Human Capital Investment and Corporate Social Responsibility in SMEs: the moderating role of family business status
Authors: Campos-Valenzuela Marta , Diéguez-Soto Julio , Ruiz-Palomo Daniel 
Published: February 2025

Purpose

The purpose of this study is to examine the effect of human capital investment (HCI) on corporate social responsibility (CSR) practices in SMEs. Analysing a sample of 1,136 firms (729 FBs and 407 NFBs) and using a PLS-PM methodology, our results support that HCI has a favourable impact on CSR practices in SMEs and that family business (FB) status plays a moderating role on these relationships.

Design/methodology/approach

We estimate the proposed model using partial least squares path modelling (PLS-PM), a variance-based structural equation (SEM) method, using SmartPLS 3.3 software. PLS simultaneously evaluates the reliability and validity of the variables (external model) and the estimation of the trajectories between these constructs (internal model). The PLS-PM technique is appropriate in this research because: 1. the model makes use of type A composites; 2. the proposed research model has some complexity since we pay attention to the existence of moderating effects; and 3. no specific distribution is required in PLS indicators.

Findings

The main findings of this study are: (1) HCI increases CSR practices in the SME context and (2) FB status exerts a positive influence on the relationship between HCI and CSR practices.

Research limitations/implications

This study, grounded in RBV theory and the concept of “familiness,” uses employees' education and training to measure HCI in FBs. While other research focuses on employee competence and attitude to define HCI, future studies should explore all these elements to better understand their impact on CSR practices in SMEs. Additionally, factors like regulation, organisational culture and personal traits may influence the relationship between HCI and CSR practices, suggesting the need for further research. Future studies could also examine family SMEs by considering aspects such as family management or governance as moderating variables, contributing to the discussion on FB heterogeneity. Causes of heterogeneity in FBs include goals, governance structures and resources, supporting recent calls for a deeper understanding of these variations, particularly in how HCI affects CSR practices.

Practical implications

This study also highlights several practical contributions. Today’s complex business environment requires organisations to focus on a wide range of stakeholders to remain sustainable. Organisations must understand how HCI influences CSR practices, specifically how education and training for both employees and managers lead to greater sustainable practices. Therefore, awareness and training for family employees, CEOs and external staff are essential for the proper development of CSR practices. Increased education or training programs by public and private institutions or incentive schemes could help promote these practices within firms. Our results further suggest that governments and other organisations interested in business development should not assume that HCI is universally beneficial for CSR practices in all firms. Specifically, the study shows that HCI has a positive effect on different dimensions of CSR in SMEs, and this influence is even more pronounced in family SMEs. Therefore, government agencies and employers' associations should consider the impact of these factors—HCI and FB status—when designing and implementing more effective policies.

Social implications

This study makes several theoretical contributions. It explores the influence of HCI on multiple dimensions of CSR, focusing on individual-level drivers like education and training for managers and employees. The findings reveal that HCI positively affects environmental, labour and social CSR practices, especially in SMEs. The study also highlights the unique role of FBs, showing that FB status strengthens the relationship between HCI and CSR due to their focus on long-term goals and community well-being. This research addresses gaps in understanding the heterogeneity of CSR practices between FBs and non-family businesses (NFBs).

Originality/value

This article is original, unpublished and all sources and contributions have been properly acknowledged.