THE BALANCE BETWEEN INTERNALLY AND EXTERNALLY ORIENTED CSR
A CASE STUDY OF DANISH SME’S
RESEARCH BASED WORKING PAPER
by
Ph.D. Assistant Professor, Annabeth Aagaard
Institute of Leadership and Strategy, University of Southern Denmark
Sdr. Stationsvej 28
4200 Slagelse
Phone: +45 26250806
Email: aaa@sdu.dk
Ph.D. Associate Professor, Jeanette Lemmergaard
Institute of Marketing and Management, University of Southern Denmark
Campusvej 55
5230 Odense M
Phone: +45 6550 3372
Email: jla@sam.sdu.dk
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THE BALANCE BETWEEN INTERNALLY AND EXTERNALLY ORIENTED CSR
A CASE STUDY OF DANISH SME’S
Abstract
Corporate social responsibility (CSR) has become an acknowledged and well-established strategic
approach in both theory and practice. A large majority of the existing literature emphasizes CSR
integration within larger corporations, although CSR also plays a pivotal role in small to mediumsized companies, SMEs. This study explores how four Danish SMEs have integrated CSR, and how
the levels of external, internal and diagonal integration affect the qualitative and quantitative results
of CSR. Whereas external CSR integration constitutes the external CSR communication and
involvement of customers, suppliers and other stakeholders, the internal CSR integration is
explained and measured through the level of employee involvement and the content and the effects
of internal oriented CSR activities and communication. The diagonal integration is understood as
integration with the business strategy.
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THE BALANCE BETWEEN INTERNALLY AND EXTERNALLY ORIENTED CSR
A CASE STUDY OF DANISH SME’S
1. Introduction
Corporate social responsibility (CSR) has become an acknowledged and well-established strategic
approach in theory and in practice (Carroll and Buchholtz, 2006; Blowfield and Murray, 2008).
Although many organizations have implemented CSR strategies, the level of organizational
integration and the effects obtained through CSR varies (Porter and Kramer, 2006). Critiques of
CSR have stressed the overemphasis on the externally oriented and often PR-driven approach to
CSR in contrast to the internal integrated and employee-driven CSR approaches (Vogel, 2005;
Kuhn and Deetz, 2008). Also, critiques have emphasized the lack of measured effects gained
through CSR implementation (Friedman, 1970; Wright and Ferris, 1997; McWilliams and Siegel,
2000).
A large majority of the existing literature emphasizes CSR integration within larger corporations.
But despite often being less institutionalized, CSR also plays a pivotal role in small to mediumsized companies, SMEs (Morsing, 2006). This study explores the levels of internal and external
integration of Danish SMEs. The internal CSR integration is here operationalized as the level of
employee involvement and the content of internal oriented CSR activities and communication. The
external CSR integration, in contrast, constitutes the external CSR communication and involvement
of customers, suppliers and other stakeholders in the externally oriented CSR activities of the
companies. Adding to these two levels of horizontal CSR integration (i.e., internal and external),
this paper also argues for the importance of a vertical and diagonal integration between and across
the external and internal integration of CSR activities and communications.
Through an exploratory case study of four Danish SMEs from different industries, and interviews
with informants on both managerial and employee level, the content and prioritization of
horizontally, vertically and diagonally oriented CSR communications and activities are examined.
The obtained data will be processed through the application of meaning categorization (Kvale and
Brinkman, 2008), where the categorizations of the findings is applied in the discussion.
2. The field of CSR
The pressure on corporations to demonstrate their responsibility towards society has intensified over
the last years, and the notion of CSR has institutionalized the ideal of an ethically alert organization
able to balance its financial interests with its concern for society as a whole (Christensen et al.,
2011). Although academic research has discussed the concept for many decades (Carroll, 1999), the
field has primarily been driven by practitioners within large American corporations. The academic
research in the field took off already in the 1950s (Carroll, 1999); still, however, there is much
confusion about how to define CSR, why and whether it should be implemented and if it should be
implemented how should it then be done (Welford, 2004).
