relatively distant second issue. Finding and hiring the appropriate workforce is a
challenge for many SMEs in the EU. Especially in the new Member States, a significant
number of jobs remain unfilled.108 Reasons for this vary, however two of them are lower
prestige being employed in an SME and lower level of social benefits SMEs provide.
Remedy against this disadvantage could be implementation of CSR in SMEs.
Another reason for CSR engagement is energy efficiency and environmental protection.
According to the Observatory of European SMEs comprehensive systems for energy
efficiency are much less in place in SMEs (4 % of total) than in large enterprises (19 % of
total). The same applies for simple measures to save energy, which are used by 30 % of
SMEs but 46 % of large enterprises.109 Again, implementation of CSR could improve
above-mentioned shortcomings of SMEs and achieve cost savings via energy efficiency.
108
Business Server Podnikatel (2008), SMEs (Malé a střední podniky (MSP)), available at: http://www.podnikatel.cz
/start/zacinajici-podnikatel/male-a-stredni-podniky-msp/
109
The Observatory of European SMEs (2007), Analysis of Competitiveness, available at: http://ec.europa.eu/enterprise
/enterprise_policy/analysis/observatory_en.htm
54
Chapter 3.
Essential Aspects of Corporate Social
Responsibility
3.1 Levels of Corporate Social Responsibility
One of the approaches how to review in a more detail CSR is based on division of CSR
into three mutually interrelated levels. According to the approach CSR can be
understood in terms of different stakeholders and the issues that they are concerned
with. These issues relate to the overlapping levels of social, environmental and economic
impact. Composition of each level provides the following Figure 3.1.
Figure 3.1: Three Fundamental Levels of Corporate Social Responsibility
Economic Level
Principles of Corporate Governance
Code of Ethics
Transparency and Mitigation of Corruption
Intellectual Property Safeguarding
Investor Relations
Business Relations
Customer Relations
Product and Services Quality and Safety
Social Level
Corporate Philanthropy and Volunteering
Employment Policy, Health and Safety of
Employees, Education and Trainings
Employment of Disadvantaged Group of
People
Gender Equality
Human Rights
Environmental Level
Ecological Production, Products and Services
Natural Resources Protection
Investments into „Green“ Technologies
Environmental Friendly Corporate Culture
(Recycling, Energy Conservation, etc.)
Source: Based on Placet, M. A., Flower, R., Kimberly, M. (2005), Strategies For Sustainability, available at:
http://www.allbusiness.com/environment-natural-resources/pollution-monitoring/10575494-1.html
and
Blažek,
L.,
Doležalová, K., Klapková, A.(2005), Corporate Social Responsibility (Společenská odpovědnost podniků), Centrum
výzkumu konkurenční schopnosti české ekonomiky, Working paper no. 9/2005, available at: http://www.econ.muni.cz
/centrum/papers/wp2005-09.pdf
The economic level concerns not simply with the basics of financial returns but elements,
which contribute to long-term financial success such as reputation and relationships and
the broad economic impact of a company in terms of the multiplier effects of wages,
investment and sourcing. Environmental level involves protecting air, water, land, and
ecosystems, as well as effectively managing the earth's natural resources including fossil
fuels. Social level means improving the quality of life and equity for employees of the
55
company and for society as a whole. In a successful sustainability focused business
strategy, these three levels are inter-related and support each other.110
It is not accidental that the three levels of CSR are in fact the same as elements of
sustainable development and “triple bottom line” (or "people, planet, profit”).
3.2 Dimensions of Corporate Social Responsibility
Dividing CSR framework into two dimensions, as was already proposed by the European
Union in the document “Promoting a European framework for corporate social
responsibility” in 2001, is helping better understand the different elements of CSR.
According to this approach, CSR has an internal and external dimension. The internal
dimension of CSR encompasses human resources management, occupational health
and safety management, business restructuring, and management of environmental
impact and natural resources. The external dimension of CSR, which goes beyond the
doors of the company and involves many stakeholders, affects local communities,
business partners and suppliers, customers and consumers, protection of human rights
along the whole supply chain, and global environmental concerns. The following
subchapters provide more details on both dimensions.
3.2.1 Internal Dimension of Corporate Social Responsibility
Internal dimension of CSR, i.e. socially responsible practices within the company,
primarily involve employees and relate to issues such as investing in human capital,
health and safety, and managing change, while environmentally responsible practices
relate mainly to the management of natural resources used in the production. These
practices open a way of managing change and reconciling social development with
improved competitiveness.
3.2.1.1 Human Resources Management
A major challenge for enterprises today is to attract and retain skilled and highly
motivated workers. The statement supports recent research by the Czech Economic
School in Prague focused on SME companies operating in the Czech Republic.
According to the results of the research, the second biggest problem for the companies
in the stage of maturity was lack and difficult recruitment of competent and skilled
employees, a major problem for companies in the stage of growth was hiring and
110
Placet, M. A., Flower, R., Kimberly, M. (2005), Strategies For Sustainability, available at: http://www.allbusiness.com
/environment-natural-resources/pollution-monitoring/10575494-1.html
56
fostering of competent managers, recruitment, job-switching of skilled employees, and
lower working morale or esprit de corps of regular employees.111
In this context, relevant measures that can help companies resolve above-mentioned
troubles include lifelong learning, empowerment of employees, better information flow
throughout the company, better balance between work, family, and leisure, greater work
force diversity, equal pay and career prospects for women, profit sharing and share
ownership schemes, and job security. Active follow up and management of employees
who are temporarily off work due to disabilities or injuries can also result in increased
employee loyalty and cost saving.
Responsible recruitment practices, involving in particular non discriminatory practices,
can facilitate companies the recruitment of people from ethnic minorities, older workers,
and women and the long-term unemployed and people at disadvantage. Such practices
are essential in relation to reducing unemployment particularly of disadvantaged people
such as gipsies or people in pre-retirement age, raising the employment rate, and
fighting against social exclusion.
In another area of human resources management, life-long learning, enterprises have an
essential role to play at several levels:

They contribute to a better definition of training needs through close partnership
with local actors who design education and training programmes;

They support the transition from school to work for young people, for example by
providing apprenticeship places; and

They provide an environment, which encourages lifelong learning by all
employees, particularly by the less educated, the less skilled and older workers.
3.2.1.2 Health and Safety at Work
Health and safety at work has traditionally been approached mainly by means of
legislation and enforcement measures. However, the recent and popular trend of
outsourcing work to contractors and suppliers makes enterprises more dependent on the
safety and health performance of their contractors, especially those who are working
within their own premises.
Today companies, governments and sector organisations are increasingly looking at
additional ways of promoting health and safety, by using them as criteria in procuring
products and services from other companies and as a marketing element for promoting
their products or services. These voluntary schemes can be seen as complementary to
111
Kubálková, M. (2006), Growth Models of SMEs (Model stádií růstu malých a středních podniků), Vysoká škola
ekonomická v Praze, available at: http://nb.vse.cz/~kubalm/Vyzkum/vyzkum2006.htm
57
legislation and control activities by public authorities as they similarly aim at promoting a
preventive culture, i.e. higher levels of occupational safety and health.112
As the focus on occupational health and safety performance and qualities of products
and services is increasing, there is also an increasing demand for measuring,
documenting and communicating these qualities in the marketing and promotional
material. Occupational safety and health criteria have been included to varying degrees
into existing certification schemes and labelling schemes for products and equipment.
Certification schemes of management systems and subcontractors focusing primarily on
occupational safety and health have also been launched. The Swedish TCO Labelling
Scheme can serve as an example. The Swedish TCO113 Labelling Scheme for office
equipment is a voluntary label that intends to stimulate the manufacturers to develop
more occupational and environmentally safe office equipment; assist purchasers to
choose office equipment less problematic for the users and the external environment;
and to provide purchasers and the vendor with a clearly defined label, thereby saving
time, work and costs in the purchasing process.114
On top of that, the tendency of companies and organisations to include occupational
safety and health criteria into their procurement schemes has supported the
development of generic procurement schemes based on uniform requirements for
contractor occupational safety and health training or management systems, which allow
for a third party to carry out the certification or initial approval of the contractors as well
as overseeing the continuous improvement of the scheme.
3.2.1.3 Management of Environmental Impacts and Natural Resources
In general, reducing the consumption of resources or reducing polluting emissions and
waste can reduce environmental impact. It can also be good for the business by reducing
energy and waste disposal bills and lowering input and de-pollution costs. Individual
enterprises have found that less use can lead to increased profitability and
competitiveness and compliance with CSR practices.
In the environmental field, environmental investments are usually referred to as "win-win"
opportunities - good for business and good for the environment. This principle has been
established for a number of years and in 2002 was recognised in the European
Commission's 6th Environment Action Programme. It explains how the EU and Member
State governments can fulfil their role to help business to identify market opportunities
112
European Agency for Safety and Health at Work (2008), EU-OSHA Annual report 2007: bringing safety and health
closer to European workers, available at: http://osha.europa.eu/en/publications/annual_report/2007full
113
TCO - The Swedish Confederation for Professional Employees comprises 16 affiliated trade unions.
114
The Swedish Confederation for Professional Employees (2008), "Go Beyond Green" with the TCO certification!,
available at: http://www.tcodevelopment.com/
58
and undertake "win-win" investments. It set out a number of other measures aimed at
business: establishment of a compliance assistance programme to help business
understand environmental requirements; development of national, but harmonised,
company environmental performance reward schemes that identify and reward good
performers and encouraging voluntary commitments and agreements.115
A good example of an approach that allows various stakeholders to work together with
companies on reduction of environmental impacts is the European Union’s Integrated
Product Policy (hereinafter also IPP). IPP is founded on the consideration of products'
impacts throughout their life cycle, and involves businesses and other stakeholders in
dialogue to find the most cost-effective approach. In the environmental field, it can
therefore be seen as a strong existing framework for promotion of CSR.116 Another
approach that facilitates CSR is the EU's Eco-Management and Audit Scheme (EMAS)
ISO 19000. This encourages companies voluntarily to set up site or company-wide
environmental management and audit systems that promote continuous environmental
performance improvements. The environmental statement is public and is validated by
accredited environmental verifiers. Very positive on EMAS is also the fact that it can be
implemented in SMEs. The EU for this purpose developed the EMAS Toolkit for small
organisations.117
In current time enterprises are well aware of the opportunities associated with improved
environmental performance, and are working to systematically take advantage of it. The
European Eco-Efficiency Initiative, an initiative of the World Business Council for
Sustainable Development and the European Partners for the Environment in partnership
with the European Commission, has been aiming to integrate eco-efficiency throughout
European businesses, and in the EU´s industrial and economic policies. According to this
Initiative, eco-efficiency is a management philosophy which encourages business to
search for environmental improvements that yield parallel economic benefits. It focuses
on business opportunities and allows companies to become more environmentally
responsible and more profitable. It fosters innovation and therefore growth and
competitiveness. Eco-efficiency is achieved by the delivery of competitively-priced goods
and services that satisfy human needs and bring quality of life, while progressively
reducing ecological impacts and resource intensity throughout the life-cycle to a level at
115
The European Parliament and the Council (2002), Decision No 1600/2002/EC of the European Parliament and of the
Council of 22 July 2002 laying down the Sixth Community Environment Action Programme, available at: http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2002:242:0001:0015:EN:PDF
116
Commission of the European Communities (2001), Green Paper on Integrated Product Policy, COM(2001)68,
Brussels, available at: http://www.iwoe.unisg.ch/org/iwo/web.nsf/SysWebRessources/EU_IPP.pdf/$FILE/EU_IPP.pdf
117
Institute of Environmental Management & Assessment (2009), Environmental Management Systems – Your A – Z
Guide, available at: http://www.iema.net/ems/emas
59
least in line with the Earth’s estimated carrying capacity. In short, it is concerned with
creating more value with less impact.118
3.2.1.4 Adaptation to Change
The last but not least sub-dimension of the internal dimension of CSR is “adaptation to
change”. The widespread restructuring and incipient global economic recession that
taking place all around the world raises concerns for all of the employees and other
stakeholders as the closure of a factory or a heavy cut in its workforce may involve a
serious economic, social or political crisis in local communities. In turbulent times, few
companies escape the need to restructure, often through downsizing and temporary
layoffs. It is often questionable whether objectives of reducing costs, increasing
productivity and improving quality and customer service as they are closely related to the
motivation, loyalty, creativity and productivity of the employees, are achieved through
restructuring operations and mergers. However, restructuring and mergers can be done
without breaking CSR rules.
Restructuring in a socially responsible manner means to balance and take into
consideration the interests and concerns of all those who are affected by the changes
and decisions. In practice the process is often as important as the substance to the
success of restructuring. In particular this involves seeking the participation and
involvement
of
those
affected
through
open
information,
consultation,
and
communication. Furthermore, restructuring needs to be well prepared by identifying
major risks, calculating all the costs associated with alternative strategies, and evaluating
all of the alternatives which could reduce the need for redundancies. The process should
seek to safeguard employees' rights and enable them to undergo vocational retraining
where necessary, to modernise production tools and processes in order to develop onsite activities, to mobilise public and private financing and to establish procedures for
information, dialogue, cooperation and partnership. Companies, by all means, should
take up their share of responsibility to ensure the employability of their staff.119
Experience of the major restructuring operations carried out in Europe in the steel, coal
and shipbuilding industries has shown that successful restructuring can be better
achieved through joint efforts of relevant stakeholders - involving the public authorities,
companies, employees' representatives, and local communities. By engaging in local
development and active labour market strategies through involvement in local
118
The World Business Council for Sustainable Development (2000), Eco-Efficiency: Creating more value with less
impact, available at: http://www.wbcsd.ch/web/publications/eco_efficiency_creating_more_value.pdf
119
The European Commission (2006), European Social Dialogue and Restructuring, available at: http://ec.europa.eu
/employment_social/restructuring/docs/social_dialogue_and_restructuturing_en.pdf
60
employment and social inclusion partnerships, companies can lessen the social and local
impact of large scale restructuring.120
3.2.2 External Dimension of Corporate Social Responsibility
CSR extends beyond the doors of the company into the local community and involves a
wide range of stakeholders in addition to employees and shareholders, particularly
business partners and suppliers, customers, public authorities and non-governmental
organizations representing local communities, as well as the global environment. In a
world of multinational investments and global supply chains, CSR must also extend
beyond the national borders. Rapid globalisation has encouraged discussion of the role
and development of global governance. The development of voluntary CSR practices
can be seen as contributing to this.
3.2.2.1 Communities
The first external sub-dimension relates to communities as CSR is also about the
integration of enterprises in their local settings. Enterprises contribute to their
communities, especially to local ones, by providing jobs, wages and benefits, and tax
revenues. On the other hand businesses depend on the health, stability, and prosperity
of the communities in which they operate. For instance, they recruit a majority of their
employees from the local labour markets, and therefore have a direct interest in the local
availability of the skills and competencies they need for their operation. Furthermore,
SMEs often also find most of their customers and business partners in the surrounding
area. The reputation of a company at its location, its image as an employer and
producer, but also as an actor in the local scene, certainly influences its competitiveness.
Companies also interact with the local physical environment. Some almost entirely rely
on a clean local environment for their production or offering of services, e.g. clean air,
clean water, uncontaminated soil or on various other factors. There can also be a
relationship between the local physical environment and the ability of business to attract
workers to the region they are located in. On the other hand, business can also be
responsible for a number of polluting activities, for example noise, light, and water
pollution, air emissions, contamination of soil, and the environmental problems
associated with transport and waste disposal.
Many companies in order to be socially responsible, competitive and to develop
sustainably become involved in community causes, notably by means of provision of
120
European Commission Directorate General for Employment and Social Affairs (2001), Promoting a European
framework for corporate social responsibility, Green Paper (COM(2001) 366 final), available at: http://ec.europa.eu/
employment_social/soc-dial/csr/greenpaper_en.pdf
61
additional vocational training places, assisting environmental charities, recruitment of
socially excluded people, provision of child-care facilities for employees, partnerships
with communities, sponsoring of local sports and cultural events or donations to
charitable activities.
The development of positive relations with the local community and thereby the
accumulation of social capital121 is particularly relevant for non-local companies.
Multinational companies increasingly use these relations to support the integration of
their affiliates into various markets in which they are present. The familiarity of
companies with the local actors, the local environment traditions and strengths is an
asset from which they can capitalise.
3.2.2.2 Business Partners,
Stakeholders
Suppliers,
Consumers,
and
Other
External
It is an old truth that by working closely with business partners companies can reduce
complexity and costs and increase quality of their products or services. Selection of
suppliers is not always exclusively through competitive bidding. Relationships with
alliance and joint venture partners and with franchisees are equally important. In the long
run building relationships may result in fair prices, terms and expectations along with
quality and reliable delivery. In adopting socially and environmentally responsible
practices all enterprises, however, have to respect the relevant national and
supranational competition laws.
Large and multinational companies are at the same time business partners of the smaller
ones, be it as their customers, suppliers, subcontractors or competitors. Companies
should be aware that their social performance can be affected as a result of the practices
of their partners and suppliers throughout the whole supply chain. The effect of CSR
activities does not remain limited to the company itself, but also concerns their economic
partners. This is particularly the true for large companies, which have outsourced part of
their production or services and, therefore, may have acquired additional CSR with
regard to these suppliers and their staffs. It has to be born in mind that sometimes
economic welfare of these suppliers depends primarily or entirely on one large company.
Large companies can demonstrate CSR by promoting entrepreneurial initiatives in the
region of their location. Examples for such practices include various mentoring schemes
offered by large companies to start-ups and local SMEs, or assistance to smaller firms
on CSR reporting and communication of their CSR activities.
121
Social capital refers to networks, norms and institutions that enable collective action among the individual players of
society including authorities, companies, non-governmental organizations and interest groups. Social capital can be seen
as an economically credible way of discussing issues of social responsibility and contributions made by business or other
groups to society. There is increasing evidence that social capital is critical for societies to prosper economically and for
development to be sustainable. Source: Spence, J. L., Habisch, A., Schmidpeter, R. (2004), Responsibility and Social
Capital – The World of Small and Medium Sized Enterprises, Palgrave Macmillan Publishing, New York, page 3)
62
Corporate venturing constitutes a further way for large companies to facilitate the
development of new innovative enterprises. Corporate venturing means that the large
company takes a minority stake in a promising start-up and promotes its development.
This offers various advantages to both partners, including a better grip on innovative
developments for the large company and easier access to financial resources and to the
market for the small company.122
Today, companies are increasingly expected to provide products and services, which
consumers need and want in an efficient, ethical and environmentally aware manner in
order to be considered as socially and environmentally responsible. Companies, which
build lasting relationships with customers by focusing their whole organisation on
understanding what the customers need and want, and providing them with superior
quality, safety, reliability and service can also expect to be more profitable.
Applying the principle of design for all, i.e. making products and services usable by as
many people as possible including disabled consumers, is also an important example of
CSR.
3.2.2.3 Human Rights
Human rights inseparably belong under the CSR umbrella. CSR has a strong human
rights dimension, particularly in relation to international operations and global supply
chains. Human rights are a very complex issue presenting political, legal and moral
dilemmas. Companies face challenging questions, including how to identify where their
areas of responsibility lie, how to monitor whether their business partners are complying
with their core values, and how to approach and operate in countries where human rights
violations are widespread.
Under increasing pressure from various non-governmental organizations and consumer
groups, companies and business sectors have been increasingly adopting codes of
conduct covering working conditions, human rights and environmental aspects (covering
also subcontractors and business partners). Companies have been doing so for various
reasons, notably to improve their corporate image and reduce the risk of negative
consumer reaction. Voluntary codes of conduct however are not an alternative to
national, EU and international laws and binding rules - binding rules ensure minimum
standards applicable to all, while codes of conduct and other voluntary initiatives can
122
Block, Z., MacMillan, C. I. (1995), Corporate Venturing: Creating New Businesses within the Firm, Harvard Business
School Press, USA, page 13-15
63
only complement these and promote higher standards for those who subscribe to
them.123
While voluntary codes of conduct can contribute to promote international labour
standards, their effectiveness however depends on proper implementation and
verification. Codes of conduct may for instance face subcontractors producing for a
number of different multinational companies with the need to fulfil many different criteria
regarding wages, working hours and other social conditions. Codes of conduct should
therefore be based on common standards such as the International Labour
Organization’s Declaration on Fundamental Principles and Rights at Work.
Full disclosure of information by companies is important, including to local communities,
as part of an ongoing dialogue with them. Furthermore, the emphasis must be on a
developmental approach - one which stresses continuing gradual improvements to
standards, and to the code itself. In the case of child labour, companies should not just
respect conventions by dismissing contractors who use child labour, but should also, for
example, help to tackle child poverty by assisting children into education.
3.2.2.4 Global Environmental Concerns
Global environmental concerns are last but not least external sub-dimension of CSR.
Through the transboundary effect of many business-related environmental problems, and
steadily increasing consumption of resources from across the world, companies are also
actors in the global environment. Enterprises, therefore, have to pursue CSR
internationally as well as in their home countries. For example, companies can
encourage better environmental performance throughout their supply chain within the
Integrated Product Policy124 approach and make larger use of their environmental knowhow, particularly when suppliers and business partners are from developing countries.
Investment and activities of the companies on the ground in third countries can have a
direct impact on social and economic development in these countries.
The debate on the role of business in achieving sustainable development is gaining
importance on the global stage. The UN Secretary General has launched a Global
Compact initiative which seeks to make business a partner in achieving social and
environmental improvements globally. The EU and the OECD Guidelines for
multinational enterprises also promote sustainable development as the only way for
further growth.
123
European Commission Directorate General for Employment and Social Affairs (2001), Promoting a European
framework for corporate social responsibility, Green Paper (COM(2001) 366 final), available at: http://ec.europa.eu
/employment_social/soc-dial/csr/greenpaper_en.pdf
124
The integrated product policy (IPP) aims to minimise the negative effects a product can cause during its life cycle by
incorporating all phases of a product and including all players, and by implementing measures in areas where they are
most effective. Thus the IPP stands in contrary to the so far used end of pipe environment protection, which has dealed
with the disposal of harmful substances not until they emerged, what resulted in a considerable effort.
64
In this respect it is sad and simultaneously alarming that the Czech Republic ranked 68 th
from the total of 149 surveyed countries according to the Environmental Performance
Index (EPI)125 in 2008, which evaluates sanitation, greenhouse gas emissions,
agricultural policies, air pollution and 20 other measures to formulate an overall score,
with 100 the best possible.126 The ranking of environmental performance put the United
States at the bottom of the industrialized nations and 39th on the list. European countries
dominated the top places in the ranking. The top 10 countries, with scores of 87 or
better, were led by Switzerland, Sweden, Norway and Finland. The others at the top
were Austria, France, Latvia, Costa Rica, Colombia and New Zealand, the leader in the
2006 version of the analysis.127
3.3
Six Forms of Corporate Social Responsibility Initiatives
Another viable concept how to distinguish various tools that are used by companies,
which want to master or have already implemented CSR concept is based on Philip
Kotler´s six forms of CSR initiatives. Kotler argues that most corporate social initiatives,
or CSR tools, under the CSR umbrella fall within one of the following distinct categories:
cause promotions, cause related marketing, corporate social marketing, corporate
philanthropy, community volunteering, and socially responsible business practices.
Though there are commonalities among these initiatives (i.e. similar causes they are
supporting, partnerships that are formed, and communication channels that are used),
each initiative has a characteristic that makes it distinct. Importance to develop these
distinctions lies in an old truth that awareness and familiarity with tools that are at hand
increases the chances they will be considered and then used.
Traditional and outdated CSR concept focused primarily on one of these initiatives, on
philanthropy. However today a more strategic and disciplined approach involves
selecting an issue for focus and then considering each of the six potential options for
contributing to the cause. The delineation of these distinct initiatives may help increase
consideration of them and may make understanding and application of the keys to
success for a particular initiative more likely. The following subchapters outline each of
the six CSR initiatives including selected practical examples in the Czech Republic.
125
The Environmental Performance Index (EPI) is a method of quantifying and numerically benchmarking the
environmental performance of a country's policies. This index was developed from the Pilot Environmental Performance
Index, first published in 2002, and designed to supplement the environmental targets set forth in the U.N. Millennium
Development Goals.
126
Gazdík, R. (2008), The Czech Republic sank by 64 ranks in global eco-index (Česko se propadlo o 64 míst ve
světovém ekoindexu), available at: http://aktualne.centrum.cz/priroda/clanek.phtml?id=609958
127
Barringer, F. (2008), U.S. Given Poor Marks on the Environment, available at: http://www.nytimes.com/2008/01/23
/washington/23enviro.html?_r=1
65
3.3.1 Corporate Philanthropy
Corporate philanthropy is a direct contribution by a company to a charity or cause, most
often in the form of cash grants, donations and/or in-kind services. It is perhaps the most
traditional of all CSR initiatives and has historically been a major source of support for
community health and human service organizations, education, and the arts, as well as
organizations with missions to protect the environment. The corporate donations are
often critical to an existence of non-profit organizations.
Some authors and definitions include employee volunteerism as a form of corporate
philanthropy. However it is better to distinguish community volunteering as a separate
initiative, as it has unique characteristics, related corporate benefits, potential concerns,
keys for success, and decision making related to developing and implementing corporate
programmes. For details, please, see subchapter Community Volunteering.
Corporate philanthropy has matured over the decades, primarily in response to internal
and external pressures to balance concerns for shareholder wealth with expectations to
demonstrate responsibility also for other stakeholders contributing to the companies´
livelihood. Perhaps the most consistent response has been to move to a more strategic
approach to selecting social issues to support, with an increased tendency to choose an
area of focus and to tie philanthropic activities to the company’s business objectives.
Second, there appear to be more long-term relationships being developed with non-profit
organizations, ones that look more like a partnership than a casual acquaintance. Third,
companies have expanded their options for giving beyond cash donations to include
contributions of other (often less costly) company resources such as excess products,
use of distribution channels, and technical expertise. Fourth, there can be seen
increased interest in involving employees in decision making regarding the prioritization
and selection of recipients for philanthropic programmes. Fifth, as with all other
initiatives, companies have been increasingly focusing on determining ways to track and
measure outcomes, even rates of return on contributions.128
Philanthropic efforts commonly involve selecting a cause that reflects a priority area for
the company, determining the type of contribution to be made, and identifying a recipient
for contributions, most often and existing non-profit organization, foundation, or a school.
The range of options for giving are summarized below and, as indicated, are varied, with
trends mentioned above that are breaking from the tradition of cash donations to creative
giving strategies that make use of other (sometimes idle) company resources:

Providing cash donations;
128
Hill, P. H., Stephens, D. (2003), Corporate Social Responsibility: An Examination of Individual Firm Behaviour,
Business and Society Review, page 339-364
66

Offering grants;

Awarding scholarships;

Donating products;

Donating services;

Providing technical expertise;

Allowing the use of facilities and distribution channels; and

Offering the use of equipment.129
Major strengths for this initiative can be building corporate reputation and goodwill,
attracting and retaining a motivated workforce, and having an impact on societal issues,
especially in local communities where the company operates.
3.3.2 Cause Promotions
In a cause promotion a company provides funds, in-kind contributions, or other company
resources to increase awareness and concern about a social cause or to support
fundraising,
participation,
or
volunteer
recruitment
for
a
cause.
Persuasive
communications are the major focus for this initiative, with an attention to create
awareness and concern relative to a selected social issue and/or to persuade potential
donors and volunteers to contribute to the selected cause or participate in activities that
support that cause. Successful campaigns utilize effective communication principles,
developing motivating messages, creating persuasive executional elements, and
selecting efficient and effective media channels. Campaign plans are based on clear
definitions of target audiences, communication objectives and goals, support for
promised benefits, opportune communication channels, and desired positioning.130
Cause promotions are distinguished from other CSR initiatives primarily by the emphasis
on promotional strategies. Particularly they differ from philanthropy in that it involves
more from the company than simply writing a check, as promotional campaigns most
often require involvement in the development and distribution of materials and
participation in public relations activities. Further cause promotions differ from cause
related marketing in that contributions and support are not tied to company sales of
specified products.
Corporate cause promotions most commonly focus on the following communication
objectives:
129
Bartošová, Z. (2006), Guidebook of Corporate Philanthropy (Průvodce firemní filantropií), Czech Donors Forum,
Prague, pages 7, 9, 11, 19
130
Ježek, J. (2008), Philanthropy is Wealth of the Soul (Mecenášství je bohatství duše), Literary Newspapers, available at:
http://www.literarky.cz/?p=clanek&id=5585
67

Building awareness and concern about a cause by presenting motivating
statistics and facts, such as publicizing the number of persons affected by lung
cancer, by sharing real stories of people in need or who have been helped by the
cause;

Persuading people to find out more about the cause by visiting a special web site
or by requesting an informational brochure;

Persuading people to donate their time and/or money and or non-monetary
resources to help those in need; and

Persuading people to participate in events, such as attending an art show,
participating in a fundraising walk, or signing a petition to help the cause.
Several potential downsides for the company are inherent in these promotional
campaigns, particularly visibility for the company can get lost; tracking investments and
return on promotional investments is difficult because of its visibility; this initiative may
generate too many additional requests for support from other organizations connected to
the cause; this approach requires more time and involvement than simple donation of
many; and promotions can often be replicated, thus potentially removing any desired
competitive advantages.131
Key to success includes recommendations to carefully select an issue that can be tied to
company products and core values. It should be a cause that owners and management
can commit to a long-term, that is a concern for customers and target markets, motivates
employees, and has the most chance for media exposure.
3.3.3 Cause Related Marketing
In cause related marketing (hereinafter also CRM) campaigns, a company commits to
making a contribution or donating a percentage of revenues to a specific cause based on
product sales.
Cause related marketing is intrinsically linked to CSR, corporate affairs, community
investment and marketing. It can be represented as shown in Figure 3.2 on the next
page. CRM intersects with marketing, philanthropy, corporate affairs, and corporate
community investments. Together they all form part of the overall matrix, which makes
up CSR, which in turn forms part of the overall business strategy. The intersection of all
spheres in Figure 3.2 is the ultimate point providing maximum return on investment and
opportunity for all concerned. Awareness, support and provision of resources can all be
enhanced if individual departments or persons in the company work in concert with each
131
Kotler, P., Lee, N. (2005), Corporate Social Responsibility – Doing the Most Good for Your Company and your Cause,
New Jersey, USA, page 79-80
68
other. The benefits to the company, the charity or cause partners and therefore to the
wider community can all be enhanced through effective communication, co-ordination,
co-operation and by taking an overall view of the business. The CRM therefore
represents a challenge to companies as it bridges organizational, functional and
decision-making boundaries.132
Figure 3.2: Relations among cause related marketing, marketing, corporate community investment,
philanthropy, and Corporate Social Responsibility
Source: Based on Adkins, S. (1999), Cause Related Marketing – Who Cares Wins, Butterworth-Heinemann, Oxford, page
48-49
According to the prestigious and nationally recognized Cone/Roper 1999 Cause Related
Trends Report: The Evolution Of Cause Branding133, consumers and employees solidly
and consistently support cause related activities and companies see benefits to their
brand and organization’s reputation, image, and bottom line. Data highlights are as
follows:

83% of consumers have a more positive image of companies who support a
cause they care about. Well created, relevant cause programmes can have a
dramatic impact on a company’s reputation and brand image;

94% of influential consumers, those socially and politically active trendsetters,
have a more favourable image of companies who are committed to a cause;

65% of consumers report they would be likely to switch brands or retailers to one
associated with a good cause, when price and quality are equal;
132
Adkins, S. (1999), Cause Related Marketing – Who Cares Wins, Butterworth-Heinemann, Oxford, page 9-10, 48-49
133
The Cone/Roper survey took place in the USA.
69

61% of consumers agree that cause marketing should be a standard business
practice;

90% of workers whose companies have a cause programme feel proud of their
companies’ values versus 56% of those whose employers are not committed to a
cause; and

87% of employees feel a strong sense of loyalty to their companies with cause
programmes versus 67% of those employed in companies without a cause
association.
The report clearly demonstrates that cause programs impact a company’s bottom line in
the short-term through increased sales, and in the long-term through increased customer
loyalty, improved employee pride, and enhanced brand image. The report reinforces the
fact that those companies that thoroughly implemented CSR are highly accepted and
rewarded with enhanced brand equity and employee loyalty. 134
As an example of CRM can serve Procter & Gamble’s Pampers “1 Pack = 1 Vaccine”
programme. In 2007, Pampers teamed with UNICEF135 to provide tetanus shots for
mothers and children in developing countries, which is a major health problem in these
countries. For each pack of specially marked Pampers diapers and wipes that
consumers buy during the promotion period, Pampers donates the cost of one vaccine to
UNICEF. On top of that the partner of the programme Tesco stores in the Czech
Republic donates the same amount as the Procter & Gamble for Pampers´ diapers
bought in its stores. The programme has helped provide more than 40 million vaccines
for UNICEF which will help protect the lives of mothers and newborns around the
globe.136 137
3.3.4 Corporate Social Marketing
Corporate social marketing is a means whereby a company supports the development
and/or implementation of a behaviour change campaign intended to improve public
health, safety, the environment, or community well-being. Behaviour change is always
the focus and the intended outcome. Successful campaigns utilize a strategic marketing
planning approach: conducting a situation analysis, selecting target audiences, setting
behaviour objectives, identifying barriers and benefits to behaviour change, and then
134
Cone, Inc. (1999), The 1999 Cone/Roper Cause-Related Trends Report: The Evolution of Cause Branding, Boston,
available at: http://kidswishnetwork.net/ConeRoper.asp
135
UNICEF - The United Nations Children's Fund works for children's rights, their survival, development and protection.
136
Pampers.cz and Procter & Gamble (2008), Programme 1 Pack = 1 Vaccine (Akce Pampers 1 balení = 1 vakcína),
available at: http://www.pampers.cz/unicef/bin/start.php
137
Procter & Gamble (2008), Caring for Babies around the World through Children’s Charities, available at:
http://www.pampers.com/en_US/childrens-charities-around-the-world
70
developing a marketing mix strategy that helps overcome perceived barriers and
maximize potential benefits. It relies on the same principles and techniques used in
developing and implementing marketing strategies for company’s goods and services.138
It is most easily distinguished from other CSR initiatives by the behaviour change focus.
Although campaign efforts may include awareness building and educational components
or efforts to alter current beliefs and attitudes, the campaign is designed primarily to
support and influence a particular public behaviour (e.g. refrain from smoking close to the
children) or action (e.g. regularly visiting a physician for a preventive check-up).
Corporate social marketing campaigns most commonly focus on promoting behaviours
that address specific issues such as the following:

Health issues including tobacco use prevention, breast cancer, prostate cancer,
physical activity, skin cancer, eating disorders, diabetes, HIV/AIDS, and other;

Injury prevention issues such as traffic safety, child injury prevention, and other;

Environmental issues including water conservation, electrical conservation, use of
pesticides, water and air pollution, and preservation of wildlife habitats; and

Community involvement issues such as volunteering, animal rights, crime
prevention, and other.
Selection of issues can be most often influenced by a natural connection to a company’s
core business. A decision to support a behaviour change campaign may then be incited
by some growing perhaps even alarming trends, for example by increase of traffic
accidents or worsening of quality of natural environment.
Potential company benefits can be greatest for supporting marketing objectives including
strengthening brand positioning, creating brand preference, and increasing sales.
Potential and significant additional benefits beyond marketing include improving
profitability and making a real social impact.139
However several concerns and potential pitfalls with corporate social marketing
campaigns are real. Some social issues, although important, are not an authentic fit for
the company. For many issues and initiatives, clinical and technical expertise needs to
be sought. Behaviour change, and therefore impact, does not often happen overnight,
and key publics and partners need to be forewarned. Companies have also to be
prepared for criticism from those who view social marketing campaigns as “none of your
business” and have to recognize that developing, even supporting a social marketing
campaign involves more than just writing a check.139
138
Valentino, B. (2007), MBA Toolkit For CSR: Corporate Marketing, available at: http://www.chinacsr.com/en/2007
/05/24/1355-mba-toolkit-for-csr-corporate-marketing/
139
Bloom, N. P., Hussein, Y. P., Szykman, R. L. (1997), The Benefits of Corporate Social Marketing Initiatives, in
Goldberg, E. M., Fishbein, M., Middlestadt, E. S. (1997), Social Marketing: Theoretical and Practical Perspectives,
Lawrence Erlbaum Associates, USA, page 317-320
71
3.3.5 Community Volunteering
Another CSR initiative, community volunteering, is an initiative in which an enterprise
supports and encourages employees, business partners, and/or franchise members to
volunteer their time to support local community and beneficial causes. Volunteer efforts
may include employees volunteering their expertise, talents, ideas, and/or physical
labour. Company support may involve providing paid time off from work, matching
services to help employees find opportunities of interest, recognition for service, and
organizing teams to support specific causes the company has targeted.140
Distinguishing community volunteering from other initiatives is not difficult, as it alone
involves employees of a company personally volunteering for local cause efforts.
Volunteering in the community is not a new corporate initiative. What is new and
noteworthy, however, is an apparent increase in the integration of employee volunteer
efforts into existing CSR initiatives and even connecting the volunteer efforts to business
objectives. Today in modern CSR concept, a strategic approach appears to be the norm,
where employees are often encouraged to volunteer for causes that are currently
supported by other CSR initiatives, often connected to core business values and goals.
Examples representing types of support include the following:

Promoting the ethic through corporate communications that encourage
employees to volunteer in their community and that may provide information on
resources to access in order to explore volunteer opportunities;

Suggesting specific causes and charities that the employee might want to
consider and providing detailed information on how to get involved, often with
causes and charities supported by other current CSR initiatives;

Organizing volunteer teams for a specific cause or event;

Providing paid time off during the year to do volunteer work, with typical benefits
ranging from offering two to five days of annual paid leave to do volunteer work
on company time (typical examples can be Česká spořitelna a.s. and
Raiffeisenbank a.s. in the Czech Republic);

