21 April 2010

CSR and SMEs

Corporate Social Responsibility (CSR) has been around for a long time and has evolved to its current form after great many mutations. It is one of the key components of business today and addresses interaction of a business with its people, environment, customers and employees. It is also almost always talked about in the context of MNCs and big businesses. However it is time that even SMEs start taking notice of this business formula. One of the best ways that CSR can help SMEs is by influencing competitiveness and may also increase production and productivity. The idea is to start thinking of CSR as a part of business and not something you do as an add-on.

This concept was further explored in the CSR Practitioners workshop conducted by the Center for Sustainability and Excellence (CSE), Chicago. CSE offers an IEMA (Institute of Environment Management and Assessment) approved professional certificate to become a CSR Practitioner. Some of the concepts covered in the workshop included how CSR acts not only as an enhancement to business as usual but essentially how it is rapidly becoming business. As an aside, I highly recommend the workshop for its pace, content, presentation and the extremely helpful directors of CSE who conducted it.

It was only when I was working on my post-workshop project that I realized the far-reaching impacts of CSR practices on small-business models. Without over-simplifying CSR, smaller companies have a lot to take away from this concept; not only as a method of doing cost-effective business but also to create a USP for themselves in the market. According to recent reports, nearly 50% of all EU small business follow a sustainable business model. This proves that if capacities and competences in business intermediaries are increased; it will go a long way to help mainstreaming CSR in the SME sector.

If the four pillars of CSR are responsibilities in the workplace, marketplace, community and environment; SMEs play a pivotal role in all four avenues. 90% of the world's business comes from SMEs and they employ about 50% of the world's population. The kind of change they are capable of is community-based, continued investment to uplift their key stakeholders. This is something that CSR models based on big companies can never hope to achieve. Change at the grass-root level is what every ethical business dreams of and this is where small enterprises stand to gain enormously.

Diverting away from the kitschy big-business idea of CSR, small business have the advantage of direct interaction with the community from out of which they operate. What they need to be convinced about is whether or not it makes business sense for them to be 'socially responsible'. The answer is a resounding yes! Watch this space and I'll tell you why.

Picture: Tom Fishburne ©. Used with permission


Ramesh said...

Superb post Akhila. You have brought out so compellingly how important CSR is for all types of business irrespective of size. Totally agree that it is equally important for small businesses.

In my book, this is one of your best posts. Great write up.

Akhila Vijayaraghavan said...

Thank you Ramesh. In my last few posts I have been consciously diverting from what I like writing about to give my blog more variety.

A few of my older posts talk about sustainable business ideals as well. I appreciate your feedback. Keep reading!