The field of CSR encompasses many different interests, goals and voices and therefore is difficult to
pin down precisely. The CSR literature flourishes with frameworks and approaches for
identification and categorization of CSR systems. Some (for example Melé, 2002; Philips et al.,
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2003) suggest that successful CSR have rather universalistic characteristics, others, like Mitchell et
al. (1997) and Swanson (1995) claim that the internal integration of CSR systems matters for their
design. Yet others (for example Husted, 2000) suggest that CSR systems should be contingent on
contextual factors. These significantly different approaches to CSR have resulted in various foci,
conceptual understandings, definitions and have led to rather elaborate methodological and thematic
relativism within the field.
One of most long-standing and widely cited definitions of CSR that has formed the basis of the
more recent definitions comes from Carroll’s (1979) ‘pyramid of CSR’. Carroll offered the
following definition: “The responsibility of business encompasses the economic, legal, ethical, and
discretionary expectations that society has of organizations at a given point in time” (Carroll, 1979:
500). The strength in this definition is its facilitation of the link between the organization and
society through its combination of economic and discretionary expectations. Often this is
understood in a disintegrated manner with economic expectations deriving for the purpose of the
organization and the discretionary expectations deriving for the purpose of others. While this
distinction is attractive, Carroll’s argument is integrative in the way that economic viability is done
also for the purpose of society. The economic responsibility is simply forming the base of the
pyramid (Carroll, 1991). In this way, Carroll (1991) is both arguing for CSR as a legal and
economic obligation to society and as an ethical obligation because CSR represents ‘the right thing
to do’.
Later definitions stress the integrated understanding of CSR including all stakeholders and
constituent groups of the corporation (Werther and Chandler, 2005). For example, the EU
Commission (2006) defines CSR as; “A concept whereby companies decide voluntarily to
contribute to a better society and a cleaner environment. A concept whereby companies integrate
social and environment concerns in their business operations and in their interaction with their
stakeholders on a voluntary basis”. As such the European Commission hedges its bets with two
definitions wrapped into one and stresses the importance of integrating both social and
environmental concerns in a firm’s business operations. The definition also stresses the fact that a
CSR initiative needs to be conducted on voluntary basis, which is beyond what is legally required.
Business for Social Responsibility is broadly agreeing that CSR should focus on the impact of how
core business is managed. They define CSR as “Operating a business in a manner that meets or
exceeds the ethical, legal, commercial and public expectations that society has of business.”
The different definitions on CSR is mainly different in prescribing how far companies should go
beyond managing their own impact into the terrain of acting specifically outside of that focus to
make a contribution to the achievement of broader societal goals. The consequence of the different
definitions is a morass of contestable models that makes CSR multiple-disciplinary and composite
with an array of theories used which includes business studies, economics, sociology, politics, law
and philosophy.
2.1 CSR in European SMEs
The CSR literature has so far paid disproportionate attention to larger American organizations
(Spencer and Rutherfoord, 2003). Consequently, the theoretical foundation of CSR is fundamentally
American and reflects strongly the Anglo-American business context (Crane et al., 2008). Also,
although there is a growing interest in CSR among SMEs many analyses still confirm how large
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organizations are still the main developers of CSR strategies (Hernáez et al., 2012). SMEs are still
the least active enterprises in regard to CSR activities.
Nevertheless, SMEs are particularly sensitive to CSR issues. The relationship with local authorities
is closer and more direct than that of larger organizations. The manager of a SME experiences in
person the territory in which the organization operates, and consequently many SMEs simply do not
realize that their business approach and activities may be classified as CSR. In general, three
assumptions about CSR in SMEs have been found (Crane et al., 2008):



CSR is rather informal and ad hoc. Trivial issues are usually ignored. Instead the topics of
interest are issues considered critical in a given context. That is, issues those are potentially
embarrassing or even scandalous.
SMEs go under the radar of wider society
CSR in SMEs is targeted at building good personal relations, networks and trust (Spence
and Schmidpeter, 2002). It can be argued that this third assumption encompasses an internal
reasoning of CSR which is in contrast to large corporations which reasons externally for
their engagement in CSR (Morsing et al., 2008).