Awarding cash grants to charities where employees spend time volunteering; and

Recognizing exemplary employee volunteers through gestures such as mentions
in internal newsletters, etc.141
140
Kotler, P., Lee, N. (2005), Corporate Social Responsibility – Doing the Most Good for Your Company and your Cause,
New Jersey, USA, page 175-176
141
Cairns, B., Hutchison, R. (2006), The Impact of Investing in Volunteers (Final Report), The Centre for Voluntary Action
Research at Aston Business School, available at: http://iiv.investinginvolunteers.org.uk/NR/rdonlyres/CFD0C332-DDA64F0B-AC27-B290F8B4003B/0/ImpactAndBenefitsreport2006.pdf
72
Generally, types of projects that employees volunteer for range from those that
contribute to a local community to ones that improve health and safety for individuals, to
those that protect the natural environment.
Similarly as other CSR initiatives, community volunteer programmes can contribute to
building strong and enduring relationships with local communities, attracting and
retaining satisfied and motivated employees, reinforcing and leveraging current
involvement and investments in CSR initiatives, contributing to business objectives,
enhancing company image, and providing opportunities to demonstrate products and
services.
On the other hand potential concerns with developing and managing community
volunteer programmes can be real, including concerns with high costs, having a
meaningful social impact, appropriately realizing business benefits, and tracking and
measuring outcomes.
3.3.6 Socially Responsible Business Practices
Socially responsible business practices are those where the company adapts and
conducts discretionary business practices and investments that support CSR causes to
improve community wellbeing and protect the natural environment. Main distinctions from
other CSR initiatives include a focus on activities that are discretionary, not those that
are mandated by laws or regulatory agencies or are simply expected, as with meeting
moral or ethical standards. Community is interpreted broadly to include employees of the
corporation, suppliers, distributors, non-profit and public sector partners, as well as
members of the general public. And wellbeing can refer to health and safety, as well as
psychological and emotional needs.142
Over the last decade there has been an apparent shift from adopting more responsible
business practices as a result of regulatory pressures, consumer complaints, and special
interest group pressures, to proactive research exploring corporate solutions to social
problems and incorporating new business practices that will support these issues.
Several factors may be contributing to this shift: evidence that socially responsible
business practices can actually increase profits; a global marketplace with increased
competition and consumer options; interest in increased employee productivity and
retention; and increased visibility and coverage of corporate social responsible and
irresponsible activities.143
142
Kotler, P., Lee, N. (2005), Corporate Social Responsibility – Doing the Most Good for Your Company and your Cause,
New Jersey, USA, page 208
143
Good Money (2008), Social, Ethical and Environmental Investing and Consuming & Corporate Accountability:
Principles & Codes for Socially Responsible Business Practices, available at: http://www.goodmoney.com
/directry_codes.htm
73
As might be expected, most initiatives related to socially responsible practices relate to
altering internal procedures and policies, such as those related to product offerings,
facility design, manufacturing, assembly, and employee support. Common activities may
include the following:

Designing
facilities
to
meet
or
exceed
environmental
and
safety
recommendations and guidelines, such as for increased energy conservation;

Developing process improvements, which may include practices such as
eliminating the use of hazardous waste materials, reducing the amount of
chemicals used in growing crops, or eliminating the use of certain types of
chemicals and materials;

Discontinuing product offerings that are considered harmful but not illegal;

Selecting suppliers based on their willingness to adopt or maintain sustainable
social and environmental practices;

Choosing
manufacturing
and
packaging
materials
that
are
the
most
environmentally friendly;

Providing full disclosure of product materials and their origins and potential
hazards;

Developing programmes to support employee wellbeing;

Measuring, tracking and reporting of accountable goals and actions;

Establishing guidelines for marketing to ensure responsible communications and
appropriate distribution channels(particularly regarding children);

Providing increased access for disabled people to products and services;

Protecting privacy of consumer information; and

When making business decisions taking into consideration the economic impact
of these decisions on local communities.144 145
Resulting financial benefits of socially responsible business practices can be associated
with decreased operating costs, monetary incentives from regulatory authorities, and
increased worker productivity and retention. Marketing benefits can be numerous as well,
with the potential for increasing community goodwill, creating brand preference, building
brand positioning, improving product quality, and increasing company respect. These
activities also provide opportunities to build relationships with external stakeholders such
144
Cassuto, S. (2008), Socially Responsible Business Practices, Salem Style, available at: http://www.alternatives
magazine.com/01/cassuto1.html
145
Littrell, M. A., Dickson, M. A. (2001), Socially Responsible Business Practices, Cornell’s Newsletter for the New York
State Apparel and Sewn Products Industry, Spring 2001, available at: http://www.topstitch.cornell.edu/issues
/Topstitch_Spring2001.pdf
74
as regulatory authorities, suppliers, non-profit organizations, and other external
partners.146
3.4
Measuring, Evaluating and Reporting On Corporate Social
Responsibility
3.4.1 Measuring and Evaluating Corporate Social Responsibility
Measuring and evaluating CSR is by no means an easy task, even for large companies,
which in many cases have highly developed and reliable measurement and internal
reporting management systems. For SMEs with lack of available resources (particularly
qualified human resources, financial means and time) and often without sophisticated
management information systems it can be even more complicated and challenging task.
Even though measuring and evaluating costs and benefits of CSR are not easy, it is
always better to do something in this respect, even with less sophisticated tools and
systems, than to do nothing. Measuring results provide companies necessary feedback
of their efforts and can enable them to take essential steps if something goes wrong
direction or just not according to plan.
Companies can take advantage of tools and systems already used for measuring and
evaluating of marketing activities and simply adjust them to measure and evaluate costs
and benefits of CSR. Of course, there is not an equal sign between marketing and CSR,
but regarding measurement and evaluation there are many similarities. However, despite
many common attributes and characteristics, there is one serious problem that needs to
be resolved and overcome - the time factor problem. Usually, costs and results of
marketing campaigns and marketing activities can be allocated to particular time period
and when calculating marketing effectiveness, costs and benefits are directly allocated to
the respective time period (sometimes certain time lag is taken into consideration). But
true CSR, and if meant seriously, is a long-time project without any foreseeable ending.
Moreover, effective CSR should be incorporated into a company’s overall strategy and
into all decision-making processes at all levels in the hierarchy. Also, many CSR related
activities and initiatives a company would do anyway as it saves costs and thus exactly
allocating costs to CSR activities can be in the least tricky, if not impossible (for example
some socially responsible business practices, which can save costs and at the same
time can be associated to CSR).
Similarly as tools and systems for measuring marketing activities, companies can apply
for measuring and evaluating CSR already known benchmarking method and
146
Fabien, A. (2008), How to Employ Socially Responsible Business Practices to Enhance Your Brand, available at:
http://smallfishbigmoney.com/2008/10/12/how-to-employ-socially-responsible-business-practices-to-enhance-your-brand/
75
methodology. The most probably usage of external benchmarking would be suitable for
most companies – companies can compare their approach and their results with the best
company in their field of operation and also with top companies in other lines of business
as well. Internal benchmarking can be used by corporations with several quasi
independent strategic business units, which can be compared among themselves or by
multinational companies for comparing costs and benefits of CSR among individual
countries, where the company operates.
Despite obstacles and unresolved issues in measuring and evaluating CSR, companies
should try their best as it can help them to substantiate invested resources and
encourage them in continuing with CSR.
3.4.2 Corporate Social Responsibility Reporting
Development of Corporate Social Responsibility Reporting
Not long time ago, CSR reports were seen as rarity, and very often as one-off activity
taken by certain companies. In addition, a group of people who red reports was limited to
hard-core campaigners or business consultants. However, this changed and improved
over the years.
CSR reporting went through three overlapping phases. The first phase of CSR reporting
(1970s and 1980s) was the weakest, not linked to corporate performance, but mainly to
PR without critical aspects. Reports at that time were composed of advertisements and
annual report sections. They were perceived as very personal and not too much
connected to CSR. 147
The second phase (end of 1980s and 1990s) was pioneering phase, which open the
door to today’s CSR reporting. In that period CSR reports were focused on major
stakeholder
categories:
communities
(e.g.
philanthropic
giving,
environmental
awareness, and global awareness), employees, customers, suppliers, and investors. In
CSR reports were often included auditors' opinions on the performance of the companies
in the area of social and environmental responsibility with respect to stakeholders
groups.147
The third phase of CSR reporting is surely the most interesting because it introduces not
only third-party certification of the reports, but certification by bodies that are accredited
to certify against social or environmental standards. The standards are already
determined before an auditor goes in and the procedures are specified. When a violation
is found, the facility is given a chance to take corrective action. The auditor returns to see
that required corrective actions are made. Major problems are not allowed to remain year
147
Marlin, J.T., Marlin, A.T. (2003), A brief history of social reporting, Business Respect, Issue Number 51, available at:
www.mallenbaker.net/csr/CSRfiles/page.php?Story_ID=857
76
after year. In light with mentioned standards and certifications companies are under the
pressure to protect brand name so businesses attitude toward CSR reporting has
become more proactive and companies have been trying to raise value of what they
report. The pioneers and global leaders and certified facilities of the new phase of CSR
reports have been the Social Accountability International enhancing labour standards,
and environmental leaders have been the Global Reporting Initiative and the
International Social and Environmental Accreditation and Labelling Alliance. Though,
there are also many other organizations writing and defining standards and codes for
CSR.147 148
A global reporting survey conducted in 2004 by the Association of Chartered Certified
Accountants found that the number of corporate social, environmental, and sustainability
reports increased from fewer than 100 in 1993 to more than 1,500 in 2003. Similarly, a
2003 study of the world's 100 largest companies by the consulting group CSR Network
found that almost half of them (49) issued an environmental, social, or sustainability
report.149
According to the Steinerova’s research, there were less than 20 companies that
published CSR reports in the Czech Republic in 2008. Majority of these CSR reports
either resembled Public Relations reports without being sufficiently credible or were
translations of CSR reports published by respective controlling (mother) company.
Impression from these reports was rather negative as majority of contained information
could not be reliably verified. Also, absolute majority of the reports was not certified and
verified by independent third party.150 If conclusion can be drawn from these facts, Czech
companies do not know how to utilize the full potential of CSR so far.
Corporate Social Responsibility Reporting Standards
With increasing expectations to get more qualitative and informative CSR report a
burden for those companies to provide such information in a standardized way also
grow. In response to the diversity of codes of conduct, the Social Accountability
International151 (hereinafter also SAI) has developed a standard for labour conditions and
a system for independently verifying factories’ compliance. The standard, Social
148
Lippman, S. (2008), Sustainability Reporting Report Card: Needs Improvement, available at: http://trilliuminvest.com
/news-articles-category/cover-story-news-articles/sustainability-reporting-report-card-needs-improvementa/
149
Business for Social Responsibility (2005), CSR Reporting, available at: www.bsr.org/CSRResources/
IssueBriefDetail.cfm?DocumentID=50962
150
Steinerová, M. (2008), Corporate Social Responsibility – Reporting as an Integral Part of Implementation Cycle
(Společenská odpovědnost firem – reportování jako součást implementačního cyklu), available at: http://library.vse.cz
/direct?000124567
151
The Social Accountability International (SAI) was established in 1997 and convened an expert, international, multistakeholder Advisory Board to partner in developing standards and systems to address workers’ rights. Representatives of
trade unions, human rights organizations, academia, retailers, manufacturers, contractors, as well as consulting,
accounting, and certification firms, by consensus, cooperated to develop the Social Accountability 8000 (SA8000)
Standard. Published in late 1997 and revised in 2001, the SA8000 Standard and verification system is a credible,
comprehensive and efficient tool for assuring humane workplaces.
77
Accountability 8000 (SA8000), and its verification system draw from established
business strategies for ensuring quality (such as those used for ISO 9000) and add
several elements that international human rights experts have identified as being
essential to social auditing.152
On the environmental side, the Global Reporting Initiative153 (hereinafter also GRI) is
currently seen as best practice. The GRI has pioneered the development of the world’s
most widely used sustainability reporting framework and is committed to its continuous
improvement and application worldwide. This framework sets out the principles and
indicators that organizations can use to measure and report their economic,
environmental, and social performance. The GRI´s sustainability reporting guidelines
also includes ambitious guidelines on social reporting. Its sustainability reporting
guidelines allows for inter-company comparability.154
The International Organization for Standardization155 (hereinafter also ISO), has also
decided to launch the development of an International Standard providing guidelines for
CSR and CSR reporting. The guidance standard is expected to be published in 2010 as
ISO 26000 and will be voluntary to use. ISO 26000 will add value to existing initiatives for
CSR by providing harmonized, globally relevant guidance based on international
consensus among expert representatives of the main stakeholder groups and so
encourage the implementation of best practice in CSR worldwide. ISO 26000 is intended
for use by organizations of all types, in both public and private sectors, in developed and
developing countries. It will assist them in their efforts to operate in the socially
responsible manner that society increasingly demands. ISO 26000 contains guidance,
not requirements, and therefore will not be for use as a certification standard like ISO
9001 and ISO 14001.156
Besides above-mentioned CSR standards and guidelines also exists a variety of other
not so renowned ones and standards dedicated only to specific areas of CSR, for
example focused on environment such as environmental management standards ISO
152
Social Accountability International (2008), Overview of Social Accountability 8000, available at: http://www.saintl.org/index.cfm?fuseaction=Page.viewPage&pageId=473&stopRedirect=1
153
The Global Reporting Initiative (GRI) is a large multi-stakeholder network of thousands of experts, in dozens of
countries worldwide, who participate in GRI’s working groups and governance bodies, use the GRI Guidelines to report,
access information in GRI-based reports, or contribute to develop the Reporting Framework in other ways – both formally
and informally.
154
Global Reporting Initiative (2008), What we do, Who we are, available at: http://www.globalreporting.org/AboutGRI/
WhatWeDo/and http://www.globalreporting.org/AboutGRI/WhoWeAre/
155
The International Organization for Standardization (ISO) is the world's largest developer and publisher of International
Standards. ISO is a network of the national standards institutes of 159 countries, one member per country, with a Central
Secretariat in Geneva, Switzerland, that coordinates the system. ISO is a non-governmental organization that forms a
bridge between the public and private sectors. On the one hand, many of its member institutes are part of the
governmental structure of their countries, or are mandated by their government. On the other hand, other members have
their roots uniquely in the private sector, having been set up by national partnerships of industry associations. Therefore,
ISO enables a consensus to be reached on solutions that meet both the requirements of business and the broader needs
of society.
156
International Organization for Standardization (2008), ISO and social responsibility, vailable at:
http://www.iso.org/iso/socialresponsibility.pdf
78
14000 (help organizations minimize how their operations negatively affect the
environment), and EMAS - the EU Eco-Management and Audit Scheme (management
tool for companies and other organisations to evaluate, report and improve their
environmental performance), or on managing occupational health and safety risks such
as OHSAS 18001 - Occupation Health and Safety Assessment Series (is intended to
help organizations to control occupational health and safety risks).157
Corporate Social Responsibility Reporting in SMEs
In European Union there has been existing increasing pressure for SMEs to engage in
CSR practices, including CSR reporting. Curiously in this promotional programme of
CSR reporting, the only group whose ideas have not been sought in this debate were the
SME leaders themselves. The analysis, based on discussions within entrepreneurs'
circles, suggested that the argument for expanding formalization of CSR reporting to
SMEs rested upon several false conclusions. It implicitly assumed that an apparent
solution for large multinationals can be transposed to SMEs, and it underestimated the
drawbacks of bureaucracy. Moreover, many SMEs experienced inconsistency between
the idealistic CSR communication of some large companies and their actions.
Formalization of CSR reporting can even be counterproductive. CSR and CSR reporting
in SMEs needs a specific approach, adapted to the informal nature and entrepreneurial
character of the SMEs business.158
Verification of a company’s CSR report involves costs and resources. The author of the
dissertation acknowledges that independent assessments are useful, but notes that,
while large companies can afford the costs of such independent assessment, a lot of
SMEs cannot readily afford them. Therefore verification of CSR reports in case of SMEs
would increase costs and in many cases do not bring expected benefits. The essence of
CSR lies in the implementation of responsible business practices. It lies in the right
attitudes, in the corporate culture, not in formalisation and third party verification of CSR
reporting.
157
Business Leaders Forum, (2008), Standards related to Corporate Social Responsibility (Normy které mají vztah k
CSR), available at: http://www.csr-online.cz/Page.aspx?normy
158
Sheehy, T. (2006), Corporate Social Responsibility, available at: http://www.csaust.com/AM/Template.cfm?
Section=Submissions&Template=/CM/ContentDisplay.cfm&ContentID=5881
79
Chapter 4.
Surveys on Corporate Social Responsibility
Conducted in the Czech Republic, Europe
and Worldwide
This chapter provides a brief overview of surveys on corporate social responsibility that
were conducted in the Czech Republic, Europe and worldwide between years 2002 and
2008. It has to be stressed that this overview is not exhaustive and does not include all
surveys that were executed in these years. There are mentioned only surveys on CSR
that were either focused on small and medium-sized companies or conducted in the
Czech Republic and/or the author thought it was worth mentioning them in this
dissertation paper.
The individual surveys, arranged according to the year in which they were published, are
shortly summarized in the following subchapters. Some of their results and conclusions
were used for comparison and as a supporting evidence for making conclusions in
chapters devoted to results of own survey on CSR (please, see Chapters Methodology
and General Results of Own Research, Specific Results of Own Research: Internal
Dimension of Corporate Social Responsibility, Specific Results of Own Research:
External Dimension of Corporate Social Responsibility).
4.1 Global Surveys
4.1.1 Survey of Small and Medium Enterprises in the Global Compact
(2004)159
The survey was conducted under the auspices of the United Nations Industrial
Development Organization (hereinafter also UNIDO) in the year 2003 and was
completed in the year 2004. The questionnaire was sent out to 193 of the 234 SME
signatories to the Global Compact. Responses to the questionnaire were received over
the period August to mid-December 2003. A total of 78 companies from 30 countries
returned the questionnaire duly filled out. The survey, therefore, enjoyed the response
rate of 40 %. The respondents were from Africa, Asia, Middle East, Latin America, North
America and Europe.
159
United Nations Industrial Development Organization (UNIDO) (2004), Survey of Small and Medium Enterprises in the
Global Compact, Vienna, available at: http://www.unido.org/index.php?id=o19478
80
The survey was based on electronic questionnaire, consisted of 25 questions and
grouped in five main categories. The most important topics the survey covered were the
relationship of the company to the Global Compact, institutional support available for
Corporate Social and Environmental Responsibility (hereinafter also CSER) and the
extent to which SMEs were involved in implementation of CSER.
The survey discovered that only 29 % of respondents connect the Global Compact to
their businesses. This finding, on the relevance of CSER to business relations, is
consistent with that of a European Union’s survey of SMEs undertaken in 2002, in which
only 28 % of 7.662 European SMEs mentioned CSER activities as instrumental to, or
beneficial for, their business strategy. The relatively weak perception of the linkages,
between CSER and business strategy, constituted a challenge on all partners to
demonstrate the business case for CSER. On the other hand a large majority of SMEs
spent between 1 and 10 % of their turnover on special benefits to employees and on
environmental conservation. This would seem to indicate that the CSER agenda is fairly
well rooted in the operations of the SME signatories to the Global Compact.
It has to be point out that the grand disadvantages of this survey were the facts that the
survey was conducted only among SME signatories to the Global Compact (i.e. its
members, which had already endorsed the idea of Corporate Social and Environmental
Responsibility) and a relatively low number of companies was involved.
4.2 European Surveys
4.2.1 Survey on European SMEs and Social and Environmental
Responsibility (2002)160
The ENSR (European Network for SME Research) survey on SMEs was carried out from
May to August 2001 and published in 2002. The survey used a Computer Assisted
Telephone Interviewing (CATI) system to collect data from entrepreneurs and managers
within SMEs, all being independent private enterprises with less than 250 employees in
all sectors of industry and in 19 countries: the 15 countries of the EU, plus Iceland,
Liechtenstein, Norway and Switzerland. In total 7.662 checked and approved interviews
were available.
In total the used questionnaire contained 59 questions split into 9 sections. Out of these
sections only one was devoted to CSR, and contained 10 questions. The survey
160
European Commission (2002), Observatory of European SMEs 2002, No. 4: European SMEs and Social and
Environmental Responsibility, Luxembourg, Available at: http://ec.europa.eu/enterprise/enterprise_policy/analysis/doc/
smes_observatory_2002_report4_en.pdf
81
provided an overview of the current situation in the SME sector in Europe through
various statistics.
The analysis showed that half of the European SMEs are involved, to different degrees,
in external community causes. An enterprise size perspective showed that this ratio
ranges from 48 % amongst the very small enterprises (0-9 employees) to 65 % and 70 %
in the case of the small (10-49 employees) and medium-sized enterprises (50-249
employees), respectively.
A sector perspective showed that involvement in external community causes does not
significantly depend on the sector in which SMEs operate.
Gender considerations showed that there are no differences in the percentage of male or
female SME owners concerning their relative participation in external community causes.
From a geographical perspective, and looking into the percentage of SMEs that suggest
carrying out any social activity with their external community, a clear North-South
European divide was observed. The highest percentages corresponded to some of the
Northern (Finland, Denmark, Iceland and Norway) and of the central European countries
(i.e. Austria, Liechtenstein). Meanwhile, it was possible to identify a heterogeneous group
of countries (The Netherlands, Ireland, Sweden, Portugal, Belgium, Luxembourg,
Switzerland, Germany and Portugal) that occupied an intermediate position in the
European context. Finally, it was in most of the Southern countries (Spain, Italy and
Greece) as well as in France and the United Kingdom where social involvement is less
common amongst SMEs. Key factors for explaining these national differences may
include different cultural traditions on the role of enterprises in society, different
expectations from the general public on the enterprises’ social involvement or different
public welfare traditions.
Referring to the concrete activities developed by those SMEs involved in external
community causes, the survey found out that these activities mainly concentrate in three
fields, the support to sport, cultural and health/welfare activities not aimed at the SMEs’
own employees.
European SMEs mainly stated ethical reasons for their involvement in external socially
responsible activities. Possible explanation for stating ethical reasons in the first place
can be linked to the desire of entrepreneurs to “give something back to the community”.
Three quarters of European SMEs were able to identify business benefits derived from
their involvement in CSR activities aimed at external stakeholders. The main identified
benefits included improvement of customer loyalty and better relations with the general
community and public authorities.
The European SMEs’ community activities were in most cases occasional and one-off,
unrelated to the business strategy. Thus, up to 51 % of the SMEs involved in external
82
community activities carried out these activities on an occasional basis in contrast to the
45 % who conducted them on a regular basis. Additionally, for seven out of ten SMEs,
these social activities were unrelated to the general business strategy. In contrast, only a
28 % of SMEs argued that these activities were integrated into the general business
strategy. Moreover, the data suggested that regular and related-to-the-business-strategy
social activities become more common as the enterprises get larger.
Unfortunately, the Czech Republic was not included in the survey. The second handicap
of the survey was a low number of questions directly aimed at CSR.
4.2.2 Study of Sustainable Competitiveness in Global Value Chains
(2006)161
The study, which purpose was to examine the role of SMEs with respect to sustainable
supply chain management in global value chains was carried out in 2005 by researchers
from the Copenhagen Centre for Corporate Responsibility. The study was realized on a
sample of 291 Danish SMEs with 10 to 250 employees.
The study dealt with two major issues: first, to what extent SMEs were affected by social
and environmental requirements from buyers, and second, to what extent SMEs applied
such requirements to their own suppliers. The study concluded that Danish SMEs faced
requirements from their buyers much more frequently than they applied such
requirements to their own suppliers. On top of that many buyer requirements in the value
chain seemed to be implicit in a way that they were neither contractual nor subject to
verification. These findings imply that SMEs are less likely than larger companies to act
as change agents for sustainable production in global value chains. Therefore, the
increased presence of small companies in global supply chains is likely to have a
negative effect on the ubiquitousness of sustainability requirements in the value chain.
4.2.3 Survey on Corporate Social Responsibility,
Standards and Corporate Governance (2006)162
Management
Survey on CSR, management standards and corporate governance was realized from
June to September 2006 by the Environmental Law Service in Cooperation with the
161
Jorgensen, A., Knudsen, J. (2006), Sustainable competitiveness in global value chains: how do small Danish firms
behave?, The Copenhagen Centre for Corporate Responsibility, available at: http://ec.europa.eu/enterprise/csr/
documents/mainstreaming/ms_sme_topic6_jorgensen.pdf
162
The Environmental Law Service in Cooperation with Global Alliance for Responsibility, Democracy and Equity (2006),
Survey on CSR, management standards and corporate governance according to the OECD Standards for multinational
companies in companies operating in the Central Europe (Výsledky průzkumu o společenské odpovědnosti a standardech
řízení a správy podniku podle Směrnic OECD pro nadnárodní společnosti u společností působících ve střední Evropě),
Brno, available at: http://www.responsibility.cz/uploads/media/OECD_monitoring-vyhodnoceni_final.pdf
83
Global Alliance for Responsibility, Democracy and Equity. In the survey took actively part
28 multinational companies located in the 5 new member states of the European Union;
11 from the Czech Republic, 2 from Slovakia, 5 from Hungry, 4 from Slovenia and 6 from
Estonia. Returnability of sent questionnaires was 22 %.
Objective of the survey was answering the question, whether multinational companies
operating in the Central Europe were familiar with CSR concept and the OECD
Standards for multinational companies and whether their behaviour reflected these
Standards.
The survey found out that multinational companies were sufficiently acquainted with CSR
concept (89 % of companies). According to the results, multinationals considered the
topic of CSR as important, however in certain cases there were doubts that
multinationals really knew, what CSR concept stood for. The survey proved that
environmental responsibility was for the majority the most important part of the CSR
(33,3 % of the companies stated environmental responsibility at the first place, 88,3 % of
the companies were managed in line with environmental friendly rules).
The survey had several shortcomings, which the most obvious were a low number of
respondents (companies) who filled out the questionnaire and an error of bias in a form
that only multinational companies that publicly expressed their support to CSR were
selected for the survey.
4.2.4 Survey on Corporate Social Responsibility in SMEs in Berlin
(2007)163
Survey on CSR in SMEs in Berlin was realized from September to November 2007 by
the TÜV Rheinland Bildung und Consulting GmbH. In the aggregate 210 SME
companies were inquired, 142 SMEs of that replied, and the overall response rate
reached 67 %.
The survey showed that the idea and the term “Corporate Social Responsibility” were not
known very well among SMEs, only few SMEs had a clear concept in this field. Despite
this conclusion social commitment was a regular part of the business for many Berlin
SME enterprises, regardless of the enterprises’ size, even though with a different
intensity. Main focus of CSR activities was aimed at employees and at securing their job,
i.e. on internal dimension of CSR.
163
TÜV Rheinland Bildung und Consulting GmbH, Outermedia GmbH (2007), Survey: Corporate Social Responsibility
(CSR) in SME in Berlin, Berlin, available at: http://www.acceleratingcsr.eu/uploads/docs/200804/ppt%20presentation
_survey%20of%20CSR%20in%20SMEs%20in%20Berlin.pdf
84
Concentration only on Berlin SMEs and not clearly stated line of business (results of the
survey did not described the business sector the respondents were from) can be
considered as the main weaknesses of this survey.
4.3 Surveys in the Czech Republic
4.3.1 Corporate Social Responsibility – Complete Guide of the Topic
and Conclusion of the Survey in the Czech Republic (2004)164
The Survey on CSR took place from November to December 2003 and investigated CSR
awareness in 111 companies165. 75 % of these companies were located in capital
Prague, 25 % outside the capital of the Czech Republic. The survey focused on
companies of all sizes including SMEs.
The goals of the survey were following:

Find out a level of awareness about CSR in the Czech Republic;

Find out an importance of CSR concept for business activities; and

Find out what CSR activities are the most commonly applied.
The survey showed that 64 % of respondents (i.e. surveyed companies) knew CSR
concept. 99 % of the companies considered active participation in CSR as important for
the company, however activities in this field should not outweigh the key mission –
generating profit. Also according to the opinion of respondents, CSR activities of the
companies should not replace the role and duties of the state. 84 % of the respondents
planned to extend their CSR activities (mainly in the internal dimension of CSR, i.e.
focused on employees of the company).
This survey was the first complex and comprehensive one touching the issue of CSR in
the Czech Republic. The main shortcoming of the survey was a too narrow concentration
on one region only - 75 % of the surveyed companies were located in capital Prague.
164
Trnková, J., et al. (2004), Corporate Social Responsibility – Complete Guide of the Topic and Conclusions of the
Survey in the Czech Republic (Společenská odpovědnost firem – kompletní průvodce tématem a závěry z průzkumu v
ČR), Prague, available at: http://www.blf.cz/csr/cz/vyzkum.pdf
165
Response rate of the survey was 42 %.
85
4.3.2 Study of Social Responsibility as One of the Conditions for
Entrepreneurial Success of the Company (2006)166
This study was prepared in 2006 and concentrated on companies in the MoravianSilesian Region only. 71 companies took an active part in the survey. A sample
consisted of 32 % large, 28 % medium-sized and 40 % small and micro-sized
companies.
The goal of the study was to prove or negate the following hypotheses:

Degree of companies involvement in CSR activities differs according to the size
of the company;

Companies´ social responsibility is largely reduced only on sponsoring and
charitable activities; and

CSR is more developed in the regions with low unemployment.
The first and the second hypotheses were disproved. As to the third hypothesis, the
survey proved the statement partly because the study was carried out in one region of
the Czech Republic only.
Narrow concentration on one region only and a weak interpretation of results (particularly
general conclusions, no detailed explanations of the results) were the main shortcomings
of the study.
4.3.3 Survey on Utilization of Corporate Social Responsibility by
Small and Medium-Sized Companies in the Czech Republic
(2006)167
Companies engaged in this study conducted at the end of 2006 had their seat in Prague
and as to the size of the company they belonged exclusively to the SME segment. The
Czech Business Leaders Forum, who managed the study, sent its questionnaire to 452
companies and received a response from 104 SMEs (i.e. 23 % response rate) in the
period from September to October 2006.
Objective of the study was to identify the level of awareness and an ability to utilize CSR
in the market competition in the Czech Republic. The study exclusively focused on
Prague’s SMEs.
The study came to conclusions that:
166
Kolibová, H. (2006), Social responsibility as one of the conditions for entrepreneurial success of the company (Sociální
odpovědnost
jako
jedna
z
podmínek
podnikatelské
úspěšnosti
firmy),
Opava,
available
at:
http://www.svses.cz/skola/akce/konf/inovace06/texty/kolibova.pdf
167
Business Leaders Forum (2006), Utilization of Corporate Social Responsibility by Small and Medium-Sized Companies
in the Czech Republic (Využití společenské odpovědnosti firem malými a středními podniky v ČR), Prague, available at:
http://www.neziskovky.cz/Files/Soubory/neziskovy_sektor_CR/Vyzkum_CSR_BLF_2006.ppt
86

Concept of CSR was known to 44 % of Prague’s SMEs;

Majority (85 %) of Prague’s SMEs carried out at least one CSR activity;

Ethical and moral reasons were the main motivators for implementing CSR; and

The greatest benefit of CSR identified by the companies was an improvement of
employees´ satisfaction.
Aiming the study solely on Prague’s SMEs, i.e. SMEs located in the largest city and the
capital of the Czech Republic with more than 1,3 million inhabitants, can be reckoned as
a flaw of this study. Because of that the survey was to a certain degree biased and could
not provide a comparison with other regions of the Czech Republic.
4.3.4 Study of Utilization of Corporate Social Responsibility by Small
and Medium-Sized Companies in the Czech Republic (2007)168
In total, 37 Prague’s small and medium-sized companies filled in a questionnaire that
investigated the level of awareness and implementation of CSR concept in SMEs. Study
lead by Mr. Dinga under the aegis of the Czech Business Leaders Forum took place in
the period from September to December 2007.
Objective of the study was reviewing perception of CSR with the purpose of increasing
competitiveness of SMEs situated in the capital Prague.
According to the study, in the year 2007, one year after the first survey among the
Prague’s SMEs, familiarity with CSR concept rose to 59 % from the level of 44 %. Also,
almost 98 % support of CSR activities by SMEs in 2007 was a fantastic result and the
level increased by 13 % since 2006. Bureaucracy and lack of time were highlighted by
the SME companies as the most significant obstacles to a more intense involvement in
CSR activities.
Again, paying attention solely to Prague’s SMEs, i.e. SMEs located in the capital of the
Czech Republic with more than 1,3 million inhabitants, and a small size of the sample
can be reckoned as real weaknesses of this study.
168
Dinga, M., Business Leaders Forum (2007), Utilization of Corporate Social Responsibility by Small and Medium-Sized
Companies in the Czech Republic (Využití společenské odpovědnosti firem malými a středními podniky v ČR), Prague,
available at: http://www.csr-online.cz/netgenium/Download.aspx?G+0eM3Y0WvtKHmg+gZbjuAZx1UhzT0cOJHBWPZP
CZOEaRDloZVXs/A==
87
4.3.5 Survey on Corporate Social Responsibility – A New Factor of
Corporate Competitiveness (2008)169
In 2008 Survey on Corporate Social Responsibility, managed again by Mr. Dinga under
the auspices of the Czech Business Leaders Forum, took active part 225 companies of
all sizes from all 14 regions of the Czech Republic. Surveyed sample consisted of 65 %
micro and small companies, 23 % medium-sized companies and 12 % large companies.
Objective of the survey was to identify a level of awareness about CSR tools and an
ability to utilize them by companies located in the Czech Republic and to compare results
according to size and seat of the company.
Results of the survey showed that 47 % of involved companies knew CSR concept170.
Percentage of companies that knew CSR concept was increasing together with an
increase of the size of the company. Also Prague’s companies ranked higher.
Significant majority of companies (almost 90 %) embraced at least one CSR activity
aimed at own employees. On the other hand, in at least one activity related to external
dimension of CSR was involved 93 % of reviewed companies.
The principal forces that motivated companies in implementing CSR concept were
ethical and moral reasons, improvement of employees´ satisfaction, improvement of
business relations and tradition. The main obstacles that hampered companies in
socially and environmentally responsible behaviour were excessive bureaucracy, lack of
time and too high costs. The same results showed the 2007 survey of Prague’s small
and medium-sized companies.
The research showed that in general Prague companies were more focused on internal
dimension of CSR, while companies from other regions were more oriented on external
dimension of CSR.
169
Dinga, M., Business Leaders Forum (2008), Corporate Social Responsibility – A New Factor of Corporate
Competitiveness (Společenská odpovědnost firem – nový faktor firemní konkurenceschopnosti), Prague, available at: http:
//www.csr-online.cz/netgenium/Download.aspx?z/5oBElbQOp3k/O/7EYGhm5gx+IJs2xr1/ZaajokasA=
170
The result is interesting in that the similar survey in the year 2004 showed that 64 % of respondents (i.e. surveyed
companies) knew CSR concept, which is 17 % decrease since then. According to the author of the dissertation, this
decline has probably been caused by a small size of the sample than by a real change in the business environment.
88
Chapter 5.
Methodology and General Results of Own
Research
5.1 Basic Facts about Research and Methodology
5.1.1 Objective of the Research
The author’s research on corporate social responsibility (CSR) in Czech small and
medium-sized enterprises (SMEs) carried out within the framework of this dissertation
paper should contribute to the knowledge of the actual state of affairs in the business
sector in the Czech Republic regarding CSR activities and foster understanding of
developments taking place in this particular field.
Main objectives of the research including a deeper analysis were following:

How Czech small and medium-sized enterprises perceive and carry out CSR;

To what degree Czech small and medium-sized enterprises are involved
(active) in CSR;

What Czech small and medium-sized enterprises motivate to be engaged in
CSR;

What benefits Czech small and medium-sized enterprises can identify from
their involvement in CSR; and

What main barriers or obstacles Czech small and medium-sized enterprises
encounter when carrying out CSR.
5.1.2 Timing of the Research
The survey on corporate social responsibility in small and medium-sized companies that
was carried out for the purpose of this dissertation paper took place between 29 April
2008 and 10 August 2008.
Transfer of information from received questionnaires to easily analyzable format began
on 12 August 2008 and continued till 27 September 2008 when this time consuming work
was successfully ended.
Analytical work consisting of data analysis and synthesis and creation of easily
understandable tables and charts started on 2 October 2008 and finished on 29
November 2008. Incorporating charts and tables into the dissertation paper commenced
on 25 September 2008 and continued simultaneously with analytical work. Actual work
on commenting completed charts and tables began on 15 April 2009.
89
5.1.3 Methodology of the Research
The research was based on a random sample of small and medium-sized companies in
the Czech Republic with respect to proportionate representation of micro, small and
medium-sized companies in the overall sample. The overall research consisted of the
following main stages:
1. Preparation of the questionnaire template: taking into consideration similar
surveys conducted in the Czech Republic and Europe, professional literature and
the author’s personal and professional experience and wit, the questionnaire
template containing a complete set of relevant questions was prepared in easy to
distribute MS Word format.
2. Preparation of the sample: as a main source of information for preparation of the
sample was utilized the Creditinfo Czech Republic’s database171. A total of 4.955
companies were selected on a random basis with only respect to proportionate
representation of micro, small and medium-sized companies in the overall sample.
Only companies with their seat in the Czech Republic were selected.
3. Testing of the questionnaire: one questionnaire was sent to an SME company,
completed by an owner of the company, and returned to the author. Then
appropriateness of individual questions and questionnaire as a whole was
discussed with him. Based on discussion rewording of some questions and
reasonable changes in the questionnaire were made.
4. Main distribution of questionnaires: gradually a total of 4.955 questionnaires in
MS Word format were sent via electronic mail to recipients (SME companies)
together with the instruction how to complete the questionnaire template. This
stage ended on 10 June 2008. On aggregate 199 fully completed questionnaires
were received back. Total returnability of questionnaires was 4 %. The relatively
low returnability can be explained by:
a) Relatively large extent of the questionnaire template;
b) Survey was conducted by an unknown person;
c) Frequent exploitation of SME companies by marketing agencies and
agencies for research of public opinion (e.g. survey on CSR was carried out
by the Czech Business Leaders Forum in 2007 and 2008); and
171
The Creditinfo Czech Republic is progressive and leading entity in the area of financial and business information on
individuals and legal persons in the Czech Republic. The Creditinfo´s database contains the maximum available
information on all the economical subjects in the Czech Republic. It is coming out from the Albertina – Company Monitor
marketing database, having existed and being regularly updated since 1992, and supplements it with a high amount of
financial information – final accountings, debtors, bankruptcies, liquidation or payments information. The database
contains data on more than 420.000 Czech companies, including the managers and the owners and all Czech stocks and
bonds emissions. The database is updated daily by an experienced team of analysts. Available at:
http://www.cicr.cz/?PageID=207
90
d) Relatively great number of e-mail addresses was addressed to company’s
general e-mail boxes and not directly to a particular person or manager and a
fact that number of e-mail addresses was obsolete.
Bearing in mind these limitations and obstacles, the returnability of 4 % is
understandable and can be considered as a success.
5. Transfer of information: in this stage data and information from individual
questionnaire forms were transferred from the MS Word format to the analytical
software tool MS Excel. Total of 9 questionnaire forms were excluded from the
consequent analysis as they represented companies with more than 249
employees, i.e. those not meeting SME´s criteria.
6. Analytical phase: data and information of all 190 SME companies were
scrutinized, logically sorted out and finally well-arranged tables and charts (figures)
were created from them. Subsequently, tables and charts were gradually reviewed,
accompanied with text comments and explanations, and finally resulting
conclusions were made.
5.1.4 Questionnaire Form
The questionnaire form consisted of the introduction, instructions how to complete it and
three principal parts. The parts were following:
1. General Information About the Company – this part consisted of 6 screening
questions.
2. Socially Responsible Activities of the Company – major section with 25 multiplechoice questions allowing a respondent to freely choose appropriate answers
(often more answers than only one).
3. Corporate Social Responsibility – Concluding Questions – 5 final questions
focusing on knowledge of and familiarity with CSR concept.
The respective questionnaire form is attached as Appendix II: Example of the
Questionnaire on Corporate Social Responsibility Designed for Small and Medium-Sized
Companies (please, see for details).
5.1.5 Software Tools Used for Processing and Analysis
The questionnaire template was designed and created in the application MS Word.
Distribution of individual questionnaires was via the electronic e-mail client MS Outlook.
The application MS Excel was selected as a software tool for analysis and following
synthesis of data and information and for creation of tables and charts used in the
dissertation paper.
91
5.2 Basic Facts about Surveyed SMEs – Number, Size, Region,
Age, Ownership Structure, Line of Business, and
Hierarchical Level of Respondents
For the purposes of this survey and further analysis (and of course this dissertation
paper) to clearly distinguish companies according to their size, a simplified approach set
by the EU Commission Recommendation of 6 May 2003, concerning the definition of
micro, small and medium-sized enterprises has been applied. The European Union’s
detailed definition of an SME is given in the subchapter Definition of Micro, Small and
Medium-Sized Enterprise of this paper, and it is basically defined as having fewer than
250 employees, an annual turnover not exceeding EUR 50 million, and/or an annual
balance sheet total not exceeding EUR 43 million.
The widely used172 simplified approach for classifying companies according to their size
is based only on number of employees who worked within the company or on its behalf
and defines three groups or categories of SMEs:

Micro-sized company with one to nine employees,

Small-sized company with ten to forty nine employees, and

Medium-sized company with fifty to two hundred and forty nine employees.
Distinguishing size of companies based only on number of employees has also been
allowed by the Article 2173 of the above-mentioned EU Commission Recommendation of
6 May 2003. On top of that the criterion of staff numbers has been viewed by the EU
Commission as the most important.174
5.2.1 Number of Surveyed SMEs and Their Division According to Size
In total 190 SME companies took active part in the survey. The distribution according to
size of the company is shown in Table 5.1. Size class refers to the number of employed
persons in the year 2008 as provided by companies in the questionnaire.
Table 5.1 shows that, in terms of number of companies, SMEs are dominated (56 %) by
medium-sized companies (50-249 employees). Micro enterprises (1-9 employees) make
172
The same approach for classifying companies based only on number of employees has been used in many research
papers, for e.g. Jorgensen, A. and Knudsen, J. (2006), Sustainable competitiveness in global value chains: how do small
Danish firms behave?, Copenhagen Centre for Corporate Responsibility; Trnková, J. (2004), Corporate Social
Responsibility, Business Leaders Forum, Prague; etc.
173
EU Commission Recommendation of 6 May 2003, concerning the definition of micro, small and medium-sized
enterprises, Article 2: In implementing certain policies, Member States may also choose to apply only the criterion of
number of employees, except in fields governed by the various rules on State aid.
174
EU Commission Recommendation of 6 May 2003, concerning the definition of micro, small and medium-sized
enterprises, paragraph 4: The criterion of staff numbers (the ‘staff headcount criterion’) remains undoubtedly one of the
most important, and must be observed as the main criterion.
92
up 24 % of the enterprise population, and small enterprises (10-49 employees) account
for the rest, i.e. 20 %.
Table 5.1:
Absolute and relative number of surveyed companies in the analysed sample, sorted by
size of the company
Size of the com pany
Num ber of surveyed com panies
Relative value
46
24%
Small (10 to 49 employees)
37
20%
Medium (50 to 249 employees)
107
56%
Total
190
100%
Micro (1 to 9 employees)
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
5.2.2 Region of the Seat of Surveyed SMEs
Since the year 2000, the Czech Republic has been divided into thirteen administrative
regions and the capital city of Prague. Prior the administrative reform in 2000, there were
seventy-six districts including three statutory cities (without the capital Prague, which had
special status). Due to the relatively small size of the sample, the author of the
dissertation decided for a simplified regional classification into just three territorial areas
– the capital city of Prague, Bohemia, and Moravia. According to the author’s opinion this
kind of segmentation provides both, the regional perspective and assures sufficient
representativeness and predicative value of the surveyed sample.
The following Table 5.2 provides regional segmentation of the surveyed sample.
Companies with their seats in Moravia form the largest part of the sample (43 %). Then
follow companies from Bohemia with 34 % and finally companies from the capital Prague
with 23 % representation.
Table 5.2:
Absolute and relative number of surveyed SMEs in the analysed sample, sorted by
region of the seat and size of the company
Region of the seat of
the company
Size of the company (as per 2008)
Micro
Small
Prague
18
9,5%
12
Bohemia
16
8,4%
Moravia
12
6,3%
Total
46
24%
37
Medium
Total
6,3%
13
6,8%
43
23%
6
3,2%
43
22,6%
65
34%
19
10,0%
51
26,8%
82
43%
19%
107
56%
190
100%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
5.2.3 Classification of Surveyed SMEs According to Years of
Operation
Table 5.3 gives a picture how surveyed SMEs are sorted by years of their operation. A
clear majority (71 %) in the SME sample is formed by companies, which has been in
operation for ten and more years.
93
Table 5.3:
Absolute and relative number of surveyed SMEs in the analysed sample, sorted by age
(years of operation) and size of the company
Age / operation of the
company
Size of the company (as per 2008)
Micro
Small
Medium
Total
Less than 1 year
1
0,5%
1
0,5%
1
0,5%
3
1 to 3 years
1
0,5%
4
2,1%
5
2,6%
10
2%
5%
4 to 9 years
15
7,9%
10
5,3%
17
8,9%
42
22%
10 and more years
29
15,3%
22
11,6%
84
44,2%
135
71%
Total
46
24%
37
19%
107
56%
190
100%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
These companies can be considered as fully matured, regarding their stage of
development. 22 % of the sample consists of companies with 4 to 9 years of operation, 5
% forms companies running more than one and less than four years, and only 2 %
makes up start up companies that were running for less than one year.
5.2.4 Ownership Structure of Surveyed SMEs
Due to the nature of surveyed topic it has been desirable to find out, whether in the
reviewed companies was present foreign capital or whether some companies were part
of international corporation. It is because there are opinions suggesting that companies
with foreign capital are more likely to have CSR in place than solely Czech companies.
As presented in the Table 5.4, 80 % of reviewed SMEs were owned solely by Czech
owner, which constitutes a clear majority. Companies combining Czech ownership with a
foreign investor made up 8 %. 7 % of companies had exclusively foreign owner, while
only 4 % of companies was a part of an international corporation.
Table 5.4:
Absolute and relative number of surveyed SMEs in the analysed sample, sorted by
ownership structure and size of the company
Ownership structure of the company
Size of the company (as per 2008)
Micro
Solely Czech owner
Small
Medium
Total
41
21,6%
34
17,9%
77
40,5%
152
80%
Czech owner with a foreign investor
3
1,6%
2
1,1%
11
5,8%
16
8%
Part of an international corporation
0
0,0%
0
0,0%
8
4,2%
8
4%
Solely foreign owner
2
1,1%
1
0,5%
11
5,8%
14
7%
46
24%
37
19%
107
56%
190
100%
Total
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
5.2.5 Classification of Surveyed SMEs According to Their Line of
Business
The following Table 5.5 provides a distribution of surveyed SMEs according to the line of
business they have been in. As evident, 41 % of companies belong to the “production”
line of business, i.e. companies that have been involved in making products (either
94
goods or production services). This can be attributed primarily to medium-sized
enterprises, which in the whole sample make up almost 29 %.
The second biggest share belongs to construction companies and companies falling into
the category “other”, each of them accounting for 14 % share in the sample. Main
activities of SMEs in the category “other” have been the following: agriculture, utility
services, publishing, advertising, entertainment, health care, education, forestry,
technical and environmental services, and geodetic survey.
Wholesale companies and companies in the IS/IT business constitute the third greatest
share in the reviewed sample, each of them with 8 % share.
According to the author, the selected sample is sufficiently representative and suitable
for intended purposes, which is review and analysis of CSR in SMEs.
Table 5.5:
Absolute and relative number of surveyed SMEs in the analysed sample, sorted by line
of business and size of the company
Main activity of the
company
Size of the company (as per 2008)
Micro
Small
Medium
Total
Production
12
6,3%
11
5,8%
55
28,9%
78
41%
Retail sale
3
1,6%
3
1,6%
1
0,5%
7
4%
Wholesale
9
4,7%
3
1,6%
4
2,1%
16
8%
Transport
1
0,5%
0
0,0%
7
3,7%
8
4%
IS/IT
5
2,6%
7
3,7%
3
1,6%
15
8%
Consultancy
3
1,6%
3
1,6%
1
0,5%
7
4%
R&D
0
0,0%
0
0,0%
2
1,1%
2
1%
Construction
6
3,2%
6
3,2%
15
7,9%
27
14%
Financial services
0
0,0%
1
0,5%
1
0,5%
2
1%
Tourism
0
0,0%
1
0,5%
1
0,5%
2
1%
Other
7
3,7%
2
1,1%
17
8,9%
26
14%
Total
46
24%
37
19%
107
56%
190
100%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
5.2.6 Hierarchical Level of Respondents
Even though the author’s “Questionnaires on CSR” have always been addressed to the
top managements or owners of SME companies, in reality the Questionnaire filled in
persons at various positions and at different levels in the company hierarchy.
Figure 5.1 and Table 5.6 provide information on hierarchical level of persons who
actually filled in the Questionnaire. As visible in the Figure 5.1 and the Table 5.6,
targeted addressees – top managers and owners – make up 78 % of respondents
(exactly 69 % top management and 9 % owners).
95
Figure 5.1: Hierarchical level of the person who filled out the questionnaire (in relative value)
Hierarchical Level Of The Person Who Filled Out The Questionnaire
Low er management or
employee 8%
Ow ner 9%
Middle management
14%
Top management 69%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Middle management constitutes 14 % of all respondents while lower management and
regular employees represent the remaining 8 %. The great responsiveness of target
group (top management and owners) can be to a certain level attributed to the specifics
of SME companies. Usually SME companies do not have overinflated bureaucracy,
multiple-level hierarchy, and abundance of administrative personnel and tasks such as
filling various forms and questionnaires in stay in hands of top managers and owners
(frequently they are the very same persons in SMEs).
Table 5.6:
Absolute and relative number of persons who filled out the questionnaire, sorted by
hierarchical level and size of the company
Size of the company (as per 2008)
Hierarchical level
Micro
Small
Medium
Total
Lower management or employee
1
0,5%
2
1,1%
12
6,3%
15
8%
Middle management
0
0,0%
2
1,1%
24
12,6%
26
14%
Top management
34
17,9%
32
16,8%
65
34,2%
131
69%
Owner
11
5,8%
1
0,5%
6
3,2%
18
9%
Total
46
24%
37
19%
107
56%
190
100%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
5.3 General Results of the Research
From an enterprise size perspective, SMEs are involved in corporate social responsibility
in general, but knowledge about CSR differs from company to company and degree of
their involvement as well. This subchapter intends to investigate the following issues:

Find out how SMEs are informed on CSR;

Whether SMEs endorse fundamentals (essence) behind the CSR concept; and

To what degree SMEs are involved in socially and environmentally responsible
activities aimed both inwards and outwards the company.
96
5.3.1 General Awareness of Corporate Social Responsibility
Table 5.7 provides answer on question, whether respondents representing SME
companies ever heard about corporate social responsibility. In total 55 % of
respondents175 stated that they heard about CSR. The result does not correspond to that
of other similar researches conducted in the Czech Republic. For example 2006 survey
by the Czech Business Leaders Forum states that 44 % of surveyed SMEs heard about
CSR and research by the same organization in 2008 states only 37 % awareness about
CSR. Higher percentage of CSR-aware company representatives in the author’s
research can be ascribed to a bigger size of the sample, different distribution of sizes of
companies in the sample, and different level of respondents in the company hierarchy.
Table 5.7:
Knowledge of Corporate Social Responsibility concept by the company (respondent),
sorted by size of the company
Knowledge of CSR concept by
the company/respondent
Size of the company (as per 2008)
Micro
Yes
19
No
Total
Small
Medium
65%
62
58%
Total
41%
24
105
55%
27
59%
13
35%
45
42%
85
45%
46
100%
37
100%
107
100%
190
100%
Question: Have you ever heard about “Corporate Social Responsibility” (CSR) before getting this questionnaire?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
The fact that 45 % of SMEs have never heard of the term Corporate Social
Responsibility does not mean these SMEs actually do not behave socially responsibly or
do not practice some of CSR activities. The result may simply suggest these SMEs do
not approach CSR strategically and in a sophisticated way.
As evident in the Table 5.7, 65 % awareness of CSR ranks small enterprises at the top,
then follow medium-sized enterprises with 58 %, and the bottom occupy micro
enterprises with only 41 %. The hypothesis and results of similar survey176 that “the
bigger the company is, the greater knowledge of CSR it has” has been partially
disproved - partially because the difference has not been so big. Result may suggest that
medium-sized companies are more confident of their position on the market than small
companies, are not as frequently targeted by various pressure groups as large
companies and thus do not have sufficient stimuli to seek alternative business models.
However, it has to be point out that it can also be coincidence and if selected a bigger or
modified sample, the results could be different.
175
Note: 78 % of all respondents can be considered as real decision-makers as they were either top managers or
company owners.
176
For example 2008 survey by the Czech Business Leaders Forum (Dinga, M., Business Leaders Forum (2008),
Corporate Social Responsibility – A New Factor of Corporate Competitiveness (Společenská odpovědnost firem – nový
faktor firemní konkurenceschopnosti), Prague, available at: http://www.csr-online.cz/netgenium/Download.aspx?z
/5oBElbQOp3k/O/7EYGhm5gx+IJs2xr1/ZaajokasA=)
97
Knowledge of the term Corporate Social Responsibility by the respondent, sorted by
position of the respondent in the company hierarchy, depicts Table 5.8. The most CSRaware group of respondents was “top managers”, of which 57 % knew the term CSR.
Then followed groups “lower management and employees” with 53 % and “middle
management” and “owners” with 50 %. The results support author’s opinion the top
managers should be the most informed group. They are the ones who lead companies,
who can really influence CSR in companies, and who should be informed first and
foremost.
Table 5.8:
Knowledge of Corporate Social Responsibility concept by the company (respondent),
sorted by hierarchical level of the person who filled out the questionnaire and size of the
company
Hierarchical
level
Low er management or
employee
Know ledge of
CSR concept
Y
N
Middle management
Y / N (%)
1 to 9
1
0 100% / 0%
10 to 49
50 to 249
1
1 50% / 50%
6
6 50% / 50%
Total
Y
N
0
53% 47%
Y / N (%)
0
Top management
Y
N
Ow ner
Y / N (%)
Y
N
Y / N (%)
0% / 0%
15
19 44% / 56%
3
8 27% / 73%
1
1 50% / 50%
21
11 65% / 35%
1
0 100% / 0%
12
12 50% / 50%
39
26 60% / 40%
5
1 83% / 17%
50% 50%
57% 43%
50% 50%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Table 5.9 provides information on awareness of the term Corporate Social Responsibility
by the respondent, sorted by region of the respondent’s seat of the company. Bohemia
region placed at the top with 65 % of respondents knowing the term CSR. Then followed
Moravia region with 58 % and Prague region with only 41 %. Results of the 2008 survey
by the Czech Business Leaders Forum suggesting Prague companies are more aware of
CSR than companies in other regions have not been confirmed. On the contrary, results
in author’s survey show SMEs with their seat in Prague are the least likely to hear about
CSR. Possible explanation could be that Prague’s SMEs are more focused on short-term
profit and their managements do not have enough time for contemplating on “soft”
(social) issues. Also business environment in the biggest city of the Czech Republic
provides a certain level of anonymousness, which can help less CSR-aware companies
survive.
Table 5.9:
Knowledge of Corporate Social Responsibility concept by the company (respondent),
sorted by region of the seat of the company
Know ledge of CSR concept by
the com pany/respondent
Region of the seat of the com pany
Prague
Bohem ia
Moravia
Total
Yes
No
19
41%
24
65%
62
58%
105
55%
27
59%
13
35%
45
42%
85
45%
Total
46
100%
37
100%
107
100%
190 100%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
98
5.3.2 Acceptance of Corporate Social Responsibility Principles
Despite only 55 % of SME companies´ respondents ever heard about the term Corporate
Social Responsibility, with the fundamental principle of CSR177 fully agree 74 % of them
and 25 % partially, as in detail illustrates Table 5.10. Together it makes excellent 99 % of
all respondents who accept CSR concept. Difference in acceptance regarding size of the
company is insignificant. The same results (99 % agreement) also provided 2004 survey
on CSR.178
Table 5.10: Acceptance of basic idea of Corporate Social Responsibility concept by the company
(respondent), sorted by size of the company
Acceptance of CSR concept by the
company / respondent
Size of the company (as per 2008)
Micro
Small
Medium
Yes, fully/completely
Rather yes
Rather no
No
33
13
0
0
Total
46 100%
72%
28%
0%
0%
26
9
2
0
70%
24%
5%
0%
37 100%
81
26
0
0
Total
76%
24%
0%
0%
140
48
2
0
74%
25%
1%
0%
107 100%
190
100%
Question: Do you agree with the following statement: “In order to assure a long-term prosperity, a company has to behave
responsibly and ethically to its employees, environment, and community, in which it undertakes its business.”
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Consensus regarding the company's orientation is thus evident - majority of participating
companies is aware, besides their commercial role, of their responsibility towards the
society in which they operate. According to some questionnaire commentaries business
should not, however, substitute the role of the government and its involvement should
have clear boundaries.
A view from different perspective provided a survey by the agency STEM. According to a
public opinion survey in the CSR area, conducted by the STEM for Philip Morris in 2003
in the Czech Republic, a large part of the asked respondents (exactly two thirds)
believed that companies should do more than just generate profit and pay taxes.179
These results support general opinion claiming that CSR is a viable concept based on
clear principles that should be embraced by companies as well as society and not just a
mere and unsubstantiated theory made up by academics.
Table 5.11 provides insight into acceptance of basic principles of CSR concept by
respondents, sorted by region of the seat of SMEs. As ensues from the survey,
177
Respondents were asked the following question: Do you agree with the following statement: “In order to assure a longterm prosperity, a company has to behave responsibly and ethically to its employees, environment, and community, in
which it undertakes its business.”
178
Trnková, J., et al. (2004), Corporate Social Responsibility – Complete Guide of the Topic and Conclusions of the
Survey in the Czech Republic (Společenská odpovědnost firem – kompletní průvodce tématem a závěry z průzkumu v
ČR), Prague, available at: http://www.blf.cz/csr/cz/vyzkum.pdf
179
Jeřábková, V., Hartl, J. (2003), Corporate Social Responsibility in the Mirror of Sociological Research (Společenská
odpovědnost firem v zrcadle sociologického výzkumu), supported by the AISIS o.s., available at:
http://www.sof.cz/download/781_03_aisis%20brožura%20sof.pdf
99
difference in acceptance regarding seat of the company is insignificant. In all regions
acceptance rate is around 99 % (74 % full agreement and 25 % partial agreement).
Table 5.11: Acceptance of basic idea of Corporate Social Responsibility concept by the company
(respondent), sorted by region of the seat of the company
Acceptance of CSR concept by the
company / respondent
Region of the seat of the company
Prague
Bohemia
Moravia
Yes, fully/completely
Rather yes
Rather no
No
32
11
0
0
74%
26%
0%
0%
48
16
1
0
74%
25%
2%
0%
60
21
1
0
73%
26%
1%
0%
140
48
2
0
Total
74%
25%
1%
0%
Total
43
100%
65
100%
82
100%
190
100%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Also promising results regarding future development of CSR provides Table 5.12, which
reviews acceptance of essential principles of CSR by respondents, sorted by position of
the respondent in the company hierarchy.
In the Table 5.12 the top positions in acceptance of CSR principles belong to actual
decision-makers - owners and top managers (fully agree 78 % respectively 75 % of
them) – who can make CSR become reality in their enterprises. Then follow middle and
lower managers and employees.
Table 5.12: Acceptance of basic idea of Corporate Social Responsibility concept by the company
(respondent), sorted by hierarchical level of the person who filled out the questionnaire
Acceptance of CSR
concept by the company
/respondent
Yes, fully/completely
Hierarchical level of the person who filled out the questionnaire
Lower management
or employee
Middle
management
Top
management
Owner
10
67%
18
69%
98
75%
14
78%
Rather yes
4
27%
7
27%
33
25%
4
22%
Rather no
1
7%
1
4%
0
0%
0
0%
No
0
0%
0
0%
0
0%
0
0%
15
100%
26
100%
131
100%
18
100%
Total
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Another view on acceptance of CSR principles presents Table 5.13, which is focused on
classification of acceptance according to ownership structure of the company. As
expected, lead positions occupy SMEs that are owned solely by foreign owners (79 %
unqualified assent) and SMEs that are part of an international corporation (75 %
unqualified assent). These groups of companies tend to an opinion stating that pure
focus on the profit alone is not a lasting sustainable policy and that it is necessary to find
a balance between the profit making and social and environmental responsibility. After
these two groups of companies come next SMEs entirely owned by Czech owners and
SMEs with combined ownership (Czech owner with a foreign investor). Only 62 % full
agreement on elementary principles of CSR by respondents representing SMEs with
100
combined ownership can be explained by their loyalty to an opinion stating that the main
function of the company is primarily being business enterprise with the goal to make
profit. Also top managers of these SMEs may be strongly motivated (or softly forced) by
foreign investors to make short-term profit without considering longer-term perspectives,
where certainly belongs CSR.
Table 5.13: Acceptance of basic idea of Corporate Social Responsibility concept by the company
(respondent), sorted by ownership structure of the company
Acceptance of CSR
concept by the company /
respondent
Ownership structure of the company
Czech owner with a
foreign investor
Solely Czech owner
Yes, fully/completely
Part of an international
corporation
Solely foreign
owner
113
74%
10
62%
6
75%
11
79%
Rather yes
37
24%
6
38%
2
25%
3
21%
Rather no
2
1%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
152 100%
16
100%
8
100%
No
Total
14 100%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
The following Table 5.14 provides information on knowledge of documents about CSR
and organizations (particularly non-profit) that promote CSR by questionnaire
respondents, classified by size of the company. Results show there is a very low level of
familiarity with documents and organization dealing with CSR among respondents from
SME companies. Only 7 % of respondents stated they knew some CSR relevant
documents or organization.
Table 5.14: Knowledge of documents or organizations (particularly non-profit) dealing with CSR by
the company (respondent), sorted by size of the company
Knowledge of documents/
organizations dealing with CSR
Micro
Size of the company (as per 2008)
Yes
3
No
Total
Small
Medium
7%
0
0%
43
93%
37
100%
46
100%
37
100%
10
Total
9%
13
7%
97
91%
177
93%
107
100%
190
100%
Question: Do you know any documents or organizations (particularly non-profit) dealing with CSR?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Some informed respondents mentioned for example in the questionnaire the following
documents and organizations: standard Social Accountability (SA 8000), environmental
rules from the Ministry of Education, publication Across Corporate Social Responsibility,
various ISO standards (ISO 14000 Environmental Management Standards, OHSAS
18001 Occupational Health and Safety Assessment Specification), and non-profit
organizations (the Czech Business Leaders Forum, Czech Donors Forum, HESTIA
National Volunteer Centre).
101
The 2006 survey focused on Prague SMEs by the Czech Business Leaders Forum
brought on similar question a little better result (19 % awareness of CSR related
documents). On the other hand the same survey indicated that 67 % of SMEs showed
interest in information on CSR.
Presented results show very little awareness of CSR related documents and
organizations caused by low activity and motivation of SMEs to actively seek information
about CSR, low activity of state and non-governmental organizations to promote CSR,
and low activity of media to properly inform on CSR.
In comparison to little knowledge of documents about CSR and organizations that
promote CSR, 42 % of SMEs´ respondents would appreciate to be provided with
generally accepted and transparent methodology how to effectively implement CSR in
their companies (please, see Table 5.15).
Table 5.15: Need for generally accepted and transparent methodology how to implement CSR in the
company, sorted by size of the company
Need for methodology how to
implement CSR
Size of the company (as per 2008)
Micro
Small
Medium
Total
Yes
8
17%
14
38%
58
54%
80
42%
No
37
80%
23
62%
46
43%
106
56%
1
2%
0
0%
3
3%
4
2%
37 100%
107
100%
190
100%
No, CSR has already been
implemented in our company
Total
46 100%
Question: Would your company appreciate generally accepted and transparent methodology how to effectively implement
CSR in your company?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
It seems these results stand in direct contrast to each other. Based on results the author
presumes that SMEs are not prepared to invest adequate efforts in order to gain
necessary information and to effectively implement CSR180. This opinion can also be
supported by the fact that less than one fifth of the surveyed SMEs have a specific
member of the staff allocated to CSR matters, even if only on part-time basis (please,
see Table 5.16).
Table 5.16 gives information on whether companies allocated some of their personnel to
coordination of CSR´s activities. The results show only 19 % of SMEs has dedicated
some personnel for managing CSR activities. The survey also confirmed opinion that the
bigger the company is, the more probable it is to have a member of staff assigned to
dedicate him/her-self to CSR.
180
The author would like to point out that information on CSR and CSR implementation can be easily obtained on
dedicated web pages or through various non-profit organizations (e.g. Czech Business Leaders Forum, web portal CSROnline, web portal CSR Europe, etc.).
102
According to the survey, usually personnel dedicated to managing CSR occupy the
following positions in the company: community investment coordinator, human resources
manager, sales manager, marketing manager, quality manager, member of the
management board, and owner. A wide variety of these positions suggests that SMEs
active in CSR do not have the same opinion on who should be coordinating CSR
activities in the company. Rather each SME company due to its relatively small size
choose the solution that fits its individual specifics.
Table 5.16: Overview of company’s personnel authorized/responsible for the coordination of CSR
activities, sorted by size of the company
Pe rs on re s pons ible for
the coordination of CSR
M icro
Size of the com pany (as pe r 2008)
Sm all
M e dium
Y es
7
15%
6
16%
24
22%
37
19%
31
84%
83
78%
153
81%
No
39
85%
Total
46
100%
37 100%
Total
107 100%
190 100%
Question: Is any of your company’s employees (or yourself) authorized/responsible for the coordination of CSR (i.e. social
and environmental activities)?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
5.3.3 Measurement of Corporate Social Responsibility
The following Table 5.17 investigates, whether SMEs measure and evaluate corporate
social responsibility, i.e. social and environmental activities they are engaged in. In spite
of the fact that 98 % of SMEs was involved in internal and 92 % was involved in external
dimension of CSR (please, see Figure 5.2 and Figure 5.5), only 9 % of SMEs measured
and evaluated their CSR activities at that time and just 5 % of SMEs has planned to do
so in the future. Regarding classification according to the company’s size, medium-sized
companies ranked top with 10 % followed by small companies with 8 % and micro
companies with 7 %.
These results proved that SME companies either did not take CSR seriously enough and
did not integrate it in their business strategies and operation or did not have enough time,
resources, and know-how for CSR measurement and evaluation or did not have both.
Table 5.17: Measurement and evaluation of CSR by the company, sorted by size of the company
Measurement and evaluation of
CSR by the company
Size of the company (as per 2008)
Micro
Small
Medium
Total
Yes
3
7%
3
8%
11
10%
17
9%
No
42
91%
32
86%
90
84%
164
86%
1
2%
2
5%
6
6%
9
5%
46
100%
37
100%
107
100%
190
100%
No, but it is planning to do so
Total
Question: Does your company measure and evaluate Corporate Social Responsibility’s related activities (i.e. social and
environmental activities)?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
103
In accordance with modern management principles, and particularly in the time of
economic downturn, top management has to be provided with consistent reporting on all
company activities in order to manage it effectively. Therefore approach to CSR should
be no different. According to the author’s opinion it is very sad that SMEs do not
measure and evaluate CSR activities, because CSR measurement and evaluation can:

Provide a picture of what is happening, qualitatively and quantitatively, within the
company. Outputs can be used as an input into a CSR report or a benchmarking
study comparing the company’s performance to other companies in its sector of
activity. In all of these intermediate uses, CSR measurement can improve the
focus and performance of the business;

Provide a disciplined approach to enable an SME to react to protect its reputation
and therefore it’s brand as the demands made by society (stakeholders) change
and multiply;

Help justify and allocate resources to the most effective CSR activities and
eliminate ineffective ones;

Help to open up new ways of thinking, which can lead to new products, better
marketing or wiser investments;

Allow communication of evaluation results that can strengthen relationships with
stakeholders.
Nevertheless the author believes that SMEs will start measuring and evaluating CSR
activities similarly as other investments in the future due to increase in price of external
resources, intensified external pressures, tougher competitive environment, and due to
internal pressures to be more efficient.
5.3.4 Degree of Involvement of SMEs in Socially Responsible
Activities towards Internal Community
According to a study of the Czech Business Leaders Forum, almost 90 % of companies
in the Czech Republic were involved in internal dimension of CSR (i.e. towards their
internal community, particularly towards employees) in the year 2007181.
Figure 5.2 provides results of the author’s research on the same topic in the year 2008.
According to the results, 98 % of all surveyed SMEs operating in the Czech Republic are
involved, to different degrees, in internal dimension of CSR. An enterprise size
perspective shows that this ratio ranges from 95 % amongst small companies to 99 %
and 100 % in the case of medium-sized and micro enterprises respectively.
181
Dinga, M., Business Leaders Forum (2008), CSR – A New Factor of Corporate Competitiveness (Společenská
odpovědnost firem – nový faktor firemní konkurenceschopnosti), Prague, available at: http://www.csronline.cz/Page.aspx?pruzkum
104
Figure 5.2: Percentage of SMEs involved in internal dimension of CSR in 2008, sorted by size of the
company including an average for all SMEs
Micro
100%
Small
95%
Medium
99%
Average for SMEs
98%
0%
25%
50%
75%
100%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
According to the author, this percentage is very high but can be plausibly explained.
Firstly, probably the main reason is that the number of examples of socially responsible
activities suggested to SMEs in the questionnaire was rather broad (please, for examples
of socially responsible activities see Table 6.1). Secondly, attention paid by SMEs to the
human resources management, especially to health and safety matters, which is part of
internal dimension of CSR has a long tradition in the Czech Republic and can be
considered as high.
The following Figure 5.3 provides insight into involvement in internal dimension of CSR
by Czech SMEs in 2008, sorted by region of the seat of the SME. As ensues from the
survey, difference in involvement in internal dimension of CSR regarding seat of the
company is insignificant. In all regions acceptance rate is around 98 %. Results thus
show that no matter where the company is from, focus of SME companies on internal
dimension of CSR and care for employees are approximately the same.
Figure 5.3: Percentage of SMEs involved in internal dimension of CSR in 2008, sorted by region of
the seat of the company including an average for all SMEs
Prague
98%
Bohemia
98%
Moravia
99%
Average for SMEs
98%
0%
25%
50%
75%
100%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
105
5.3.5 Degree of Involvement of SMEs in Socially and Environmentally
Responsible Activities towards External Community
Enterprises may develop a number of activities and relationships with the external
communities where they are located. From an SME perspective, it is fair to recognise
that many SMEs already take up their social and environmental responsibility,
particularly through community involvement, even though these activities are not
explicitly disseminated or marketed to the community.
According to the 2001 SME survey182 that covered 15 countries of the EU, plus Iceland,
Liechtenstein, Norway and Switzerland and published in the Observatory of European
SMEs, half of the European SMEs was involved, to different degrees, in external
community causes, i.e. external dimension of CSR. An enterprise size perspective
showed that the ratio ranged from 48 % for the micro companies to 65 % for small and
70 % for medium-sized companies (please, see Figure 5.4).
Figure 5.4: Percentage of European SMEs involved in external dimension of CSR in 2001, sorted by
size of the company including an average for all SMEs
Percentage of European SMEs involved in external CSR activities in 2001
100%
35%
75%
30%
50%
52%
No
50%
65%
25%
70%
50%
48%
Yes
0%
Micro
Small
Medium
Average for SMEs
Size of the company
Source: European Commission (2002), Observatory of European SMEs 2002, No. 4: European SMEs and Social and
Environmental Responsibility, Luxembourg, available at: http://ec.europa.eu/enterprise/enterprise_policy/analysis/doc/
smes_observatory_2002_report4_en.pdf
The following Figure 5.5 provides results of the author’s research on the same topic in
the year 2008. According to the outcome of the research, 92 % of all surveyed SMEs
operating in the Czech Republic are involved, to different degrees, in external dimension
of CSR. A company size perspective shows that the involvement of SMEs in socially and
environmentally responsible activities towards external community is positively related to
the size of company.
According to the author’s opinion, this percentage is high, especially in comparison to
European SMEs´ average of 50 %. Three possible explanations can be given in this
182
For more information on the survey, please, see Chapter 4.2.1 Survey on European SMEs and Social and
Environmental Responsibility (2002).
106
respect. On the one hand, it should not be forgotten that the number of examples of
socially and environmentally responsible activities suggested to companies in the
questionnaire is rather broad (please, see Table 7.1 for details). On the other hand, this
may be an example of a question that evokes socially desirable answers, which
somehow foster positive replies from respondents representing SMEs. And finally, SMEs
are really involved in external community causes due to the tradition and the fact that this
involvement indeed helps SMEs to maintain good relations with external stakeholders
and their competitiveness.
Figure 5.5: Percentage of SMEs involved in external dimension of CSR in 2008, sorted by size of the
company including an average for all SMEs
Percentage of SMEs involved in external dimension of CSR in 2008
100%
17%
8%
8%
4%
No
75%
50%
83%
92%
96%
92%
Yes
25%
0%
Micro
Small
Medium
Average for SMEs
Size of the company
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Percentage of SMEs involved in external dimension of CSR in 2008 classified by region
of the seat of the company depicts Figure 5.6.
Figure 5.6: Percentage of SMEs involved in external dimension of CSR in 2008, sorted by region of
the seat of the company including an average for all SMEs
Percentage of SMEs involved in external dimension of CSR in 2008
100%
12%
11%
4%
8%
No
75%
50%
88%
96%
89%
92%
Yes
25%
0%
Prague
Bohemia
Moravia
Average for SMEs
Region
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
107
As portrays Figure 5.6 region Moravia with 96 % of SMEs involved in external community
causes tops the three selected regions. Region Bohemia with 89 % involvement and
region Prague with 88 % involvement followed the leading region. Higher engagement of
Moravia SMEs in socially and environmentally responsible activities towards external
community can be attributed to a deeper cultural tradition of mutual relations amongst
business sector, local communities, and local authorities.
A sector perspective illustrated in Figure 5.7 shows that involvement in external
dimension of CSR to a certain degree depends on the sector in which SMEs operate.
According to the available data, those SMEs belonging to retail sale, consultancy,
research and development, and tourism sectors show the highest involvement, whereas
the lowest SMEs’ involvement corresponds to the financial services and IS/IT sectors.
Figure 5.7: Percentage of SMEs involved in external dimension of CSR in 2008, sorted by sector of
the company including an average for all SMEs
Production
96%
Retail sale
100%
Wholesale
88%
Transport
88%
IS/IT
67%
Consultancy
100%
R&D
100%
Construction
96%
Financial services
50%
Tourism
100%
Other
92%
Average for SMEs
92%
0%
25%
50%
75%
100%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Possible explanation for a lower involvement in external dimension of CSR of SMEs
belonging to the financial services and IS/IT sectors can be that companies not involved
do not see connection between their line of business and external dimension of CSR or
they cannot identify added value by engaging in external dimension of CSR or their
managements just do not have time for external dimension of CSR or combination of all
previous factors.
Figure 5.8 provides information on percentage of SMEs involved in external community
causes, sorted by years of operation of an enterprise. Involvement of enterprises
operating less than one year was 67 %, while involvement of older enterprises was
approximately 92 %.
According to the results of the survey, the involvement in external dimension of CSR
depends on years of operation of the enterprise. Nevertheless there is no positive
108
relation to the age of enterprise (i.e. the older the enterprise, the higher the percentage of
involvement and vice-versa) but there is a clear dividing line between SMEs operating
less than one year and older SMEs. This conclusion can be substantiated by facts that
start-up SMEs existing less than one year have to primarily focus on their own existence
and survival, their own business and usually do not have time for anything else. In CSR
activities this kind of enterprises engage when their position on the market is more stable
and when they are more matured.
Figure 5.8: Percentage of SMEs involved in external dimension of CSR in 2008, sorted by age/years
of operation of the company including an average for all SMEs
Less than 1 year
67%
1 to 3 years
90%
4 to 9 years
93%
10 and more years
93%
Average for SMEs
92%
0%
25%
50%
75%
100%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Another view on involvement in external dimension of CSR provides Figure 5.9, which is
focused on classification of engagement according to ownership structure of the
company.
Figure 5.9: Percentage of SMEs involved in external dimension of CSR in 2008, sorted by ownership
structure of the company including an average for all SMEs
Solely Czech ow ner
93%
Czech ow ner w ith a foreign investor
75%
Part of an international corporation
100%
Solely foreign ow ner
100%
Average for SMEs
92%
0%
25%
50%
75%
100%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
As expected, lead positions occupy SMEs that are owned solely by foreign owners (100
% engagement) and SMEs that are part of an international corporation (also 100 %
engagement). SMEs entirely owned by Czech owners come next (93 % engagement). It
can be said that these groups of companies tend to an opinion stating that pure focus on
the profit alone is not a lasting sustainable policy and that it is necessary to find a
balance between the profit making and social and environmental responsibility. The last
position occupies SMEs with combined ownership (Czech owner with a foreign investor),
109
where their engagement in external dimension of CSR reached only 75 %. The similar
result showed also Table 5.13 summarizing acceptance of basic principles of CSR
concept. Likely explanation of this result can be that these SMEs tend to an opinion
stating that the main function of the company is primarily being business enterprise with
the goal to make profit. Also top managers of these SMEs may be strongly motivated by
foreign investors to make short-term profit without considering longer-term perspectives,
where surely belongs CSR.
The research found out that there is a fairly strong positive relation between ISO
certification of the company and involvement in external dimension of CSR. As Figure
5.10 illustrates, on average 99 % of SMEs that were ISO certified were also involved, to
different degrees, in external socially and environmentally responsible activities.
Comparing to that 84 % of SMEs that were not ISO certified were involved in external
dimension of CSR too. Reasons for the conclusion can be following: firstly, ISO certified
companies are more matured and CSR conscious; secondly, CSR is implicitly integrated
into ISO standards.
Figure 5.10: Percentage of SMEs involved in external dimension of CSR in 2008 based on ISO
Certification, sorted by size of the company and including an average for all SMEs
Involvement in external CSR based on ISO Certification
100%
100%
100%
79%
99%
86%
90%
99%
84%
ISO
Certified
75%
50%
25%
ISO Not
certified
0%
Micro
Small
Medium
Average for SMEs
Size of the company
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
However, as illustrates Figure 5.11, almost no link exists between SMEs with defined
and written business strategy and engagement in socially and environmentally
responsible activities towards external stakeholders. Surveyed SMEs with defined
business strategy in writing scored only 3 % higher in engagement than SMEs without
any business strategy (93 % vs. 90%, while average was 92 %).
This result suggests that no matter whether an SME company has or does not have its
business strategy its involvement in external dimension of CSR is almost the same.
According to the author’s opinion, elaborated business strategy does not ensure that if it
is properly implemented in the company, the company in question will also be a “good
corporate citizen”, i.e. will incorporate CSR in its business operation. Whether a company
110
is or is not socially and environmentally responsible depends more on conviction of its
top managers and owners on added value of CSR for the company and willingness and
effort implementing it into business operations than on existing company strategy.
Nevertheless, existing company strategy is a necessary precondition for effective and
efficient use of CSR principles and concept. Without it CSR can become for the company
a mere routine, sometimes unpopular like paying taxes, with uncertain future.
Figure 5.11: Percentage of SMEs involved in external dimension of CSR in 2008 based on defined
corporate strategy and including an average for all SMEs
Defined corporate strategy
93%
Not defined corporate strategy
90%
Average for SMEs
92%
0%
25%
50%
75%
100%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
111
Chapter 6.
Specific Results of Own Research:
Internal Dimension of Corporate Social
Responsibility
Internal dimension of corporate social responsibility is focused on matters such as
investment in human capital183, health and safety at work184, managing change185 and
environmentally responsible business practices186. For theoretical background on internal
dimension of CSR, please, see subchapter 3.2.1 Internal Dimension of Corporate Social
Responsibility.
This Chapter intends to investigate the following issues of internal dimension of
corporate social responsibility:

In what activities of internal dimension of CSR SME companies are involved;

In what way SME companies support their employees and/or family members
within the frame of internally focused socially responsible activities;

Review various characteristics of internal dimension of CSR, such as whether
SME companies have strategies for internally focused CSR or to find out how
important it is for SMEs behaving socially responsible towards their employees;

Determine reasons of SME companies for their involvement in internal dimension
of CSR;

Find out what benefits SME companies can identify by participating on internally
targeted socially responsible activities; and

Determine what barriers SME companies can face if they participate or want to
participate on internally aimed socially responsible activities.
183
Investment in human capital can include measures such as lifelong learning, empowerment of employees,
better information throughout the company, better balance between work, family, and leisure, greater work force
diversity, equal pay and career prospects for women, profit sharing and share ownership schemes, and concern for
employability as well as job security.
184
Health and safety at work within the frame of internal dimension of CSR can be interpreted as voluntary
schemes, which can be seen as complementary to legislation and control activities by public authorities as they
likewise aim at promoting a preventive culture, i.e. higher levels of occupational safety and health.
185
Managing change means restructuring in a socially responsible manner to balance and take into consideration
the interests and concerns of all those who are affected by the changes and decisions.
186
Environmentally responsible business practices in general mean, reducing the consumption of resources or
reducing polluting emissions and waste in order to reduce environmental impact. It can be good for the business by
reducing energy and waste disposal costs and lowering input and de-pollution costs. Al these practices lead to
increased profitability and competitiveness.
112
6.1
Description of Internal Dimension of Socially Responsible
Activities Used by SMEs
According to the 2004 survey187 conducted in the Czech Republic amongst companies of
all sizes, internal dimension of corporate social responsibility was the most accentuated
at that time as well as for the future, particularly the area of employee care and benefits
and employee education.188
76% of participating companies declared they already care about their employees.
Companies usually named the following benefits: pension insurance, canteen or
luncheon vouchers, one additional week of vacation, social events, and financing of
preventive health care programmes. Large companies, where heavy cuts of workforce
are a common threat, often mentioned retraining of employees.
55% of participating companies provided educational and training programs for their
employees (and 55% of companies were planning to educate their employees more in
the future). Interestingly, some companies mentioned the possibility of their employees'
personal development by their engagement in a non-profit organization or community
development activities.
According to the answers, 56% of participating companies pursued activities in the area
of own transparency. In connection with this issue, companies named their ethical codes,
openness on web pages, employees' possibility to look at company accounting, internal
control mechanisms, and annual company reports with information exceeding the
obligatory (legal) framework. One company mentioned a day of “open doors”.
In order to find out precisely in what topics of internal dimension of CSR do SME
companies in the Czech Republic engage the most and what topics they consider as
important, the author offered to SMEs in the questionnaire a range of topics189 (for
individual topics, please, see Table 6.1). When filling in the questionnaires, companies
were asked to choose CSR topics they were engaged in.
Table 6.1 gives an overview on wide-range of activities within the frame of internal
dimension of CSR SME companies were involved in 2008. The Table 6.1 is sorted by
size of the company and includes an average for all SMEs. Referring to the concrete
activities developed by those SMEs involved in socially responsible activities focused on
internal stakeholders, the author’s survey shows that these activities mainly concentrate
187
Trnková, J., et al. (2004), Corporate Social Responsibility – Complete Guide of the Topic and Conclusions of the
Survey in the Czech Republic (Společenská odpovědnost firem – kompletní průvodce tématem a závěry z průzkumu v
ČR), Prague, available at: http://www.blf.cz/csr/cz/vyzkum.pdf
188
According to the 2004 survey, attracting and retaining outstanding employees was the second most usual motivation
for companies to engage in CSR activities. The first most usual motivation for companies to be involved in CSR was a
belief that it was right to do.
189
Topics of internal dimension of CSR have been thoroughly selected by the author using professional literature, already
realized CSR surveys, and his own knowledge and experience in the area.
113
in five fields (fields where average involvement was higher than 60 %). The SME
companies showed highest engagement in the following activities:

Sufficient health and safety arrangements at workplace (77 %);

Employee motivation and education system (67 %);

Possibility of flexible working hours for employees (67 %);

Company contributes to pension insurance and/or life insurance of its
employees (62 %); and

Top management discusses or consults important matters with employees
(62 %).
Other internally aimed socially responsible activities received a lower degree of attention
from SMEs. Particularly, SME companies paid the lowest level of attention to company
Code of Ethics. Only 2 % of SMEs were not involved in any of the selected internal
socially responsible activities, which corresponds to an average of 98 % involvement
(please, see Figure 5.2).
Validity of results of the author’s survey can be supported by two independent Czech
Business Leaders Forum’s surveys conducted in 2004 and 2008, which brought similar
findings.
Table 6.1:
Percentage of SMEs involved in wide-ranging activities of internal dimension of CSR in
2008, sorted by size of the company and including an average for all SMEs
Size of the company (as per 2008)
Description of internal dimension of socially responsible activities
used by SMEs
Micro
Small
Medium
SMEs average
Employee motivation and education system
46%
73%
75%
67%
Process to ensure steps are taken against all forms of discrimination,
both in the workplace and at the time of recruitment
24%
35%
36%
33%
65%
76%
83%
77%
83%
62%
53%
62%
4%
24%
38%
27%
Possibility/ option of flexible working hours
76%
70%
62%
67%
Possibility to work part-time for mothers taking care of small children
37%
54%
49%
47%
Code of Ethics is worked out and implemented in the company
9%
8%
16%
13%
Company contributes to pension insurance and/or life insurance of its
employees
61%
51%
70%
64%
1 or more extra weeks of holiday above the standard legal length of 4
weeks
28%
22%
51%
40%
None of these measures/ arrangements are implemented in the
company
0%
5%
1%
2%
Sufficient health and safety arrangements are implemented at the
work place
Top management discusses/ consults important matters with
employees
Rules for recruitment of disabled or handicapped people are set up
in the company
Question: Have any of the following measures/arrangements been implemented in your company?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
114
Concluding the results of the survey, the reason why the five above-mentioned activities
of internal dimension of CSR190 scored highest is that these activities either bring
companies the biggest competitive advantage in order to attract and retain qualified
employees or they can inflict the company the highest damage (both financial and
reputation), if the relevant activity is missing or managed below common standards. In
the first category falls employee motivation and education system, possibility of flexible
working hours, contributions to pension insurance and/or life insurance, and willingness
of top management to consult important matters with employees. On the other hand
sufficient health and safety arrangements at workplace fall into the second category.
The most probable explanation why SME companies paid the lowest level of their
attention to working out and implementing company Code of Ethics is that SMEs may
consider drawing up a company Code of Ethics a typical example of bureaucracy for
which they do not have time and available resources. On top of that they often regard
themselves as ethical companies and consider waste of time drawing up something in
writing they already do in their regular business. According to the author’s opinion it is a
pity that so low percentage of SME companies have their company Code of Ethics
because they can also positively influence their competitiveness. Code of Ethics should
be regarded as a “constitution” for the company, the cornerstone of its values on which
future development can be built. Code of Ethics should serve as a guide to the everyday
professional conduct of employees and its objective is to support desired standards of
behaviour and law and order on the one hand and inform the public on the behaviour
they can request from the company’s employee on the other hand.191
The available data also suggest that there is a positive relationship between the size of
companies and their degree of involvement in three fields: sufficient health and safety
arrangements at workplace, employee motivation and education system, and rules
preventing various forms of discrimination. The positive relationship in these cases
makes sense because these measures are more crucial for larger companies with more
complex processes and operation than for small and micro companies.
On the other hand, there is also a negative relationship between the size of companies
and their degree of involvement in two fields: willingness of top management to discuss
important matters with employees and possibility of flexible working hours for employees.
The negative relationship in these cases also makes sense as these measures are more
easily implemented in smaller companies with lower level of complexity than in larger
ones. In the author’s opinion SME companies regardless of their size should strive for
190
Activities (fields) of internal dimension of CSR, where average involvement was higher than 60 %.
191
MacDonald, Ch. (2008), Creating a Code of Ethics for Your Organization, available at http://www.ethicsweb.ca/codes/
115
implementation of all these measures and activities because they can contribute to the
increase of competitiveness.
The following Table 6.2 complements Table 6.1 on previous page and provides general
information on forms of activities of internal dimension of CSR, which SME companies
were using in supporting of their employees and/or family members in the year 2008.
The most common form of activity was regardless size of the company ensuring proper
education and training for employees and/or their family members (exactly 88 % of SMEs
support educational activities of employees and/or their family members)192. The second
most frequent form of activity that SME companies were supporting was a support of
sport activities (actually supported by 46 % of SMEs). The third place occupies support
of cultural activities of company’s employees and/or their family members. To very
similar results came two independent Czech Business Leaders Forum’s surveys
conducted in 2004 and 2008.
Table 6.2:
Percentage of SMEs involved in supporting of employees and/or family members in
various activities of internal dimension of CSR in 2008, sorted by size of the company
and including an average for all SMEs
Description of activities related to internal
dimension of CSR supported by SMEs
Size of the company (as per 2008)
Micro
Small
Medium
SMEs average
Sport activities
39%
46%
50%
46%
Cultural activities
24%
27%
52%
41%
Health care
20%
24%
38%
31%
Environmental protection – ecological activities (other
than directly related to consequences of the
company’s own operations)
2%
8%
8%
7%
Education
74%
89%
94%
88%
Other
0%
3%
3%
2%
None
20%
8%
6%
9%
Question: Indicate in which of the following activities your company has been supporting its employees and/or its family
members.
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Probable reason why SMEs give preference to support of particularly education, sport
and cultural activities is that these activities can both bring a company the greatest
benefits (especially various forms of employees´ education) and they are highly
appreciated by employees (sport and cultural activities). Hardly is anything better for a
company than properly trained and educated, and highly satisfied, motivated and loyal
employees.
A less satisfactory outcome of the survey is that 20 % of micro companies were not
supporting any of the proposed activities. The most probably these companies do not
192
In the author’s opinion this activity (education) is primarily focused on company’s employees and hardly ever on
employees´ family members.
116
see sufficient added value in support of these voluntary activities or they simply do not
have resources for their support.
Only 7 % support of ecological activities in which employees and/or their family members
are engaged in is far to be satisfactory. On the other hand this result reflects current
situation in the Czech Republic where people are seldom actively engaged in
environmental protection because they consider this activity to be a duty of municipal
and state authorities for which they pay taxes.
The available data also suggest that there is a positive relationship between the size of
SMEs and their degree of involvement in the different types of voluntary social activities.
The order of preference for different types of activities is equal in all size-classes. This
outcome supports a common fact that the bigger and richer the company is the more
resources it can give on motivation of its employees and on voluntary activities.
Regarding Table 6.3, which further develops Table 6.1 and Table 6.2 it investigates
forms of further education and training of employees that are supported by SME
companies. 83 % of SMEs prefer “professional education”, i.e. short-term courses and
trainings, as a primary form of further education for their employees. The second most
common form of education is language courses.
SME companies prefer these two forms of education for their employees particularly for
their relevance to actual needs of companies, possibility of tailor-made approach, and
favourable ratio between costs and expected benefits for SMEs and employees.
Table 6.3:
Forms of further education of employees supported by SMEs, sorted by size of the
company and including an average for all SMEs
Forms of further education of employees
supported by SMEs
Size of the company (as per 2008)
Micro
Small
Medium
SMEs average
Professional education (short-term courses,
trainings)
67%
84%
89%
83%
Training in managerial techniques
9%
22%
43%
31%
Further long-term education (secondary/high school,
university, post-graduate education)
9%
19%
28%
22%
Language courses
22%
46%
64%
51%
Question: Which forms of further education of employees has your company been supporting?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
The third place occupies trainings in managerial techniques, which are much less
common because they are usually focused on narrower group of participants –
managers.
The last place with 22 % support belongs to long-term education, which requires more
resources (particularly time and financial resources), is not as related to actual needs of
117
companies as other forms of education and namely for these features it is the least likely
option for SMEs.
Results also suggest that there is a positive relationship between the size of SMEs and
their degree of involvement in various forms of further education of employees. The order
of preference for different types of forms is equal in all size-classes. This outcome again
supports a common fact that the bigger and richer the company is the more resources it
can spend.
6.2
Characteristics of SMEs´ Internal Dimension of Socially
Responsible Activities
Previous subchapter 6.1 “Description of Internal Dimension of Socially Responsible
Activities Used by SMEs” gave an overview on wide-ranging activities of internal
dimension of CSR, which SME companies were engaged in. This subchapter develops
the issue further as it intends to investigates degree of importance of socially responsible
and ethical behaviour towards employees for SME companies and to answer the
question how many SMEs have strategy for internal dimension of CSR in place.
Figure 6.1 provides information in graphic form on percentage of SME companies with
and without strategy for internal dimension of CSR in 2008.
Figure 6.1: Percentage of SMEs with and without strategy for internal dimension of CSR in 2008,
sorted by size of the company and including an average for all SMEs
SMEs involved in wide-ranging activities of internal dimension of CSR in 2008 with and without
relevant strategy
75%
74%
60%
54%
45%
46%
59%
54%
46%
Existing strategy
41%
30%
26%
No strategy
15%
0%
Micro
Small
Medium
SMEs average
Company´s size
Question: Has your company prepared strategy for above-mentioned measures/arrangements, which are implemented in
your company? (Please, see options in question “Have any of the following measures/arrangements been implemented in
your company?”)
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
According to the results of the survey 41 % of SMEs on average had a strategy for
socially responsible activities aimed at internal stakeholders (particularly employees). As
118
far as size of company is concerned, 46 % of small and medium-sized companies had
strategy for internal dimension of CSR at their disposal, while only 26 % of micro
companies elaborated the respective strategy. These outcomes approximately
correspond to degree of SMEs´ involvement based on their size in wide-ranging activities
of internal dimension of CSR as depicted at Table 6.1 and Table 6.2. Probable reasons
why SMEs pay less attention to formalizing existing and planned internally aimed socially
responsible measures and activities into the strategic document can be following:

Adherence on inherent informality of mutual relations and processes that are
typical for SMEs;

Lack of available resources (namely time and financial and human resources)
and lack of know-how; and

Belief of top managers and owners that formalizing existing and planned
internally aimed socially responsible measures and activities is a waste of time
and other scarce resources without additional added value for the company (in
the author’s opinion this belief is, of course, wrong).
According to the author’s opinion, on one hand 98 % engagement of SMEs in internally
focused socially responsible activities and on the other 59 % of SMEs without any
strategy for these activities show that more than every second SME cannot utilize the full
potential of internal dimension of CSR. Unfortunately, probably many SME companies
did not understand or underestimated essentials of strategic management – company
without a strategy is like a ship without a compass; risks are unknown, direction unclear,
and safety harbour far away. Tailor-made strategy for internal dimension of CSR should
undoubtedly form an essential part of overall company strategy.
Table 6.4 compares SME companies with and without strategy for internal dimension of
CSR and with and without company (corporate) strategy. By providing this additional
information Table 6.4 complements previous Figure 6.1.
Table 6.4:
Comparison of SMEs with/without strategy for internal dimension of CSR and
with/without corporate strategy in 2008 including an average for all SMEs
Corporate strategy
Strategy for internal
dimension of CSR
Yes
No
Yes
55%
13%
No
45%
87%
SMEs average
68%
32%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Results showed that subsistent company (corporate) strategy was more common
amongst SMEs than strategy for internal socially responsible activities – on average 68
119
% of SMEs had company strategy versus only 41 % which had strategy for internal CSR
activities. On one hand 55 % of SMEs which had company strategy in place had also
strategy for internal dimension of CSR. On the other hand just 13 % of SMEs which did
not have company strategy had strategy for internal socially responsible activities.
Concluding these results, approximately every second SME with company strategy had
also strategy for internal dimension of CSR while only every seventh SME without
company strategy had strategy for internal dimension of CSR too. It is clear that
probability that a company has strategy for internal CSR activities is much higher, when
the respective company has also overall company (corporate) strategy. Reasons why
SMEs with overall company strategies have much more often also strategy for internal
dimension of CSR are probably enlightened, competent and well educated top
management and overall greater maturity of these SMEs.
The next Table 6.5 gives an overview on author’s investigation to what degree socially
responsible and ethical behaviour to employees is important for SME companies.
According to the results 44 % of SMEs considered on average as very important and 52
% of SMEs considered as important socially responsible and ethical behaviour towards
employees in 2008. Together it makes 96 % of all surveyed SMEs, which considered this
kind of behaviour as important for their companies.
3 % of SMEs deemed this behaviour as less important and only 1 % it deemed as
unimportant for their companies.
Two surveys on similar topic carried out by the Czech Business Leaders Forum in 2006
and 2008 came to almost identical findings.
Table 6.5:
Degree of importance of socially responsible and ethical behaviour towards employees
for SMEs, sorted by size of the company and including an average for all SMEs
Size of the company (as per 2008)
Importance of socially responsible and ethical
behaviour towards its employees for SMEs
Micro
Small
Medium
SMEs average
Very important
48%
41%
44%
44%
Important
50%
54%
51%
52%
Less important
2%
0%
5%
3%
Unimportant
0%
5%
0%
1%
Question: How important is for your company socially responsible and ethical behaviour towards its employees?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Such good results prove that almost all SME companies take, except several exceptions,
socially responsible and ethical behaviour to employees as a matter of fact. SME
companies understand prominent position of their very influential internal stakeholders –
employees – and take care to have with them excellent and sincere relations. SMEs also
understand that with competent, loyal, devoted, inspired, and motivated employees
120
companies can better challenge turbulent economic environment and competitors and
reach planned objectives. Without socially responsible and ethical behaviour to
employees, it would be hardly ever possible.
Regarding SMEs, which regarded socially responsible and ethical behaviour to
employees as unimportant, one was from Moravia and one was from Bohemia, one was
operating more than one and less than 3 years and the other one was operating more
than 10 years, both had solely Czech owner, both were from IS/IT, both had corporate
strategy in place, and both were not involved in any internal or external CSR activities.
Possible explanation for such inappropriate and obsolete opinion can be that these
companies do not (or do not want to) see connection between socially responsible and
ethical behaviour to employees and benefits of such behaviour for the company or top
managements or owners of these SMEs just consider such behaviour as irrelevant for
well-being of their companies or both of previous presumptions.
The following Table 6.6 complements previous Table 6.5 and further explores those SME
companies for which socially responsible and ethical behaviour towards employees was
very important. The author selected only those results in individual categories, which
exceeded an imaginary threshold of 50 % in given category.
Regarding ownership structure of the company, 75 % of SMEs that were part of
international corporation considered socially responsible and ethical behaviour to
employees as very important. SMEs belonging to all other ownership structures scored
below virtual 50 % threshold.
As regards line of business, 100 % of SMEs engaged in research and development, 100
% of SMEs in financial services, and 57 % of SMEs doing business in consultancy
considered socially responsible and ethical behaviour to employees as very important.
SMEs belonging to all other lines of business scored below imaginary 50 % threshold.
Table 6.6:
Analysis of SMEs for which socially responsible and ethical behaviour towards
employees was very important, sorted by ownership structure and line of business
Ownership structure
Importance of socially responsible and ethical
behaviour towards its employees for SMEs
Part of an international corporation
very important for 75%
Line of business
Consultancy
very important for 57%
Research & Development
very important for 100%
Financial services
very important for 100%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Important note: In the table above are mentioned only those results that exceeded imaginary threshold of 50 %, i.e. those
that can be considered the most important.
121
Almost no difference was observed amongst SMEs, if classified according to years of
operation. SMEs for which importance of socially responsible and ethical behaviour
towards their employees was very important formed approximately 44 % of all SMEs
irrespective of duration of company’s existence.
Summarizing all the facts, SME companies that are part of international corporation are
aware the most of benefits from socially responsible and ethical behaviour to employees
and accentuate above standard employer-employee relations. The most probably for
these reasons they topped the list of SMEs, sorted according to the ownership structure
of company, for which responsible behaviour to employees was very important.
SMEs doing business in research and development, financial services, and consultancy
top the list of SMEs for which responsible behaviour to employees was very important.
SME companies in these lines of business topped the list because they belong to lines
with high economic value added where business success to a great extent depends on
competent and motivated personnel and companies in these lines accentuate above
standard employer-employee relations.
6.3
Reasons for Involvement in Internal Dimension of Socially
Responsible Activities
According to the results of the All-European Survey conducted in the year 2001 and the
Czech Business Leaders Forum’s Surveys conducted in the year 2006, 2007, and
2008193, the main reason of companies behind involvement in corporate social
responsibility was related to “ethical reasons”, probably linked to the desire of
entrepreneurs to “give something back to the community”. Particularly SMEs suggested
this reason, well above other frequently quoted reasons. The second and the third most
mentioned reasons in Czech surveys were “enhancement of employees´ satisfaction”
and “tradition” while in European survey they were “improvement of public relations with
the community and public authorities” and “improvement of customer loyalty”.
Enterprise size considerations are an important explanatory factor in this respect. Thus,
ethical considerations were the main reason for SMEs’ involvement in CSR activities for
all enterprise sizes, although this reason seemed to be particularly important the smaller
the enterprise size was. For the other reasons, the opposite enterprise size relation could
be detected. This result suggests that larger SMEs have been more aware of the
business benefits derived from their involvement in socially responsible activities in
comparison to the smallest ones.
193
For more information on respective surveys, please, see subchapters 4.2 and 4.3.
122
The following Table 6.7 tries to answer the important question, what have been the major
drivers (or motivators) for SME companies for implementing socially responsible and
ethical behaviour towards their employees.
Great majority (exactly 82 %) of participating SME companies (regardless of company
size) declared that the main reason behind their involvement in socially responsible and
ethical behaviour towards employees was recruitment and retention of qualified
employees. The second most important driver for SME companies to be engaged in
socially responsible behaviour to employees was improvement of employees´ job
satisfaction and the third most important motivator was improvement of employees´ job
motivation. Ethical or moral reasons that were mentioned the most in European and
Czech surveys occupied the fourth place in the author’s survey. After the top four then
followed reasons “improvement of economic performance of the company” and
“tradition”. Drivers that were mentioned the least were “application of business code of
conduct”, “use of existing public incentives” and “pressure from third parties”.
Table 6.7:
Major drivers for implementing of socially responsible and ethical behaviour towards
employees, sorted by size of the company and including an average for all SMEs
Major motivators for implementing socially responsible and
ethical behaviour towards employees
Size of the company (as per 2008)
Micro
Small
Medium
SMEs average
Ethical/moral reasons
65%
57%
52%
56%
Tradition
24%
32%
35%
32%
Recruitment and retention of qualified employees (Improvement of
employees´ loyalty)
78%
84%
82%
82%
Improvement of employees´ job motivation
Improvement of employees´ job satisfaction
Improvement of economic performance of the company (costs´
reduction, sales´ increase)
Application/implementation of business code of conduct
Pressure from third parties (i.e. clients, competitors, governments)
41%
70%
54%
62%
65%
63%
57%
64%
41%
38%
51%
46%
2%
11%
11%
11%
10%
19%
8%
15%
Use of existing public incentives (tax incentives, subsidies, others)
7%
14%
18%
14%
None
0%
5%
0%
1%
Question: Indicate which have been the major drivers/motivators for your company for implementing socially responsible
and ethical behaviour towards its employees.
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Results in Table 6.7 suggest that surveyed SME companies have been more aware of
the business benefits194 derived from their involvement in socially responsible and ethical
behaviour towards employees in comparison to the ones that took part in European and
Czech surveys, where ethical reasons occupied the top place. This conclusion also
underlines the fact that reason “improvement of economic performance of the company”
was picked by SMEs as the fifth most important from ten alternative options.
194
For benefits identified by SME companies from their participation on internally targeted socially responsible activities
please, see Table 6.8.
123
Reasons “improvement of employees´ job satisfaction” and “improvement of employees´
job motivation” scored very high in the survey. Summarizing these results, employee
care in the context of an equal and ethical approach and support of their professional
development all form the stable core of business strategy of SMEs. Attention has been
paid to activities that directly support employee performance; professional training and
education being one of the most often selected answers followed by language courses
(see Table 6.2 and Table 6.3). All the outcomes suggest that employee care has been
both part of human resources management and part of activities carried out in the direct
context of the CSR package. However, the exact percentage proportion between these
two factors is unknown and hardly measurable.
Concluding what has been mentioned above the author can say that SMEs concentrate
their attention on activities that have a direct influence on their own overall economic
management.
The available data also suggest that there is a negative relationship between the size of
SMEs and their preference of ethical (moral) reasons – ethical reasons seem to be
particularly important the smaller the company size is. This result suggests that larger
SMEs have been more aware of the business benefits derived from their involvement in
socially responsible and ethical behaviour towards employees in comparison to the
smaller ones.
The most infrequent reason was “application (implementation) of business code of
conduct”, which suggests that formalized approach to internal dimension of CSR is the
least likely to be found in SME companies. Rather informal, practical and focused on
actual business environment approach driven by economic reasons is preferred by
SMEs. The opinion supports the fact that from a wide-range of activities within the frame
of internal dimension of CSR reviewed SME companies paid the lowest level of attention
to company Code of Ethics (please, see Table 6.1). However, according to some
authors, the existence of codes of conduct in SMEs does not necessarily affect the
SMEs’ ethical and social behaviour since the foundation of ethics in most SMEs is in the
mind of the owners and/or top managers195.
195
The idea has been taken from Marnburg, E. (2000), The behaviour effects of corporate ethical codes: Empirical
findings and discussion, Business Ethics: A European Review, Vol. 9 Number 3, page 200-210
124
6.4
Benefits Identified by SMEs from Their Participation on
Internally Targeted Socially Responsible Activities
According to the survey amongst SME companies conducted by the Czech Business
Leaders Forum in the year 2006, support of employee performance was the main
advantage of the socially responsible conduct of small to medium-sized businesses in
the Czech Republic. The second most mentioned benefit was enhancement of firm’s
reputation and the third one improved relations with business partners or investors.
Maximising economic outcomes ranked fourth on the scale of benefits that CSR can
bring. The results proved that CSR was still perceived in the context of standalone
benefits, rather than a complex route towards the encouragement of prosperity. This was
supported by the fact that more than half of the firms did not communicate with their
stakeholders on a strategic level and instead concentrated on instantaneous betterment
in focusing on a specific group.
Overview of major benefits for SME companies arising from implementing socially
responsible and ethical behaviour towards employees summarizes the following Table
6.8. Results of the author’s survey showed that SMEs placed at the top of major benefits
improvement of employees´ job satisfaction closely followed with increase of current
employees´ loyalty and reduction of staff turnover. So the first two most selected major
benefits were tightly related to support of employee performance, which was also the top
advantage mentioned in the 2006 Czech Business Leaders Forum’s survey.
Table 6.8:
Major benefits for SMEs arising from implementing socially responsible and ethical
behaviour towards employees, sorted by size of the company and including an average
for all SMEs
Major benefits arising from implementing socially responsible
and ethical behaviour towards employees
Recruitment of new qualified employees
Size of the company (as per 2008)
Micro
Small
Medium
SMEs average
24%
30%
43%
36%
Increase of current employees´ loyalty (reduction of staff
turnover/fluctuation)
Improvement of employees´ job satisfaction
Improvement of relations with business partners and investors
Improvement of customer satisfaction
Improvement of economic performance of the company (costs´
reduction, sales´ increase)
61%
73%
65%
66%
85%
28%
57%
78%
43%
43%
65%
24%
35%
73%
29%
42%
37%
30%
36%
35%
Use of existing public incentives (tax incentives, subsidies, others)
11%
14%
11%
12%
Improvement of company's reputation (better image)
Other
33%
2%
32%
0%
30%
2%
31%
2%
None
0%
5%
4%
3%
Question: Indicate which have been in practice the major benefits for your company regarding socially responsible and
ethical behaviour towards its employees.
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
125
Benefit “improvement of customer satisfaction” ranked third and “improvement of
economic performance of the company” scored fifth, just one percentage point after
“recruitment of new qualified employees”. Other benefits seem to be less perceived by
the surveyed SMEs. The outcomes imply that encouragement of employee performance
together with improved customer satisfaction lead in SME companies to reinforcement of
economic performance, which should be the paramount objective of every company
together with sustainable growth and also the paramount benefit of CSR endeavour.
The available data suggest that, generally speaking, SMEs are quite aware of the
benefits derived from being involved in socially responsible and ethical behaviour
towards employees, i.e. in internal community activities. Only around one percent of the
SMEs effectively involved in internal dimension of CSR are unable to identify any
business benefit derived from these activities, whereas the remaining ninety-nine percent
do identify different business benefits. Interestingly enough, the smallest enterprises do
not have more difficulties to perceive these benefits.
Interestingly also, many benefits are identified more often by the smaller companies,
especially as far as improvement of employees´ job satisfaction and improvement of
customer satisfaction are concerned. The outcomes allow one to reach a very interesting
conclusion, in the sense that the business benefits of socially responsible activities,
assumed to lie exclusively in the domain of large companies, are in fact also present in
the SME sector. However, this important result should be contrasted with the fact that, as
already mentioned in the Table 5.17:
Measurement and evaluation of CSR by the
company, sorted by size of the company”, only a minority of SMEs involved in corporate
social responsibility monitors the effectiveness of their involvement.
6.5
Barriers to the Participation on Internally Targeted Socially
Responsible Activities
Previous chapters have shown that the SME companies operating in the Czech Republic
are able to identify a number of reasons and benefits underpinning their involvement in
internal dimension of CSR. By way of contrast, this subchapter is interested in looking
into the main barriers that hinder SMEs’ activities in this field.
According to the 2008 Czech Business Leaders Forum’s survey, bureaucracy, lack of
time and high costs were the main barriers enterprises of all sizes in the Czech Republic
were facing when implementing corporate social responsibility in their enterprises. Less
than one third of enterprises did not mention any obstacles.
The author’s survey provides some insight into the SMEs’ perspective on major barriers
for SMEs for implementing socially responsible and ethical behaviour towards employees
126
(please, see Table 6.9 for a graphical summary). Reasons that impede SME companies
most in implementing internal dimension of CSR can be aggregated into three groups.
The most frequently SMEs mentioned that there were no barriers that would prevent
them in implementing socially responsible and ethical behaviour to their employees.
Especially for further expansion and improvement in quality and effectiveness of CSR
practices it is an important finding that more than one third of SMEs operating in the
Czech Republic do not see any obstacles in implementing socially responsible behaviour
to employees. Thus, it can be expected that internal dimension of CSR can reinforce its
already strong position amongst SME companies.
Table 6.9:
Major barriers for SMEs for implementing socially responsible and ethical behaviour
towards employees, sorted by size of the company and including an average for all
SMEs
Major barriers for implementing socially responsible and
ethical behaviour towards employees
I haven't thought about a possibility that my company could
behave in such a way (responsibly)
Such (responsible) behaviour doesn't benefit to the company
in any way
Lack of time (not enough time)
Lack of financial resources
Absence of state/government support
Absence of public support/pressure
Lack of know-how for establishment of such a
system/program in the company
Other
None
Size of the company (as per 2008)
Micro
Small
Medium
SMEs average
7%
8%
5%
6%
7%
8%
4%
5%
24%
37%
17%
11%
14%
38%
30%
0%
18%
28%
18%
6%
18%
32%
20%
6%
9%
0%
15%
11%
2%
8%
8%
7%
35%
38%
36%
36%
Question: Indicate which have been the major barriers/obstacles for your company for behaving socially responsibly and
ethically towards its employees.
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Lack of internal resources, particularly financial means and time, and lack of know-how
form the second most mentioned group of barriers. Nevertheless a lack of internal
resources is not anything new for SMEs, as this obstacle is inherently present
disadvantage in this category of enterprises.
As the third group of most quoted barriers SMEs identified an absence of state and/or
government support. In the author’s opinion this obstacle is based on real foundations
and SMEs are right in their statement that state and governmental support of enterprises
that want implement or already practicing CSR has been vague and weak. The results of
author’s research is also supported with outcomes from 2004 Czech Business Leaders
Forum’s survey. According to that survey motivation for activities in the CSR area was
very weak on the side of the government. Commentaries of the participants in the indepth interviews pointed out that the role of government in creating better business
127
environment in the country was marginal at that time and wished to be stronger and
more proactive. The situation has not changed too much since then in this respect.
Only 5 % of SMEs argued that the main obstacle impeding them in implementing socially
responsible and ethical behaviour towards employees was because they do not expect
any benefits from this behaviour and 6 % of SMEs have not thought about a possibility
that they could behave in such a way. Also a minority of 6 % saw the lack of public
support and/or pressure as the main reason. In the author’s opinion these reasons
obstructing SMEs in implementation of internal dimension of CSR form only minority,
which could be further diminished if state and government support of CSR practices
would increase and intensify.
128
Chapter 7.
Specific Results of Own Research:
External Dimension of Corporate Social
Responsibility
Corporate social responsibility extends beyond the doors of the company into the local
community and involves a wide range of stakeholders in addition to employees and
shareholders: business partners and suppliers, customers, public authorities and nonprofit organizations representing local communities, as well as the environment (for
theoretical background on external dimension of CSR, please, see subchapter 3.2.2
External Dimension of Corporate Social Responsibility).
The view that companies have a deep self-interest in developing strong, healthy, safe,
sustainable and affluent communities has increasingly been gaining ground. Corporate
social responsibility is now seen as central to business strategy and long-term success
and should be closely aligned with business mission, values and management
practice.196
This Chapter intends to investigate the following issues of external dimension of
corporate social responsibility:

In what activities of external dimension of CSR SME companies are involved and
what forms of support they use;

Review various characteristics of external dimension of CSR, such as whether
SME companies have strategies for externally focused CSR or to find out how
important it is for SMEs behaving responsibly towards environment and
community;

Determine reasons of SME companies for their involvement in external dimension
of CSR;

Find out what benefits SME companies can identify by participating on externally
targeted socially and environmentally responsible activities;

Determine what obstacles SME companies can face if they participate or want to
participate on externally aimed socially and environmentally responsible activities;
and

