Corporate social responsibility in micro and small enterprises

Corporate social responsibility (CSR) has been on the Danish agenda since 1994. However, research into the relations between CSR and working conditions in small enterprises has not been assessed until now. A study finds that CSR in small companies mainly focuses on employee well-being, as well as preserving a good reputation in the local community. About 75% of small and medium-sized enterprises are active in terms of CSR.

Background

In Denmark, public interest in and research on corporate social responsibility (CSR) dates back to 1994. CSR was put on the agenda by the then Ministry of Social Affairs (Socialministeriet), now the Ministry of the Interior and Social Affairs (Indenrigs- og Socialministeriet). Nevertheless, possible links between CSR initiatives and working conditions in small enterprises have remained unexplored. Recently, however, a joint study (in Danish, 1.2Mb PDF) from the National Research Centre for the Working Environment (Det Nationale Forskningscenter for ArbejdsmiljA¸, NFA) and the Copenhagen Business School (HandelshA¸jskolen, CBS) has focused attention on relations between CSR and working conditions in micro and small enterprises employing fewer than 50 workers.

CSR in Danish national context

The NFA/CBS study applies the definition of CSR outlined by the European Commission in a 2006 Communication on Implementing the partnership for growth and jobs: Making Europe a pole of excellence on corporate social responsibility (COM(2006) 136 final). Thus, CSR is aeuro~a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basisaeuroTM. However, as already highlighted by a Eurofound report in 2003, entitled Towards a sustainable corporate social responsibility, exactly what is considered aeuro~socially responsibleaeuroTM may vary significantly from one country to another.

In Denmark, CSR and related concepts often refer to the prevention of social exclusion and the inclusion of marginalised groups in the labour market. For example, this is the focus of the CSR concept applied by the Danish National Centre for Social Research (Det Nationale Forskningscenter for VelfA|rd, SFI) (see DK0502NU03 for details).

Moreover, as emphasised in the NFA/CBS report, in Denmark small enterprises are unlikely to perceive the physical working environment as being relevant for CSR; instead, the concept implies voluntarism, whereas the national Working Environment Act covers rather detailed regulation of the physical working environment. However, risk exposure has been found to increase as the size of the workplace decreases, presumably due to a less systematic approach in ensuring occupational health and safety (see DK0602NU06 on the working environment in small enterprises).

CSR among small and medium-sized enterprises

In studies undertaken on behalf of the Danish Commerce and Companies Agency (Erhvervs- og Selskabsstyrelsen, EogS), it has been verified that Danish small and medium-sized enterprises (SMEs) are active in the field of CSR. A 2005 mapping of CSR activities in SMEs (in Danish, 1.6 Mb PDF) reveals that 75% of the responding SMEs were engaged in CSR in some way, that 19% were not and that 6% did not know. A total of 1,071 SMEs with fewer than 250 employees in all sectors of the economy were surveyed, showing that CSR is widespread in micro and small enterprises as well as in medium-sized companies. The following figure shows the proportion of companies that are active with regard to CSR according to their size, denoted by the number of employees.

Engaged in CSR activities, by company size (%)

Engaged in CSR activities, by company size (%)

Source: EogS, 2005

Engaged in CSR activities, by company size (%)

The mapping, however, does not give much insight into how CSR influences working conditions. Therefore, the NFA/CBS study approached CSR in small enterprises by conducting 21 qualitative face-to-face interviews.

Identifying CSR

The study finds that, in practice, some difficulties arise in applying the CSR concept with regard to small enterprises. Similar to findings in Luxembourg (LU0809029I) and Portugal (PT0708019I), the Danish study reveals that the English term CSR, often applied by researchers and in larger companies, is not that well-known in small enterprises. Nevertheless, this does not mean that the companies are not putting any effort into being socially responsible: small enterprises seem to label social responsibility differently or are simply unaware that they have actually initiated CSR.

Characteristics of CSR in practice

The NFA/CBS study applies a Catalogue of CSR activities (855Kb PDF) that was developed on behalf of EogS and classifies CSR into the following seven categories:

  • leadership, vision and values;
  • marketplace activities;
  • workforce activities;
  • supply chain activities;
  • stakeholder engagement;
  • community activities;
  • environmental activities.

The study finds that small companies primarily engage in workforce and community aspects of CSR; only a few small enterprises implement CSR strategically. According to the study, the more personal relations which are often present in small enterprises may lead companies aeuro" when practising CSR aeuro" to focus on the ethical aspects related to the psychosocial working environment, diversity, work organisation, specific individuals, fringe benefits and employment security. In practice, this includes a wide range of initiatives, such as the introduction of flexible working time schemes, increased gender equality, employing young people with a criminal record, access to fitness classes or exercise facilities, courses on how to stop smoking and free fruit at the workplace. Moreover, small enterprises tend to focus on maintaining a good reputation in the local community. Thus, the CSR of small enterprises corresponds to the possible reach of initiatives and to the organisational horizon of the enterprise.

Drivers of CSR in small enterprises

In investigating the catalysts for CSR engagement in small enterprises, the study distinguishes between internal and external factors. The main internal factors for implementing CSR initiatives are the presence of a motivated individual and the emergence of acute needs for action. Regarding external factors, participation in regional networks, impetus from trade associations and local contacts are identified as being important in promoting CSR.

Rune Holm Christiansen and Helle OurA¸ Nielsen, Oxford Research

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