Abstract
In recent times, small and medium-sized companies (SMEs) have focused their activities on short-term financial results. Corporate social responsibility (CSR) is among the organizational practices currently being adopted by companies to increase their competitiveness. While some companies implement CSR out of curiosity or because it is aligned with their true social vocation, most embrace it to increase economic and financial performance. Whereas some theories support CSR practices and assert the great benefits these activities can yield, other theories state that management should not allocate resources to CSR actions. Focusing on SMEs, the present study sought to examine the effects of CSR on profitability from three perspectives: the social, the environmental, and the economic dimensions of social responsibility. The sample for this study included 81 companies in the industrial (54.3%) and services (45.7%) sectors operating in the south of the state of Sonora (Mexico). Data collection was carried out from August to November, 2013, and used a self-directed survey administered to company managers. Results were analyzed and validated using a variance-based statistical technique focused on structural equation models (SEM); the structured relationships were validated by partial least square (PLS) modeling using the SmartPLS Professional software (version 3.2.6). Our findings provide evidence that social and economic CSR activities have a positive influence on profitability in SMEs. This study contributes to the development of the main literature on CSR practices in their social, environmental, and economic dimensions: firm theory, sustainability theory, and stakeholder theory.
Highlights
The economic, sociopolitical, and environmental changes constantly taking place in the world of today have important effects in most organizations (Martínez, Fuentes, & Delgado, 2015; Werther Jr & Chandler, 2010)
From an economic point of view, firm theory has demonstrated that resources and capabilities must be directed only towards activities that will result in higher economic value (Barney et al, 2011; Demmerling, 2014)
We found a strong relationship between social Corporate social responsibility (CSR) activities and profitability in sized companies (SMEs)
Summary
The economic, sociopolitical, and environmental changes constantly taking place in the world of today have important effects in most organizations (Martínez, Fuentes, & Delgado, 2015; Werther Jr & Chandler, 2010). The proliferation of international quality and environmental certifications centered on corporate social responsibility (CSR) reflects the necessity of such certifications to increase competitiveness in companies (Lee, 2008). Lee (2008) and Carroll & Buchholtz (2014) report that CSR actions are positively associated with profitability in organizations. To attain such an effect, companies must adopt a CSR model based on four perspectives or categories: economic, legal, ethical, and discretional (philanthropic-altruistic) (Carroll, 1999). CSR in SMEs has received scant attention; there are only a few local comparative case studies (Carroll, 2008; Lee, 2008), mostly centered on very large and companies, specially multinational (Attig, El Ghoul, Guedhami, & Suh, 2013; Carroll & Buchholtz, 2014)
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