Find out future expectations on involvement of SMEs in activities of external
dimension CSR.
196
European Foundation Centre (2001), EFC Comments on EC Green Paper on CSR, December 2001, available at:
http://www.efc.be/ftp/public/cce/Dec2001_EFCComments_GreenPaper.pdf
129
7.1
Description of External Dimension of Socially and
Environmentally Responsible Activities Used by SMEs
7.1.1 Involvement in Wide-Ranging Activities of External Dimension
of Corporate Social Responsibility
Referring to the concrete activities developed by those SMEs involved in external
community causes, the All-European Survey conducted in the year 2001197 showed that
these activities mainly concentrated in three fields: the support to sport, cultural and
health and/or welfare activities not aimed at the SMEs’ own employees. Considering only
those SMEs effectively participating in social and environmental activities, up to 47 %, 33
% and 33 % carried out activities in the previously suggested fields, respectively. Other
fields received a lower degree of attention from European SMEs. From a national
perspective, it was interesting to notice that the support to sporting activities was the
most preferred type of external social activities by SMEs in nearly all the surveyed
countries, although some exceptions were identified.198
Table 7.1 shows results of the author’s research, a percentage of SMEs operating in the
Czech Republic that were involved in a wide range of activities of external dimension of
CSR in 2008.
Table 7.1:
Percentage of SMEs involved in wide-ranging activities of external dimension of CSR in
2008, sorted by size of the company and including an average for all SMEs
CSR activities supported by SMEs w ithin the fram e of
external dim ension of CSR
Size of the com pany (as per 2008)
Micro
Sm all
Medium
SMEs average
Sport activities (not ow n employees)
35%
35%
58%
48%
Cultural activities (not ow n employees)
33%
38%
55%
46%
Health care (not ow n employees)
4%
8%
16%
12%
Education and training activities (not ow n employees)
4%
16%
22%
17%
Financial or other help/support to non-profit organization
Environmental protection - ecological activities (other than directly
related to consequences of the company's ow n operations)
Creation of good conditions for socially or in other w ay deprived
groups for their involvement in community and w ork process
Participation in public affairs or political process on behalf of the
company
39%
65%
62%
57%
20%
46%
46%
39%
17%
19%
17%
17%
2%
14%
10%
9%
Other
0%
0%
4%
2%
None
17%
8%
4%
8%
Question: Has your company been supporting any of the following activities (not its own employees and/or its family
members)?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
197
For more information on respective survey, please, see subchapter 4.2.
198
Greek and Portuguese SMEs paid special attention to the support of cultural activities, whereas Icelandic and British
SMEs devoted particular attention to the support of health and to education activities not aimed at their own employees,
respectively. However, support to sport was ranked as the second most common social activity developed by SMEs in
these four countries.
130
As already said in the subchapter 5.3.5 and depicted in Figure 5.5, the important finding
is that only 8 % of SMEs were not involved in external dimension of CSR, which means
that excellent 92 % of SMEs were, to a certain degree, engaged.
On average, the most common (57 % of all SMEs) type of involvement in wide array of
activities of external dimension of CSR was financial or other help or support of non-profit
organization. The 2008 Czech Business Leaders Forum’s survey came to the very same
outcome, which strengthens the validity of author’s result.
The second and the third most frequently used types of involvement were support of
sport activities (48 % of all SMEs) and support of cultural activities (46 % of all SMEs) not
aimed at SMEs´ own employees. The fourth place with 39 % support belongs to the
environmental protection and various ecological activities that were not directly related to
consequences of company’s own operations. All other types of activities of external
dimension of CSR were less common amongst Czech SME companies. The 2001 AllEuropean survey and 2008 Czech survey obtained similar results.
The results suggest that non-profit organizations have been very active in the Czech
Republic and quite successful in raising funds from SME companies. Direct support of
other initiatives received less attention, probably due to their lower activity in raising
funds or lower interest from SMEs in these activities or combination of the previous two
factors.
The available data also suggest that there is a positive relationship between the size of
companies and their degree of involvement in the majority of activities aimed at external
stakeholders.
7.1.2 Forms of Support of Socially and Environmentally Responsible
Activities
According to the All-European Survey conducted in the year 2001199 the most popular
way of European SMEs involvement in externally focused social and environmental
activities was through donations (56 %), either in cash or in kind, conducted on an adhoc or irregular basis. This possibility was slightly more popular amongst the SME
female owners in comparison to their male counterparts. The second most selected way
was through regular or continued sponsorships, adopted by 45 % of the surveyed SMEs.
By way of contrast, other ways of social and environmental involvement such as cause
related marketing activities or employee/employer involvement in community activities
(always, of course, on behalf of the enterprise) were less common amongst European
SMEs. A positive relationship between the size of the enterprises and the percentage of
199
For more information on respective survey, please, see subchapter 4.2.
131
SMEs involved in the different ways was identified. Sponsorships were the most usual
way of involvement of medium enterprises, in contrast to very small and small
enterprises, where donations were the most preferred method.
Forms of support of socially responsible activities that have been used by Czech SMEs
within the frame of external dimension of CSR depict Table 7.2. The most common way,
exactly three quarters of all SMEs, of Czech SMEs engagement in externally aimed
social activities was through donations, either financial or in kind gifts, conducted on an
ad-hoc basis. This possibility was by 26 % more popular than the second most selected
form through sponsorship. The third place occupied cooperation with other parties (e.g.
non-profit sector, public sector, other private companies, etc) on socially beneficial
projects, adopted by 31 % of the surveyed SME companies. Other ways of social
involvement were less common amongst SMEs. A positive relationship between the size
of the SMEs and the percentage of SMEs involved in the different ways was identified.
The outcomes suggest that involvement in socially responsible activities within the frame
of external dimension of CSR in a form of donations, either financial or in kind gifts, was
the most convenient way for Czech SMEs – companies donate money and/or in kind
gifts and do not have to further dedicate their resources, particularly time and human
resources. However in this way companies partially lose their opportunity to influence
what exactly happens with donated money and an opportunity to be better associated
with donations as a part of overall communication strategy.
Table 7.2:
Forms of support of socially responsible activities used by SMEs in terms of external
dimension of CSR, sorted by size of the company and including an average for all SMEs
Form of support of socially responsible activities used by SMEs
(external dimension of CSR)
Size of the company (as per 2008)
Micro
Small
Medium
SMEs average
Sponsorship
Financial or in kind gifts (ad-hoc or once only)
Cause related marketing
Cooperation with other parties on socially beneficial projects (i.e.
non-profit sector, public sector, other private companies)
Employee involvement in social/community activities (on behalf of
the company)
Other
35%
70%
11%
46%
65%
30%
57%
80%
29%
49%
75%
25%
20%
32%
35%
31%
2%
16%
20%
15%
0%
0%
0%
0%
The company does not support any social activity
17%
8%
4%
8%
Question: Indicate in which way your company has supported social activities (do not include activities for or support to
your own employees).
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
The following Table 7.3 summarizes forms of support of environmentally responsible
activities that have been used by Czech SMEs within the scope of external dimension of
CSR. The most popular way of SMEs involvement in environmental activities not directly
related to consequences of company’s own operations was through donations conducted
132
on irregular basis (17 % of all SMEs). The second most selected way was through cause
related marketing (11 % of all SMEs) and the third most common form was through
support of employee involvement in environmental activities on behalf of the company
(10 % of all SMEs).
Table 7.3:
Forms of support of environmentally responsible activities used by SMEs in terms of
external dimension of CSR, sorted by size of the company
Form of support of environmentally responsible activities used by
SMEs (external dimension of CSR)
Size of the company (as per 2008)
Micro
Small
Medium
SMEs average
Sponsorship
Financial or in kind gifts (ad-hoc or once only)
Cause related marketing
0%
7%
4%
3%
14%
14%
14%
23%
12%
8%
17%
11%
Cooperation with other parties on environmentally beneficial projects
(i.e. non-profit/public sector, other private companies)
7%
19%
7%
9%
Employee involvement in environmental activities (on behalf of the
company)
2%
14%
12%
10%
Other
2%
0%
3%
2%
The company does not support any environmental activity
80%
54%
54%
61%
Question: Indicate in which way your company has supported environmental activities (other than directly related to
consequences of the company’s own operations).
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Unfortunately all the three most popular ways of engagement in environmentally
responsible activities received much lower level of attention than socially responsible
activities. Surprisingly almost two thirds of all surveyed SMEs were not involved in any
environmentally responsible activities under the umbrella of external dimension of CSR.
These results correspond to findings stating that 31 % of surveyed SMEs could not
identify any motivator for implementing environmentally responsible activities (please,
see Table 7.15) and 42 % of SMEs did not name any benefits for SMEs arising from the
support of environmentally responsible activities aimed at external community (please,
see Table 7.17). If companies struggle to find any real motivators and benefits in this
respect, it is no wonder that their support of externally aimed environmentally responsible
activities has been so weak.
On the other hand, current low support of environmentally responsible activities can be a
great opportunity for SMEs to get involved in these activities and to distinguish
themselves from those SMEs not supporting them and if being successful in doing them
they may eventually acquire a competitive advantage in this field.
133
7.1.3 Forms of Public Support of External Dimension of CSR Realized
by SMEs
Figure 7.1 shows percentage of SMEs that received public support in a form of tax
incentive, subsidy or grant for support of their engagement in external community causes
during three-year period 2004 to 2007.
According to the results, 16 % of Czech SMEs on average received during that period
some public incentive. It is also worth identifying a positive relationship between the size
of companies and the percentage of SMEs that actually received public support.
The results suggest that only a minority (one sixth) of surveyed SMEs has been given
some public incentive for their active involvement in external community causes.
Moreover, larger SMEs have been much more successful in receiving public support
than smaller ones.
Figure 7.1: Percentage of SMEs that have received public support (incentive/subsidy) for their
external dimension of CSR during last 3 years, sorted by size of the company
Percentage of SMEs receiving public support (incentive/subsidy)
Micro
9%
14%
Small
21%
Medium
16%
SMEs average
0%
5%
10%
15%
20%
25%
Question: Did your company receive any public support (i.e. incentive, subsidy) for its socially and environmentally
responsible activities (CSR) not aimed at its own employees during the last 3 years?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
In the author’s opinion, taking into consideration 92 % involvement of SMEs in activities
of external dimension of CSR on one hand and on the other only 16 % of them actually
receiving some public incentives, overall public support of CSR activities aimed at
external stakeholders can be considered weak and should be strengthened. On top of
that smaller SMEs should be more active in attracting public support and municipal and
state authorities should focused more on smaller companies for which it is more difficult
obtaining support due to their inherent characteristics (particularly lack of know-how,
lower level of various resources, narrower scope of impact of their CSR activities on wide
public, etc).
The following Table 7.4 complements Figure 7.1 by providing information on forms of
public support Czech SMEs received for three-year period 2004 to 2007 for their external
community causes.
The most common form of public support of external community causes was public
subsidy and/or grant, while tax incentives were much less frequent way of support. Free
134
of charge consultancy services received only 16 % of all SMEs that obtained public
support.
In the author’s opinion free of charge consultancy services should be more promoted as
a direct form of public support because they can help, especially to micro companies, to
overcome lack of professional know-how and facilitate SMEs embracing activities of
external dimension of CSR in a strategic manner.
Table 7.4:
Forms of public support the SMEs* have received during last 3 years (2005 – 2008) for
their external dimension of CSR, sorted by size of the company
Form of public support SMEs received
Tax incentive
Subsidy/grant
Free of charge consultancy service
Size of the company (as per 2008)
Micro
Small
Medium
SMEs average
50%
75%
0%
40%
60%
40%
36%
73%
14%
39%
71%
16%
* Data refer to SMEs that actually received public support
Question: Companies could choose from the following forms of public support: Tax incentive, Subsidy/grant, Free of
charge consultancy service.
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
7.2
Characteristics of SMEs´ External Dimension of Socially
and Environmentally Responsible Activities
This subchapter concentrates on describing, what are the main characteristics that
define and distinguish the socially and environmentally responsible activities developed
by Czech SMEs.
Degree of Importance of Socially Responsible and Ethical Behaviour towards
Environment and Community
Table 7.5 gives an overview on author’s investigation to what degree socially and
environmentally responsible activities aimed at external stakeholders are important for
SME companies.
According to the results 34 % of surveyed SMEs considered as very important and 60 %
of SMEs considered as important their engagement in activities of external dimension of
CSR in 2008. Together it makes 94 % of all surveyed SMEs, which considered this kind
of engagement as important for their companies. 4 % of SMEs deemed this involvement
as less important and only 2 % it deemed as unimportant for their companies.
Survey on similar topic carried out by the Czech Business Leaders Forum in 2008 came
to similar findings, even though the relation between the very important and important
category was different – more than half of SMEs selected the first category. If compared
degree of importance for internal (see Table 6.5) and external dimension of CSR for
135
SMEs, the results are almost the same. The finding suggests that SMEs take seriously
both dimensions of CSR and consider them nearly equally important for their existence
and future prospects.
Table 7.5:
Degree of importance of socially responsible and ethical behaviour towards
environment and community for SMEs, sorted by size of the company and including an
average for all SMEs
Size of the company (as per 2008)
Importance of socially and ethically responsible
behaviour tow ards environment and community
Micro
Small
Medium
SMEs average
Very important
28%
27%
38%
34%
Important
63%
65%
57%
60%
Less important
7%
3%
5%
4%
Unimportant
2%
5%
0%
2%
Question: How important is for your company socially responsible and ethical behaviour towards environment and its
community?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Such good results prove that almost all SME companies take their involvement in
external community causes as a matter of fact. SMEs understand position of their
external stakeholders and take care to have with them good relations. SMEs also
understand that with satisfied external stakeholders companies can better challenge
changing economic environment and competitors and reach planned objectives. Without
engagement in both dimensions of CSR, it would be much more difficult achieving
planned objectives and success would probably be only short-lived.
SMEs´ Approach to Socially and Environmentally Responsible Activities
Table 7.6 investigates what kind of approach Czech SMEs have chosen for their socially
and environmentally responsible activities within the external dimension of CSR, while
Table 7.7 provides facts on the same topic for European SMEs.
Table 7.6:
SMEs´ strategic approach to socially and environmentally responsible activities
(external dimension of CSR), sorted by size of the company and including an average for
all SMEs
Size of the company (as per 2008)
SMEs´ strategic approach to socially and
environmentally responsible activities
Micro
Occasional activities, unrelated to business strategy
Occasional activities, related to business strategy
Regular activities, unrelated to business strategy
Small
Medium
SMEs average
46%
32%
28%
33%
7%
24%
21%
18%
24%
19%
18%
19%
Regular activities, related to business strategy
7%
16%
30%
22%
CSR is not supported by our company
17%
8%
4%
8%
Total
100%
100%
100%
100%
Question: Is involvement of your company in socially and environmentally responsible activities (CSR) occasional or
regular? And is it related to business strategy or not?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
136
The Czech SMEs’ external community activities were in most cases occasional and oneoff, unrelated to the business strategy. Thus, up to 51 % of the Czech SMEs involved in
external community activities carried out these activities on an occasional basis in
contrast to the 41 % who conducted them on a regular basis. Additionally, for 52 % of
Czech SMEs, these socially and environmentally responsible activities were unrelated to
the general business strategy. In contrast, 40 % of SMEs argued that these activities
were integrated into the general business strategy. Moreover, the data suggest that
regular and related to the business strategy external community activities become more
common as the companies get larger.
If results for Czech SMEs are compared to the results of the European survey (see Table
7.7), relative percentage distribution amongst the given categories are almost the same
for both Czech and European SMEs. The only significant difference is high percentage of
European SMEs that did not supported external community causes.
Table 7.7:
European SMEs´ strategic approach to socially and environmentally responsible
activities (external dimension of CSR), sorted by size of the company and including an
average for all SMEs
European SMEs´ strategic approach to socially and
environmentally responsible activities
Size of the company (as per 2008)
Micro
Small
Medium
SMEs average
Occasional activities, unrelated to business strategy
18%
26%
25%
23%
Occasional activities, related to business strategy
7%
8%
8%
8%
Regular activities, unrelated to business strategy
16%
18%
20%
18%
Regular activities, related to business strategy
7%
13%
16%
11%
CSR is not supported by the company
52%
35%
30%
41%
Total
100%
100%
100%
100%
Source: European Commission (2002), Observatory of European SMEs 2002, No. 4: European SMEs and Social and
Environmental Responsibility, Luxembourg, available at: http://ec.europa.eu/enterprise/enterprise_policy/analysis
/doc/smes_observatory_2002_report4_en.pdf
Regarding a national perspective in the Pan-European survey, the available data
confirmed the Pan-European results (see Table 7.7). Thus, in all the nineteen surveyed
countries (with some exceptions) external community activities were performed on an
occasional basis, unrelated to the business strategy.
The results suggest that both Czech and European SMEs approach to CSR
unsystematically and do not utilize the full potential of socially and environmentally
responsible activities aimed at external stakeholders as more than half of surveyed
SMEs that actually were engaged in these activities did not align management of these
activities with their business strategies.
On top of that as depicts Table 7.8 “Percentage of Czech SMEs with and without
strategy for external dimension of CSR in 2008”, just 16 % of SMEs that have been
participating in external dimension of CSR had strategy for these activities.
137
According to the available data more than two thirds of SME companies had general
business strategy in place (see Table 6.4), then followed 41 % of SMEs which had
elaborated strategy for internal dimension of CSR (see Figure 6.1), and finally only 15 %
of all SMEs prepared strategy for external dimension of CSR (see Table 7.8 bellow).
In the author’s opinion these results show how important each of the above-mentioned
strategies has been for SME companies and which issues are vital, which important, and
which only marginal for Czech SME companies. Findings further suggest that probably
many SME companies do not understand essentials of strategic management and
underestimate risks and negative impacts of missing or inadequate strategic
management in the company. Tailor-made strategy for internal and external dimension of
CSR should undoubtedly form an essential part of overall general business strategy.
Table 7.8:
Percentage of SMEs with and without strategy for external dimension of CSR* in 2008,
sorted by size of the company and including an average for all SMEs
Existing strategy for external
dimension of CSR
Micro
Small
Medium
SMEs average
Yes
11%
12%
19%
16%
No
89%
88%
81%
84%
Total
100%
100%
100%
100%
Size of the company (as per 2008)
* Data refer only to SMEs participating in external dimension of CSR
Question: Has your company prepared strategy for socially and environmentally responsible activities (external dimension
of CSR)?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Summarized view on manner, how SMEs carried out socially and environmentally
responsible activities under the CSR umbrella presents Table 7.9.
Table 7.9:
Manner, how SMEs carry out socially and environmentally responsible activities
(external dimension of CSR), sorted by size of the company and including an average for
all SMEs
Size of the company (as per 2008)
Manner, how SMEs carry out socially and
environmentally responsible activities
Micro
Small
Medium
SMEs average
Independently (only your company)
57%
43%
59%
55%
In cooperation w ith other companies
13%
14%
11%
12%
In cooperation w ith non-profit organization
13%
35%
26%
25%
CSR is not supported by our company
17%
8%
4%
8%
Question: Your company carries out socially and environmentally responsible activities (CSR) not aimed at its own
employees: Independently (only your company), in cooperation with non-profit organization, in cooperation with other
companies, CSR is not supported by our company.
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
According to the outcomes, more than half of surveyed Czech SMEs (exactly 55 %)
carried out CSR activities aimed at external stakeholders independently, i.e. without
138
cooperation with other companies and/or non-profit organizations. A quarter of surveyed
companies participated in the above-mentioned activities in cooperation with some nonprofit organization(s), while only 12 % of SMEs cooperated on external community
causes with other companies.
The available data suggest that Czech SMEs prefer carrying out socially and
environmentally responsible activities aimed at external stakeholders independently. This
finding confirms local sphere of action of SMEs, their close relations with local
communities, and lower trust of SMEs in various alliances, particularly with other
companies. In the author’s opinion SMEs should start forming local alliances that would
manage their CSR activities in a coordinated way in order to overcome their inherent
disadvantages (particularly lack of know-how, lack of available resources, and lower
communication impact of their activities compared to large companies).
Acceptance of Idea that SMEs Can More Effectively Apply CSR on Local Level than
Large Companies
The 2001 Pan-European survey concluded that most of the SMEs involved in community
causes focused their activities and interests at a local level. According to one survey in
the United Kingdom in 2000, around 94 % of the SMEs active in CSR concentrated their
CSR activities at a local level. Similar preference for local level activities was identified in
the German example.200 Some authors suggest that SMEs’ knowledge of the local
situation make them ideally placed to help tackle community issues.201
The following Table 7.10 investigates, whether Czech SMEs can more effectively carry
out activities aimed at external stakeholders on a local level than large and multinational
corporation in the Czech Republic.
According to the outcomes of the author’s research more than two third (exactly 72 %) of
Czech SMEs believed that they had competitive advantage over large companies and
multinational corporations in conducting socially and environmentally responsible
activities at a local level.
In the author’s opinion persuasion of SMEs in this respect is very probably true and
based on real experience. The respective competitive advantage is linked to inherent
advantages and characteristics of SMEs – they are small, flexible, rooted into the local
communities and know local communities much better than large companies and
multinational corporations (see also Table 7.11). Thus their help can be directly focused
200
Stibbard, H. (2000), Connecting SMEs with the Community: A research report on the Involvement of Small and
Medium-sized Enterprises in Community Causes, Business Community Connections Research, available at:
http://www.volunteering.org.uk/WhatWeDo/Projects+and+initiatives/Employer+Supported+Volunteering/Resources/Resear
ch/Sector+specific+research.htm
201
Joseph, E. (2000), A Welcome engagement: SMEs and Social Inclusion, available at: http://www.ippr.org
/uploadedFiles/projects/WESumcover1.pdf
139
on issues (i.e. CSR activities) the local communities value and appreciate the most. On
the other hand SMEs are limited in their CSR activities by lack of available resources
much more than large and multinational companies, which is their disadvantage.
Table 7.10: Acceptance of idea that SMEs can more effectively apply CSR on a local level than large
and multinational corporations, sorted by size of the company and including an average
for all SMEs
Acceptance / approval of superior
position of SMEs in CSR concept
Size of the company (as per 2008)
Micro
Small
Medium
SMEs average
Yes, fully / completely
24%
14%
16%
17%
Rather yes
52%
43%
61%
55%
Rather no
13%
24%
10%
14%
No
11%
19%
13%
14%
Total
100%
100%
100%
100%
Question: Do you agree with the following statement: “Small and medium-sized companies can more effectively and in a
more suitable way apply Corporate Social Responsibility on a local level than large and multinational corporations due to a
better familiarity with local community.”
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Awareness of Local Issues and Willingness of SMEs to Offer Help
Table 7.11 concurs on Table 7.10 and further examines, whether Czech SMEs are
aware of problems and issues troubling their communities and whether SMEs are willing
to offer help in solving these issues. The outcomes show that 65 % of SMEs were aware
of problems and issues troubling their local communities and 85 % of these SMEs were
willing to offer some kind of help or have already been helping solving these issues.
Moreover, 67 % of SMEs that were not ready to offer help were willing to take more
interest in local communities´ problems and issues and, probably in the future also offer
some kind of help or assistance.
Table 7.11: Awareness of local issues and willingness of SMEs to offer help in solving these issues,
sorted by size of the company and including an average for all SMEs
Size of the company (as per 2008)
Awareness of local issues by SMEs
Micro
Small
Medium
SMEs average
Yes
48%
68%
72%
65%
No
52%
32%
28%
35%
73%
27%
88%
12%
88%
12%
85%
15%
67%
33%
50%
50%
73%
27%
67%
33%
If yes, is your company willing to offer help?
Yes
No
If no, is your company willing to take more
interest in community´s problems/issues?
Yes
No
Question: Is your company aware of problems/thorny issues that trouble its close community?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
140
The results proof that SMEs really have very good position to positively influence local
communities with directly aimed CSR activities. What is more, 85 % of Czech SMEs that
were aware of problems and issues troubling local communities were either willing to
offer help or have already been helping tackling these problems and issues. On the other
hand it is hard to assess, which activities – those of SMEs or large companies – have
greater impact on local communities because there are no available data that would
allow such a comparison. Nevertheless, in the author’s opinion CSR activities of SMEs
have greater real impact on local communities because they are directly aimed, have
been provided in much greater number (number of SMEs is much greater than number
of large companies), and may be perceived by communities as more sincere.
The Most Influenced Groups by SMEs´ CSR Activities
Table 7.12 gives an overview of the most influenced groups by SMEs´ internal and
external dimension of CSR. According to the available data the most influenced group by
SMEs´ socially and environmentally responsible activities was employees202. The second
most influenced group by SMEs´ CSR activities was customers and/or buyers203 and the
third one was local communities204. Only 10 % of SMEs thought that their CSR activities
influenced public (local) administration the most. Author’s findings can be supported by
the 2008 Czech Business Leaders Forum’s survey, which came to the very similar
results.
Table 7.12: The most influenced groups by SMEs´ CSR activities*, sorted by size of the company
and including an average for all SMEs
The most influenced groups by
SMEs´ CSR
Size of the company (as per 2008)
Micro
Small
Medium
SMEs average
Employees
74%
71%
74%
73%
Customers / Buyers
58%
44%
43%
46%
Suppliers
11%
9%
18%
15%
Shareholders / owners
11%
9%
17%
14%
Community of the company
37%
24%
40%
36%
Competitors
3%
6%
2%
3%
Public administration
0%
9%
15%
10%
Other
0%
0%
1%
1%
None
0%
3%
0%
1%
* Data refer only to SMEs participating in CSR activities
Question: According to your opinion, which of the following groups has been influenced/affected by your company’s
Corporate Social Responsibility the most? (Maximum 3 answers allowed)
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
202
73 % of SMEs selected group “Employees” to be the most influenced by their CSR activities
203
46 % of SMEs selected group “Customers/Buyers” to be the most influenced by their CSR activities
204
36 % of SMEs selected group “Community of the company” to be the most influenced by their CSR activities
141
The above-mentioned results provide an indirect proof that SME companies accentuate
internal dimension of CSR from the overall CSR concept as 73 % of SMEs selected
group “Employees” to be the most influenced by their CSR activities. Nevertheless,
outcomes further imply that external dimension of CSR plays also important role in life of
SMEs as 46 % of SMEs selected group “Customers/Buyers” and 36 % “Community of
the company” to be the most influenced by their CSR activities.
Degree How SMEs Provide Information on CSR Activities
According to the research study conducted for the Business in the Community in the year
2000, only a minority of SMEs involved in corporate social responsibility was publishing
any information about their organisation’s involvement, a fact that contributes to the poor
perception of the general public on the SMEs’ activities in this field. Notwithstanding this,
SMEs were also aware of the importance of communicating their social and community
involvement, although SMEs also suggested that no significant amounts of money
should be devoted to that. Additionally, the lack of generally accepted certification in this
field was also increasing the difficulties for SMEs in communicating socially responsible
activities.205
The following Table 7.13 provides information on degree, how Czech SMEs provide
information about their CSR activities to internal and external stakeholders. According to
the results only every second SME company operating in the Czech Republic that was
active in CSR field regularly provided information on its CSR activities to its internal and
external communities. 13 % of SMEs have been providing information fully (i.e. complete
information on CSR activities to all stakeholders), while 35 % only partially (i.e.
incomplete information and/or not to all stakeholders).
Table 7.13: Degree how SMEs provide information about company’s CSR activities*, sorted by size
of the company and including an average for all SMEs
Size of the company (as per 2008)
SMEs providing information about
their CSR activities
Micro
Yes, fully
Partly
No
Small
Medium
SMEs average
15%
6%
15%
13%
24%
41%
36%
35%
61%
53%
49%
52%
* Data refer only to SMEs participating in CSR activities
Question: Has regularly been your company providing information about company’s Corporate Social Responsibility to
above-mentioned groups (see previous question)?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
205
MORI (2000), SMEs’ Attitudes to Social Responsibility. Research Study conducted for the Business in the Community’s
Business Impact Task Force, available at: http://ec.europa.eu/enterprise/enterprise_policy/analysis/doc/smes_observatory
_2002_report4_en.pdf
142
It is also worth identifying an almost positive relationship between the size of the
companies and the percentage of SMEs providing information on their CSR activities to
internal and external communities (see Table 7.13).
The above-mentioned results suggest that Czech SMEs do not approach to CSR agenda
in a strategic way and have difficulties utilizing the full potential of corporate social
responsibility and CSR activities they are engaged in. The ground for this conclusion is
based on fact that communication of CSR objectives, achievements, activities, and other
relevant information to internal and external stakeholders forms an inseparable part of an
overall CSR framework and strategy. In the author’s opinion it is important to let the
others know that a company is a socially-responsible business. This information should
be appropriately communicated, reflecting the activities and initiatives in which respective
company is involved.
7.3
Reasons for Involvement in External Dimension of Socially
and Environmentally Responsible Activities
Reasons for Involvement in External Socially Responsible Activities
According to the 2001 All-European Survey’s results206, and referring only to those
European SMEs involved in external community activities, the main reason behind their
involvement in external social activities was related to ethical reasons, probably linked to
the desire of entrepreneurs to give something back to the community. This reason was
suggested as the most important irrespectively of the gender of the SME owner, with no
significant differences amongst both groups. Other frequently quoted reasons were
“improvement of public relations with the community and/or public authorities” and
“improvement of customer loyalty”.
Enterprise size considerations were a very important explanatory factor in this respect.
Thus, ethical considerations were the main reason for European SMEs’ involvement in
external community activities for all enterprise sizes, although this reason seemed to be
particularly important the smaller the enterprise size was. For the remaining reasons, the
opposite enterprise size relation was detected. This result would suggest that larger
SMEs have been more aware of the business benefits derived from their involvement in
socially responsible activities in comparison to the smallest ones.
Table 7.14 presents results of the author’s research on major drivers (reasons) for Czech
SME companies for implementing socially responsible activities towards external
stakeholders. According to the survey’s outcomes, and referring only to those SMEs
participating in external dimension of CSR, the main reason behind their involvement in
206
For more information on respective survey, please, see subchapter 4.2.
143
external social activities was related to improvement of positive image of the company.
53 % of the Czech SMEs suggested this reason, only slightly above other frequently
quoted reasons such as ethical/moral reasons and improvement of employees´ job
satisfaction (pointed out by 52 % and 48 % of SMEs, respectively). Other reasons (e.g.
tradition, improvement of relations with business partners and investors, improvement of
economic performance of the company, etc.) were mentioned by less than one third of
SMEs participating in external social activities. Only 2 % of SMEs could not find any
reason (driver) for their involvement in external social activities. Similar outcomes
presented Czech Business Leaders Forum in its 2008 survey.207
Ethical considerations were the second most mentioned reason for SMEs’ involvement in
external social activities, although this reason was particularly important the smaller the
company size was. For the majority of remaining reasons, particularly improvement of
positive image of the company and improvement of employees´ job satisfaction, the
opposite company size relation was identified. In the author’s opinion this finding
suggests that larger SMEs have been more aware of the business benefits derived from
their involvement in external socially responsible activities compared with the smaller
ones. The 2001Pan-European survey came to the identical finding regarding European
SMEs.
Table 7.14: Major drivers for implementing socially responsible activities* towards external
community, sorted by size of the company and including an average for all SMEs
Major motivators for support of social activities by SMEs
Size of the company (as per 2008)
Micro
Small Medium SMEs average
Ethical / moral reasons
Tradition
Improvement of relations with public administration (public/state
authorities)
Improvement of customers´ loyalty
Improvement of relations with business partners and investors
Improvement of employees´ job satisfaction
Improvement of positive image of the company
Improvement of economic performance of the company (costs´ reduction,
sales´ increase)
58%
24%
53%
32%
50%
36%
52%
33%
13%
9%
21%
17%
37%
26%
34%
45%
24%
15%
50%
53%
25%
38%
52%
56%
27%
31%
48%
53%
18%
21%
18%
19%
Establishment and/or retention of competitive advantage
Application / implementation of business code of conduct
Pressure from third parties (i.e. clients, competitors, governments)
Use of existing public incentives (tax incentives, subsidies, others)
Marketing and Public Relations
Other
None
8%
3%
8%
3%
8%
0%
0%
21%
6%
3%
6%
18%
0%
6%
25%
9%
7%
8%
16%
1%
2%
21%
7%
6%
6%
14%
1%
2%
* Data refer only to SMEs participating in external dimension of CSR
Question: Indicate, which have been the major drivers/motivators for your company for support of social activities (part of
external dimension of CSR).
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
207
The results primarily differed in that the ethical reasons ranked the first and improvement of employees´ satisfaction
ranked the second.
144
Finally, the outcomes of the survey imply that a great number of Czech SMEs
understand that adherence to CSR principles can bring the company a number of
advantages – mainly in the form of appreciation in the value of its intangible assets –
such as its corporate reputation, the value of its brand identity, its human capital and the
relationships it has built on trust and its business partnerships, which in turn can also
positively impact the value of the company for its owners or shareholders.
Reasons for Involvement in External Environmentally Responsible Activities
Enterprises’ motivations to engage themselves in environmentally responsible activities
may include a wide array of considerations. According to the existing literature and
empirical evidence, the adaptation to the existing legislation and regulations is one of the
key driving reasons amongst European SMEs for engaging themselves in environmental
activities related to the own enterprise’s operations, irrespective of enterprise size or
country considerations.208
Enterprises in general and SMEs in particular are fostered to become engaged in
environmentally responsible activities for a number of pro-active reasons. Examples
include the strategic choice to improve the enterprise’s own image or the wish to obtain
certain competitive advantage in comparison to competitors. For instance, this former
reason is ranked as second by the Spanish enterprises after adaptation to legislation,
irrespective of enterprise size considerations.209
It is also worth mentioning the increasing importance of market demands (basically from
customers and especially from business customers through subcontracting relationships)
for adopting environmentally responsible solutions in general and environmental
management systems in particular. Thus, supply chain management is becoming a key
environmental driving force since large enterprises are starting to look at and drive
environmental improvements along their supply chains, whereas smaller firms are
coming under increasing pressure to modify their environmental behaviour. Also the
relatively important role played by existing public support should not be forgotten. To give
one example, Austrian evidence suggests that up to 55 % of the Austrian SMEs that
have an environmental management system would not have obtained it without financial
support from the public sector.210
208
Petts, J. et al. (1999), The climate and culture of environmental compliance within SMEs, Business Strategy and the
Environment, Volume 8, page 14-30, available at: http://www.esrcsocietytoday.ac.uk
209
European Commission (2002), Observatory of European SMEs 2002, No. 4: European SMEs and Social and
Environmental Responsibility, Luxembourg, Available at: http://ec.europa.eu/enterprise/enterprise_policy/analysis
/doc/smes_observatory_2002_report4_en.pdf
210
Ruth, H. (1999), Evaluation of Study Reports on the Barriers, Opportunities and Drivers for SMEs in the Adoption of
Environmental Management Systems, Published by the Department of Trade and Industry, Environment Directorate,
available at: http://www.smallbusinessjourney.com/output/Page256.asp
145
Table 7.15 analyses the main reasons why Czech SMEs get involved in external
environmentally responsible activities. Same as in case of external social activities, the
most cited reason was improvement of positive image of the company, however quoted
only by 38 % of SMEs participating in external dimension of CSR. Ethical considerations
seemed to be the second most important driving force behind SMEs’ external
environmentally responsible activities. This evidence suggests that SMEs have some
environmental concern and recognition of the responsibility of businesses to help to
protect the environment. Also the relatively important role played by the establishment
and/or retention of competitive advantage, which ranked at the fourth place, should not
be forgotten. This reason implies that some SMEs discovered concrete value and
competitive advantages from taking environmental initiatives, for example, in areas such
as pollution prevention, energy efficiency, environmentally oriented design, supply-chain
management, industrial ecology etc.
Table 7.15: Major drivers for implementing environmentally responsible activities* towards external
community, sorted by size of the company and including an average for all SMEs
Major motivators for support of environmental activities by SMEs
Ethical / moral reasons
Tradition
Improvement of relations with public administration (public/state
authorities)
Improvement of customers´ loyalty
Improvement of relations with business partners and investors
Improvement of employees´ job satisfaction
Improvement of positive image of the company
Improvement of economic performance of the company (costs´
reduction, sales´ increase)
Establishment and/or retention of competitive advantage
Application / implementation of business code of conduct
Pressure from third parties (i.e. clients, competitors, governments)
Use of existing public incentives (tax incentives, subsidies, others)
Marketing and Public Relations
Other
None
Size of the company (as per 2008)
Micro
Small
37%
5%
35%
12%
Medium SMEs average
31%
17%
33%
13%
13%
3%
17%
13%
8%
3%
5%
24%
9%
6%
12%
35%
11%
17%
15%
44%
10%
12%
12%
38%
0%
3%
12%
7%
3%
3%
5%
0%
8%
0%
47%
12%
6%
6%
6%
12%
0%
29%
22%
4%
14%
7%
6%
1%
26%
16%
4%
10%
5%
7%
1%
31%
* Data refer only to SMEs participating in external dimension of CSR
Question: Indicate, which have been the major drivers/motivators for your company for support of environmental activities
(part of external dimension of CSR).
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
On the other hand, surprisingly, one third of surveyed SMEs could not identify any
motivator
for
implementing
environmentally
responsible
activities.
This
result
corresponds to findings stating that almost two thirds of all surveyed SMEs were not
involved in any environmentally responsible activities under the umbrella of external
dimension of CSR (see Table 7.3) and 42 % of SMEs did not name any benefits for them
arising from the support of environmentally responsible activities aimed at external
146
community (see Table 7.17). If companies struggle to find any real motivators and
benefits in this respect, it is no wonder that their support of externally aimed
environmentally responsible activities has been so weak.
In the author’s opinion possible explanation for low involvement in external
environmentally responsible activities and problem with identifying motivators for
engaging in these activities can be inability of SMEs to identify real connection between
environmental responsibility and prosperity of the company, which can be caused by
variety of reasons, for example by lack of know-how, lack of courage to do things
differently, lack of public support, personal conviction of owners or managers, etc.
7.4
Benefits Identified by SMEs from Their Participation on
External Dimension of Socially and Environmentally
Responsible Activities
Benefits from Involvement in External Socially Responsible Activities
The available empirical evidence from the 2001 Pan-European Survey suggested that,
generally speaking, SMEs were quite aware of the benefits derived from being involved
in external community activities. The two main benefits identified by SMEs included an
improvement of the loyalty of customers and better relations with the general
community/public authorities (35 % and 28 % of SMEs involved in external social
activities point out these benefits, respectively). Other benefits seemed to be less
perceived by the European SMEs. Only around a quarter of the European SMEs
effectively involved in external social activities was unable to identify any business
benefit derived from these activities, whereas the remaining three-quarters did identify
different business benefits. Interestingly enough, the smallest enterprises had more
difficulties to perceive these benefits.
Major benefits for Czech SMEs arising from the support of socially responsible activities
aimed at external community presents Table 7.16. According to results of the author’s
survey, and referring only to those SMEs involved in external community activities, the
main benefit identified by Czech SMEs from their involvement in external social activities
was improvement of positive image of the company (picked by 57 % of SMEs). The most
SMEs also selected improvement of positive image of the company as the main reason
for their involvement in external social activities (see Table 7.14).
Improvement of employees´ job satisfaction was the second and improvement of
relations with business partners and investors was the third most important business
benefit arising from the support of external socially responsible activities. The fourth
147
place occupied benefit improvement of company’s reputation and the fifth improvement
of customers´ loyalty. Other benefits seem to be less perceived by the Czech SMEs.
Interestingly also, some benefits were identified more often by the larger companies,
especially as far as improved employees’ job satisfaction and improved relations with
public administration/authorities are concerned.
Table 7.16: Major benefits for SMEs arising from the support of socially responsible activities*
aimed at external community, sorted by size of the company and including an average
for all SMEs
Major benefits for SMEs arising from the support of socially responsible
activities towards external community
Size of the company (as per 2008)
Micro
Small
Medium
SMEs average
Improvement of relations with public administration (public/state
authorities)
8%
18%
24%
19%
Improvement of customers´ loyalty
32%
18%
24%
25%
Improvement of relations with business partners and investors
29%
24%
33%
30%
Improvement of employees´ job satisfaction
37%
41%
48%
44%
Improvement of positive image of the company
Improvement of economic performance of the company (costs´
reduction, sales´ increase)
Establishment and/or retention of competitive advantage
61%
41%
60%
57%
8%
18%
17%
15%
13%
15%
19%
17%
Use of existing public incentives (tax incentives, subsidies, others)
5%
9%
5%
6%
Improvement company's reputation
26%
35%
28%
29%
None
16%
15%
9%
11%
* Data refer only to SMEs participating in external dimension of CSR
Question: Indicate, which have been in practice the major benefits for your company from the support of social activities
(part of external dimension of CSR).
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
The previous data allow one to reach an interesting conclusion, in the sense that the
business benefits of social activities, often assumed to lie exclusively in the domain of
large companies, are in fact also present in the SME sector. However, this important
result should be contrasted with the fact that, as already mentioned, only a minority of
Czech SMEs involved in community causes have strategy for external dimension of CSR
(see Table 7.8) and measure and monitor the effectiveness of their involvement (see
Table 5.17).
Benefits from Involvement in External Environmentally Responsible Activities
Referring to the main benefits that SMEs obtain from their involvement in
environmentally responsible activities, the literature provides many concrete examples of
SMEs that have achieved cost and resource reduction as well as increased
competitiveness and market niche expansion through environmental improvements.
However, this win-win situation, both economic and environmental benefits resulting from
improved environmental behaviour, cannot be always guaranteed. Generally, the existing
business literature identifies a number of benefits obtained by those SMEs who
148
effectively adopted an environmental management system. These benefits can be
differentiated according to their internal and external nature:

Internal benefits can be grouped in three main sub-categories:
o
Organisational benefits basically derived from improvements in the quality of
management, improved quality of environmental information or improvement in
the procedures.
o
Financial benefits, such as cost savings from material, energy and waste
reductions and efficiencies, which results in improved economic performance.
o
Benefits regarding internal employees, such as increased employee motivation
and morale, enhanced employees’ skills and qualifications.211

External benefits again can be grouped in several sub-categories:
o
Commercial benefits, such as new customers/business opportunities, clear
environmental profile contributing to competitive/marketing advantage or
satisfaction of existing customers.
o
Environmental
benefits
basically
derived
from
improved
environmental
performance.
o
Communication benefits, such as positive enterprise’s public image, better
relationships with customers, better access to capital from environmentallysensitive investors or improved co-operation and relationships with regulators and
administrative bodies that contributes to reduced regulatory oversight.211
Table 7.17 analyses the main benefits for Czech SMEs arising from their support of
environmentally responsible activities aimed at external stakeholders. In the same way
as in case of external socially responsible activities, the most quoted business benefit
was improvement of positive image of the company, however mentioned only by 35 % of
SMEs participating in external community causes. Improvement of relations with public
administration/authorities was the second most important benefit arising from SMEs’
support of external environmentally responsible activities, although cited only by 17 % of
SMEs. The third most quoted benefit was improvement of company’s reputation.
This evidence suggests that at least some SMEs can identify some business benefits
resulting from their engagement in external environmentally responsible activities,
although it is much more difficult for them than in case of socially responsible activities.
On the other hand, 42 % of surveyed Czech SMEs could not identify any business
benefit that would arise from their involvement in external environmentally responsible
activities. This result corresponds to previous findings stating that one third of surveyed
211
Ruth, H. (1999), Evaluation of Study Reports on the Barriers, Opportunities and Drivers for SMEs in the Adoption of
Environmental Management Systems, Published by the Department of Trade and Industry, Environment Directorate,
available at: http://www.smallbusinessjourney.com/output/Page256.asp
149
SMEs could not identify any motivator for implementing environmentally responsible
activities aimed at external community (see Table 7.15) and almost two thirds of all
surveyed SMEs were not involved in any environmentally responsible activities under the
umbrella of external dimension of CSR (see Table 7.3). If companies struggle to find any
real drivers and benefits in this respect, it is no wonder that their support of externally
aimed environmentally responsible activities has been so weak.
Table 7.17: Major benefits for SMEs arising from the support of environmentally responsible
activities* aimed at external community, sorted by size of the company and including an
average for all SMEs
Major benefits for SMEs arising from the support of environmentally
responsible activities towards external community
Improvement of relations with public administration (public/state
authorities)
Size of the company (as per 2008)
Micro
Small
Medium SMEs average
13%
9%
21%
17%
Improvement of customers´ loyalty
8%
9%
12%
10%
Improvement of relations with business partners and investors
11%
21%
15%
15%
Improvement of employees´ job satisfaction
11%
6%
17%
13%
Improvement of positive image of the company
Improvement of economic performance of the company (costs´
reduction, sales´ increase)
Establishment and/or retention of competitive advantage
26%
18%
45%
35%
0%
12%
12%
9%
3%
9%
17%
13%
Use of existing public incentives (tax incentives, subsidies, others)
3%
3%
1%
2%
Improvement company's reputation
11%
24%
16%
16%
Other
0%
0%
1%
1%
None
61%
50%
33%
42%
* Data refer only to SMEs participating in external dimension of CSR
Question: Indicate, which have been in practice the major benefits for your company from the support of environmental
activities (part of external dimension of CSR).
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
As already mentioned in the subchapter 7.3 Reasons for Involvement in External
Dimension of Socially and Environmentally Responsible Activities, possible explanation
for low involvement in external environmentally responsible activities and problem with
identifying motivators for engaging in these activities can be inability of SMEs to identify
real connection between environmental responsibility and prosperity of the company,
which can be caused by variety of reasons, for example by lack of know-how, lack of
courage to do things differently, lack of public support, personal conviction of owners or
managers, etc. Also there are obstacles, which can discourage SMEs in environmental
involvement. According to some authors, as far as the internal barriers are concerned,
the most important one is given by a negative company culture towards the environment
(despite positive attitudes amongst both employers and employees). Many small firms
feel that environmental activity is something to be avoided unless driven by legislative
demands. Moreover, a large proportion of SMEs (especially the smallest ones) remains
unaware both of the environmental impacts derived from their business activities and of
150
the existing environmental programmes and resources available to them. For instance, a
Belgian study showed that up to 84 % of the Belgian industrial SMEs do not feel that they
contribute to pollution.212
7.5
Barriers to the Participation on Externally Targeted Socially
and Environmentally Responsible Activities
Previous subchapters have shown that the SMEs are able to identify a number of
reasons and benefits underpinning their involvement in external social and environmental
activities. By way of contrast, this subchapter is interested in looking into the main
barriers that impede SMEs’ activities in this field.
According to the 2001 Pan-European Survey, the main reason suggested by European
SMEs for not getting involved in external social and environmental activities was simply
because they have never considered the possibility of engaging in such activities (24 %
of responses). This result was complemented by the fact that up to 17 % of the total
respondents argued that external social and environmental activities were “not related to
the enterprise’s activities”. Around 19 % and 16 % of SMEs respectively, identified the
lack of time and financial resources as their main barriers for involvement. Only 8 % of
SMEs argued that the main reason underpinning their inactivity was because they did not
expect any benefits from these activities, whereas a minority of 2 % saw the lack of
public support as the main reason. Data by enterprise size suggested that whereas the
lack of consideration about these activities was the main barrier amongst the smallest
enterprises (quoted by 25 % of them), small and medium-sized enterprises pointed to the
lack of time as their main barrier (21 % of responses in both cases).
British evidence suggested that the two most important barriers identified by SMEs were
money and time considerations, whereas fewer SMEs suggested other barriers such as
bureaucracy/red tape or lack of awareness and understanding of social responsibility.213
Results of the author’s survey provide some insight into the Czech SMEs’ perspective on
barriers that stay in the SMEs´ way of implementing CSR activities (both social and
environmental) towards external communities (please, see Table 7.18). The most quoted
barrier by Czech SMEs for behaving in a socially responsible way towards community
and environment was lack of financial resources. This obstacle supported 42 % of SMEs
212
European Commission (2002), Observatory of European SMEs 2002, No. 4: European SMEs and Social and
Environmental Responsibility, Luxembourg, available at: http://ec.europa.eu/enterprise/enterprise_policy/analysis
/doc/smes_observatory_2002_report4_en.pdf
213
MORI (2000), SMEs’ Attitudes to Social Responsibility, Research Study conducted for the Business in the
Community’s Business Impact Task Force, available at: http://ec.europa.eu/enterprise/enterprise_policy/analysis
/doc/smes_observatory _2002_report4_en.pdf
151
on average; however the obstacle was much more quoted by micro and small
businesses (52 % and 46 % respectively) compared to medium-sized companies (36 %).
Absence of state and/or government support was the second and lack of human
resources and/or capacity was the third most important barrier for Czech SMEs for
implementing external social and environmental activities (27 % and 23 % of SMEs
mentioned these barriers respectively). Lack of time was picked by 22 % of respondents
and ranked at the fourth place. The fifth most cited obstacle for SMEs was
bureaucracy/red tape, which mentioned 21 % respondents. Subjective (attitudinal)
reasons such as “have not thought about the possibility of behaving in such a way” and
“do not see relation to the activities of the company” were mentioned only by 3 % and 4
% of SMEs respectively. On the other hand 18 % of Czech SMEs did not identify any
obstacles that would impede their involvement in activities of external dimension of CSR,
which is a good sign for future development of corporate social responsibility in the
Czech Republic.
Table 7.18: Major barriers for SMEs for implementing CSR activities (both social and environmental)
towards external communities, sorted by size of the company and including an average
for all SMEs
Major barriers for implementing CSR activities towards external
community
I haven't thought about a possibility that my company could
behave in such a way (responsibly)
I do not see relation to the activities of my company
Such (responsible) behaviour doesn't benefit to the company in
any way
Lack of time (not enough time)
Lack of human resources/capacity
Lack of financial resources
Absence of state/government support
Absence of public support/pressure
Lack of information on Corporate Social Responsibility
Lack of know-how for implementation of Corporate Social
Responsibility in the company
Bureaucracy
Other
None
Size of the company (as per 2008)
Micro Small Medium SMEs average
0%
3%
5%
3%
7%
0%
5%
4%
13%
8%
7%
9%
28%
24%
52%
24%
2%
11%
19%
22%
46%
32%
3%
3%
21%
23%
36%
27%
9%
15%
22%
23%
42%
27%
6%
12%
7%
16%
15%
13%
13%
0%
24%
24%
5%
14%
23%
3%
18%
21%
3%
18%
Question: Indicate which have been the major barriers/obstacles for your company for behaving socially responsibly
towards its community and environment (i.e. supporting of social and environmental activities)?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
In the author’s opinion the previous results show that, generally speaking, attitudinal
reasons (i.e. no consideration, lack of relation to business activities and no benefits
expected) are much less important for SMEs in comparison to lack of resources reasons
(i.e. lack of money/human resources/time) and lack of state support for explaining the
low activity and inactivity of SMEs in external social activities.
152
According to the author’s opinion obstacle “absence of state and/or government support”
is based on real foundations and SMEs are right in their statement that state and
governmental support of companies that want implement or already practicing CSR has
been vague and weak. The results of author’s research is also supported with outcomes
from 2004 Czech Business Leaders Forum’s survey. According to that survey motivation
for activities in the CSR area was very weak on the side of the government.
Commentaries of the participants in the in-depth interviews pointed out that the role of
government in creating better business environment in the country was marginal at that
time and wished to be stronger and more proactive. According to some interview
participants, government activity would be desirable also towards the public
(communication, tools for customer's orientation, awards for responsible companies, and
implementing CSR into the broader context of national economy or national competition
advantage). This need to explain and inform on CSR was confirmed by the survey
results214, conducted among the Czech general public by STEM215 for company Philip
Morris.
7.6
Future Expectations on Involvement of SMEs in External
Dimension of Socially and Environmentally Responsible
Activities
This subchapter presents 2008 author’s survey results focused on future expectations on
involvement of Czech SME companies in external dimension of socially and
environmentally responsible activities. The following Table 7.19 and Figure 7.2 provide
information on involvement of Czech SMEs in socially and environmentally responsible
activities aimed at external stakeholders for the next three years (2009 to 2011).
Table 7.19 on the following page shows that on average 75 % of Czech SMEs expected
to continue as it is in their engagement in activities of external dimension of CSR, 23 %
would like to increase their involvement, and only 2 % wanted to decrease their
participation. The author’s survey results are supported by independent 2008 Czech
Business Leaders Forum’s survey, which came to the same outcomes. Due to the fact
that the Czech Business Leaders Forum’s survey comprised also respondents from
Czech large companies, their results can provide interesting additional information.
According to this survey 52 % of large companies wanted to continue as it is in activities
of external dimension of CSR, surprising 48 % wanted to increase these activities and no
one wanted to decrease their participation. This result suggests that large companies are
214
Approximately 90 % of people responded that they only hardly find out if a company is socially responsible or not.
Information on social, ethical, and ecological behaviour of companies is sufficient only according to 5 % of people.
215
STEM is the Czech Centre for empirical research
153
even more committed to CSR than SMEs and especially they consider that CSR
activities will be gaining importance in the future.
Table 7.19: Future involvement of SMEs in external dimension of socially and environmentally
responsible activities, sorted by size of the company and including an average for all
SMEs
Future involvement in external
dimension of CSR
Size of the company (as per 2008)
Micro
Small
Medium
SMEs average
Decrease participation
Continue as it is
4%
74%
3%
73%
2%
76%
2%
75%
Increase participation
22%
24%
22%
23%
Question: Is your company planning to decrease or to increase its participation in external social and environmental
activities over the next 3 years?
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Concerning the Czech SMEs’ future expectations on their involvement in external social
and environmental activities, an overwhelming majority of those SMEs currently engaged
in this type of activities are expecting to either continue or even increase their
participation in the next three years (77 % and 21 %, respectively). By way of contrast,
only 2 % confessed that they intended to reduce their participation (see Figure 7.2).
Figure 7.2: SMEs´ plans regarding participation in external dimension of CSR for the next three
years, percentage of all SMEs
SMEs not participating in external dimension of CSR
SMEs participating in external dimension of CSR
Increase
participati
on
21%
Plan to
start
participati
on
47%
No
participati
on is
foreseen
53%
Decrease
participati
on
2%
Continue
as it is
77%
Source: Polášek, D. (2008), Own survey of corporate social responsibility in small and medium-sized companies in the
Czech Republic conducted from April to August 2008, Prague.
Also, the picture does seem to be very optimistic where Czech SMEs not participating in
external social and environmental activities are considered. Almost half of them (47 %)
were planning to start participating in these activities in the next three years. On the other
hand 53 % of SMEs not involved did not expect to begin with these activities in the next
three years. No specific company size differences have been detected in either case.
154
Chapter 8. Recommendations for Small and MediumSized Companies How to Implement
Corporate Social Responsibility Concept
This chapter provides a guide to responsible business, which includes steps how to
identify and apply principles of corporate social responsibility in micro, small, and
medium-sized companies. The author believes the introduced CSR concept can enrich
SME business community, bring many benefits and also competitive advantages for
those SMEs, which would like to strategically engage themselves in CSR or have already
been engaged.
This chapter was compiled by the author based on results of own research216, author’s
professional knowledge and experience, and review of professional literature, particularly
Business in the Community’s Winning With Integrity material217, Business Leaders
Forum’s Concept of CSR in Practice218 and CSR Europe's Toolbox.219
8.1 Scope of Corporate Social Responsibility Involvement
Before developing ten-step concept how to implement corporate social responsibility in
SME companies, the author would like to point out several important information
regarding scope of CSR. Over the time and mainly for SMEs, it has become increasingly
important to understand the scope of CSR activities and initiatives both in developing
possible defences against attacks on their competitive position and ability to compete,
and as a potential source of new types of competitive strength.
For better understanding and defining scope of CSR for SMEs, corporate social
responsibility can be broken out into four different areas in terms of CSR activities
orientation:

Marketplace;

Workplace;

Community; and

Environment.
216
For details, please, see Chapter 5, Chapter 6, and Chapter 7 of this dissertation paper.
Business Impact Project Team (2000), Winning with integrity, Business in the Community, available at:
http://www.bitc.org.uk/resources/publications/wwi.html
218
Steinerová, M., Business Leaders Forum ČR (2008), Concept of CSR in Practice - guide to responsible business
(Koncept CSR v praxi - průvodce odpovědným podnikáním), available at: http://www.blf.cz/doc/brozura_CSR_web_CZ.pdf
219
CSR Europe's Toolbox includes information, ideas and advice designed to help companies and their stakeholders
address socio-economic and environmental challenges and integrate corporate social responsibility (CSR) into
mainstream business practice. The Toolbox is based on the first results of the CSR Laboratories, cross-sectoral businessstakeholder cooperation projects under the umbrella of the European Alliance for CSR. (CSR Europe's Toolbox, available
at: http://www.csreurope.org/pages/en/toolbox.html)
217
155
As an alternative, the CSR concept is sometimes broken down into the following three
levels: economic (equivalent to Marketplace), social (equivalent to Workplace and
Community) and environmental (equivalent to Environment); please, see Figure 8.1 for a
graphical illustration. Or it can be divided into internal and external dimension. These
suitable alternatives were reviewed in subchapters 3.1 Levels of Corporate Social
Responsibility and 3.2 Dimensions of Corporate Social Responsibility.
Nevertheless, for the purposes of this chapter and proposal of steps and activities how to
implement CSR in SMEs, the author used the first above-mentioned and very practical
concept of dividing CSR into four fundamental areas. More detailed information on
individual areas of CSR, activities which SMEs can be engaged in within these areas and
business benefits associated with responsible behaviour in these areas is provided in the
following subchapters.
Figure 8.1: Three levels and four areas of corporate social responsibility
CSR Level
CSR Area
Economic Level
Marketplace
Social Level
Environmental Level
Workplace
Community
Environment
Source: Based on review of professional literature and outcomes of own research.
A fully socially responsible company should be active in all four above-mentioned areas.
Based on its core values and principles, field of business, and the requirements of its
stakeholders, the company chooses individual, specific activities in each of these areas
on which it is going to focus its efforts.
However, it has to be stressed that a given SME company does not have to be involved
in all possible CSR activities that are associated to these four CSR areas. Right on the
contrary, an SME company due to its size and inherent disadvantages (particularly lack
of resources and know-how) should rather focus its attention and effort on one or several
the most suitable CSR activities, which can comprehensively cover CSR concept. After
successfully managing these, SME company can extend scope of its CSR involvement.
Choosing the right scope of CSR concept is extremely important for SMEs. If scope is
too wide, an SME company can have difficulties allocating scarce resources to all
selected activities and probably it will never accomplish planned objectives (both
economic and CSR). Such company may end up in financial difficulties and/or resign
from CSR concept. On the other hand, if scope is too narrow, a company may be seen
as not enough socially responsible by stakeholders, which undermines invested effort
and resources and again it may prevent achieving planned objectives.
156
Last but not least it is also immensely important to choose within the scope of CSR those
activities that are consistent with the overall strategy and business objectives of the
company, i.e. activities that are of interest to company’s existing and potential
customers.220
8.1.1 Marketplace
In today’s market-oriented environment, a socially-responsible company is expected to
conduct its business in a transparent manner and to have positive relationships with its
investors, customers, suppliers and other business partners. The company’s ability to
succeed on a long-term basis depends on its ability to create lasting and high quality
sales networks for its products and services. A responsible approach to business
partners can contribute to the building up of a sense of mutual trust, produce higher
quality products and services and, in its final result, also lead to higher profits, generated
from these enhanced business partnerships.
Corporate Social Responsibility Activities Relating to Marketplace Area
The following is a list of examples of CSR activities which belong in the Marketplace
category:

Business policies guaranteeing adherence to ethical standards;

Providing of clear and accurate information on products and services;

Timely settlement of liabilities (payment of invoices);

Monitoring and responding to complaints from customers, suppliers and other
business partners;

Collaborating with other businesses and/or organizations on CSR activities and
projects; and

Applying high ethical standards in marketing and advertising.
Benefits Associated with Marketplace Area
The following benefits can be associated with responsible behaviour in the Marketplace
category of CSR:

Increased customer loyalty;

Standing out among competitors;
220
With alignment of CSR concept with a business strategy deals subchapters 3.3 Six Forms of Corporate Social
Responsibility Initiatives, 5.3.5 Degree of Involvement of SMEs in Socially and Environmentally Responsible Activities
towards External Community, 6.2 Characteristics of SMEs´ Internal Dimension of Socially Responsible Activities, and 7.2
Characteristics of SMEs´ External Dimension of Socially and Environmentally Responsible Activities.
157

Becoming an attractive business partner for socially perceptive business partners
and customers;

Becoming a generally sought after supplier and business partner; and

Enhanced supplier chain performance.
8.1.2 Workplace
Employees are highly dependent on the company for which they work. Work is the
location where they spend most of their day and their profession impacts the quality of
their private and their family life and it often also impacts their level of physical wellbeing. In a complimentary fashion, the long-term ability of the company to thrive and be
successful is dependent upon on the quality of the workforce managing the company,
manufacturing its products, providing services to its customers and carrying out other
activities that help the company to achieve its business objectives. Behaving in a socially
responsible manner to its most valuable assets – employees – should be the standard
for all companies. Due to these facts SMEs should pay special attention to Workplace
area when deciding on scope of CSR activities.
Corporate Social Responsibility Activities Relating to Workplace Area
The following is a list of typical CSR activities which belong in the Workplace category:

Involvement of employees in corporate decision-making processes;

Non-monetary benefits;

Employee training and personal development programmes;

A balance between professional and personal life (e.g. flexible forms of work,
particularly for parents with small children);

Workplace diversity, i.e. employment of women, ethnic minorities, handicapped
individuals and seniors;

High standards regarding health and safety at work and workplace in general;

Providing of support for laid-off workers; and

Implementation of anti-discrimination measures.
Benefits Associated with Workplace Area
The following benefits can be associated with responsible behaviour in the Workplace
category of CSR:

A company can become a preferred employer;

A company can attract a quality workforce;
158

Lower costs on recruitment and training of new employees due to lower employee
turnover;

Healthier and more satisfied workforce;

A company can provide motivation leading to increased productivity; and

A company can establish a creative and innovative working environment, which
may build up a competitive advantage.
8.1.3 Community
As soon as the company starts the operation of its business activities, it becomes a part
of the local community. A socially responsible company tries to build good-neighbourtype relationships by minimizing any negative impact on the local environment and by
getting involved in addressing and dealing with local problems and concerns. All of this
pays off through a reduction in possible risks to the company’s operations and through
goodwill created by the company’s acceptance by the local community. The local
community is a source of both potential customers and employees for the company. To
become a good neighbour, the company can engage itself in such varied initiatives as
providing financial and material support for local activities and projects and by making
the time and the professional knowledge of its employees available to the local
community.
Corporate Social Responsibility Activities Relating to Community Area
The following is a list of examples of CSR activities belonging in the Community
category:

Financial and in kind (material) donations;

Corporate volunteerism;

A company can provide free of charge consulting and spreading of know-how;

Support for social integration;

Education of the public;

Various support for the local quality of life (e.g. sports, culture, etc.);

Building local alliances with other companies in order to provide coordinated
support to local community;

Collaboration with local schools, authorities, and various organizations; and

Shared marketing, i.e. joint marketing activities promoting the company and a
non-profit project.
159
Benefits Associated with Community Area
The following are typical benefits associated with responsible behaviour in the
Community category of CSR:

Improvement of the company’s reputation and image;

Loyal employees and customers;

Simplified access to local resources;

Lower costs on security due to lower crime and vandalism; and

New business opportunities.
8.1.4 Environment
Even in the natural environment area, it has been evident that businesses that try to
minimize negative environmental impact of their activities can benefit through new
business opportunities. An SME company that actively cares for the natural environment
has a better chance of succeeding in tenders held by large corporations and the public
sector and a better chance of acquiring new customers from the ranks of
environmentally-conscious consumers.
Corporate Social Responsibility Activities Relating to Environment Area
The following is a list of examples of CSR activities which belong in the Environment
category:

Environmentally friendly manufacturing, products, and services;

Environmentally friendly packaging;

Environmentally friendly distribution and transportation practices;

Recycling;

Use of recycled materials;

Energy and water saving practices;

Waste reduction practices;

Compliance with regulations and standards (e.g. ISO 9000 standards for quality
management systems, ISO 14000 standards for environmental management
systems, Eco-Management and Audit Scheme - EMAS, etc.)221;

Protection of natural resources; and

Providing of accurate environmental information on products, services and
activities.
221
See also subchapter 3.4.2 Corporate Social Responsibility Reporting
160
Benefits Associated with Environment Area
The following are typical benefits associated with a socially and environmentally
responsible behaviour in the Environment category of CSR:

New business opportunities (e.g. attraction of environmentally-conscious
customers);

Protection of resources;

Reduction of energy and waste;

Lower costs due to improved energy efficiency and use of resources; and

More efficient operations.
8.2
Ten Steps How to Adopt and Implement Corporate Social
Responsibility Concept in Small and Medium-Sized
Companies
There is no “one-size-fits-all” method for pursuing a corporate social responsibility
approach. Each company has unique characteristics and circumstances that will affect
how it views its operational context and its defining of social responsibilities. Each will
vary in its awareness of CSR issues and how much work it has already done towards
implementing a CSR approach.
That said, there is considerable value in proceeding with CSR implementation in a
systematic way, i.e. in harmony with the company’s mission, and sensitive to its business
culture, environment and risk profile, and operating conditions. Many SME companies
are already engaging in activities in the area of customer and employee care, community
support and environmental protection. These activities can serve as a good starting point
for development of a more strategic approach to corporate social responsibility so that a
company could maximise competitive as well as social benefits. CSR can be phased in
by focusing carefully on priorities in accordance with resource or time constraints. The
bottom line is that CSR needs to be integrated into the company’s core decision making,
strategy, management processes and activities, be it incrementally or comprehensively.
When implementing CSR concept, it is important to have a systematic approach and to
take the following into consideration:

Mission statement of a company;

Corporate culture of a company;

Line of business of a company;

Overall business strategy of a company;

Environmental profile of a company;

Risk profile of a company; and
161

Operating conditions of a company.
Managing corporate social responsibility is just like managing any other aspect of the
business. Whether a company employs 5 people or is a multinational corporation, there
are a number of key principles that generally apply. These all turn on ensuring that a
company has the right policies, the right processes, and that it gets the right
performance.
Based on the results of own research222, author’s professional knowledge and
experience, and review of professional literature223, the author prepared a set of ten
steps for turning all this into action, i.e. implementing CSR in the SME company. The
following implementation ten-step diagram (Figure 8.2) is based on the well-known
PDCA concept: Plan = plan ahead; Do = execute your plan; Check = evaluate the
results; Act = act on the results by trying to improve.224 Individual steps in the PDCA
cycle are further elaborated in the following subchapters.
Figure 8.2: Diagram how to implement corporate social responsibility concept in SMEs in ten steps
1. Management commitment
2. Identifying of key
stakeholders
3. Analysis of current
situation
4. Setting of values and
principles
5. Setting of objectives and
CSR approach
6. Action plan
10. Improvement measures
8. Monitoring
9. Communication and
reporting
7. Implementation
Source: Based on Hohnen, P., Potts, J. (2007), Corporate Social Responsibility: An Implementation Guide for Business,
International Institute for Sustainable Development, available at: http://www.iisd.org/pdf/2007/csr_guide.pdf; Business
Impact Project Team (2000), Winning with integrity: Summary, Business in the Community, available at: http://www.bitc.
org.uk/resources/publications/wwi.html; and CSR Europe (2008), CSR Europe's Toolbox, available at:
http://www.csreurope.org/pages/en/toolbox.html
222
For details, please, see Chapter 5, Chapter 6, and Chapter 7 of this dissertation paper.
Particularly review of the following information sources: Business Impact Project Team (2000), Winning with integrity,
Business in the Community, available at: http://www.bitc.org.uk/resources/publications/wwi.html; Steinerová, M., Business
Leaders Forum ČR (2008), Concept of CSR in Practice - guide to responsible business (Koncept CSR v praxi - průvodce
odpovědným podnikáním), available at: http://www.blf.cz/doc/brozura_CSR_web_CZ.pdf; CSR Europe's Toolbox,
available at: http://www.csreurope.org/pages/en/toolbox.html.
224
PDCA ("Plan-Do-Check-Act") is an iterative four-step problem-solving process typically used in business process
improvement. It is also known as the Deming Cycle, Shewhart cycle, Deming Wheel, or Plan-Do-Study-Act. Available at:
http://en.wikipedia.org/wiki/PDCA
223
162
8.2.1 Planning Phase
8.2.1.1 Management Commitment (Step 1)
Without the support of top management and owners, a CSR programme would have only
a small chance of success. Owners and management convinced of the necessity of
taking a responsible CSR approach can spread these values across the company,
involving all of their employees. Under ideal conditions, owners and management can
even involve their employees in the process of selecting the CSR activities for the
company (this can be especially the case of micro companies, where relations resemble
a family).
Owners and management should openly declare their support for a socially responsible
approach and commit themselves to actions that will lead to a more positive impact of
the company on the market environment, the work environment, the local community and
the natural environment.
For larger SMEs, which have senior managers, the personal commitment of them, based
on ethical approaches and viewpoints, can make a major contribution to the
effectiveness of the application of the CSR concept in the company. Management should
feel the need to turn the company into an integral part of the broader society and overall
environment in which it operates. The rewards will come in the form of all of the benefits,
which CSR can provide to a business over a medium to longer-term time horizon (as
already mentioned in the subchapter 8.1 Scope of Corporate Social Responsibility
Involvement).
As part of this particular step, owners and top management also have to decide on how
to allocate resources and whether to set up a special CSR team headed by a member of
top management and/or owners, which will manage implementation of CSR in the
company. If the special CSR team is established, it should ideally include members with
the following specializations: human resources, public relations, marketing, process
management, finance and controlling, production, health and safety at work, and sales.
In smaller SMEs a function (role) of the specialized CSR team should ensure owners, top
managers and selected employees.
8.2.1.2 Identifying Key Stakeholders (Step 2)
No SME company is completely isolated from its surroundings and it usually represents
an important part of its local community and the environment within which it operates.
The ability of a business to succeed on a long-term basis depends on the relationships it
has with its owners, investors, employees, customers, suppliers, the local community
and other involved parties who are collectively referred to as stakeholders (for more
163
information on stakeholder concept, see subchapter 1.4 Definition of the Stakeholder
Concept and its Relation to Corporate Social Responsibility).
The term “stakeholders” encompasses all parties, institutions and organizations, which
either have an impact on the operation of the respective SME business or which are in
turn impacted by it. In a broader sense, competitors, governmental and local authorities,
special interest groups, media, unions, international organizations and even the general
public can also be considered to be stakeholders.
In order to effectively implement CSR concept, SMEs have to understand and appreciate
value of their involvement with their stakeholders. This is because corporate social
responsibility is not just about the advocating of the company’s values and principles but
also about understanding expectations of those who have an impact on the company
and who are being impacted by the company.
The following Figure 8.3 shows a list of stakeholders broken down into four different
areas (or three levels) of corporate social responsibility.
Figure 8.3: Example of a list of stakeholders associated with four different areas of corporate social
responsibility
CSR Levels*
CSR Area**
Stakeholders
Owners and investors
Customers
Business partners
Economic Level
Marketplace
Suppliers
Competitors
Governmental institutions
Employees and their families
Workplace
Unions
Public
Social Level
Non-profit organizations
Community
Media
Educational institutions
Non-profit organizations
Environmental Level
Environment
Governmental institutions
Public
* Alternative concept of dividing CSR into three levels
** Practical concept of dividing CSR into four areas
Source: Based on review of professional literature and outcomes of the author’s own research.
164
Importance of Stakeholders´ Engagement
The systematic and regular involvement of key stakeholders gives the SME companies
numerous advantages. The author would like to point out the following:

Establishing innovative environment: A continuing dialog with stakeholders
represents a valuable tool for the prediction of new trends and possible areas of
interest to the business. It allows SMEs to better understand complexity of the
business environment and current market trends and helping them to properly put
together their future strategic plans.

Improving risk management: A dialog with external parties can often warn SMEs
about potential future risks.

Establishing of mutually beneficial relationships: Face-to-face contact and the
ability to maintain a close relationship with stakeholders is the best way to build
mutual trust between SMEs and their key stakeholders.

Setting of objectives and performance monitoring: An outsider’s perspective
allows the SMEs to properly set out their objectives and evaluate their actual
performance.

Improving access to information: Strong and close relationships with stakeholders
can be a valuable source of information for SMEs.225
An explanation and overview of the roles played by the stakeholders throughout the four
stages of the CSR implementation process, i.e. planning, execution, evaluation and
improvement, helps to better understand how important it is to get the stakeholders
involved in the decision-making processes of one’s business (please, see Figure 8.4 on
the following page).
During the planning stage, stakeholders can help SMEs to understand the respective
economic, social and environmental impacts of company's actions and help them choose
the right CSR strategies. When executing CSR strategy stakeholders play an important
role strategy by helping SMEs to define and act upon their commitments in the area of
corporate social responsibility. Stakeholders are also an essential part of the monitoring
and reporting of business' performance. They are included in selection of performance
indicators and provide SMEs with feedback on their performance in the different CSR
areas. Last but not least SMEs´ stakeholders contribute to the shaping of ideas for
improving their existing CSR strategies.
225
Based on results of the author’s research and Smith, S. (2004), Navigating the Stakeholder Relations Continuum,
Leading Perspectives: In perspective – Stakeholder engagement, Business for Social Responsibility, available at:
http://www.bsr.org/reports/leading-perspectives/2004/Fall.pdf
165
Figure 8.4: An explanation and overview of the roles played by the stakeholders throughout the four
stages of the CSR implementation process
Company’s
stakeholders
contribute to the shaping of
ideas for improving its
existing CSR strategy.
During the planning stage,
stakeholders
can
help
company to understand the
respective economic, social
and environmental impacts
of company's actions and
help it choose the right CSR
strategy for its business.
Stakeholders
are
an
essential
part
of
the
monitoring and reporting of
business' performance. They
are included in selection of
performance indicators and
provide the company with
feedback on its performance
in the different CSR areas.
Stakeholders
play
an
important role in company’s
business' execution of its
CSR strategy by helping it to
define
and
act
upon
company's commitments in
the area of corporate social
responsibility.
Source: Based on Steinerová, M., Václavíková, A, Mervart, R. (2008), Corporate Social Responsibility: Guide not only for
SMEs (Společenská odpovědnost firem: Průvodce nejen pro malé a střední podniky), Business Leaders Forum ČR,
available at: http://www.dokumenty.ipodnikatel.cz/ke-stazeni/BLF_Pruvodce_CSR.pdf
Identifying Key Stakeholders
SME companies should first identify their key stakeholders and subsequently involve
these stakeholders in practically all stages of the CSR implementation process (see
Figure 8.4). During the preparatory stage, a dialog with the stakeholders gives SME
companies a detailed understanding of their needs. Such a dialog can be a rich source of
ideas and can help SME companies identify the particular areas on which they should
focus parts of the CSR programmes.
In identifying the key stakeholders, the particular SME company should ask itself the
following questions:

What individuals or groups impact our business?

What individuals or groups does our business impact?
It is important to always consider both the positive and negative impacts of stakeholders
on SME´s business. By answering the above-mentioned questions, the SME company
should be able to come up with a long list of stakeholders that are involved in different
aspects of the company’s business, some of whom having opposing interests. This is
why it is important to ask another question:

What types of relationships are important for our business?
166
After completing a list of stakeholders, comes another step - stakeholder analysis, which
is an essential part of developing a useful engagement plan. A common method of
stakeholder analysis is a Stakeholder Matrix. This is where stakeholders are plotted
against two variables. The Stakeholder Influence and Dependency Matrix (so-called
Stakeholder Matrix) can be used as a guide to help SME companies to decide on which
particular stakeholders and areas they should be focusing their attention and the
respective courses of action they should be taking (see Figure 8.5). In the matrix, the
involved parties are categorized from two different perspectives: the level of relative
impact (stakeholder influence on company), and the level of relative expectations
(stakeholder dependence on company).
Figure 8.5: Stakeholder influence and dependency matrix (the so-called Stakeholder Matrix)
Level of expectations stakeholder dependence on SME
company
Level of impact - stakeholder influence on SME company
Low
High
High
(C)
Treat fairly – honour commitments
to these stakeholders
(A)
Strategic threat or opportunity invest in engagement processes
to understand concerns and
develop solutions
Low
(D)
Low priority - provide access to
general channels of information
and feedback
(B)
Keep involved and informed, but
ensure balance between the
concerns of high influence
stakeholders and those actually
impacted by decisions
Source: Based on Krick, T., Forstater, M., Monaghan, P., Sillanpää, M. (2005), The Stakeholder Engagement Manual,
Volume 2: The Practitioner’s Handbook on Stakeholder Engagement, AccountAbility, the United Nations Environment
Programme, and Stakeholder Research Associates, available at: http://www.accountability21.net/uploadedFiles
/publications/Stakeholder%20Engagement%20Handbook.pdf
Boxes A, B and C are the key stakeholders of the SME company. The explanations to
each box are summarised below:

Box A (High-High): These are stakeholders appearing to have a high degree of
influence on the SME, who are also of high importance for its success and they
pose strategic threat or opportunity. This implies that the SME should construct
good working relationships with these stakeholders to ensure an effective
coalition of support for the company. It is necessary to invest in engagement
processes to understand concerns and develop suitable solutions.

