Capabilities, Proactive CSR and Financial Performance in SMEs: Empirical Evidence from an Australian Manufacturing Industry Sector

Proactive corporate social responsibility (CSR) involves business strategies and practices adopted voluntarily by firms that go beyond regulatory requirements in order to manage their social responsibilities, and thereby contribute broadly and positively to society. Proactive CSR has been less researched in small and medium enterprises (SMEs) compared to large firms; and, whether SMEs are ideally placed to gain competitive advantage through such activity therefore remains a point of debate. This study examines empirically the association between three specified capabilities (shared vision, stakeholder management and strategic proactivity), proactive CSR and financial performance in SMEs. Using quantitative data collected from a sample of 171 SMEs in the machinery and equipment sector of the Australian manufacturing industry, we find that all specified capabilities are positively associated with adoption of proactive CSR by SMEs, and that proactive CSR is, in turn, associated with an improvement in firm financial performance. Evidence of a fully mediating role for proactive CSR on the association between capabilities and financial performance presented in this study aligns with RBV theory that suggests adoption of value-creating strategies that make the most effective use of a firm’s capabilities is essential to financial success. The study contributes to the CSR literature by demonstrating a case for SMEs being able to maximise financial returns whilst proactively making progress towards CSR.     

Predictors of Organizational Citizenship Behavior: Ethical Leadership and Workplace Jealousy

This paper analyzes how national institutions impact corporate social responsibility (CSR) practices for small- and medium-sized enterprises (SMEs) in the food-processing industries of France and Morocco. In this study, CSR practices are defined around two main dimensions: corporate performance (financial vs. global) and the CSR approach (defensive vs. active). Qualitative data were collected during semi-structured interviews with SME managers in charge of CSR issues. We then performed a content analysis. Our study shows that there is a distinct difference between the CSR practices adopted by SMEs in France and Morocco. Indeed, the findings suggest that under the rule-based governance system of France, most SMEs view CSR as an economic tool and it is adopted as an opportunity-seeking perspective anchored in the search for global performance. The findings also show that under the relationship-based governance system of Morocco, SMEs mainly see CSR from a constraint-reducing perspective. However, some Moroccan SMEs have begun to see the economic opportunities of CSR, especially in accessing foreign markets.     

Do Entrepreneurial SMEs Perform Better Because They are More Responsible?

Many scholars have investigated the direct impact of entrepreneurial orientation (EO) on performance, but this direct association seems both spurious and ambiguous because many parameters may have an indirect influence on this relationship. The present study thus considers sustainable practices—environmental practices, social practices in the workplace (SPW), and social practices in the community (SPC)—as three probable mediators in the relationship between EO and performance, which is considered in terms of its financial and non-financial dimensions. We seek to show to what extent small- and medium-sized enterprises’ (SMEs) sustainable practices are useful assets, which are supported by EO, to improve performance. Using a structural equation modeling approach, data collected from 406 French SMEs were tested against the model. Our findings reveal that EO has a positive impact on the implementation of sustainable practices and that SPW partially mediate the link between EO and performance. Taken together, these findings suggest that EO plays a role in indirectly promoting performance by enhancing certain human resource management practices.     

Which Dimension of Corporate Social Responsibility is a Value Driver in the Oil and Gas Industry?

The oil and gas (O&G) industry suffers from a negative perception of poor sustainability. O&G companies are therefore engaged in several socially sustainable activities related to community development and environmental protection. This article determines whether the social, environmental, and economic dimensions of corporate social responsibility (CSR) are equally value‐additive to O&G companies. We measure the company‐specific level of CSR activities from the information provided in the annual financial reports of O&G companies and determine the effects of CSR dimensions on firm value. We find that CSR enhances firm value of O&G companies. While social activities such as employee well‐being and community development are key value‐drivers, environmental and economic sustainable activities have an insignificant impact on the market value of O&G companies. Copyright © 2018 ASAC. Published by John Wiley & Sons, Ltd     

The effect of cross-listing on the environmental,social, and governance performance of firms

We propose that cross-listing is associated with better environmental, social, and governance (ESG) performance, because cross-listed firms adopt ESG practices to mitigate the liability of foreignness (LOF) in foreign financial markets. Institutionalization processes have made ESG practices important for managing challenges associated with the LOF. With tests involving the S&P Global 1200 index, we show that cross-listing improves corporate social responsibility (CSR; i.e., social and environmental dimensions) but not corporate governance. The effects of cross-listing on CSR also depend on investor protection regimes of listing destinations: Stronger regimes correspond with poorer CSR performance, suggesting that they limit managerial discretion.     