CSR in SMEs are also claimed to be more value-driven, since a SME is usually an owner-managed
firm with ownership, control and decision-making held by the some person (Jenkins, 2006).
Personal and ethical values of SME owners, managers and employees drive the motivation to
implement CSR and it is therefore important that CSR in SME is built upon these values or
responds to them (Verhaugen, 2003). Jenkins (2006) suggests that an internal drive rather than
external pressure is the main driver for CSR in SMEs. Finally, personal relationships are often both
preferred and predominant in SMEs and it is suggested that SMEs’ absence of bureaucratic controls
could enhance the openness and trust in business relationships (Spencer and Rutherfoord, 2001).
Apart from these general assumptions, it is important to notice also differences among SMEs based
on country of origin. CSR is an idea that needs contextualizing in the relevant social context, and
Denmark is often highlighted as a country where CSR activities are carried out at a rather high level
compared with other countries. A major driver for this difference is the Danish law with imposes a
relatively high standard of corporate responsibility (Vallentin, 2011).
2.2 A model for research on CSR practices
Relatively little research has been performed within the area of the actual management,
implementation and operational side of CSR, where operational CSR is mostly discussed in terms
of a project management structure (Castka et al., 2004; Sachs et al., 2006). This study suggests a
coherent design of CSR, integrating CSR both horizontally and vertically.
Horizontal CSR integration is understood as integration of respectively internal and external CSR.
In many organizations CSR is characterized by practices, which have been aggregated into CSR
bundles. These bundles have been translated into CSR strategies depending on the level of
systematic and conscious work with alignment. This study argues that in order to facilitate a vertical
and a diagonal integration it is necessary to uncover the level of consciousness and system building
in the field of CSR. Researchers have given special attention to the link between CSR and company
performance (Stanwick and Stanwick, 1998: Waddock and Graces, 1997). What is missing,
however, is a discussion on how CSR communication and activities are integrated horizontally.
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Without the horizontal integration at both the internal and external level, we claim, companies are
missing important performance opportunities.
Internal CSR integration is understood as the level of employee involvement and the content and
the effects of internal oriented CSR communication and activities. For this study, the employee
engagement pyramid (Melcrum, 2006) is adopted moving from a base of CSR awareness, to
understanding and further to believing in the CSR strategy with the ultimate goal of employees
reaching the level where they are committed to act in a CSR responsible way. Moreover, internal
CSR integration includes the social topics of engage in fair and efficient HRM, guarantee safety,
occupational health & security, respect freedom of association, abandon discrimination &
encourage diversity (inspired by Martinuzzi, Gisch-Boie et al., 2010). External CSR integration
constitutes the external CSR communication and involvement of customers, suppliers and other
stakeholders in the externally oriented CSR communication and activities of the companies.
Vertical integration is understood as a holistic approach to CSR integrating the external and the
internal CSR operations. According to the list of generic CSR topics as developed by Martinuzzi,
Gisch-Boie et al. (2010), this includes Environmental topics (i.e., support the protection of air and
water, land biodiversity, minimize the amount of toxic substances, emissions, sewage and waste,
conserve natural resources, apply renewable energy & avoid the usage of raw materials, engage in
climate protection, boost innovation for improvement in efficiency and consider the whole product
life-cycle, facilitate reusability & recyclability of products), Global topics (i.e., raise stakeholders’
awareness for social & environmental topics, practice sound stakeholder management, facilitate
sustainable supply chains, respect Human Rights, engage in poverty reduction and participate in the
development of public policies), Social topic (i.e., respect consumer interests) and Economic topics
(i.e., pursue sound corporate governance practices, ensure transparency through economic, social &
environmental reporting, engage in fair competition, foster innovation, combat bribery &
corruption, employ Socially Responsible Investment, protect intellectual property rights, offer safe
and high-quality products/services, foster sustainable consumption & production and implement
sound risk management systems).
