IDEAS home Printed from https://ideas.repec.org/a/ibn/jmsjnl/v7y2017i3p75-89.html
   My bibliography  Save this article

Corporate Social Responsibility: Its Effect on SMEs

Author

Listed:
  • Luis Enrique Valdez Juarez

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.

Suggested Citation

  • Luis Enrique Valdez Juarez, 2017. "Corporate Social Responsibility: Its Effect on SMEs," Journal of Management and Sustainability, Canadian Center of Science and Education, vol. 7(3), pages 75-89, September.
    • Handle: RePEc:ibn:jmsjnl:v:7:y:2017:i:3:p:75-89
    as

    Download full text from publisher

    File URL: http://www.ccsenet.org/journal/index.php/jms/article/view/68943/38026
    Download Restriction: no
    File URL: http://www.ccsenet.org/journal/index.php/jms/article/view/68943
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Xueming Luo & Heli Wang & Sascha Raithel & Qinqin Zheng, 2015. "Corporate social performance, analyst stock recommendations, and firm future returns," Strategic Management Journal, Wiley Blackwell, vol. 36(1), pages 123-136, January.
    2. Esben Pedersen, 2010. "Modelling CSR: How Managers Understand the Responsibilities of Business Towards Society," Journal of Business Ethics, Springer, vol. 91(2), pages 155-166, January.
    3. Benjamin M. Friedman, 2006. "Moral Consequences of Economic Growth: The John R. Commons Lecture, 2006," The American Economist, Sage Publications, vol. 50(2), pages 3-8, October.
    4. Shaker A. Zahra & Donald O. Neubaum & Galal M. El–Hagrassey, 2002. "Competitive Analysis and New Venture Performance: Understanding the Impact of Strategic Uncertainty and Venture Origin," Entrepreneurship Theory and Practice, , vol. 27(1), pages 1-28, January.
    5. Ina Freeman & Amir Hasnaoui, 2011. "The Meaning of Corporate Social Responsibility: The Vision of Four Nations," Journal of Business Ethics, Springer, vol. 100(3), pages 419-443, May.
    6. Joan Fontrodona & Alejo Sison, 2006. "The Nature of the Firm, Agency Theory and Shareholder Theory: A Critique from Philosophical Anthropology," Journal of Business Ethics, Springer, vol. 66(1), pages 33-42, June.
    7. David J. Teece, 2007. "Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance," Strategic Management Journal, Wiley Blackwell, vol. 28(13), pages 1319-1350, December.
    8. Bhimani, Alnoor & Silvola, Hanna & Sivabalan, Prabhu, 2016. "Voluntary corporate social responsibility reporting: a study of early and late reporter motivations and outcomes," LSE Research Online Documents on Economics 65762, London School of Economics and Political Science, LSE Library.
    9. Peter W Roberts, 2001. "Innovation and firm-level persistent profitability: a Schumpeterian framework," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 22(4-5), pages 239-250.
    10. Jan Lepoutre & Aimé Heene, 2006. "Investigating the Impact of Firm Size on Small Business Social Responsibility: A Critical Review," Journal of Business Ethics, Springer, vol. 67(3), pages 257-273, September.
    11. Duygu Turker, 2009. "Measuring Corporate Social Responsibility: A Scale Development Study," Journal of Business Ethics, Springer, vol. 85(4), pages 411-427, April.
    12. Ina Freeman & Amir Hasnaoui, 2011. "The Meaning of Corporate Social Responsibility," Post-Print hal-00599320, HAL.
    13. Abagail McWilliams & Donald S. Siegel & Patrick M. Wright, 2006. "Corporate Social Responsibility: Strategic Implications," Journal of Management Studies, Wiley Blackwell, vol. 43(1), pages 1-18, January.
    14. Carlo Bagnoli & Marco Vedovato, 2014. "The impact of knowledge management and strategy configuration coherence on SME performance," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(2), pages 615-647, May.
