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Business Benefits of CSR for SMEs (Small/Medium Enterprises)

Business & Community Working Together

In this blog, Giva has detailed some of the business benefits of Corporate Social Responsibility (CSR). Implicit in much of this analysis is the assumption that the company being addressed is quite large and has the resources to implement certain policies. One is right to ponder whether these business benefits of CSR are the same for Small and Medium Enterprises (SME). A report titled "Opportunity and Responsibility" compiled by the European Commission helps answer this question. It details some of the most effective CSR investments for SMEs and highlights the benefits that can only be achieved with scale.

As one might expect, many of the business benefits of CSR are the same for firms of all sizes. Companies stand to gain engaged staff, an enhanced reputation, and lower long-run costs. But, small businesses in particular may be interested in some other benefits. For instance, SMEs with great CSR policies (particularly strong sustainability measures and labor practices) may be more likely to win contracts from larger businesses. Those with strong CSR reputations are poised for success as more and more large companies hold their entire supply chain accountable to certain ethical standards. In general, small businesses may find that investors are partial to companies with great corporate citizenship policies.

SMEs in the same industry are much more likely to cooperate with one another on a CSR initiative. Unlike their larger brethren who might tend to avoid this kind of cooperation, small businesses are more comfortable working together to solve a community problem. In one instance, a group of 77 shop owners in a section of Copenhagen worked with the Ministry of Education to design an apprenticeship program for young people. The program was designed to confront a rise in youth crime while having the added benefit of increasing the number of skilled retail workers. These kind of joint initiatives give small businesses the opportunity to have an impact comparable in size to that of large multinational enterprises. They are often community focused and help to improve the local business climate.

Moreover, thinking of creative CSR policies and social entrepreneurship can spur incredible innovation. Today's economy is increasingly knowledge driven. Companies of all sizes are reliant on their employee's creativity. For a small business that does not have an extensive research and development team, thinking about CSR can be a great way to transform the business and its products with fresh ideas.

Surveys continue to indicate that ethics and morals are the primary drivers of CSR in small business. This finding is important. Ultimately, great CSR is born from great ethics. But, that does not exclude CSR from being great for business. Corporate Social Responsibility can improve local communities, lead to new business partnerships, and spur innovation. Ultimately, these benefits improve the business.