A further dimension is added to the vertical integration, namely the diagonal integration, which
should be understood as strategic CSR. This study leans on Burke and Logsdon’s (1996) strategic
CSR understanding. From this perspective the following concepts are relevant; 1) Centrality (i.e., fit
between CSR policy or program and mission and objectives of the organization), 2) Specificity (i.e.,
the organizations ability to capture and internalize the benefits of a CSR program), 3) Proactivity
(i.e., in absence of crisis conditions), 4) Voluntarism (i.e., discretionary decision-making and
absence of externally imposed compliance requirements) and 5) Visibility (i.e., observability of a
business activity and the ability to gain recognition form stakeholders). The model in figure 1
illustrates the different levels of integration that lays the foundation for this study.
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The horizontal CSR integration aims at consistency of CSR communication and activities both
internally and externally, respectively. Vertical CSR aims at consistency between the internal and
the external CSR. Of particular interest are the vertical and diagonal restraints, as the CSR domain
is characterized by limited conceptual clarity, this exercise of integrating across the internal and the
external domain is important.
3. Methodology
The exploratory case study design was selected in order to explore: how Scandinavian SMEs have
integrated CSR. The research question was developed by trying to match theoretical gabs with
relevant company problems in order to make contributions to CSR research as well as attempts to
contribute to improvement of CSR practice. The case companies were identified through the
application of a number of criteria:



Privately held small-to-medium sized companies (SMEs),
which had worked with CSR related strategies and activities for a minimum of two years,
and that could present a somewhat structured and documented approach towards CSR
Privately held SMEs were selected, as the authors had an assumption that privately held SMEs
share similar challenges in integrating CSR while staying competitive, due to their financial and
organizational structure. Furthermore, the selected case companies had to be able to document
relatively structured CSR related activities and strategies. This criterion was put forward to ensure
that the data could be collected and findings could be documented.
The data collection was performed through informal observations and semi-structured interviews
with CSR managers and employees from the four case companies. The interview sessions were
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conducted following the same interview guide in order to establish an indication of the validity and
reliability of the results found in the case study (Yin, 1994). In addition, the interviews sessions
were held in the informants’ own offices and meeting rooms. This approach was utilized to ensure a
higher level of ecological validity of the data gathered (Maaløe, 2002). The analysis of the
interviews was carried out applying the contemporary data processing and data analysis method of
”meaning categorization”, which implies that the statements of the interviews are coded into
categories (Kvale and Brinkmann, 2008).
4. Findings
The findings from the four case examples revealed a number of similarities but also some
interesting differences in relations to the organizations’ approaches towards CSR. In the following
brief case descriptions reveal the more significant findings.
Case 1: Rynkeby
Rynkeby Foods A/S's contemporary history is a tale of mergers and acquisitions. Today Rynkeby is
the largest producer of juice in Denmark and is owned by the largest dairy cooperation in Denmark,
Arla Foods. In one year more than 150 million liters of juice go through Rynkeby’s production and
out to consumers, primarily in Denmark and Sweden.
Rynkeby’s CSR program was initiated as a subordinary, zero-sum budget project assigned to the
person responsible for communications, who was given the task to “do something about the
company’s CSR”. The assigned employee build the CSR program on the company’s existing
development and HR activities, which had a CSR aspect to them, using CSR as an ‘umbrella’ to
cover sustainable activities within the organization. Working with beverages, health became a
central starting point, and as the company prioritized employees’ well-being, employee health and
well-being also became a key focus area within the CSR strategy. A number of health-related
activities (for example annual health-checks, stop-smoking-courses and weightloss-programs) were
initiated. Furthermore, an internal event (i.e., Tour the Rynkeby, which is a biking-trip in the French
Alpes) was upgraded to also include external participants. Thus, this CSR activity is one of the few
example of how they have developed internal sustainability activities into more externally oriented
event communicated CSR to the public, customers and other stakeholders, and this event is today
publicly well-known and has received multiple positive PR.
The emphasis on internal CSR originates from several factors. Rynkeby is situated in a local area
with limited access to employees, which makes maintaining a staff of qualified employees a target
area and key to success. In addition, Rynkeby are of a SME with limited funds for setting up
explicit CSR functions, hence the ‘low budget approach’ with a combination of the functional areas
of communications and CSR. When asking the CSR responsible what roles external sustainability
had played in establishing and working with CSR, she replied: “we have emphasized CSR within
our own organization, before we have gone external, as we wanted to develop a certain level of
experience working with CSR before we went on the record and involved our stakeholders. When
asking her, what the next step for the integration of CSR in Rynkeby, she stated: “We have now
established a good foundation for sustainability within the organization and next step for us is now
to involve our customers and external stakeholder much more. We live in a local area and probably
have a mentality that resembles that fact, as you don’t go outside bragging about anything before
you are an ‘expert’ and know it by heart”.