Box B (Low-High): These are stakeholders with high influence, who can therefore
affect the SME, but whose interests are not necessarily aligned with the overall
goals of the company. This implies that these stakeholders may be a source of
significant risk, and they will need careful monitoring and management. The SME
167
should keep involved and informed these stakeholders, but ensure balance
between the concerns of high influence stakeholders and those actually impacted
by SME´s decisions.

Box C (High-Low): These are stakeholders of high importance to the success of
the SME, but with low influence. This implies that they require special initiatives if
their interests are to be protected. The SME should honour commitments to these
stakeholders in line with company policy, regulations and industry norms, and
endeavour to keep stakeholders satisfied insomuch as balance of costs and
benefits allow.

Box D (Low-Low): The stakeholders in this box, with low influence on, or
importance to the SME, may require limited monitoring or evaluation, and are of
low priority. The SME should provide these stakeholders with access to general
channels of information and feedback.226
Concluding the stakeholder analysis, those stakeholders that have a strong impact on
and who also expect a lot from SMEs represent the key stakeholders from the SMEs’
perspective (the group located in the upper right hand section of the Matrix). These are
also the parties with whom the SMEs should be leading a dialog with and who the
companies should get involved in their CSR related decision-making.
What SMEs Should Talk to Stakeholders About
Once the SMEs have identified the key stakeholders with whom they plan to enter into a
dialog, they still have to determine what topics are that the stakeholders would be
interested in talking about. This can be determined by using another matrix in which
different types of stakeholders are associated with specific areas of interest (see Figure
8.6). The matrix provides a systemic way of examining a range of issues and identifying
the stakeholders likely to be concerned about a particular topic.
To breath some life into this matrix, the author taken a hypothetical example of an SME
company and shaded various cells in a way that illustrates the perspectives and
concerns of that company. The dark grey cells show areas of strong interest, light gray
illustrates medium interest and white indicates areas of weak interest in the given topic.
This type of matrix would be the most likely different for each SME company.
226
Based on Krick, T., Forstater, M., Monaghan, P., Sillanpää, M. (2005), The Stakeholder Engagement Manual, Volume
2: The Practitioner’s Handbook on Stakeholder Engagement, AccountAbility, the United Nations Environment Programme,
and
Stakeholder
Research
Associates,
available
at:
http://www.accountability21.net/uploadedFiles
/publications/Stakeholder%20Engagement%20Handbook.pdf and The Department of Sustainability and Environment
(2007), Stakeholder Analysis (Stakeholder Matrix), available at: http://www.dse.vic.gov.au/DSE/wcmn203.nsf/LinkView/
86D3534A103DB113CA257089000A2FB3B3D050C7331FFEBBCA257091000FEF77
168
Furthermore, a company’s perspectives and concerns will almost certainly change over
time.
Figure 8.6: Examples of interests of different types of key stakeholders in corporate social
responsibility key issues
Key Stakeholders
Ow ners,
shareholders,
investors
Employees
Customers
Suppliers
Public (local
community)
Non-profit
organizations
CSR Key Issues
Values and Management Practices
Transparency
Work Conditions
Product Impact
Social Impact
Environmental Impact
Strong interest
Some interest
Weak interest
Source: Freely based on Holme, R., Watts, P. (2000), Corporate Social Responsibility: Making Good Business Sense,
World Business Council for Sustainable Development, available at: http://sustainable-finance.org/DocRoot/IunSPdIKvm
YH5HjbN4XC/csr2000.pdf
Although listening to stakeholders might seem a simple concept, effective engagement of
stakeholders and dialogue with them is not nearly as easy or self-evident as it might first
appear. In order to complete the matrix presented in the Figure 8.6, SMEs should try
screening their stakeholders by asking the following questions:

Area of Legitimacy: Is a particular stakeholder group representative of issues
which are relevant to your business and accountable to those with a legitimate
interest in the way you do business?

Area of Contribution and Influence: Does the stakeholder group have a
contribution to make in helping you to run the business more responsibly or
significant influence on your company’s business and/or on other stakeholders?

Outcome: Is the engagement likely to result in a productive outcome in the long
run?
Those stakeholder groups for whom the answers are “yes” should be considered key
stakeholders and have priority in a dialogue. SMEs have to be prepared to listen to them
– they may even reveal other stakeholders with valid concerns that SMEs did not
identify. By making constructive use of what SMEs hear, SME companies can devise
strategies and plans to avoid conflicts and gain insights which can help preserve and
enhance their reputation in the marketplace because they show concern for the social
impact of their activities.
169
Methods of Stakeholder Engagement
The choice of the methods to use to get stakeholders involved in the CSR process
depends on the degree of involvement being sought from the particular group of
stakeholders (as already identified in Figure 8.5 and Figure 8.6). There are certain ways
to communicate, which are more appropriate for obtaining feedback, while other
techniques are more appropriate for the involvement of the stakeholders in decisionmaking processes. However, there are also tools and techniques which are suitable for
both purposes. Examples of tools and techniques that SMEs can use for stakeholders´
engagement are provided in Figure 8.7.
Figure 8.7: Examples of tools and techniques a company can use for stakeholders´ engagement
Feedback from stakeholders
Dialog with stakeholders
Surveys
Forums for representatives of key stakeholders
Questionnaires and online forms
Expert committees
Help Desk and telephone support
Individual discussions with stakeholders
Comments and suggestions box
Work groups
Feedback forums
Participation in decision-making processes
Marketing surveys
Organisation of joint projects
Feedback and Dialog
In-depth interviews
Group discussions
Work meetings
Online discussion forums and internet blogs
Informal meetings
Source: Based on outcomes of own research and freely on Partridge, K., Jackson, C., Wheeler, D., Zohar, A. (2005), The
Stakeholder Engagement Manual, Volume 1: The Guide to Practitioner’s Perspectives on Stakeholder Engagement,
Stakeholder Research Associates Canada Inc., available at: http://www.accountability21.net/uploadedFiles/publications/
Stakeholder%20Engagement_Practitioners'%20Perspectives.pdf
It is important for SMEs to make sure that they become familiar with the objectives and
preferred methods of communication they can use with particular stakeholders before
initiating contact and moving forward to active dialog.
8.2.1.3 Analysis of Current Situation (Step 3)
Prior setting fundamental values and principles, SMEs have to carry out analysis of
current situation consisting of internal and external analysis.
Internal Analysis
As a part of the CSR concept, SMEs have to analyze their current statuses in terms of
their CSR involvement. A thorough internal analysis helps SMEs to understand the
current condition of their involvement in CSR related activities, it inspires them to
170
become involved in additional CSR activities and it motivates them to take a systematic
approach towards CSR.
When conducting an internal analysis SME companies should try to focus on and look at
the following:

Legislative requirements in the area of environmental protection, care for
employees, customer service, etc.

Current CSR activities in which the SME is involved and the method(s) being
used to measure results.

The tools and methods being used for communicating the SME’s CSR concept.

The use of financial resources on CSR activities and internal capacity to generate
them.

A review of existing business policies and documents.

Specific aspects of CSR that relate to the SME’s area of business and the implied
key areas of CSR, which have or might have an impact on the company.

Anticipated benefits from the socially and environmentally responsible behaviour
on the SME.
External Analysis
Once SMEs have completed their internal analyses, the next step is to perform an
analysis of the external environment, which involves completing the following tasks:

An identification of possible external factors (e.g. globalization, new national and
EU legislation, local and EU incentives associated with CSR, technological
advancements, etc.) that might impact the SME.

Research into the CSR activities and tools used by the competition.

A comparison of the SME’s performance with the best practices used in the
respective field (benchmarking).
8.2.1.4 Setting Fundamental Values and Principles (Step 4)
CSR should be based on values that are important to SME companies with respect to
their individual key stakeholders. Company (corporate) values represent the general
preferences of the respective SME company. The key values are usually included in the
company’s mission statement, which is communicated to all of its employees, as well as
to the public.
Today many large companies and according to the author’s survey 13 % of Czech SMEs
(see Table 6.1) also have their own code of ethics in order to make sure that their daily
business activities and the conduct of their employees conform to their company
principles. Such a code of ethics is a set of specific rules that are based on the values
171
and the principles of the respective company and which define standards for professional
conduct. Such clearly defined rules and guidelines are used as a management tool and
they make it easier for employees to make decisions especially in non-standard-type
situations.
In order to successfully complete this implementation step, i.e. setting fundamental
values and principles, SMEs have to try to identify the most important values for each of
their key stakeholders (as already identified in Figure 8.5 and Figure 8.6). For examples
of key company (corporate) values, see Figure 8.8 below. In the table the key company
values were associated with individual stakeholders that were grouped according to CSR
area they belong to. For real examples of selected Czech SMEs´ company values and
principles, please, see Appendix III: Examples of Company Values and Principles.
Figure 8.8: Examples of key company (corporate) values
CSR Area
Marketplace
Workplace
Community
Environment
Targeted Stakeholders
Key Company Values
Owners and investors
Transparency
Customers
Personal approach
Business partners
Quality
Employees
Training and development
Non-profit organizations
Active support
Local (municipal) authority
Transparency
Environmental non-profit organizations
Environmental protection
Source: Based on review of professional literature and outcomes of own research.
Based on the company values that SMEs selected, the SMEs can then put together sets
of principles of responsible behaviour. These can serve as the basic building blocks of
their CSR strategy.
8.2.1.5 Setting Key Objectives and Corporate Social Responsibility Approach
(Step 5)
In this next step, the SME companies have to set forth the direction in which they would
like to proceed with respect to CSR. SMEs have to identify individual objectives for each
area of corporate social responsibility. These objectives should correspond to their own
company (corporate) values and principles as already identified in the previous step.
In order to keep CSR objectives updated, SMEs should set out and review these
objectives on an annual basis and regularly evaluate their fulfilment. The following Figure
8.9 shows examples of CSR objectives categorized into four CSR areas.
172
Figure 8.9: Examples of company’s corporate social responsibility objectives categorized into four
CSR areas
CSR Area
Examples of CSR Objectives
Environmental management of suppliers
Marketplace
Harmonization and optimization of relations with suppliers
Improvement of customer relations
Improvement of training and educational opportunities for employees
Workplace
Improvement of health and safety at work standards
Improvement of employee-employer relations
Community
Environment
Involvement of employees in the selection of supportive community projects
Harmonization and optimization of relations with local community
Improvement of environmental impact of the company’s products and services (e.g.
production, packaging, shipping, etc.)
Promotion of alternative means of transport (e.g. bicycles, public transport, etc.) for
commuting to work
Source: Based on review of professional literature and outcomes of own research.
8.2.1.6 Preparation of Action Plan (Step 6)
The next step is the creation of an action plan – i.e. the selection of CSR activities that
will lead to the fulfilment of the company’s CSR objectives. The following practical issues
should SMEs also clarify:

The allocation of resources (financial resources, time capacities, human
resources, and other necessary resources);

The establishment of authority and responsibility in the respective SME for the
work to be done; and

An implementation schedule.
Action plan should have clearly elaborated implementation schedule with assigned
responsibilities and should be in an appropriate way communicated to all relevant
stakeholders, particularly to employees.
As a useful source of valuable information and ideas Czech SMEs can use CSR
Europe's Toolbox.227 The Toolbox includes information, ideas and advices designed to
help companies and their stakeholders address socio-economic and environmental
challenges and integrate CSR into mainstream business practice. The Toolbox is based
on the first results of the CSR Laboratories, cross-sectoral business-stakeholder
cooperation projects under the umbrella of the European Alliance for CSR. The Toolbox
consists of the following five parts:

Sustainable Production & Consumption;
227
CSR Europe is the leading European business network for corporate social responsibility with around 75 multinational
corporations and 25 national partner organisations as members. The organisation was founded in 1995 and it has since
grown to become an inspiring network of business people working at the very forefront of CSR across Europe and
globally.
173

Communication & Transparency;

R(E)volutionary Business Models;

Human Capital; and

Integrated Workplace.228
The Figure 8.10 below shows examples of specific CSR activities that in imaginary
scenario should lead to the accomplishment of the CSR objectives (the CSR objectives
were already set in the previous subchapter).
Figure 8.10: Examples of specific corporate social responsibility activities that are related to the
accomplishment of planned corporate social responsibility objectives
CSR Area
Marketplace
Workplace
Community
Environment
Examples of CSR Objectives
Examples of CSR Activities
A company has to launch the Environmental Management of Suppliers project –
with suppliers, whose activities have a significant impact on the environment, will
Environmental management of suppliers be negotiated endorsement of environmental commitment clauses, under which
they will commit themselves to behave responsibly with respect to the
environment.
A company has to incorporate best ethical standards and best practices of supply
Harmonization and optimization of
management into relations with its suppliers.
relations with suppliers
Improvement of customer relations
A company has to incorporate best ethical standards and best practices of
customer relationship management into relations with its customers.
Improvement of training and educational
opportunities for employees
A company has to establish individual development plans for its employees.
Based on that the company has to introduce a new form of training which
combines traditional learning with online teaching methods.
Improvement of health and safety at work
standards
Improvement of employee-employer
relations
Involvement of employees in the
selection of supportive community
projects
Harmonization and optimization of
relations with local community
Improvement of environmental impact of
the company’s products and services
(e.g. production, packaging, shipping,
etc.)
Promotion of alternative means of
transport (e.g. bicycles, public transport,
etc.) for commuting to work
A company has to implement best standards of health and safety at work.
A company has to adopt such management practices, which will lead to
improvement of employee-employer relations.
A company has to establish an employee grant programme for the support of
employees who are active in and want to do something positive for the local
community.
A company has to find ways how to improve its relations with local community
and based on real needs provide it with suitable support.
A company has to launch project establishing/improving overall environmental
management of the company or environmental management in selected area or
process.
A company has to launch project for promotion of alternative means of transport
(other than cars) for commuting to work and e.g. instal bike stands.
Source: Based on review of professional literature and outcomes of own research.
8.2.2 Execution Phase
8.2.2.1 Implementation of Corporate Social Responsibility (Step 7)
During the implementation stage, SME companies follow the previously created action
plans and by doing so, they incorporate CSR into their daily activities.
SMEs should follow the implementation schedule and evaluate progress of
implementation regularly. The best available solution for doing it would be using
228
CSR Europe (2009), CSR Europe's Toolbox, available at: www.csreurope.org/toolbox
174
methodology and know-how for project management; after all, implementing CSR into
daily activities of a given SME is a full-valued project and thus should also be treated.
SMEs implementing corporate social responsibility should also keep in mind that the
essence of CSR lies in the implementation of responsible business practices. It lies in the
right attitudes, in the company culture, not in formalisation or mere public relations
without real backing.
8.2.3 Evaluation Phase
8.2.3.1 Monitoring of Corporate Social Responsibility (Step 8)
During this step, SME companies perform the monitoring of their own performance using
a group of quantitative and qualitative indicators. This provides management with the
data and information required for future decision-making. The SMEs’ stakeholders
should actively participate in the selection and evaluation of these indicators in order to
ensure transparency, reliability, efficiency and effectiveness of monitoring.
The Figure 8.11 below shows a list of exemplary indicators that SMEs can use for the
evaluation of the results of their CSR activities (determination of CSR activities was in
the Step 6).
Figure 8.11: Examples of indicators used for the evaluation of results of a company’s corporate
social responsibility activities
CSR Area
Marketplace
Workplace
Community
Environment
Examples of CSR Indicators
Number of suppliers participating in the
Customer and advertising complaints about
environmental management project
products and services
Area(s) covered by the environmental
commitment clauses
Results of customer satisfaction survey
Number of missed payment deadlines
Customer loyalty index (number of repeat orders)
Number of trained employees
Feedback – i.e. how satisfied were employees
with the training courses
Results of employee satisfaction survey
Employee breakdown (gender, age, race,
handicap)
Number of flexible employment arrangements
Employee turnover rate
Number of employee complaints
Absenteeism
Number of community projects being supported
Ratio of donations to gross profit
Total amount spent on support for projects
Number of hours of corporate volunteerism
Total value of donated resources
Results of the corporate image survey
Volume of non-monetary donations (products,
Positive/negative reaction of media to the
services, know-how)
company’s activities
Number of employees using alternative means of Number of complaints related to environmental
transport for commuting to work
pollution
Total energy and water consumption
Amount of CO2/greenhouse gas released
Amount of waste produced
Amount of hazardous substances used
Positive/negative reaction of media to the
company’s environmental impact
Percent of waste that is recycled
Source: Freely based on Holme, R., Watts, P. (2000), Corporate Social Responsibility: Making Good Business Sense,
World Business Council for Sustainable Development, available at: http://sustainable-finance.org/DocRoot/IunSPdIKvm
YH5HjbN4XC/csr2000.pdf and outcomes of own research.
175
8.2.3.2 Communication and Reporting (Step 9)
Once SMEs have initiated collaborative relationships with their key stakeholders and
started to engage in activities that are part of their overall CSR strategies, it is time to let
the surrounding community and also the SMEs’ own internal communities know about
their initiatives in the area of corporate social responsibility. As a first step, SMEs have to
make sure that their employees and partners are supportive of the SMEs’ efforts in this
area. In order to make this happen, SMEs have to thoroughly explain to them what, how
and why certain types of CSR activities are being undertaken. SMEs’ external
stakeholders also need to be properly informed about these CSR efforts because this is
the only way in which the given SME company can be able to set itself apart from its
competitors in the eyes of these external parties.
In this phase of the implementation process, SMEs present comprehensive overviews of
their CSR performance over the respective reporting period. This information can either
be released as part of a CSR report or it might be posted on the company’s website. The
CSR overview (report) should include information on the given SME’s ability to meet the
objectives that it set out for itself at the start of the reporting period (usually a year) and a
list of new objectives for the coming period. More information on this topic can be found
in the subchapter 3.4.2 Corporate Social Responsibility Reporting and further in this
subchapter Step 9.
Figure 8.12 on previous page shows in the table examples of reported results of fictitious
SME´s CSR activities. Achieved results in the field of CSR are in the table aggregated
according to the CSR area they belong to.
Regarding communication on CSR, according to the research conducted in the Czech
Republic in 2004, there has been a problem of lack of interest on the side of media and
the public regarding corporate social responsibility. According to the corporate
representatives' opinions, Czech people have been primarily concerned with the price of
products and/or services. Czech wider public has not been getting information about
CSR behaviour; the topic has not been communicated and thus has not been reflected
upon. Czech company representatives also considered the journalists' concerns of
hidden company advertisement to be a mere excuse or a misunderstanding, as
according to their opinions, a mention of a company in the CSR context did not bring any
dramatic increase of sales whatsoever. Lack of interest from the media brings yet other
negative consequences - on one hand, it blocks wider public debate about CSR and on
the other, it does not enable responsible companies to take up the activity, promote the
topic, and inspire others. Although some branches of multinational corporations, for
example, show interest in being exemplary, majority of them expressed their concerns
that the whole issue would, at the end, turn against them. These concerns can be
176
summarized by the words of one of the survey participants: "Here, it is really easy to turn
a good thing into a bad one."229
Figure 8.12: Examples of reported results of the company’s corporate social responsibility activities
CSR Area
Achieved Results in CSR (per indicator)
X out of Y suppliers participated in the environmental management project
Marketplace
The environmental management project resulted in the signing of X environmental clauses
According to the customer satisfaction survey X % of customers were very satisfied and Y % were
satisfied with company´ products and services
A company established e-learning
X % of all employees completed new traning courses
According to the employee satisfaction survey X % of employees were very satisfied and Y % were
satisfied with the company
Employee turnover rate declined by X % and absenteeism by Y %
X community development programmes were supported by company
Workplace
X % of all employees were involved in community volunteer programmes
Community
Employees devoted X hours to community development programmes
Total value of devoted monetary resources was CZK X and non-monetary resurces CZK Y
X % of all employees were using alternative means of transport for commuting to work; as of M %
used public transport, N % used bicycles, O % walked
Company produced X tons of waste; Y % was recycled, which is Z % improvement compared to
previous year
Environment
Company supported X environmental protection programmes with the total amount of CZK Y
Company spent on improvement of its environmental impact in total CZK X
Company produces X tons of greenhouse gas, which is Y % improvement compared to previous
year
Source: Based on review of professional literature and outcomes of own research.
Why Companies Should Communicate about Corporate Social Responsibility
Regularly communicating information about the company’s socially and environmentally
responsible behaviour can provide SMEs with a number of advantages. They can be
following:

Transparency: provides others with better information on the company’s CSR
activities and makes the company and its business more transparent.

Better control over CSR activities: allows the company to compare its publicly
proclaimed CSR commitments with what is actually taking place and helps it
identify weaknesses in its CSR strategy.

Involvement of stakeholders: strengthens the position and involvement of
stakeholders in company decision-making processes.

Non-commercial partnerships: promotes non-commercial partnerships between
enterprises, public institutions and non-profit organizations.
229
Trnková, J., et al. (2004), Corporate Social Responsibility – Complete Guide of the Topic and Conclusions of the
Survey in the Czech Republic (Společenská odpovědnost firem – kompletní průvodce tématem a závěry z průzkumu v
ČR), Prague, available at: http://www.blf.cz/csr/cz/vyzkum.pdf
177
Corporate Social Responsibility Communication Tools
There are many communication tools and methods that SMEs can use when providing
communications about their socially and environmentally responsible behaviour to
stakeholders. Some of these are highly affordable for SMEs and should take a minimum
of effort. They can be following:

CSR Report;

Internet - publishing of information about CSR activities on SMEs’ websites,
publishing of articles in the companies´ blogs, providing information on CSR via
various community forums (e.g. Facebook), etc;

Internal and external newsletters and magazines;

Announcements sent via e-mail or via traditional mail;

Employee training on CSR;

Publishing of information about CSR activities on SMEs´ Intranets;

Code of Ethics;

Speeches and presentations, press releases and conferences, open house
events;

Standards and Norms (e.g. ISO 9000, ISO 14000, SA 8000, EMAS, etc.);

Product designations (e.g. organic, bio-degradable, environmentally friendly,
quality guaranteed, Fair-Trade, etc.) and shared marketing;

Awards and recognition (e.g. socially responsible enterprise, employer of the
year, corporate philanthropist of the year, Czech TOP 100 – Corporate Social
Responsibility Report category, etc.);

Presentation of SME as a good CSR example through non-profit organizations
(e.g. inclusion in the Czech Business Leaders Forum’s database); and

Active communication with the media and media announcements in the form of
paid advertising.230
Practical Information on Corporate Social Responsibility Report
CSR report can be described as an annually released public report that provides a
detailed overview of the company and its economic, social and environmental impact on
the society. The release of the CSR report accomplishes the following two purposes:

It acts as a communication tool which should be used by SMEs to communicate
information about their CSR activities to internal and external stakeholders; and
230
Based on Steinerová, M., Business Leaders Forum ČR (2008), Concept of CSR in Practice - guide to responsible
business (Koncept CSR v praxi - průvodce odpovědným podnikáním), available at: http://www.blf.cz/doc/brozura_CSR
_web_CZ.pdf
178

It acts as a management tool which helps SMEs to systematically approach the
CSR concept, measure progress and set out new strategies and objectives.
According to the author’s opinion Czech SMEs should be preparing and publishing their
CSR reports whenever it is possible with respect to their size and internal capacities in
order to achieve desired CSR benefits. There is not anywhere written that CSR report
has to be one-hundred-page hard-covered document. On the contrary, it should
correspond to the size and scope of activities of respective SME.
Important Characteristics of CSR Report
When preparing CSR reports, SME companies should make sure that the information
released in their reports is accurate and credible and that reports meet necessary formal
requirements as summarized below:

Completeness - it is expected that the CSR report should cover all of the SME’s
operations and branches and provide comprehensive information on the
significant aspects of the SME’s impact on the society and the environment.

Credibility - the credibility of the CSR report is based on the way in which the
SME describes its business policies, its responsibilities towards its employees
and methods it uses for the collection of data and the setting out of future
objectives. Credibility is also dependent on the level of involvement of the SME’s
stakeholders (and in case of large SMEs also on the results of an independent
internal audit of the SME’s systems and data).

Format - the formal aspects of the CSR report can also play an important role.
These include not just the graphic layout and the overall look of the document,
but also the fact that the report is easy to understand, readable and neither too
short nor too long. The reader should be able to easily navigate through and
orient when reading the report.231
SMEs should keep in mind that their CSR reports will most likely be read by two different
types of readers – those who will quickly skim through it and select only key, desired
information and those who will carefully read through the report in its entirety or study
particular parts of the document (e.g. employees, non-profit organizations, analysts,
various interest groups).
Once published, CSR reports should be easily accessible and available to readers
(ideally in both electronic and printed version). Regarding publishing, the internet opens
231
Based on Ceres-ACCA North American Awards for Sustainability Reporting (2009), Report of the judges, available at:
http://www.ceres.org/Document.Doc?id=433
179
up a broad range of possibilities for flexible and up-to-date reporting and feedback giving
stakeholders a chance to immediately respond to the information provided.
In order to measure SMEs’ actual performance in the area of CSR, the use of hard
quantitative data can be recommended wherever possible. Nevertheless, performance
data on its own can be sometimes boring so the text should be interlaced with practical
examples, as well as with tables, charts and graphic images so that SMEs would be in
this way able to visually illustrate their data instead of just writing about it or charting it.
Key Elements of CSR Report232
A good CSR report should include sections dealing with all of the following: corporate
commitment, CSR management, business performance and information about creation
of the CSR report. The following bullet points present a summarized content of justmentioned most important parts of the CSR report.

Corporate commitment - in order to give the readers a proper orientation to the
CSR report, the authors should try and describe the given SME company in terms
of the broader environment in which it operates. Specific elements that should
usually be included in this section are the commitment of the SME’s senior
management and/or owners to the CSR concept along with a profile of the
company.

CSR management – this part should describe SME´s ability to successfully
achieve its objectives in the area of corporate social responsibility, explain the
relationship between SME´s CSR strategy and its overall business strategy, and
explain the quality of its management and the level of involvement of its
stakeholders on SME´s CSR activities and business operation.

Corporate performance - a description of the CSR performance of the given
SME represents the core part of the CSR report. Both quantitative and qualitative
information should be presented in this section, particularly the impact of the
SME’s operation, processes, products and services on the society and
environment in the context of the respective CSR areas (i.e. marketplace,
workplace, community, and natural environment). The best way how to present
measured results of SMEs´ performance is through comparisons (benchmarking).
As reference points, SMEs can use data released for businesses operating in the
same sector, current trends or the objectives that SMEs have set out for
themselves for the upcoming period.
232
Freely based on Heemskerk, B., Pistorio, P., Scicluna, M. (2002), Sustainable Development Reporting: Striking the
balance, The World Business Council for Sustainable Development, available at: http://www.wbcsd.org/DocRoot/
fBBNXf7oYVJuJAG77hUt/20030106_sdreport.pdf
180

Information about creation of the CSR report – in this part SMEs should:
o
Describe scope of their CSR reports, methodology (i.e. standards and
methods used in the creation of the report), and feedback mechanisms that
can be used by readers to communicate back to the SMEs their opinions on
the report or CSR activities; and
o
Provide a list of performance indicators included in the report, sources of
additional information about the given SME, and the results of an independent
audit into their CSR reports (this can be valid particularly for large SMEs).
As an alternative, SMEs can separate their CSR reports into chapters dedicated to
specific types or classes of stakeholders.
8.2.4 Improvement Phase
8.2.4.1 Improvement Measures (Step 10)
In the last step of the implementation cycle, SMEs should propose measures for further
improvements to their CSR activities, expansion of the existing activities or perhaps
revisions to their entire CSR strategies. The results of the evaluation of the SME’s prior
performance in the area of CSR and recommendations made by its stakeholders should
be used as sources of vital information for these improvements. The following Figure
8.13 gives examples of such recommended improvements.
Figure 8.13: Examples of improvement measures for the company’s corporate social responsibility
activities
CSR Area
Marketplace
Examples of Improvement Measures for Company´s CSR Actiities
Increase number of suppliers participating in the environmental management project
Increase number of areas covered by the environmental commitment clauses
Increase number of trained employees
Workplace
Extend offer of training and educational cources for employees
Increase number of flexible employment arrangements, if it is feasible
Allow employees to actively participate in the supported community projects during working hours
Community Increase number of hours of corporate volunteerism
Evaluate company´s support of community projects and based on it adjust company´s support
Decrease total energy and water consumption
Environment
Decrease amount of waste produced
Decrease amount of greenhouse gas released
Increase percentage of waste that is recycled
Source: Based on review of professional literature and outcomes of own research.
Also, in case an overall business strategy is amended or completely changed, it is
necessary reviewing its CSR strategy in order to maintain CSR strategy aligned to
mission, vision, core values, and overall business strategy.
181
Chapter 9. Conclusions
9.1 Conclusions - Theoretical Part
9.1.1 Defining Corporate Social Responsibility
Corporate social responsibility over the past half a century evolved into a modern and
widely accepted concept. It represents a comprehensive concept related to the role of
business in global market and development. CSR is based on the presumption that the
stakeholders expect companies to perform responsibly in terms of reducing negative
outcomes resulting from their operation and for the most part profit-orientated objectives
of their undertaking.
Various definitions and approaches to CSR coexist today, some determined by sociocultural and economic situation in a given country, some by the political system and
belief. In the USA, CSR has developed as an attempt to respect shareholders’ needs
and promote companies’ image through philanthropic events, while in Europe CSR is
seen as a day-to-day management practice and a way how companies should be
managed concerning wider group of stakeholders. Usually in developing countries, CSR
is still not adopted as corporate value but it is more ad-hoc reaction to external market
and investors’ requirements. The Green Paper of the European Commission published in
the year 2001 defined CSR as a concept whereby companies integrate social and
environmental concerns in their business operations and in their interaction with their
stakeholders on a voluntary basis. The term CSR is often used interchangeably with
others, including corporate citizenship, social enterprise, sustainability, sustainable
development, triple bottom line, societal value-added, strategic philanthropy, corporate
ethics, etc.
9.1.2 Dimensions of Corporate Social Responsibility and Corporate
Social Responsibility Initiatives
CSR includes both internal corporate behaviour and external relationships. Internal
dimension of CSR comprises of human resources management, occupational health and
safety management, business restructuring, and management of environmental impacts
and natural resources. External dimension of CSR goes beyond doors of the company
and involves many stakeholders, affects local communities, business partners and
suppliers, customers and consumers, deals with protection of human rights along the
whole supply chain, and global environmental concerns. Based on Kotler´s review, there
are accustomed ways of “doing good” that can be implemented by companies. These
ways - corporate social initiatives or CSR tools - fall within one of the following distinct
categories: cause promotions, cause related marketing, corporate social marketing,
182
corporate philanthropy, community volunteering, and socially responsible business
practices.
9.1.3 Aspects of Corporate Social Responsibility
Contemporary view on CSR rationale brings into play arguments challenging CSR
impact and motivation behind. In theory, CSR is favourable both for company and for
society. In practice, it is difficult to verify all achievements and to appraise concrete
changes. It also put forward question whether companies are accountable for social
problems and instability. Companies are not obliged to takeover public service role but
they should be helpful in terms of making complementary actions and preventing
potential problems resulted from their business. CSR contributes companies in more
than a few different areas such as increased profit, access to capital, reduced operating
costs and increased operational efficiency, enhanced brand image and reputation,
increased sales and customer loyalty, increased productivity and quality, increased
ability to attract and retain employees, possible reduced regulatory oversight, reducing
risk, increased risk management, etc. Impact on society cannot be generalized as there
are many different options how CSR can positively influence society, e.g. support of local
communities in their efforts to create better environment for living, support of
humanitarian programmes, support of educational activities, environmental protection,
etc.
9.1.4 Corporate Social Responsibility in the Czech Republic
Consumers in the Czech Republic make their choices when buying a product and/or
service also based on companies´ CSR record and strategy. Research conducted in
2003 showed that around 50 % of citizens said that when shopping, they are willing to
pay higher price for products and/or services of companies, which are engaged in CSR.
Results of this research confirm that Czech consumers are about the same in their
attitude towards CSR as in rest of the Europe.
As CSR gaining its popularity among Czech entrepreneurs, some non-governmental
organizations have been focusing on building partnership between profit and non-profit
organizations in the area of corporate philanthropy, corporate volunteerism, social
marketing, environmental protection and others. The promotion of CSR is aided by the
country's cooperation with international organisations. In March 2007 the Ministry of
Labour and Social Affairs created a new website on CSR, to inform users about the
concept of CSR in the European Union. The website also provides references to different
projects and activities concerning the promotion of CSR.
Despite of non-profit and profit organizations´ and government’s efforts in promoting
CSR, there still is a lot of companies, which consider as satisfactory CSR involvement
183
only providing financial and non-financial means for philanthropy and do not concentrate
on more deeper integration of CSR into company’s structure and operation. Conducted
surveys discovered that this effort was not efficient enough. According to the survey
among Czech entrepreneurs in 2004, the state has not been playing any important role
in promoting CSR. The only governmental body paying some attention to CSR has been
the Council for Sustainable Development. Entrepreneurs would welcome communication
of the CSR concept and strategies how to achieve and implement it by the state to the
general public, awards to socially responsible companies, and information directed to
consumers, who on all accounts play an important role in adopting CSR practices. Lack
of CSR information has been manifested in other surveys as well.
In the author’s opinion, CSR is seen as a viable concept in the Czech Republic.
However, some important factors fostering this modern philosophy of doing business as
well as an appropriate institutional framework are still not sufficient. Among these factors,
pressure of consumers, investors and banks may be considered crucial. Socially
responsible investments are not yet an option for Czech citizens, as there has not been a
tradition in investing in stock market. Also the role of the media should increase. Last but
not least governmental incentives, mainly fiscal, but also various other tools and awards
should be developed to promote CSR in an organized and systemic way. Organizations
promoting CSR should also be more supported.
9.2 Conclusions - Summary of the Author’s Own Research
9.2.1 General Aspects of Corporate Social Responsibility in Czech
SMEs
9.2.1.1 Objectives of the Author’s Research on CSR
The author’s research on CSR in SMEs carried out within the framework of this
dissertation paper should contribute to the knowledge of the actual state of affairs in the
business sector in the Czech Republic regarding CSR activities and foster understanding
of developments taking place in this particular field. Main objectives of the research
including an analysis were following:

How Czech SMEs perceive and carry out CSR;

To what degree Czech SMEs are involved (active) in CSR;

What Czech SMEs motivate to be engaged in CSR;

What benefits Czech SMEs can identify from their involvement in CSR; and

What main barriers or obstacles Czech SMEs encounter when carrying out CSR.
184
9.2.1.2 Structure of the Selected Sample of Czech SMEs
The author’s survey took place between 29 April 2008 and 10 August 2008 on a random
sample of 190 SME companies operating in the Czech Republic. The sample was
dominated by medium-sized companies (56 %), and then followed micro enterprises (24
%), and small enterprises (20 %).
9.2.1.3 General Awareness of CSR amongst Czech SMEs
In total 55 % of respondents233 stated that they had heard about CSR. The fact that 45 %
of SMEs´ respondents have never heard of the term CSR does not mean these SMEs
actually do not behave socially responsibly or do not practice some of CSR activities.
The result may simply suggest these SMEs do not approach CSR strategically and in a
systemic way.
9.2.1.4 Acceptance of CSR by Czech SMEs
74 % of SMEs´ respondents fully and 25 % partially agreed with the fundamental
principle of CSR. Together it makes excellent 99 % of all respondents who accepted
CSR concept. Difference in acceptance regarding size of the company is insignificant.
Consensus regarding company's orientation is thus evident - majority of participating
companies was aware, besides their commercial role, of their responsibility towards the
society in which they operate.
9.2.1.5 Degree of Czech SMEs´ Involvement in CSR
According to the results, 98 % of surveyed SMEs were involved, to different degrees, in
internal dimension and 92 % in external dimension of CSR. A company size perspective
showed that the involvement of SMEs in external dimension of CSR was positively
related to the size of company.
9.2.1.6 Measurement and Evaluation of CSR in Czech SMEs
In spite of the fact that 98 % of SMEs was involved in internal and 92 % was involved in
external dimension of CSR, only 9 % of Czech SMEs measured and evaluated their CSR
activities at that time and just 5 % of SMEs has planned to do so in the future. These
results proved that SME companies either did not take CSR seriously enough and did
not integrate it in their business strategies and operation or did not have enough time,
resources, and know-how for CSR measurement and evaluation or did not have both. In
accordance with modern management principles, and particularly in the time of economic
downturn, top management has to be provided with consistent reporting on all company
233
Note: 78 % of all respondents can be considered as real decision-makers as they were either top managers or
company owners.
185
activities in order to manage it effectively. Therefore approach to CSR should be no
different. According to the author’s opinion it is very unfortunate that Czech SMEs do not
measure and evaluate CSR activities, because they miss great opportunities and
benefits stemming from CSR measurement and evaluation and deprive their CSR efforts
of strategic dimension.
9.2.2 Internal Dimension of Corporate Social Responsibility in Czech
SMEs
9.2.2.1 The Most Frequent Activities of Internal Dimension of CSR Used by Czech
SMEs
Referring to activities developed by those SMEs that have been involved in socially
responsible activities focused on internal stakeholders, the author’s survey showed that
these activities mainly concentrated in five fields (fields where average involvement was
higher than 60 %):
1. Health and safety arrangements at workplace;
2. Employee motivation and education system;
3. Possibility of flexible working hours for employees;
4. Company´s contribution to pension insurance and/or life insurance of its
employees; and
5. Willingness of top management to discuss (consult) important matters with
employees.
The reason why the five above-mentioned activities of internal dimension of CSR scored
highest is that probably these activities either bring companies the biggest competitive
advantage in attracting and retaining qualified personnel and/or they can inflict SMEs the
highest damage (both financial and reputational), if the relevant activity is missing or
managed below common standards.
9.2.2.2 Use of Strategy for Internal Dimension of CSR by Czech SMEs
According to the results of the survey 41 % of Czech SMEs had a strategy for socially
responsible activities aimed at internal stakeholders (particularly employees). Probable
reasons why SMEs pay less attention to formalizing existing and planned internally
aimed socially responsible measures into the strategic document can be following:

