CHAPTER ONE
INTRODUCTION
Background to the Study
Corporate Social Responsibility (CSR) is defined by the European Commission, (2011) as “the responsibility of enterprises for their impacts on society”. According to Giovanna, Alfredo, and Lucio (2012),cothnecept of CSR also means that “organizations have moral, ethical, and philanthropic responsibilities in addition to their responsibility to earn a fair return for investors and comply with the law”. In other words, CSR requires organizations to adopt a broader view of its responsibilities that involves not only shareholders, but also many other stakeholders, including employees, suppliers, customers, the local community, local and national governments and other special interest groups.
According to the European Commission (2011), CSR at least covers areas such as human rights, labour and employment practices (such as training, diversity, gender equality and employee health and well-being), environmental issues (such as biodiversity, climate change, resource efficiency, life-cycle assessment and pollution prevention), and combating bribery and corruption. Community involvement and development, integration of disabled persons, and consideration of consumer interests such as privacy, also forms part of the CSR agenda. In pursuing such CSR ventures, organizations stand to gain some competitive advantage.
Ajala (2005) says CSR programmes offer organizations the opportunity to build goodwill and affect their corporate image and reputation. She added that CSR enhances growth of investors‟ confidence in a company‟s shares. According to Ajala, a firm which consistently fulfils its social obligations makes itself a welcomed member of the community and this may attract customers both home and abroad. Apart from providing a platform for organizations to portray themselves as good corporate citizens, CSR is also used for building good corporate reputation via the organizations wide range of stakeholders (Roberts, 2003). Other studies have found the importance of undertaking CSR to include, helping organizations to gain a competitive advantage (Wether & Chandler, 2005) and improve their financial performance (Hull & Rothenberg, 2008; Waddock & Graves, 1997).
The importance of CSR as discussed above is not limited to large and multinational organizations alone, but Small and Medium Enterprises (SMEs) as well. Yet, CSR has mostly been examined, studied and discussed from the angle of large and multinational organizations. Small businesses, however, account for the vast majority of businesses (Fitzgerald et al., 2010). Hopkins (2003) and Williams (2005) have suggested that all organizations, regardless of size, have an impact on society and environment. This implies that SMEs equally have a role to play as far as CSR issues are concerned. Available literature indicates that, while multinationals have become fully aware of their CSR responsibilities to the community and are actively pursuing it, the outlook of SMEs in terms of CSR issues are not clearly known; or at least, they are not getting the same amount of media, government and academic attention (Cochius, 2006).