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The vertical integration of CSR has obviously not been a key priority at first, as customers and other
external stakeholders has not been the main target of Rynkeby’s CSR approach. However,
horisontal integration has been a must to get the full potential internally of sustainability and of the
health-focus of the company’s CSR approach. The CSR informant explained that, “we have used
common sense in explaining why we all have to act sustainable by e.g. stressing how we can reduce
costs by reducing waste, e.g. by turning of the lights and using and re-using our resources
smarter”. She continued, “when you focus on health in your CSR approach then everybody
automatically gets involved as you cannot offer e.g. a health check to some employees and not
others”. In relations to diagonal integration, several initiatives had been carried out among others
CSR was directly linked to the company’s objectives and all divisional directors had been given the
responsibility to carry out targeted activities within their part of the organization to actively support
sustainability. The CSR informant commented on this: “CSR in small companies has to be
connected to business, or else they won’t survive. We do not have the luxury of having used funding
for CSR, so if our CSR activities do not support our business objectives, then it will easily be
cancelled”.
Case company 2: The specialists
The Specialists or in Danish ‘Specialisterne’ is a pioneer organization in several areas and is
internationally recognized as the first company in the world to use employees with autism as the
main labor. It is a social economic company that offers It services and It-consulting services to
businesses in sectors such as programming, data conversion, data filing, data logistics and data
recording. It was initially founded by Thorkil Sonne in 2003, when his son Lars at the age of three
received an autism diagnosis. With family house as collateral Thorkil started the first company in
the world designed in terms of people with autism spectrum disorders (ASD) or popularly known as
autism. The goal was not to create a company that would match Lars, but to change society's
attitude towards people with ASF and get people to look at autism with respect and courtesy and as
worthy and valuable citizens. The Specialists operate on market conditions which mean that they
must make a profit to exist, but that profit is not an end in itself: it is a means to develop the concept
of The Specialists and creating yet more jobs for people with autism.
The specialists were founded on sustainability as their entire business model revolved around CSR.
One could claim that the business model is corporate social innovation, CSI, as the idea of offering
a service through the application of people with autism is social innovation and an innovative and
new business model. Building a company on employees with autism who perform complex
programming assignments requires a targeted strategy, organization, processes and integration, if
success is to be attained. This SME case also revealed an overemphasis on internal sustainability as
the employees with autism are the center of every operation and the entire organization. If the needs
and unique characteristics of these employees are not understood or meet, then this organization and
the entire concept cannot work. The director and CSR responsible emphasized the following: “the
employee group of this company is what makes us unique, and without them we don’t have a
business model or a company”. External sustainability had been sought in relations to building
sustainable collaborations and partnerships with customers and with working agencies, which could
direct the often ‘misunderstood’ people with autism to the organization.
Horizontal integration of CSR had been a key element from the start in designing and developing
the organization, as everybody in the organization needed to know by heart what kind of
organization and employees they are working with and what was required across the organization to
nurture this potential as part of the organization’s purpose, strategy and objectives. Vertical
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integration of CSR was also central, but came second. Yet, the success of the company also
depended on the customers’ understanding of the sustainable concept and of how to work with Itspecialists with autism. The director and CSR responsible stated the following: “working with
people with autism requires a specific approach and by everybody both internally as well as
externally… where you would normally ask people to think up their own solutions or give them
multiple information at once, you have to be very specific and avoid to many ‘open ends’ with this
employee group…. They have a unique gift when it comes to programming, but the ‘social stuff’
that comes with working in an organization and getting assignments is often difficult for people
with autism. The customers need to know this as well, or else the assignments will not be completed
successfully”.
Diagonal CSR integration had also been a central point in establishing and running the company.