Adherence on inherent informality of mutual relations and processes that are
typical for SMEs;

Lack of available resources and lack of know-how; and
186

Belief of top managers and owners that formalizing measures and activities is a
waste of time and other scarce resources without additional added value for the
company (in the author’s opinion this belief is, of course, wrong).
According to the author’s opinion, on one hand 98 % engagement of SMEs in internally
focused socially responsible activities and on the other 59 % of SMEs without any
strategy for these activities show that more than every second SME cannot utilize the full
potential of internal dimension of CSR. However, outcomes also showed that 44 % of
Czech SMEs considered as very important and 52 % of SMEs considered as important
socially responsible and ethical behaviour towards employees.
9.2.2.3 Reasons of Czech SMEs for Engagement in Internal Dimension of CSR
Great majority (exactly 82 %) of participating SMEs, regardless of company size,
declared that the main reason behind their involvement in socially responsible and
ethical behaviour towards employees was recruitment and retention of qualified
employees. The second most important driver was improvement of employees´ job
satisfaction and the third one was improvement of employees´ job motivation. Ethical or
moral reasons that were mentioned the most in European and Czech surveys occupied
the fourth place in the author’s survey. Results suggest that surveyed Czech SMEs have
been aware of business benefits derived from their involvement in internal dimension of
CSR. This finding also underlines the fact that reason “improvement of economic
performance of the company” was picked by SMEs as the fifth most important from ten
different options.
9.2.2.4 Benefits Identified by Czech SMEs from Involvement in Internal Dimension
of CSR
Further outcomes of the author’s survey showed that Czech SMEs placed at the top of
major benefits, arising from implementing socially responsible and ethical behaviour
towards employees, “improvement of employees´ job satisfaction” closely followed with
“increase of current employees´ loyalty and reduction of staff turnover”. Benefit
“improvement of customer satisfaction” ranked third and “improvement of economic
performance of the company” scored fifth, just one percentage point behind “recruitment
of new qualified employees”.
9.2.2.5 Obstacles Identified by Czech SMEs for Involvement in Internal Dimension
of CSR
Reasons that impede Czech SMEs most in implementing internal dimension of CSR can
be aggregated into three groups. The most frequently SMEs mentioned that there were
no barriers that would prevent them in implementing socially responsible and ethical
187
behaviour towards their employees. Especially for further expansion and improvement in
quality and effectiveness of CSR practices it is an important finding that more than one
third of SMEs operating in the Czech Republic do not see any obstacles in implementing
internal dimension of CSR. Thus, it can be expected that internal dimension of CSR can
reinforce its already strong position amongst SMEs. Lack of internal resources,
particularly financial means and time, and lack of know-how form the second most
mentioned group of barriers. As the third group of most quoted barriers SMEs identified
an absence of state and/or government support. In the author’s opinion this obstacle is
based on real foundations. SMEs have been right in their statement that state support of
companies that would like to implement CSR or have already embedded CSR in their
operation has been weak.
9.2.3 External Dimension of Corporate Social Responsibility in Czech
SMEs
9.2.3.1 The Most Frequent Activities of External Dimension of CSR Used by
Czech SMEs
The most common type of Czech SMEs´ involvement in wide array of activities of
external dimension of CSR was “financial or other support of non-profit organizations”
(exercised by 57 % of SMEs).234 The second and the third most frequently used types of
involvement were “support of sport activities” and “support of cultural activities” not aimed
at SMEs´ own employees (exercised by 48 %, respectively 46 % of SMEs).
9.2.3.2 The Most Common Way of Czech SMEs´ Engagement in Activities of
External Dimension of CSR
The most common way of Czech SMEs´ engagement in externally aimed social activities
was through donations, either financial or in kind gifts, conducted on an ad-hoc basis
(used by three quarters of SMEs). The second most selected form was through
sponsorship and the third one occupied cooperation with other parties (e.g. non-profit
sector, public sector, other private companies, etc) on socially beneficial projects (used
by 49 %, respectively 31 % of the surveyed SMEs).
The most popular way of Czech SMEs´ involvement in environmental activities not
directly related to consequences of company’s own operations was through donations
conducted on irregular basis (used by 17 % of all SMEs). The second most selected way
was through cause related marketing and the third one was through support of employee
involvement in environmental activities on behalf of the company. Surprisingly, almost
234
The 2008 Czech Business Leaders Forum’s survey came to the very same outcomes, which strengthens the validity of
the author’s results.
188
two thirds of all surveyed SMEs were not involved in any environmentally responsible
activities under the umbrella of external dimension of CSR.
9.2.3.3 Use of Strategy for External Dimension of CSR by Czech SMEs
The Czech SMEs’ external community activities were in most cases occasional and oneoff, unrelated to the business strategy. According to the available data more than two
thirds of Czech SMEs had general business strategy in place, followed by 41 % of SMEs
which elaborated strategy for internal dimension of CSR, and only 15 % prepared
strategy for external dimension of CSR. The results suggest that both Czech and
European SMEs approach to CSR unsystematically and do not utilize the full potential of
socially and environmentally responsible activities aimed at external stakeholders as
more than half of surveyed SMEs that actually were engaged in these activities did not
align management of these activities with their business strategies. Findings further
suggest that probably many Czech SMEs do not understand essentials of strategic
management and underestimate risks and negative impacts of missing or inadequate
strategic management in the company. Tailor-made strategy for internal and external
dimension of CSR should undoubtedly form an essential part of overall general business
strategy.
9.2.3.4 Manner How Czech SMEs Engage in External Dimension of CSR
According to the outcomes, more than half of Czech SMEs carried out CSR activities
aimed at external stakeholders independently. A quarter of SMEs participated in these
activities in cooperation with some non-profit organization(s), while only 12 % cooperated
on external community causes with other companies. The results suggest that Czech
SMEs prefer carrying out CSR activities aimed at external stakeholders independently. In
the author’s opinion SMEs should start forming local alliances that would manage their
CSR activities in a coordinated way to overcome their inherent disadvantages
(particularly lack of know-how, lack of available resources, and lower communication
impact of their activities compared to large companies).
9.2.3.5 Reasons of Czech SMEs for Engagement in External Dimension of CSR
According to the survey’s results, the main reason behind SMEs´ involvement in external
social activities was related to improvement of positive image of the company. Czech
SMEs suggested this reason, only slightly above other frequently quoted reasons such
as ethical/moral reasons and improvement of employees´ job satisfaction. Other reasons
(e.g. tradition, improvement of relations with business partners, etc.) were mentioned by
less than one third of SMEs participating in external social activities. Concerning
engagement in external environmentally responsible activities, the most cited reason
189
behind was improvement of positive image of the company. Ethical considerations were
the second most important driving force. This evidence suggests that SMEs have some
environmental concern and recognition of the responsibility of businesses to help to
protect the environment. Also relatively important role played establishment and/or
retention of competitive advantage. This reason implies that some SMEs discovered
concrete value and competitive advantages from taking environmental initiatives. On the
other hand, one third of surveyed SMEs could not identify any motivator for implementing
environmentally responsible activities.
9.2.3.6 Benefits Identified by Czech SMEs from Involvement in External
Dimension of CSR
According to outcomes of the author’s survey, the main benefit identified by Czech SMEs
from their involvement in external social activities was improvement of positive image of
the company. Improvement of employees´ job satisfaction was the second and
improvement of relations with business partners and investors was the third most
important business benefit. The previous data allow one to reach an interesting
conclusion, in the sense that the business benefits of social activities, often assumed to
lie exclusively in the domain of large companies, are in fact also present in the SME
sector. However, this important result should be contrasted with the fact that, as already
mentioned, only a minority of Czech SMEs involved in community causes have strategy
for external dimension of CSR and measure and monitor the effectiveness of their
involvement.
The most significant business benefit for Czech SMEs stemming from their engagement
in environmentally responsible activities within external dimension of CSR was
improvement of positive image of the company. Improvement of relations with public
authorities was the second and improvement of company’s reputation was the third most
important benefit. However all above-mentioned benefits were much less quoted as in
case of external social activities. This evidence suggests that at least some SMEs can
identify some business benefits resulting from their engagement in external
environmentally responsible activities, although it is much more difficult for them than in
case of socially responsible activities. A possible explanation for low involvement in
external environmentally responsible activities and problem with identifying motivators for
engaging in these activities can be inability of SMEs to identify real connection between
environmental responsibility and prosperity of the company, which can be caused by
variety of reasons, for example by lack of know-how, lack of courage to do things
differently, lack of public support, personal conviction of owners or managers, etc. Also
there can be other obstacles, which can discourage SMEs in environmental involvement.
190
According to some authors, as far as the internal barriers are concerned, the most
important one is given by a negative company culture towards the environment (despite
positive attitudes amongst both employers and employees). Many small firms feel that
environmental activity is something to be avoided unless driven by legislative demands.
Moreover, a large proportion of SMEs (especially the smallest ones) remains unaware
both of the environmental impacts derived from their business activities and of the
existing environmental programmes and resources available to them.235
9.2.3.7 Obstacles Identified by Czech SMEs for Involvement in External
Dimension of CSR
The most quoted barrier by Czech SMEs for behaving in a socially responsible way
towards community and environment was lack of financial resources. Absence of state
support was the second and lack of human resources and/or capacity was the third most
important barrier. Lack of time ranked at the fourth place. The fifth most cited obstacle for
SMEs was bureaucracy/red tape. On the contrary almost fifth of Czech SMEs did not
identify any obstacles that would impede their involvement in activities of external
dimension of CSR, which is a good sign for future development of CSR in the Czech
Republic. In the author’s opinion the previous results show that, generally speaking,
attitudinal reasons (i.e. no consideration, lack of relation to business activities and no
benefits expected) are much less important for SMEs in comparison to lack of resources
reasons (i.e. lack of money, human resources, time) and lack of state support for
explaining the lower activity and inactivity of SMEs in external dimension of CSR.
9.2.3.8 Future Engagement of Czech SMEs in External Dimension of CSR
Finally, on average 75 % of Czech SMEs expected to continue as it is, 23 % would like to
increase, and only 2 % wanted to decrease their engagement in activities of external
dimension of CSR.
9.3 Conclusions - General Steps How to Implement Corporate
Social Responsibility in Czech SMEs
9.3.1 Considering Strategic Approach
Responsibility in Czech SMEs
to
Corporate
Social
There is no “one-size-fits-all” method for pursuing CSR. Each company has unique
characteristics and circumstances that will affect how it views its operational context and
defining of social responsibilities. Each will vary in its awareness of CSR issues and how
much work it has already done towards implementing a CSR approach. That said, there
235
For instance, a Belgian study showed that up to 84 % of the Belgian industrial SMEs did not feel that they contribute to
pollution.
191
is considerable value in proceeding with CSR implementation in a systematic way, i.e. in
harmony with the company’s mission, and sensitive to its business culture, environment
and risk profile, and operating conditions. Many Czech SMEs have already been
engaged in activities in the area of customer and employee care, community support and
environmental protection. These activities can serve as a good starting point for the
development of a more strategic approach to CSR so that a company could maximise
competitive as well as social benefits. CSR can be phased in by focusing carefully on
priorities in accordance with resource or time constraints. The bottom line is that CSR
needs to be integrated into the company’s core decision making, strategy, management
processes and activities, be it incrementally or comprehensively.
Managing CSR is just like managing any other aspect of the business. Whether a
company employs five people or is a multinational corporation, there are a number of key
principles that generally apply. These all turn on ensuring that a company has the right
policies, the right processes, and that it gets the right performance.
9.3.2 Proposal of Ten Steps How to Implement Corporate Social
Responsibility in Czech SMEs
Based on results of own research, author’s professional knowledge and experience, and
review of professional literature, the author prepared a set of ten steps for turning all this
into action, i.e. implementing CSR into SME company. Proposed implementation tenstep approach is based on the well-known PDCA concept: Plan = plan ahead; Do =
execute your plan; Check = evaluate the results; Act = act on the results by trying to
improve. The individual steps are following:
1.
Management commitment to CSR;
2.
Identifying of key stakeholders;
3.
Analysis of current situation;
4.
Setting of values and principles;
5.
Setting of objectives and CSR approach;
6.
Preparation of action plan;
7.
Implementation phase;
8.
Monitoring of CSR;
9.
Communication and reporting on CSR; and
10.
Preparation and implementation of improvement measures.
It will take much hard work to develop a comprehensive CSR approach tailored to
current and future needs and situation of a given SME. However, partnerships and good
scope of joint activities including government, civil society, non-profit sector and private
sector can significantly contribute to the success.
192
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http://www.unido.org/index.php?id=o19478
[168] Vágási, M. (2004), Integration of the Sustainability Concept into Strategy and Marketing,
Budapest
University
of
Technology
and
Economics,
available
at:
http://www.pp.bme.hu/so/2004_2/pdf/so2004_2_10.pdf, January 28, 2008.
[169] Valentino, B. (2007), MBA Toolkit For CSR: Corporate Marketing, available at:
http://www.chinacsr.com/en/2007/05/24/1355-mba-toolkit-for-csr-corporate-marketing/
[170] Veber, J., et al. (2007), Quality Management and Consumer Protection (Management
kvality a ochrana spotřebitele), Grada Publishing, Praha
[171] Veber, J., Srpová, J., et al. (2005), Entrepreneurship and Small and Medium-Sized
Companies (Podnikání malé a střední firmy), Grada Publishing, Praha, page 23-24
[172] Visser, W. (2005), Revisiting Carroll's CSR Pyramid: An African Perspective, available at:
http://www.waynevisser.com/chapter_wvisser_africa_csr_pyramid.pdf
[173] Vogel, D. (2006), The Market for Virtue: The Potential and Limits of Corporate Social
responsibility, Brookings Institution Press, Washington, D.C., page 150-152
[174] Walsh, J. P. (2004), Taking Stock of Stakeholder Management, University of Michigan,
available at: http://www.si.umich.edu/ICOS/Jim%20WalshICOS.pdf
[175] Ward, H. (2004), Public Sector Roles in Strengthening Corporate Social Responsibility:
Taking Stock, International Institute for Environment and Development, available at:
http://www.iied.org/pubs/pdfs/16014IIED.pdf
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http://sbinfocanada.about.com/od/businessinfo/g/SME.htm
202
[177] Weyzig, F. (2006), Local and global dimensions of corporate social responsibility in Mexico,
Journal of Corporate Citizenship, available at: http://goliath.ecnext.com/coms2/gi_01996339646/Local-and-global-dimensions-of.html
[178] World Business Council for Sustainable Development (2000), Eco-Efficiency: Creating
more value with less impact, available at: http://www.wbcsd.ch/web/publications
/eco_efficiency_creating_more_value.pdf
[179] World Commission on Environment and Development (1987), Report of the World
Commission on Environment and Development: Our Common Future, available at:
http://www.un-documents.net/ocf-02.htm
[180] Writer, S. (2008), CSR is not good PR: study, available at: http://www.marketinginteractive.com/news/5441
[181] Xenophon (380 BC), Economics, available at: http://www.perseus.tufts.edu/cgi-bin/ptext?
doc=Perseus%3Aabo%3Atlg%2C0032%2C003&query=init.
[182] Your Dictionary.Com (2008), SME Definition, available at: http://www.yourdictionary.com
/sme
[183] Zadek, S., et al. (1998), Social Labels: Tools for Ethical Trade, New Economics Foundation
for the European Commission, available at: http://www.oit.org/dyn/basi/docs/F126
/social_labels_tools.pdf
203
APPENDIX
Appendix I:
Glossary of Terms
Brundtland Commission
The Brundtland Commission, formally the World Commission on Environment and
Development, named by its Chair Gro Harlem Brundtland, was convened by the United
Nations in 1983. The Commission was created to address growing concern about the
accelerating deterioration of the human environment and natural resources and the
consequences of that deterioration for economic and social development. In establishing
the Commission, the UN General Assembly recognized that environmental problems
were global in nature and determined that it was in the common interest of all nations to
establish policies for sustainable development.
Business, Company, Enterprise
In accordance with Articles 48, 81 and 82 of the Treaty establishing the European
Community, as interpreted by the Court of Justice of the European Communities, an
enterprise should be considered for the purposes of this dissertation paper to be any
entity, regardless of its legal form, regularly engaged in economic activities on an
individual or family basis, partnerships or associations. Terms enterprise, company and
business are used in this paper as synonyms and do not differ in their meaning.
Business Leaders´ Forum
The Business Leaders´ Forum, which has been operating in the Czech Republic since
1992, started from scrap and over the time has become influential. It is the Czech affiliate
of the Prince of Wales Business Leaders´ Forum, which among others, acts as a
National Partner of CSR Europe.
Corporate Citizenship
In the business community, corporate social responsibility (CSR) is alternatively referred
to as corporate citizenship, which essentially means that a company should be a “good
neighbour” within its host community. Or in other words corporate citizenship is a
company's sense of responsibility towards the community and environment (both
ecological and social) in which it operates, and draws resources and sustenance from.
Terms corporate citizenship and corporate social responsibility are used in this paper as
synonyms and do not differ in their meaning.
204
Corporate Social Responsibility (CSR)
The Green Paper of the European Commission published in 2001 defines corporate
social responsibility (CSR) as a concept whereby companies integrate social and
environmental concerns in their business operations and in their interaction with their
stakeholders on a voluntary basis.
CSR Europe
CSR Europe is the leading European business network for corporate social responsibility
with around 75 multinational corporations and 25 national partner organisations as
members. The organisation was founded in 1995 and it has since grown to become an
inspiring network of business people working at the very forefront of CSR across Europe
and globally.
CSR Europe's Toolbox
CSR Europe's Toolbox includes information, ideas and advice designed to help
companies and their stakeholders address socio-economic and environmental
challenges and integrate corporate social responsibility (CSR) into mainstream business
practice. The Toolbox is based on the first results of the CSR Laboratories, crosssectoral business-stakeholder cooperation projects under the umbrella of the European
Alliance for CSR.
EMAS - EU Eco-Management and Audit Scheme
EMAS - the EU Eco-Management and Audit Scheme is a management tool for
companies and other organisations to evaluate, report, and improve their environmental
performance.
Fair Trade
Fair trade has been defined by its practitioners as “a trading partnership, based on
dialogue, transparency and respect that seeks greater equity in international trade. It
contributes to sustainable development by offering better trading conditions to, and
securing the rights of, marginalized producers and workers—especially in the South.”
Global Compact
The Global Compact (GC) was initiated by the Secretary-General of the United Nations
at the Davos World Economic Forum in January 1999, encouraging the private sector to
exercise Corporate Social and Environmental Responsibility (CSER) by adhering to nine
205
principles drawn from international conventions or declarations on conditions of work,
respect for human rights and the protection of the environment. In broad terms, CSER is
seen as constituting demonstrable ethical, socially responsive and environmentally
sensitive business practice. Membership of the Compact is voluntary. United Nations
Industrial Development Organization (UNIDO) was inducted as the fifth partner UN
Agency of the Compact in May 2003. The association of UNIDO with the Global
Compact was sought in order to cater to the need for a growing membership of Small
and Medium Enterprises (SMEs) in the Global Compact.
Global Reporting Initiative (GRI)
The Global Reporting Initiative (GRI) is a large multi-stakeholder network of thousands of
experts, in dozens of countries worldwide, who participate in GRI’s working groups and
governance bodies, use the GRI Guidelines to report, access information in GRI-based
reports, or contribute to develop the Reporting Framework in other ways – both formally
and informally.
Green Paper Promoting a European framework for Corporate Social Responsibility
The Green Paper published in 2001 aimed to launch a wide debate on how the
European Union could promote corporate social responsibility at both the European and
international level, in particular on how to make the most of existing experiences, to
encourage the development of innovative practices, to bring greater transparency and to
increase the reliability of evaluation and validation. It suggested an approach based on
the deepening of partnerships in which all actors (stakeholders) have an active role to
play.
International Organization for Standardization (ISO)
The International Organization for Standardization (ISO) is the world's largest developer
and publisher of International Standards. ISO is a network of the national standards
institutes of 159 countries, one member per country, with a Central Secretariat in
Geneva, Switzerland, that coordinates the system. ISO is a non-governmental
organization that forms a bridge between the public and private sectors.
Non-Governmental Organization (NGO)
Non-governmental organization (NGO) is a term that has become widely accepted for
referring to a legally constituted, non-governmental organization created by natural or
legal persons with no participation or representation of any government.
206
Non-Profit Organization
A non-profit organization (abbreviated NPO, also not-for-profit) is an organization that
does not distribute its surplus funds to owners or shareholders, but instead uses them to
help pursue its goals. Examples of NPOs include charities (i.e. charitable organizations),
trade unions, and public arts organizations. Terms non-profit organization and nongovernmental organization (NGO) are used in this paper as synonyms and do not differ
in their meaning.
Small and Medium-Sized Enterprise (SME)
According to the definition of the European Commission the category of micro, small and
medium-sized enterprises (SMEs) is made up of enterprises which employ fewer than
250 persons and which have an annual turnover not exceeding EUR 50 million, and/or
an annual balance sheet total not exceeding EUR 43 million. A small enterprise is
defined as an enterprise which employs fewer than 50 persons and whose annual
turnover and/or annual balance sheet total does not exceed EUR 10 million. And finally a
micro enterprise is defined as an enterprise which employs fewer than 10 persons and
whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million.
Social Accountability International (SAI)
The Social Accountability International (SAI) was established in 1997 and convened an
expert, international, multi-stakeholder Advisory Board to partner in developing standards
and systems to address workers’ rights. Representatives of trade unions, human rights
organizations, academia, retailers, manufacturers, contractors, as well as consulting,
accounting, and certification firms, by consensus, cooperated to develop the Social
Accountability 8000 (SA8000) Standard. Published in late 1997 and revised in 2001, the
SA8000 Standard and verification system is a credible, comprehensive and efficient tool
for assuring humane workplaces.
Stakeholder
Stakeholder is a person, group, or organization that has direct or indirect stake in an
organization because it can affect or be affected by the organization's actions,
objectives, and policies. Key stakeholders in a business organization include creditors,
customers, directors, employees, government (and its agencies), owners (shareholders),
suppliers, unions, and the community from which the business draws its resources.
Although stake-holding is usually self-legitimizing (those who judge themselves to be
stakeholders are de facto so), all stakeholders are not equal and different stakeholders
are entitled to different considerations. For example, a firm's customers are entitled to
207
fair trading practices but they are not entitled to the same consideration as the firm's
employees.
Sustainable Development
In 1987 the Brundtland Commission offered its initial definition of sustainable
development, which is development that meets the needs of the present, without
compromising the ability of future generations to meet their needs.
Triple Bottom Line
According to John Elkington, author of the book Cannibals With Forks and the inventor of
the term, triple bottom line (or in other words "People, Planet, Profit") captures an
expanded spectrum of values and criteria for measuring organizational (and societal)
success: economic, environmental and social. In practical terms, triple bottom line
accounting means expanding the traditional reporting framework to take into account
environmental and social performance in addition to financial performance.
208
Appendix II:
Example of the Questionnaire on Corporate
Social Responsibility Designed for Small and
Medium-Sized Companies
Academic Research
Dear Sirs,
I kindly would like to ask you for filling in an attached questionnaire (it should take you to
complete only approximately 10 to 15 minutes), which surveys Corporate Social
Responsibility of small and medium-sized enterprises in the Czech Republic.
Nowadays Corporate Social Responsibility (hereinafter also CSR) is constantly growing
in its importance, particularly due to the fact that it represents a factor of further growth
and sustainable development of enterprises.
Main objectives of this research are following:
 How small and medium-sized enterprises perceive and carry out CSR;
 To what degree are enterprises involved (active) in CSR;
 What main barriers/obstacles enterprises encounter when carrying out CSR.
Results of the survey and further research will be incorporated in doctoral dissertation
named „Corporate Social Responsibility in Small and Medium-Sized Companies in the
Czech Republic“.
Simultaneously I would like to assure you that results of this survey will not be misused in
any way and that obtained information will be considered as strictly confidential.
If you decide to fill in my questionnaire, I will be glad to send to you results of the
survey and doctoral dissertation.
I believe both materials (results of the survey and doctoral dissertation) may provide you
with useful information on CSR and in this way may contribute to creation or
strengthening of competitive advantages of your enterprise.
I am kindly asking you for sending a completed questionnaire either via e-mail or by post
to the below stated address.
In case of any question, please, do not hesitate to contact me.
I thank you for your cooperation and your valuable time in advance very much.
David Polášek, M.B.A.
Czech Management Institute Praha - ESMA Barcelona
Contact information (addresses where you can send completed questionnaires):
E-mail: dapol@tiscali.cz or d_polasek@cbox.cz
Mobile phone: +420-732-477-946
David Polášek
Terezínská 701/4
190 00 Praha 9, Letňany
209
Instructions for completion of the questionnaire: next to the answer, which you
identify with the most, make a cross or write a text where an underline is. In the
questionnaire use only tabulators or mouse when moving from one question to
another (do not use Enter key). After completion, please, save the questionnaire
and send it to my return address. Thank you very much.
I. GENERAL INFORMATION ABOUT THE COMPANY
Seat/residence of the company (only city):
Your working position in the company:
1. How long has your company been running/operating?
Less than one year
1 to 3 years
4 to 9 years
10 and more years
2. How many employees have your company? (Without parent company or other
companies in the group)
(Only one answer allowed; in case your company has no employees, please, mark the answer „1 to 9“)
1 to 9
10 to 49
50 to 249
More than 249
3. What is the ownership structure of your company?
(Only one answer allowed)
Solely Czech owner
Czech owner with a foreign
investor
Part of an international corporation
Solely foreign owner
4. What kind of business is your company in?
(Only one answer allowed)
Production
Retail sale
Wholesale
Transport
IS/IT
Consultancy
R&D
Construction
Other:
Financial services
Tourism
5. Is your company certified according to some standards (e.g. ISO 9000, ISO
14000, EMAS, Standard “Responsible Company“)?
(Only one answer allowed; please, write a name of the respective certificate)
Yes, company is certified according to:
Currently not, but my company is considering the following certification:
No
6. Has your company defined strategy in writing (or at least mission and vision for
the future)?
Yes
No
Do not know
II. SOCIALLY RESPONSIBLE ACTIVITIES OF THE COMPANY
1. Do you agree with the following statement: “In order to assure a long-term
prosperity, a company has to behave responsibly and ethically to its employees,
environment, and community, in which it undertakes its business.”
Yes, fully/completely
Rather yes
No
Rather no
2. Have any of the following measures/arrangements been implemented in your
company?
(More answers allowed)
Employee motivation and education system
Process to ensure steps are taken against all forms of discrimination, both in the
210
workplace and at the time of recruitment
Sufficient health and safety arrangements are implemented at the workplace
Top management discusses/consults important matters with employees
Rules for recruitment of disabled or handicapped people are set up in the company
Possibility/option of flexible working hours
Possibility to work part-time for mothers taking care of small children
Code of Ethics is worked out and implemented in the company
Company contributes to pension insurance and/or life insurance of its employees
1 or more extra weeks of holiday above the standard legal length (4 weeks)
None of these measures/arrangements are implemented in the company
3.
Has
your
company
prepared
strategy
for
above
mentioned
measures/arrangements, which are implemented in your company (Please, see
question no. 2 above)?
Yes
No
4. Indicate in which of the following activities your company has been supporting
its employees and/or its family members.
(More answers allowed)
Sport activities
Education
Cultural activities
Other:
Health care
None
Environmental protection – ecological activities (other than directly related to
consequences of the company’s own operations)
5. Which forms of further education of employees has your company been
supporting?
(More answers allowed)
Professional education (short-term courses, trainings)
Language courses
Training in managerial techniques
Other:
Further long-term education (secondary/high school, university, post-graduate
education)
6. How important is for your company socially responsible and ethical behaviour
towards its employees?
(Only one answer allowed)
Very important
Important
Less important
Unimportant
7. Indicate which have been the major drivers/motivators for your company for
implementing socially responsible and ethical behaviour towards its employees.
(More answers allowed)
Ethical/moral reasons
Tradition
Recruitment and retention of qualified employees (Improvement of employees´
loyalty)
Improvement of employees´ job motivation
Improvement of employees´ job satisfaction
Improvement of economic performance of the company (costs´ reduction, sales´
increase)
Application/implementation of business code of conduct
Pressure from third parties (i.e. clients, competitors, governments)
Use of existing public incentives (tax incentives, subsidies, others)
Other:
None
211
8. Indicate which have been in practice the major benefits for your company
regarding socially responsible and ethical behaviour towards its employees.
(More answers allowed)
Recruitment of new qualified employees
Increase of current employees´ loyalty (reduction of staff turnover/fluctuation)
Improvement of employees´ job satisfaction
Improvement of relations with business partners and investors
Improvement of customer satisfaction
Improvement of economic performance of the company (costs´ reduction, sales´
increase)
Use of existing public incentives (tax incentives, subsidies, others)
Improvement of company’s reputation (better image)
Other:
None
9. Indicate which have been the major barriers/obstacles for your company for
behaving socially responsibly and ethically towards its employees.
(Maximum 3 answers allowed)
I haven’t thought about a possibility that my company could behave in such a way
(responsibly)
Such (responsible) behaviour doesn’t benefit to the company in any way
Lack of time (not enough time)
Lack of financial resources
Absence of state/government support
Absence of public support/pressure
Lack of know-how for establishment of such a system/program in the company
Other:
None
10. How important is for your company socially responsible and ethical behaviour
towards environment and its community?
(Only one answer allowed)
Very important
Important
Less important
Unimportant
11. Is your company aware of problems/thorny issues that trouble its close
community?
No. If no, is your company willing to take more
interest in community’s problems/issues?
Yes. If yes, is your company willing to offer help?
Yes
No
Yes
No
12. Has your company been supporting any of the following activities (not its own
employees and/or its family members)?
(More answers allowed)
Sport activities (not own employees)
Cultural activities (not own employees)
Health care (not own employees)
Education and training activities (not own employees)
Financial or other help/support to non-profit organization
Environmental protection – ecological activities (other than directly related to
consequences of the company’s own operations)
Creation of good conditions for socially or in other way deprived groups for their
involvement in community and work process
Participation in public affairs or political process on behalf of the company
Other:
None
212
13. Indicate in which way your company has supported social activities (do not
include activities for or support to your own employees).
(More answers allowed)
Sponsorship
Financial or in kind gifts (ad-hoc or once only)
Cause related marketing236
Cooperation with other parties on socially beneficial projects (i.e. non-profit sector,
public sector, other private companies)
Employee involvement in social/community activities (on behalf of the company)
Other:
The company does not support any social activity
14. Indicate in which way your company has supported environmental activities
(other than directly related to consequences of the company’s own operations).
(More answers allowed)
Sponsorship
Financial or in kind gifts (ad-hoc or once only)
Cause related marketing
Cooperation with other parties on environmentally beneficial projects (i.e. non-profit
sector, public sector, other private companies)
Employee involvement in environmental activities (on behalf of the company)
Other:
The company does not support any environmental activity
15. Did your company receive any public support (i.e. incentive, subsidy) for its
socially and environmentally responsible activities (CSR) not aimed at its own
employees during the last 3 years?
Yes, in a form of
Tax incentive
Subsidy/grant
Free of charge consultancy service
Other:
No
16. Your company carries out socially and environmentally responsible activities
(CSR) not aimed at its own employees:
(Only one answer allowed)
Independently (only your company)
In cooperation with other companies
In cooperation with non-profit organization
CSR is not supported by our company
17. Is involvement of your company in socially and environmentally responsible
activities (CSR) occasional or regular? And is it related to business strategy or
not?
(Only one answer allowed)
Occasional activities, unrelated to business strategy
Occasional activities, related to business strategy
Regular activities, unrelated to business strategy
Regular activities, related to business strategy
CSR is not supported by our company
18. Has your company prepared strategy for socially and environmentally
responsible activities (CSR)?
Yes
No
236
Cause related marketing: the utilization of marketing means for the purposes of supporting and
promoting a “good cause” and simultaneously supporting the commercial goals of the company.
213
19. Indicate, which have been the major drivers/motivators for your company for
support of: A) Social activities
B) Environmental activities
A)
B)
(More answers allowed)
Ethical/moral reasons
Tradition
Improvement of relations with public administration (public/state authorities)
Improvement of customers´ loyalty
Improvement of relations with business partners and investors
Improvement of employees´ job satisfaction
Improvement of positive image of the company
Improvement of economic performance of the company (costs´ reduction, sales´
increase)
Establishment and/or retention of competitive advantage
Application/implementation of business code of conduct
Pressure from third parties (i.e. clients, competitors, governments)
Use of existing public incentives (tax incentives, subsidies, others)
Marketing and Public Relations
Other:
None
20. Is your company planning to decrease or to increase its participation in
external social and environmental activities over the next 3 years?
(Only one answer allowed)
Decrease participation
Continue as it is
Increase participation
21. Indicate, which have been in practice the major benefits for your company from
the support of: A) Social activities
B) Environmental activities
A)
B)
(More answers allowed)
Improvement of relations with public administration (public/state authorities)
Improvement of customers´ loyalty
Improvement of relations with business partners and investors
Improvement of employees´ job satisfaction
Improvement of positive image of the company
Improvement of economic performance of the company (costs´ reduction, sales´
increase)
Establishment and/or retention of competitive advantage
Use of existing public incentives (tax incentives, subsidies, others)
Improvement company’s reputation
Other:
None
22. According to your opinion, which of the following groups has been
influenced/affected by your company’s Corporate Social Responsibility the most?
(Maximum 3 answers allowed)
Employees
Customers/Buyers
Suppliers
Shareholders/owners
Community of the company
Competitors
Public administration
Other:
None
23. Has regularly been your company providing information about company’s
Corporate Social Responsibility to above-mentioned groups (see question no. 22)?
Yes, fully
Partly
No
If yes or partly, in which way (e.g. Report on CSR)
214
24. Do you agree with the following statement: “Small and medium-sized
companies can more effectively and in a more suitable way apply Corporate Social
Responsibility on a local level than large and multinational corporations due to a
better familiarity with local community.”
Yes, fully/completely
Rather yes
No
Rather no
25. Indicate which have been the major barriers/obstacles for your company for
behaving socially responsibly towards its community and environment (i.e.
supporting of social and environmental activities) ?
(Maximum 3 answers allowed)
I haven’t thought about a possibility that my company could behave in such a way
(responsibly)
I do not see relation to the activities of my company
Such (responsible) behaviour doesn’t benefit to the company in any way
Lack of time (not enough time)
Lack of human resources/capacity
Lack of financial resources
Absence of state/government support
Absence of public support/pressure
Lack of information on Corporate Social Responsibility
Lack of know-how for implementation of Corporate Social Responsibility in the
company
Bureaucracy
None
Other:
III. CORPORATE SOCIAL RESPONSIBILITY – CONCLUDING QUESTIONS
1. Have you ever heard about “Corporate Social Responsibility” (CSR) before
getting this questionnaire?
Yes
No
2. Does your company measure and evaluate Corporate Social Responsibility’s
related activities (i.e. social and environmental activities)?
Yes
No
No, but the company is planning to do so
3. Would your company appreciate generally accepted and transparent
methodology how to effectively implement CSR in your company?
Yes
No
No, CSR has already been
implemented in our company
4. Do you know any documents or organizations (particularly non-profit) dealing with
CSR?
Yes, e.g.:
No
5. Is any of your company’s employees (or yourself) authorized/responsible for the
coordination of CSR (i.e. social and environmental activities)?
Yes. If yes, please indicate his/her job position:
No
In case of having interest in the results of this survey, please, fill in the following
information.
Name:
E-mail:
Thank you very much for your time and your attention you paid to this
questionnaire.
215
Appendix III:
Examples of Company Values and Principles
Company Kovohutě Příbram237
Mission of the company Kovohutě Příbram
“We provide environmentally friendly services with wastes of lead, precious metals and
electronic equipment with the best available technologies in recycling. We are traditional
and faithful supplier of products and alloys based on lead, tin and precious metals. Our
aim is to be in a leader position as regional employer.”
CSR mission statement of the company Kovohutě Příbram
“Having a friendly approach to people and to the environment.”
Company Plastia s.r.o.238
CSR mission statement of the company Plastia
“We profess a belief in corporate social responsibility. This principle of work rests in a
responsible approach to our neighbourhood, the society, our employees and the
environment.”
CSR commitment of the company Plastia
Plastia, out of choice, has accepted an obligation to apply the principles of corporate
social responsibility as part of its activities. This decision has practical implications: some
part of financial assets that we have gained from our economical activities is donated to
selected projects in a long-term support campaign. The sphere we are engaged in is
parenthood, motherhood and children. It is children who will once follow in our footsteps,
and it is just them who will be creating the future world. Children welfare thus represents
the most effective investment in the future we can make. In a joint project, therefore, we
are trying to support maternity centres which help mothers with babies come out of
isolation that they tend to get in due to day-long care of their children. At the same time
the project helps those mothers keep in touch with their professions and boost selfconfidence. We also give support to a nursery school in Nové Veselí, as it makes one
part of our village community, and they give back something in services they provide to
our employees too.
237
Kovohutě Příbram (2009), Mission of the Company (Poslání společnosti), available at: http://www.kovopb.cz/cz
/poslani_i.html
238
Plastia (2009), Corporate Social Responsibility (Společenská odpovědnost), available at: http://www.plastia.cz
/index.php?option=com_content&task=view&id=34&Itemid=68
216
Company TPCA239
CSR commitment of the company TPCA
“We want to be a good neighbour and a partner playing an important role in economical
and cultural development of the region of Kolín. It also concerns good relations and open
communication with employees, institutions, local government and individuals. We feel
our role in gradual participation in various fields of the public life of the region of Kolín.”
CSR principles of the company TPCA
1. We care about the local region.
2. We respect the local culture and traditions.
3. We make life better by providing safe products.
4. We develop technologies that allow us to fully satisfy our customers’ needs.
5. We support a corporate culture built around creativity and teamwork.
6. We strive for growth that doesn’t negatively impact society.
7. With our business partners, we strive for sustainable development.
239
TPCA (2009), A green factory (Zelená továrna), available at: http://www.tpca.cz/cz/zelena-tovarna and TPCA (2009),
TPCA and the region (TPCA a region), available at: http://www.tpca.cz/cz/tpca-a-region
217