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Capabilities, Proactive CSR and Financial Performance in SMEs: Empirical Evidence from an Australian Manufacturing Industry Sector


  • Nuttaneeya Torugsa


  • Wayne O’Donohue
  • Rob Hecker


Proactive corporate social responsibility (CSR) involves business strategies and practices adopted voluntarily by firms that go beyond regulatory requirements in order to manage their social responsibilities, and thereby contribute broadly and positively to society. Proactive CSR has been less researched in small and medium enterprises (SMEs) compared to large firms; and, whether SMEs are ideally placed to gain competitive advantage through such activity therefore remains a point of debate. This study examines empirically the association between three specified capabilities (shared vision, stakeholder management and strategic proactivity), proactive CSR and financial performance in SMEs. Using quantitative data collected from a sample of 171 SMEs in the machinery and equipment sector of the Australian manufacturing industry, we find that all specified capabilities are positively associated with adoption of proactive CSR by SMEs, and that proactive CSR is, in turn, associated with an improvement in firm financial performance. Evidence of a fully mediating role for proactive CSR on the association between capabilities and financial performance presented in this study aligns with RBV theory that suggests adoption of value-creating strategies that make the most effective use of a firm’s capabilities is essential to financial success. The study contributes to the CSR literature by demonstrating a case for SMEs being able to maximise financial returns whilst proactively making progress towards CSR. Copyright Springer Science+Business Media B.V. 2012

Suggested Citation

  • Nuttaneeya Torugsa & Wayne O’Donohue & Rob Hecker, 2012. "Capabilities, Proactive CSR and Financial Performance in SMEs: Empirical Evidence from an Australian Manufacturing Industry Sector," Journal of Business Ethics, Springer, vol. 109(4), pages 483-500, September.
  • Handle: RePEc:kap:jbuset:v:109:y:2012:i:4:p:483-500
    DOI: 10.1007/s10551-011-1141-1

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    References listed on IDEAS

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    Cited by:

    1. Nazim Hussain, 2015. "Impact of Sustainability Performance on Financial Performance: An Empirical Study of Global Fortune (N100) Firms," Working Papers 1, Department of Management, Università Ca' Foscari Venezia.
    2. repec:gam:jsusta:v:8:y:2016:i:2:p:93:d:63840 is not listed on IDEAS
    3. repec:spr:qualqt:v:51:y:2017:i:4:d:10.1007_s11135-016-0352-z is not listed on IDEAS
    4. repec:bit:bsrysr:v:8:y:2017:i:1:p:133-146:n:11 is not listed on IDEAS
    5. Park, Byung Il & Ghauri, Pervez N., 2015. "Determinants influencing CSR practices in small and medium sized MNE subsidiaries: A stakeholder perspective," Journal of World Business, Elsevier, vol. 50(1), pages 192-204.
    6. Zaborek Piotr, 2014. "CSR and Financial Performance: The Case of Polish Small and Medium Manufacturers," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 43(1), pages 53-73, September.
    7. Francisco J. Sáez-Martínez & Cristina Díaz-García & Ángela González-Moreno, 2016. "Factors Promoting Environmental Responsibility in European SMEs: The Effect on Performance," Sustainability, MDPI, Open Access Journal, vol. 8(9), pages 1-14, September.
    8. Elisa Alt & Emilio Díez-de-Castro & Francisco Lloréns-Montes, 2015. "Linking Employee Stakeholders to Environmental Performance: The Role of Proactive Environmental Strategies and Shared Vision," Journal of Business Ethics, Springer, vol. 128(1), pages 167-181, April.
    9. repec:gam:jsusta:v:10:y:2018:i:6:p:1816-:d:149903 is not listed on IDEAS
    10. repec:gam:jsusta:v:10:y:2018:i:4:p:964-:d:138126 is not listed on IDEAS
    11. Andreas Georg Scherer & Andreas Rasche & Guido Palazzo & André Spicer, 2016. "Managing for Political Corporate Social Responsibility: New Challenges and Directions for PCSR 2.0," Journal of Management Studies, Wiley Blackwell, vol. 53(3), pages 273-298, May.
    12. repec:nup:jrmdke:v:5:y:2017:i:3:415-437 is not listed on IDEAS
    13. repec:eee:touman:v:64:y:2018:i:c:p:1-12 is not listed on IDEAS
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    16. Roxana STEGEREAN & AnamariaPETRE & Alexandru CHIS, 2014. "Environmental Strategy And Hotel Competitiveness-Evidence From Bra?Ov County," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 8(1), pages 590-597, November.
    17. Marzanna Katarzyna Witek-Hajduk & Piotr Zaborek, 2016. "Does Business Model Affect CSR Involvement? A Survey of Polish Manufacturing and Service Companies," Sustainability, MDPI, Open Access Journal, vol. 8(2), pages 1-20, February.
    18. Jitka Srpová & Jan Mísař, 2016. "A Case Study on Implementation of CSR to Mitigate High Employee Turnover in a PR Agency," Ekonomika a Management, University of Economics, Prague, vol. 2016(4).
    19. repec:gam:jsusta:v:9:y:2017:i:8:p:1300-:d:105931 is not listed on IDEAS
    20. Juraj Cheben & Drahoslav Lancaric & Radovan Savov & Marián Tóth, 2015. "Towards Sustainable Marketing: Strategy in Slovak Companies," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 17(40), pages 855-855, August.
    21. repec:ucm:reveco:y:2017:i:123:p:07-36 is not listed on IDEAS
    22. repec:eco:journ1:2017-02-41 is not listed on IDEAS
    23. Andrzej Chodyñski, Wojciech Huszlak, 2015. "Ecological Security Of A Business And Execution Of Corporate Social Responsibility Assumptions," Ekonomika, Journal for Economic Theory and Practice and Social Issues 2014-04, „Ekonomika“ Society of Economists, Niš (Serbia).
    24. repec:eee:soceco:v:73:y:2018:i:c:p:116-124 is not listed on IDEAS
    25. repec:rss:jnljms:v1i9p4 is not listed on IDEAS


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