Working with people with autism is the business strategy of the company, and in attaining the
business objectives everybody play a part in nurturing the right environment for this unique
employee group.
Case company 3: Fazer Food Services
Fazer’s Food Services provides US-style lunch backs to both the private and the public sector.
Originally, the company was manufacturing beverage and food vending machines, but in 1982 the
company stepped out of its core businesses, and became a key provider of lunch backs. After the
death of the founder in 1999, the company was sold to the Finnish Fazer Group and today the
company is part of a Nordic alignment. The company serves 35,000 meals daily based not only on
talented chefs, but also a constant devotion to CSR. The company is simultaneously working on
both a social, environmental and a global orientation towards CSR. On the social dimension, the
company is developing and improving their employees. On the environmental and global dimension
special focus is on raw materials (i.e., organic food), environmental awareness and health issues.
Fazer Food Services has a holistic view on well-being. The company offers nutritionally balanced
products which induce physical well-being. In 2010, a representative from the company explains;
“Despite a growth in number of catering companies from 131 in 2007 to 148 in 2010, our
consumption of whipped cream has fallen 26 per cent, whole milk consumption with 23 per cent and
butter consumption with 16 per cent. We have come a very long way. Currently, we train customers
as well as chefs to convert our food policies. Next step will be to include the users of our canteens
for example through formulating and setting goals for diets, for example to reduce the intake of
saturated fat.”
As can be seen from the quote above, open dialogue about the qualities of products and services are
a natural part of Fazer’s interaction with its customers. In 2011, Fazer also continued to implement
what they called the E-code optimization programme. Its goal was to inspect all the products and
reduce the use of additives whenever possible. This was done, for example, through the renewal of
recipes.
The internal integration of CSR at Fazer is also linked to well-being. The organization takes
occupational well-being into consideration by, for example, developing working methods and
conditions, minimizing high-load work stages and investing in new systems and equipment.
However, despite a general devotion to CSR the company has primarily been focused on external
integration. Fazer’s main focus has been on providing its stakeholder with products and services
that suit a responsible lifestyle and as expressed in the annual report 2011: “Corporate
responsibility is an inseparable part of Fazer’s brand and corporate identity”. Customers’ rising
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interest in corporate responsibility questions and the increasingly important role of the food industry
in the field of CSR is the main driver.
Case company 4: Middelfart bank
Middelfart Savings Bank’s CSR program is not new, although it was first formulated under the
label of social responsibility in 2009 which was also the year when the bank’s first CSR responsible
was appointed. In the years 1993-2007, Middelfart Savings Bank developed the so-called SocialEthical Accounting Statement focusing on non-monetary values such as the value of satisfied
customers and employees and good relations with local citizens. These annual reports demonstrated
both a wish for and a possibility to enter into dialog with key stakeholder groups. Also, these
reports were seen as early warning systems, informing the bank about any unfavorable
developments and allowing them to take proactive action. The underlying intension was
transparency regarding strengths and weaknesses for both potential customers and potential
employees.
But the bank’s involvement in the local community can be traced back even further. Actually it can
be traced back to the very founding of the bank in 1853, where a group of craftsmen sought for
alternative financing options, and the bank was intended as a savings bank for the common good. It
can therefore be argued that the bank embraced the idea of working with human values as early as
1853, and in particular since 1991, the bank has undergone a process revolving around value-based
management, ethical accounting and self-management. As such it can be argued that Middelfart
Savings Bank since its foundation has incorporated a diagonal CSR integration. A flurry of
activities around the bank’s role in advancing social, environmental and economic development
have been present since the foundation of the bank deriving from the bank’s mission.
Furthermore, Middelfart Savings Bank has worked simultaneously with both internal and external
integration of their CSR activities focusing on horizontal integration. As explained by the CSR
responsible of Middelfart Savings Bank around social topics: “For many years, we have focused on
the psychological balance among our employees. Good mental health leads to good performance,
and this focus has contributed to the recent nomination of our bank as Denmark's best place to
work for the third time in a row. The bank, for example, offers a four-day workshop for our
employees and their spouses with the purpose of bringing 'life back in balance'. The workshop
focuses on the individual challenges of the employees or their spouses, and the goal is to bring back
pleasure in working and certainly also in going back home.”
