Strategic Capabilities for Successful Engagement in Proactive CSR in Small and Medium Enterprises: A Resource‐Based View Approach

Abstract

The objectives of this chapter are twofold: first, to review and discuss the literature on how the distinctive organizational characteristics attributed to small and medium enterprises (SMEs) can provide the opportunity to gain a strategic advantage through the development of specific capabilities for ‘proactive’ Corporate Social Responsibility (CSR); and second, to propose a model explaining how SMEs can generate positive outcomes through the adoption of business practices based on such strategic capabilities i.e. improve financial performance whilst enabling progress towards meeting the call by society for responsible business strategies. The chapter contains a discussion of six particular strategic capabilities, associated with SMEs in the literature and which our research suggests make the adoption of proactive CSR more likely. These specific capabilities comprise three ‘internally-directed’ (shared vision, organizational learning and capital management) and three ‘externally-directed’ (stakeholder engagement, strategic proactivity and continuous innovation). We argue that only when an SME engages in a strategy that efficiently exploits and enhances these capabilities, will competitive advantage and superior performance be achieved.