CSR in SMEs: An Analysis of Donor-Financed Management Tools

In this article, we set out to analyze the management tools that have been developed by international development agencies with the aim of promoting corporate social responsibility (CSR) in Small and medium-sized enterprises (SMEs) in developing countries. In doing so, we made an original contribution to the literature on this topic in two ways. First, we developed a conceptual framework using insights from the literatures on institutional theory, critical perspectives on CSR in developing countries, and writings on the relationship between CSR and SMEs in the developing world to enable an analysis of the potential and limits of management tools aimed at promoting CSR in developing country SMEs. Here we argued that attention to poverty reduction and the silent/sunken CSR practices in such tools might be relevant yard sticks to assess their potential relevance and applicability in the South. Second, our empirical analysis of the contents of these tools indicates that they pay little or no attention to advocating the alleviation of income related poverty as part of SMEs’ CSR strategies in the developing world. They might, however, indirectly promote poverty reduction if we think of poverty as relating to the enhancement of capabilities and/or the reduction of vulnerability of SMEs, workers, and communities in the developing world. At the same time, the tools examined encourage the adoption of explicit CSR approaches, similar to those employed by large firms in the Western world, while they tend to ignore the silent or sunken CSR approaches that one would usually expect to find in SMEs operating in the developing world. In terms of policy implication of our analysis, there appears to be a very real risk that the promotion of such CSR tools are likely to be perceived as a top-down, outside-in imposition by SME managers in developing countries who may find that they embody assumptions and practices that have very little or nothing to do with the reality of their every-day operations. Hence, in our view, it might be a better starting point for international development agencies to first map the informal CSR practices of SMEs and then use such a mapping process to enhancing or strengthening existing social responsibility practices which are already present in these firms. Otherwise the use of such tools might result in a process of CSR capacity destruction instead of CSR capacity development for such firms. Finally, we suggest that future research in this area would benefit from a broader examination of the spread, relevance and effectiveness of tools intended to promote CSR in SMEs in developing countries in two ways. First, it would be important to conduct in-depth interviews with aid agency personnel, consultants, SME managers, workers, and community members with a view to probing their views of their relevance and effectiveness of these tools in the South. Second, we suggest that similar tools produced by developing country governments, business associations, consultants, and other stakeholders with an interest in this area could be mapped and analyzed using the theoretical framework developed in this study. In this way, we would gain a better understanding of how the spread of these tools mediate the processes through which CSR is institutionalized in developing country settings.