Regarding the external integration of CSR at Middelfart Savings Bank, the CSR responsible have
numerous examples of social action in relation to customers, suppliers and a number of other
stakeholders. As an example: “We support associations, clubs and various cultural activities. We
assist them in marketing of their activities on our website and in newsletters. We also help in
various other ways for example with "man" hours, grants and ticket sales. This is a different
approach than the more traditional sponsorship agreements, which we of course also included. If
we are to develop the society in which we are a part of, it gives something back to us.”
For Middelfart Savings Bank the CSR activities are firmly tight into the mission, vision and the
strategy of the bank. Hereby the bank is a studious example of a company that manages to conduct
their CSR activities in a way that meets the horizontal, vertical and diagonal integration at both the
external and the internal level. The major challenge, however, for Middelfart Savings Bank is the
challenge of fostering persistent employee engagement at all levels in the organization. If people
can see a problem, they can solve it. But working proactively on CSR in an organization where
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many stones are already turned in the name of CSR, it is a challenge to retain the energy and
engagement on an everyday basis.
5. Discussion
When combining the findings of the four case companies a number of similarities in the SMEs’
CSR approaches were detected, but also some key differences. As this is an exploratory study based
on a small number of cases comparisons should of course be made with caution. The following
table 1 shows the preliminary findings of this explorative study:
The level of internally oriented CSR varied between the four SMEs. Generally the four case
companies had been involved in sustainability activities much longer than they have applied the
CSR terminology. All four case companies had to some extent relabeled existing activities with
CSR terminology. For two of the cases organizations (Rynkeby and The Specialists) the
geographical local had been a challenge in terms recruiting enough qualified employees. Therefore
sustaining and maintaining the right employees becomes key focus areas, and internal sustainability
therefore has to be prioritized to some extent.
A key finding revealed that the companies, which emphasized internally oriented CSR (Rynkeby,
The Specialists and Middelfart Bank), had also stressed horizontal integration as a way to optimize
CSR performance through more effective cross-company CSR integration. An employee-driven
CSR focus was high among the same three cases, which would also explain why integrating CSR
horizontally across the organization was emphasized. In the case of Fazer, well-being had been
addressed, although not in relations to the customers, but as a tool to integrate customers. It
appeared that Fazer, which had initially prioritized externally oriented CSR had also emphasized
vertical integration of CSR.
Middelfart Bank had prioritized both internally and externally oriented CSR and more importantly
they stress both the vertical and the horizontal integration. The Specialists were originally founded
on internally oriented CSR and had emphasized the horizontal integration to ensure a thorough
integration of this unique business model. Yet, externally oriented CSR and vertical integration had
been emphasized subsequentially as part of taking the business to market. It could be argued that
the Specialists had been forced to integrate vertically as the company is particularly dependent on
the customers’ understanding due to the rather unique business concept.
Another key finding revealed that all four SMEs had stressed diagonal integration. One conclusion
could be that diagonal integration is central to the success of CSR in SMEs as these smaller
companies do often not have high budget for CSR, but have to ensure that all resources are applied
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effectively in living up to the business strategy and objectives. Thus, integrating CSR diagonally is
viewed as a way to ensure success and performance of CSR among SMEs.
Another interesting finding and potential speculation relate to the individuals, who had been given
the responsibility of CSR. It appeared from the interviews that the informants of Rynkeby and The
Specialists had they focused particularly on ensuring an effective internal integration and
understanding of CSR. However, the informant of Fazer had stressed an external customer focus
from the start. The informant from Middelfart bank had emphasized both an internal and external
oriented CSR had been stressed from the beginning. Anticipating the limitations of the data material
of this study, it seems that the personal convictions and focus of the individual in charge of CSR
affects the choice between internally versus externally oriented CSR and the priority of horizontal,
vertical and diagonal integration. CSR in SMEs are very much driven by individuals. The
individual who is put in charge therefore has a lot of influence and almost ‘monopoly’ on how CSR
is established.
