Document Type


Publication details

Sen, S 2011, 'Corporate social responsibility in small and medium enterprises: application of stakeholder theory and social capital theory', DBA thesis, Southern Cross University, Lismore, NSW.

Copyright S Sen 2011


Corporate social responsibility (CSR) is a business management concept that originated in the early 1930s after the Wall Street crash of 1929 exposed corporate irresponsibility in large organisations. Since then, social responsibility has continued to be the focus of business operations and a popular topic of investigation for practitioners and academics from a range of disciplines.

Whilst the initial interpretation of CSR has been modified and refined since it was first used, the significance of this multidimensional concept for the small and medium enterprise (SME) sector has continued to be overshadowed by its application to large and multinational organisations. Due to relatively little attention being given to CSR in relation to SMEs until recent years, the knowledge of social activities in this sector, particularly in Australia, has remained unexplored and amorphous. This study therefore investigates CSR from the perspective of SMEs in Australia.

The aim of this research is to advance the understanding of how SMEs perceive CSR and their approaches to social responsibility. From the literature review, a few areas were identified in which investigation would contribute to developing a holistic understanding. These areas are: business values, knowledge and attitudes to CSR, actual and stated CSR behaviour, influences on CSR participation, motivations for CSR, the barriers and facilitators of CSR in SMEs and finally, the motivations for voluntary engagements with different associations. The increased understanding of the CSR orientation of these organisations obtained by investigating these areas shed more light on the use of stakeholder theory and social capital theory for explaining the SME–CSR relationship.

A qualitative case study research methodology was applied to investigate the research problem. Data was collected through twelve semi-structured open ended interviews with owner-managers of SMEs in the Gold Coast region of Australia. The analysis of responses commenced with data reduction followed by data display and then conclusion forming and verification. A range of tactics was used to ensure the validity and reliability of the case study research design.

This research supports the view that SMEs are not always profit driven and that they are therefore fundamentally distinct from large organisations. Ethical operation and compliance with social norms are the most common values that drive such organisations. In contrast to past assumptions, SMEs are well aware of the fundamentals of social responsibility and presently consider responsible behaviour as a platform to grow their businesses. As a result, they think, act and engage with their communities proactively. The term Business Social Responsibility (BSR) appears to be more relevant and appropriate for SMEs rather than the traditional term ‘CSR’. However, Australian SMEs are not yet strategic about business responsibilities, rather strongly influenced by their moral values. Creating and maintaining their reputations through social networking and relationships with stakeholders, irrespective of their salience, is the primary motivation for SMEs’ participation in social activities.

The findings of this study indicate that even though primary stakeholders like employees, customers and suppliers are important for economic objectives, social engagement with secondary stakeholders in the community, and the social capital which results from those social engagements, are more important for the survival of SMEs. Thus, SMEs see BSR as a source of social capital and an opportunity to compensate their limited resources. Based on this understanding of BSR in SMEs, social capital theory appears to be a more valid approach for explaining the SME–BSR relationship than stakeholder theory.

It is expected that the knowledge gained from this study will benefit future researchers from a range of disciplines who may wish to investigate the topic. The advanced perception of business responsibility will also contribute to the development of a comprehensive theory that can improve SME business management in particular, and social life and economic growth in general.