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Multinational & SME CSR Relationships

CSR for Large & Small/Medium Businesses

Much of the evolution in Corporate Social Responsibility (CSR) over the last decade has been driven by large multinational enterprises. The ambitious initiatives undertaken by some of the world's largest companies have made them leaders in the field. But, CSR also occupies an important place in many Small and Medium Sized Enterprises (SMEs) creating an interesting dynamic with the multinational firms these companies often supply. A fascinating report by the World Bank Institute titled "Can Small Be Responsible" analyzes this dynamic in some detail. The report, based on dialogue from an e-Conference on CSR in SMEs, is internationally focused and a decade old. But, many of its conclusions are still relevant today for SMEs in a variety of cultural contexts. It raises many questions concerning the best way to form a CSR agreement that meets both parties' expectations.

The majority of comments concerning this topic centered on the one-sided dialogue that often plays out in these multinational SME CSR relationships. Multinational enterprises often demand SMEs attain their compliance standards without analyzing the unique challenges these demands create. Occasionally, loan schemes are provided to SMEs to reach these goals. The method is a very top-down approach and caters primarily to the multinational company's interest.

Some small businesses complain of other challenges as well. For example, satisfying the elaborate reporting systems of their multinational consumers is often difficult. But, the benefits the multinational companies bring can outweigh these kinds of difficulties, and the vast majority of experts agree that these large enterprises have been instrumental in exporting ethical business practices overseas and to SMEs.

Ultimately, in order to improve the CSR relationship of multinational companies and SMEs, both parties need to improve the ongoing dialogue. The report recommends that multinationals implement their policies with rewards to SMEs rather than demands. They can take advantage of the more entrepreneurial and less risk-averse spirit of their smaller suppliers. In the end, it comes down to improving the education of these small firms. By offering both guidance and support to SMEs while still allowing flexibility, multinational companies can extract the most from such an important part of their partnerships.