The majority of the existing research on CSR and CSR integration has been performed among large
organizations. This challenges the way we examine SMEs as we apply theories and models
generated from large corporations and use them to explain CSR conducted in SMEs. As stressed by
recent research there are several differences among CSR in large organizations and SMEs. Among
others the generally more personal, implicit and informal approach towards CSR among SMEs
compared to the more formal and explicit approach applied by large companies.
6. Conclusion
The majority of the research performed within the CSR area is conducted among larger and
particularly American organizations, which may be expected to differ to some extend from
European and Asian organization and among SMEs. Furthermore the definitions and research
performed within internally and externally oriented CSR and vertical, horizontal and diagonal CSR
integration are quite limited. Thus, more empirical studies are needed to confirm or invalidate these
definitions and the way vertical, horizontal and diagonal integration of CSR can be explained in
European and Asian companies. In lack of European research on the subject matter, this study has
applied definitions derived primarily from American studies, but have examined how CSR is
integrated through an empirical study of Danish SMEs. A cross-country study of integration would
therefore be interesting in revealing potential differences in integration patterns among companies
of different nationality.
The findings from the case study stressed that a more employee-focused and informal approach is
characteristic of the SMEs CSR approach. The right employees are harder to come by due to the
SME’s locations in local communities, which is why employees and a more internally oriented
approach will always have some prioritization. Yet, the level of internally oriented CSR varied
between the four cases and revealed a key difference in the CSR approach, which also affected the
CSR integration (horizontal, vertical, diagonal). Emphasis on internally oriented CSR led to more
emphasis on horizontal integration, and where an externally oriented CSR resulted in more vertical
integration. Diagonal integration was high among all four case companies, which may be explained
by the fact that CSR has to be part of the strategy, objectives and the business to survive in small
companies where resource are sparse.
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An interesting finding or observation revealed that the personal motivation and conviction of the
individual in charge of company CSR also had a profound effect on the selected CSR approach and
integration model. As CSR in SMEs are often driven forward by one person, this person’s
characteristics can affect the final outcome of the company’s CSR tremendously.
The four case companies originated from four different industries, which may also have affected the
result. There were small indications of differences in the CSR approaches originating from the
industrial setting. Although the study does not present sufficient data to conclude cross-industry, so
a larger study is required to make those examinations.
The findings also revealed that the SME case companies carried out several sustainable activities
within applying the CSR terminology. A potential problem with the SME’s not applying sufficient
CSR terminology may be the potential loss of financial gains and business benefits. Furthermore,
the SME’s which do not apply the proper CSR terminology may potentially result in larger CSR
organizations deselecting the non-CSR communicating SME’s as suppliers. The findings from this
study present a number of propositions, which would be relevant to study in a larger case study:








Proposition 1: An overemphasis of internally oriented CSR result in a higher prioritization
of horizontal integration of CSR
Proposition 2: An overemphasis of externally oriented CSR result in a higher prioritization
of vertical integration
Proposition 3: Diagonally integration of CSR is always high among SME’s
Proposition 4: The personal motivation, characteristics and conviction of the individual in
charge of CSR in SME’s has a profound effect on the selected CSR approach of the
company (internal vs. external) and the integration approach (vertical, horizontal,
diagonal)
Proposition 5: The industry of the SME determine the way CSR is applied through an
internally oriented or externally oriented approach
Proposition 6: The industry of the SME may determine the way CSR is integrated, vertically,
horizontally and diagonally
Proposition 7: The lack in usage of CSR terminology hampers the number of customers and
financial gains from CSR
Proposition 8: The longitudinal effects of an overemphasis of internally oriented CSR may
be different than the short term effects.
This study presents certain limitations. For one the number of case companies does not allow for
generalization across SMEs. Therefore, a larger study would be necessary for such final
conclusions. In addition, a larger cross-industry study would provide testimony of the potential
uniqueness of each industry’s CSR approach among SME’s. Furthermore the duration and content
of this study did not allow for a longitudinal measurement and examination of the actual effects of
prioritizing internally oriented versus externally oriented CSR. The limitations of this study
therefore present a number of opportunities and avenues for future research to be pursued.
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