    15. Najah Attig & Sadok El Ghoul & Omrane Guedhami & Jungwon Suh, 2013. "Corporate Social Responsibility and Credit Ratings," Journal of Business Ethics, Springer, vol. 117(4), pages 679-694, November.
    16. Milton Friedman, 2007. "The Social Responsibility of Business Is to Increase Its Profits," Springer Books, in: Walther Ch Zimmerli & Markus Holzinger & Klaus Richter (ed.), Corporate Ethics and Corporate Governance, pages 173-178, Springer.
    17. Shuo Wang, 2015. "Literature Review of Corporate Social Responsibility," CSR, Sustainability, Ethics & Governance, in: Chinese Strategic Decision-making on CSR, edition 127, chapter 0, pages 7-28, Springer.
    18. Leal-Rodríguez, Antonio L. & Ariza-Montes, José A. & Roldán, José L. & Leal-Millán, Antonio G., 2014. "Absorptive capacity, innovation and cultural barriers: A conditional mediation model," Journal of Business Research, Elsevier, vol. 67(5), pages 763-768.
    19. Nwachukwu, Saviour L. S. & Vitell Jr., Scott J. & Gilbert, Faye W. & Barnes, James H., 1997. "Ethics and Social Responsibility in Marketing: An Examination of the Ethical Evaluation of Advertising Strategies," Journal of Business Research, Elsevier, vol. 39(2), pages 107-118, June.
    20. Freeman, R. Edward & Liedtka, Jeanne, 1991. "Corporate social responsibility: A critical approach," Business Horizons, Elsevier, vol. 34(4), pages 92-98.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anna Dunay & Abebe Ayalew & Gemechu Abdissa, 2021. "Why Socially Responsible? Determinant Factors of Organizational Performance: Case of Dangote Cement Factory in Ethiopia," Sustainability, MDPI, vol. 13(9), pages 1-23, April.
    2. Dolores Gallardo-Vázquez & Luis Enrique Valdez-Juárez & Ángela María Castuera-Díaz, 2019. "Corporate Social Responsibility as an Antecedent of Innovation, Reputation, Performance, and Competitive Success: A Multiple Mediation Analysis," Sustainability, MDPI, vol. 11(20), pages 1-28, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luis Enrique Valdez-Juárez & Dolores Gallardo-Vázquez & Elva Alicia Ramos-Escobar, 2019. "Organizational Learning and Corporate Social Responsibility Drivers of Performance in SMEs in Northwestern Mexico," Sustainability, MDPI, vol. 11(20), pages 1-23, October.
    2. Dolores Gallardo-Vázquez & Luis Enrique Valdez-Juárez & Ángela María Castuera-Díaz, 2019. "Corporate Social Responsibility as an Antecedent of Innovation, Reputation, Performance, and Competitive Success: A Multiple Mediation Analysis," Sustainability, MDPI, vol. 11(20), pages 1-28, October.
    3. Luis Enrique Valdez-Juárez & Dolores Gallardo-Vázquez & Elva Alicia Ramos-Escobar & Roberto Limón-Ulloa, 2020. "ISO 14001 and 26001, Agents of Change in the SME," Journal of Management and Sustainability, Canadian Center of Science and Education, vol. 9(1), pages 1-32, March.
    4. Donato Calace, 2014. "Non-Financial Reporting in Italian SMEs: An Exploratory Study on Strategic and Cultural Motivations," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 5(3), pages 34-48, May.
    5. Luis Enrique Valdez-Juárez & Dolores Gallardo-Vázquez & Elva Alicia Ramos-Escobar, 2018. "CSR and the Supply Chain: Effects on the Results of SMEs," Sustainability, MDPI, vol. 10(7), pages 1-27, July.
    6. Debora Scarpato & Gennaro Civero & Vincenzo Rusciano & Marcello Risitano, 2020. "Sustainable strategies and corporate social responsibility in the Italian fisheries companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(6), pages 2983-2990, November.
    7. Caterina Lorenzo-Molo & Zenon Udani, 2013. "Bringing Back the Essence of the “S” and “R” to CSR: Understanding the Limitations of the Merchant Trade and the White Man’s Burden," Journal of Business Ethics, Springer, vol. 117(1), pages 123-136, September.
