Corporate Social Responsibility (CSR) in Small and Medium-Sized Enterprises: A Developing Country Perspective

Abstract

The aim of the current research is to generate insights into CSR understanding and practices as exercised by SMEs in Egypt, and the resulting overall impact on addressing the social developmental challenges in the Egyptian society. By embedding social capital theory within multi-layered levels of analysis, the research pays specific attention to the macro conditions that are conducive or obstructive to CSR engagement in this context. Based on 54 interviews with SME owner-managers and representatives of organizations concerned with CSR development, the researcher adopts a social constructionist approach in examining the CSR phenomenon in order to shed light on multiple perspectives and experiences of SME owner-managers. The findings suggest that the understanding of CSR is largely grounded in the context of economic and discretionary domains, highlighting the dominant role of long-standing cultural tradition, coupled with adverse institutional influence. Such an environment leads to a peculiar operationalization of the concept. CSR often takes the form of philanthropic giving, which is practised in a sporadic manner to address pressing economic needs, such as poverty and income disparity. The absence in the country of a conducive, institutionalized environment in favour of CSR further contributes to the lack of systematic approach to CSR engagement, manifested in the misalignment between CSR and businesses’ objectives and strategies. The result is an ad hoc philanthropic mode of giving. The findings reveal, however, that CSR in developing countries can act as a catalyst for social and economic development through three functions: institutionalization, strategic exchange and value creation. A strategic process has the potential of not only improving the well-being and living conditions of society, but also, in turn, creating a future pool of skilled and educated workforces and markets. Institutionalizing socially responsible practices, through endorsement, collaboration, support and legislation, encourages businesses to knit CSR into their overall strategy, and can generate sustainable shared value for their stakeholders. Social capital elements in terms of the relations of mutual trust, identification and reciprocity are the main lubricant of these functions. The contribution of this research to the field is threefold. First, it addresses a gap in the knowledge by generating insights into an under-studied topic, which is the dynamics of CSR in SMEs in a developing country. Second, it provides rich empirical evidence on the subject, drawing on semi-structured interviews with SME owner-managers as socially responsible entrepreneurs. Third, it uncovers the important role of contextual dynamics in shaping, enabling, or constraining SMEs in fulfilling their role towards society, through engaging with range of stakeholders, including practitioners (entrepreneurs) and policy-makers (such as international organizations that have a significant influence on shaping CSR policy agendas for developing countries).