Entrepreneurial orientation,entrepreneurial competencies,innovation, and performances in SMEs of Pakistan: Moderating role of social ties

The current study examines the mediating role of innovation and entrepreneurial competencies in entrepreneurial orientation’s relationship with financial, social, and environmental performance. This research also determines the role of social ties in strengthening the association between innovation and entrepreneurial competencies with social, financial, and environmental performance. Using multi-source and time-lagged studies, the data was collected from 297 small and medium-sized enterprises (SMEs) in Pakistan, and structural equation modeling was used to test direct, indirect, and moderating hypotheses. The findings show that entrepreneurial orientation, entrepreneurial competencies, and innovation positively correlate with all the types of performance under investigation and confirm the mediating role of innovation and entrepreneurial competencies. Additionally, social network ties strengthen innovation—financial performance, and entrepreneurial competencies—social performance relationship. This research proposes significant theoretical and managerial implications by determining the impact of entrepreneurial orientation on SMEs in Pakistan.     

Corporate social responsibility and the development agenda

The European Commission has designated 2005 as the year of corporate social responsibility in EU countries. Likewise, individual EU member states have taken important steps, such as the UK appointing a Minister for CSR within the Department for Trade and Industry, France legally requiring companies to include social and environmental impact in their annual reports, the Netherlands linking financial support schemes for large companies to compliance with the OECD Guidelines for Multinational Enterprises and the Danish Government establishing the Copenhagen Centre (a CSR focused research institution). What is this emphasis on CSR all about? The present paper reviews recent trends in CSR theory and practice placing special emphasis on their relevance for small and medium enterprises (SMEs) and on the context of economic development in developing countries.     

The Brand Personality of Nonprofit Organizations and the Influence of Monetary Incentives

This article contributes to the limited literatures on small- and medium-size enterprises (SMEs) and corporate social responsibility (CSR). Using an institutional theoretical framework, we analyzed fieldwork interviews with twenty SMEs and perspectives of 165 SME managers and workers in textiles, garment, and footwear industries, the most important wage-earning sector in Vietnam. Having understood in the context of a developing “market economy with socialist orientation” (thus a “Southern perspective”), we find that socially responsible practices and expectations developed long before the arrival of CSR as a western concept and an MNC agenda. While identifying and contributing ideas concerning forms of “informal” CSR practices—influenced by social and cultural expectations—to the CSR/SME literature, we are conscious of the mixed effects of these practices and the ongoing nuanced negotiations between workers and managers in these SMEs. In our research, we found that it takes both domestic and international stakeholders to improve labor conditions in Vietnam under the banner of CSR.     

Sustainable Supply Chain Design in Social Businesses: Advancing the Theory of Supply Chain

A significant conceptual and practical challenge for companies is how to integrate triple bottom line (TBL) sustainability into their global supply chains. In supply chain research, the classic economic perspective—the business of business is to be profitable—still dominates, followed by coverage of the environmental dimension; the social dimension is underrepresented. Stakeholders, however, are calling for a TBL perspective that simultaneously includes environmental, social, and economic gains. While there have been recent theoretical advances on how to characterize supply chains in terms of their structure, how to connect these insights into supply chain design for TBL sustainability has not been studied. Therefore, the purpose of this research was to move the theory of supply chain forward into the sustainable supply chain management (SSCM) research agenda. Toward that purpose, the paper analyzes the sustainable supply chain design (SSCD) at social businesses, incorporating the physical chain and the information and financial support chains. Four social businesses located in Haiti are used as cases of innovative supply chain structures for TBL sustainability. By analyzing the supply chain structures and boundaries of these social businesses, three supply chain configurations combining physical and support chains are presented.     

Scoring Sustainability Reports Using GRI 2011 Guidelines for Assessing Environmental,Economic, and Social Dimensions of Leading Public and Private Indian Companies

Sustainability reporting guidelines developed by Global Reporting Initiative (GRI) provide a systematic approach for the companies to report their performance on social, environmental, and economic dimensions of sustainability. This study compared the sustainability reports of leading Indian public and private sector companies. Reports were analyzed based on GRI guidelines toward their reporting on sustainability. A numerical score from 0 to 3 was assigned for each of the 84 performance indicators (9, 30, and 45 indicators for economic, environment, and social dimensions, respectively) of the GRI 2011 guidelines based on inclusiveness of sustainability report. The analysis showed that reporting on economic dimension was comparatively better as compared to social and environmental dimensions. Sampled companies did not show much difference in their reporting practices on economic performances. However, considerable difference was observed in their reporting practices on environmental and social dimensions. Reporting practices of Tata Steel were better in all dimensions of sustainability and emerged as a responsible company on sustainability reporting.     

