Corporate Social Responsibility (CSR) is employed by large businesses as a business strategy that is used to enhance company performance. It is globally used to link business and society through social practices.
Although CSR is a well-established term in the business world, findings show that CSR has focused on large corporations with few studies focusing on Small and Medium Enterprises (SMEs), even in developing economies where SMEs play a pivotal role in the economic development of the countries. Small and Medium Enterprises are the backbone of the world economy, accounting for most businesses across nearly every region. In the developing world, SMEs make up 90 per cent of the private sector and create more than 50 per cent of jobs in their corresponding economies.
African business environment is characterized by a signiﬁcant number of SMEs. SMEs provide an estimated 90 per cent of jobs across the continent, representing an important driver of economic growth. Sub-Saharan Africa alone has 44 million micro, small, and medium enterprises, almost all of which are micro. These figures are important for understanding why smaller businesses should be considered for the social and environmental impacts of their activities.
There are many good examples of CSR practices being implemented across all levels and sectors of business in Africa. However, the extent to which SMEs actively incorporate CSR into their core business operations remains low and there is a lack of engagement. SMEs across Africa acknowledge CSR as a business concept, however, the concept has experienced a very different development in SMEs than it has in large companies.
Perhaps, SMEs cannot and shouldn’t be blamed for the disengagement towards CSR practices. Even exemplary practices are always associated with large corporations.
Whenever CSR practices are publicized in the media they are usually associated with companies such as MTN, Cocacola, and UBA among others. Thus, most SMEs find it difficult to relate to these examples as they do not have the financial capital or infrastructure, management skills, and minimal access to information and manpower to replicate them.
Even those SMEs that want to carry out socially responsible practices tend to lack necessary CSR tools, making it impossible for them to realize the advantages of CSR; and some who do are usually not aware of the meaning of CSR, and they do not report their activities although they may be engaged in CSR activities to their communities.
Another not-so-farfetched reason why SMEs disassociate from CSR practices is that many of them are too isolated and often sit out on a limb with little support and guidance. Most businesses prefer to engage in partnerships with each other or large businesses when implementing CSR initiatives.
Moreover, many SME owners are unaware of the benefits of incorporating CSR practices within their core operations. Instead, CSR is often regarded as a distraction from business activities and just another financial and time-consuming burden. It is often viewed as doing the right thing and not doing the best thing for business.
However, SMEs across Africa can benefit from CSR by properly implementing CSR activities. CSR can assist SMEs to maintain and set standards because of the continuous response they would get from interacting and dealing with their immediate community. CSR in SMEs has the power to improve the performance of a business, and improve the competitiveness of the SMEs, therefore assisting in poverty alleviation in the community where the business operates.
Irrespective of whether SMEs have to be CSR compliant to stay alive or not, there is a crucial need for owners and managers of SMEs to enhance their attitudes toward CSR as a whole. If SME owners are better informed and better supported to actively pursue CSR objectives, they could collectively generate wealth for themselves and their communities because they are more in touch with their staff, customers, and communities than larger organizations.
To encourage SMEs and improve their engagement with CRS practices, the government should introduce tax incentives that encourage businesses to engage in socially responsible practices. The government can also introduce regulatory framework policies that break down CSR into a more useful concept that applies to every business regardless of size and scope.
It is the collective power of SMEs that will drive the CSR movement forward on the continent and not the isolated CSR pursuits of larger corporations.