    8. Muhamad Azrin Nazri & Nor Asiah Omar & Aini Aman & Abu Hanifah Ayob & Nur Ainna Ramli, 2020. "Corporate Social Responsibility and Business Performance in Takaful Agencies: The Moderating Role of Objective Environment," Sustainability, MDPI, vol. 12(20), pages 1-18, October.
    9. Ivan Bozhikin & Nikolay Dentchev, 2018. "Discovering a Wilderness of Regulatory Mechanisms for Corporate Social Responsibility: Literature Review," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 145-174, June.
    10. Ben Lahouel, Béchir & Ben Zaied, Younes & Managi, Shunsuke & Taleb, Lotfi, 2022. "Re-thinking about U: The relevance of regime-switching model in the relationship between environmental corporate social responsibility and financial performance," Journal of Business Research, Elsevier, vol. 140(C), pages 498-519.
    11. Luis Enrique Valdez-Juárez & Domingo García-Pérez-de-Lema & Gonzalo Maldonado-Guzmán, 2018. "ICT and KM, Drivers of Innovation and Profitability in SMEs," Journal of Information & Knowledge Management (JIKM), World Scientific Publishing Co. Pte. Ltd., vol. 17(01), pages 1-34, March.
    12. Soliman, Marwa & Ben-Amar, Walid, 2022. "Corporate social responsibility orientation and textual features of financial disclosures," International Review of Financial Analysis, Elsevier, vol. 84(C).
    13. Nazamul Hoque & Abdul Rahim Abdul Rahman & Rafiqul Islam Molla & Abu Hanifa Md. Noman & Mohammad Zahid Hossain Bhuiyan, 2018. "Is corporate social responsibility pursuing pristine business goals for sustainable development?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(6), pages 1130-1142, November.
    14. Georgiana Grigore & Mike Molesworth & Andreea Vontea & Abdullah Hasan Basnawi & Ogeday Celep & Sylvian Patrick Jesudoss, 2021. "Corporate Social Responsibility in Liquid Times: The Case of Romania," Journal of Business Ethics, Springer, vol. 174(4), pages 763-782, December.
    15. Manoj Anand & Jagandeep Singh, 2021. "Business students’ perception of corporate social responsibility: an exploratory study," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 48(3), pages 261-284, September.
    16. Rahman, Fathony & Norman, Ruth T., 2016. "The effect of firm scale and CSR geographical scope of impact on consumers' response," Journal of Retailing and Consumer Services, Elsevier, vol. 28(C), pages 189-198.
    17. Abhishek Behl & P. S. Raghu Kumari & Harnesh Makhija & Dipasha Sharma, 2022. "Exploring the relationship of ESG score and firm value using cross-lagged panel analyses: case of the Indian energy sector," Annals of Operations Research, Springer, vol. 313(1), pages 231-256, June.
    18. Xuan Bai & Jeanine Chang, 2015. "Corporate social responsibility and firm performance: The mediating role of marketing competence and the moderating role of market environment," Asia Pacific Journal of Management, Springer, vol. 32(2), pages 505-530, June.
    19. Hana Hlochova, 2019. "The Origins of CSR In Theory and Practice: Chapter from CSR History In The CEE Region," International Journal of Business Research and Management (IJBRM), Computer Science Journals (CSC Journals), vol. 10(4), pages 84-101, December.
    20. Changhee Lee & Dan Palmon & Ari Yezegel, 2018. "The Corporate Social Responsibility Information Environment: Examining the Value of Financial Analysts’ Recommendations," Journal of Business Ethics, Springer, vol. 150(1), pages 279-301, June.

    More about this item

    Keywords

    corporate social responsibility; environmental social responsibility; economic social responsibility; stakeholders; profitability; SME;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibn:jmsjnl:v:7:y:2017:i:3:p:75-89. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Canadian Center of Science and Education (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.