Is the Impact of CSR Similar Across Borders? An Exploratory Study Comparing Young Adults' Perceptions of CSR Between Puerto Rico and United States

This study aimed to explore how young adults in Puerto Rico perceive and respond to corporate social responsibility (CSR) initiatives in comparison with young adults in the United States. It explored the awareness of CSR, the importance placed on four CSR dimensions (economic, legal, ethical, philanthropic), and how such perceptions potentially link to individuals' behavioral intentions. An online survey found that Puerto Rican respondents perceive themselves as having a higher level of awareness of CSR than young adults in the United States; however, the level of CSR awareness among these demographic groups was low in both countries. Puerto Rican respondents placed more importance on the economic dimension of CSR, while U.S. respondents placed more importance on the legal dimension of CSR. CSR awareness was positively linked to behavioral intentions only among U.S. respondents. The allocated importance of CSR was a critical factor for respondents in Puerto Rico to show more favorable behavioral intentions.     

Does corporate social responsibility influence corporate innovation? International evidence

Whether corporate social responsibility (CSR) affects corporate innovation remains controversial in the literature. We re-examine this issue using a newly available comprehensive innovation database on 20 countries and find support for the view that CSR performance fosters innovation. This effect of CSR is reflected on corporate innovation through its environmental and social dimensions. We also show that the effect of CSR on corporate innovation is less pronounced in emerging countries, but this is driven only by the environmental dimension of CSR. Finally, in comparison to common-law countries, we report a more positive impact of CSR on innovation in civil-law countries.     

Corporate social responsibility in China: implementation and challenges

Corporate social responsibility (CSR) is becoming increasingly important in China. This paper investigates the implementation of instruments for dimensions of CSR that are relevant for the Chinese context and the challenges that Chinese companies face. Based on a survey among 109 Chinese companies, we find that formal instruments to implement CSR are rather common. Companies spend most effort in improving the economic aspects of CSR, such as competitiveness, product innovation and process innovation. Only a small minority of the companies set concrete targets and report the realization of these targets for social and environmental goals. This indicates that the attention to social and environmental aspects of CSR is still rather loose. The most important challenges for improving CSR are strong competitive pressure, insufficient support from the government and/or nongovernmental organizations and high costs of CSR implementation. Multiple regression analysis shows that the use of instruments is positively related to company size and foreign ownership and negatively related to lack of resources and support for CSR by investors and consumers.     

Corporate social responsibility and employee attitudes: The moderating role of employee age

This study examines the role of corporate social responsibility (CSR) on employee engagement and job satisfaction. Using 322 responses from employees of selected companies in Ghana, and employing hierarchical regression analysis, the study examines the direct impact of economic, legal, ethical and discretionary CSR practices on employee satisfaction and engagement in organisations. The study further explores the moderating role of employee age on the relationship between CSR and employee engagement and satisfaction. The results provide evidence that economic, legal, ethical and discretionary CSR practices influence higher employee engagement and satisfaction levels at work. However, the study finds no evidence of employee age moderating the association between each of the four CSR dimensions and employee job attitudes (engagement and satisfaction). These findings are insightful and provide a response to calls for research on these issues. The study contributes to the literature by demonstrating that ethical CSR practices strongly influence employees' satisfaction and engagement levels; legal and discretionary CSR activities also have an influence, though to a lesser extent; and the economic dimension of CSR activities has the least impact. The managerial, practical and further research implications of these findings are discussed.     

Doing right,investing right: Socially responsible investing and shareholder activism in the financial sector

In this article, we present an overview of corporate social responsibility (CSR) in the financial sector. We focus on how socially responsible investment and shareholder activism have been integral parts of corporate social responsibility in the financial sector. We examine how the financial sector and its firms are evaluated and rated via a sustainability index, the Dow Jones Sustainability World Index, and show that even leading financial institutions do not employ proactive practices regarding socially responsible investment and shareholder activism. Finally, we provide examples of two companies, UBS AG and the Co-operative Banking Group, that do utilize proactive practices.     

The Signaling Effect of Corporate Social Responsibility in Emerging Economies

What signals do firms in emerging economies send to stakeholders when they adopt corporate social responsibility (CSR) practices? We argue that in emerging economies, firms that adopt CSR practices positively signal investors that their firms have superior capabilities for filling institutional voids. From an institution-based view, we hypothesize that the institutional environment moderates the signaling effect of CSR on a firm’s financial performance. Based on a sample of firms from ten Asian emerging economies, we find a positive relationship between CSR practices and financial performance. This positive relationship is stronger in the less developed capital market than in the more developed one. The financial benefits of CSR practices are also more salient in the low information diffusion market than in the high one. We emphasize that signaling theory and the institution-based view can jointly contribute to the CSR literature.     

