Importance of CSR for Small Companies

Did you know that approximately 90% of businesses worldwide are made up of small to medium sized enterprises? SMEs also provide 50-60% employment, playing an important role in the development of the society. Small and medium sized companies are also an important factor in ensuring social welfare but sadly, initiatives related to corporate social responsibility have been mainly focused on multinationals and large companies. Experts believe that CSR is as important for small companies as it is for large firms since SMEs also have stakeholders and their impact is also significant for the society.

There are limited numbers of case studies that show small enterprises behaving in a socially responsible manner. According to industry experts, if a large number of small and medium level companies start making investments in the local communities, it will be easy to transform various social and environmental issues. It will help reduce poverty levels, provide more employment and also solve the problem of homelessness. For various transnational corporations, SME social responsibility can be improved if their supply chain risks are controlled. Issues such as child labor, health, environmental or safety problems in small and large companies are mostly found in developing countries. Therefore, significant changes will be required in this sector and the government will have to encourage small companies to make sure that CSR activities are undertaken and such issues are solved.

There are some who feel that corporate social responsibility can have a negative impact if it is implemented on small companies in developing nations. It will not only increase the costs but the companies will also face difficulties in competing in the market. They believe that good results will be shown on the basis of how CSR is integrated in small business activities. But all said and done, corporate social responsibility represents an approach for doing business in a better manner so; it should be promoted to SMEs. By following CSR activities, small companies can easily manage environmental impact and bring down their costs. They can also retain good employees and exercise leadership in the market to make a difference.