Corporate Social Responsibility and Firm Value: Disaggregating the Effects on Cash Flow,Risk and Growth

This paper investigates the effect of corporate social responsibility (CSR) on firm value and seeks to identify the source of that value, by disaggregating the effects on forecasted profitability, long-term growth and the cost of capital. The study explores the possible risk (reducing) effects of CSR and their implications for financial measures of performance. For individual dimensions of CSR, in general strengths are positively valued and concerns are negatively valued, although the effect is not universal across all dimensions of CSR. We show that these valuation effects are principally driven by CSR performance associated with better long run growth prospects, with an additional minor contribution made by a lower cost of equity capital.     

Small‐Firm Performance: Modeling the Role of Product and Process Improvements*

Entrepreneurial and small and medium‐sized enterprises (SMEs) firm performance is a complex, multifaceted construct that should be examined with an eye toward its complexity. Our research study seeks to accomplish this examination by proposing a conceptual model of SME performance with two distinct but related outcome dimensions—growth as one dimension and profitability as another. We propose hypotheses for relationships between four antecedent factor conditions— environmental hostility, firm size, innovation capability, and internationalization—and an SME's likelihood to pursue either product improvement or process improvement as their primary strategic orientation. Furthermore, we propose that an SME product improvement orientation likely has greater influence on growth and profit performance than will a process improvement orientation. The findings of the study suggest that internationalization and innovator position have a positive impact on new product and process improvements, while environmental hostility, internationalization, and product improvement have positive influences on growth as a performance dimension. In addition and as hypothesized, the product improvement orientation is positively associated with growth and in turn profitability, whereas the process improvement orientation showed no statistical relationship to growth and ultimately profitability.     

Does Corporate Social Responsibility Influence Firm Performance of Indian Companies?

This study examines whether corporate social responsibility (CSR) towards primary stakeholders influences the financial and the non-financial performance (NFP) of Indian firms. Perceptual data on CSR and NFP were collected from 150 senior-level Indian managers including CEOs through questionnaire survey. Hard data on financial performance (FP) of the companies were obtained from secondary sources. A questionnaire for assessing CSR was developed with respect to six stakeholder groups – employees, customers, investors, community, natural environment, and suppliers. A composite measure of CSR was obtained by aggregating the six dimensions. Findings indicate that stock-listed firms show responsible business practices and better FP than the non-stock-listed firms. Controlling confounding effects of stock-listing, ownership, and firm size, a favorable perception of managers towards CSR is found to be associated with increase in FP and NFP of firms. Such findings hold good when CSR is assessed for the six stakeholder groups in aggregate and for each stakeholder group in segregate. Findings suggest that responsible business practices towards primary stakeholders can be profitable and beneficial to Indian firms.     

A 'business opportunity' model of corporate social responsibility for small- and medium-sized enterprises

In their book 'Corporate Social Opportunity', Grayson and Hodges maintain that 'the driver for business success is entrepreneurialism, a competitive instinct and a willingness to look for innovation from non-traditional areas such as those increasingly found within the corporate social responsibility (CSR) agenda'. Such opportunities are described as 'commercially viable activities which also advance environmental and social sustainability'. There are three dimensions to corporate social opportunity (CSO) – innovation in products and services, serving unserved markets and building new business models. While small- and medium-sized enterprises (SMEs) have traditionally been presented as non-entrepreneurial in this area, this paper demonstrates how SMEs can take advantage of the opportunities presented by CSR. Using data from 24 detailed case studies of UK SMEs from a range of sectors, the paper explores the numerous CSR opportunities that present themselves to SMEs, such as developing innovative products and services and exploiting niche markets. There are inevitable challenges for SMEs undertaking CSR, but by their very nature they have many characteristics that can aid the adoption of CSR; the paper explores these characteristics and how the utilisation of positive qualities will help SMEs make the most of CSOs. Integrating CSR into the core of a company is crucial to its success. Using the case studies to illustrate key points, the paper suggests how CSR can be built into a company's systems and become 'just the way we do things'. There are a number of factors that characterise the CSO 'mentality' in an organisation, and Grayson and Hodges's book describes seven steps that will move a company in the direction of a 'want to do' CSO mentality. This paper adapts these steps for SMEs, and by transferring and building on knowledge from the 24 detailed case studies, it develops a 'business opportunity' model of CSR for SMEs.