CSR and Competitiveness European SMEs - KMU Forschung Austria

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32 CSR and Competitiveness - European SMEs’ Good Practice - Consolidated European Report Having in mind the comparatively limited resources of small and medium-sized enterprises it is not surprising that one of the main hindering factors for becoming involved in CSR refers to the lack of time and financial resources (particularly against the background of perceived additional costs of CSR activities and the more severe pressure of the “daily struggle to survive” (European Multistakeholder Forum on CSR, 2004)), mentioned, for example, by 16 % - 19 % of the European SMEs participating in the ENSR Enterprise survey 2001 (European Communities, 2002). More “impressive” data can be found at national level: So, for example, 35 % of Romanian (Source: American-Romanian Chamber of Commerce – AmCham) or 68 % of the Austrian enterprises (Deuerlein et al., 2003) mentioned the lack of financial resources as the most important reason for not donating. As to this regard, the fact that respective returns on CSR investment may only manifest in the long-run results in the feeling that CSR is only affordable for larger enterprises with a good financial standing. Furthermore, and in relation to the above-mentioned lack of understanding of and familiarity with the concept of CSR by SMEs, a lack of know-how in terms of different modes of application, but also with regard to where to find support for implementing CSR measures or relevant partners (e.g. NGOs conducting CSR related programmes) can be seen as an important barrier for SMEs’ engagement in socially responsible acting (European Multistakeholder Forum on CSR, 2004). Another aspect influencing SMEs’ decision for/against CSR refers to the expected outcome. The ENSR Enterprise Survey 2001 (European Communities, 2002) shows that only 8 % of the European SMEs not engaging in CSR argue that the main reason underpinning their inactivity is because they do not expect any benefits from these activities. Danish data, for example, shows that 64 % of the enterprises have implemented CSR activities in order to preserve or improve the enterprise’s reputation, and 56 % expect a positive impact on the enterprise’s financial result (with a positive correlation between company size and this expectation). (TNS Gallup, 2005). Also Bronchain (2003) mentions the amelioration of the enterprise’s image as one of the most important motivations for engaging in CSR whereby he distinguishes between a pro-active (to enhance the image of the company) and a reactive approach (to prevent it from potential deterioration) and also pinpoints the potential of improving the company’s image as an attractive employer. Furthermore, he emphasises the possibility of using CSR as a tool to launch new or improved products or services or to create a market for them, i.e. using CSR strategically as a marketing tool. As in recent years a generally increasing awareness of consumers in the field of responsible business behaviour can be observed the application of CSR measures in combination with a target group oriented communication of these activities may increase companies’ competitiveness. Nevertheless, due to their higher degree of familiarity with public reporting it is still larger enterprises that choose to use their CSR activities for PR purposes while only a comparatively small percentage of SMEs opt for such. Polish research (UOKiK, 2006), for example, shows that for only about 30 % of SMEs marketing reasons are an important motive to involve in CSR, and also Huju (2005) and Maaß/Clemens (2002) find for Finnish and German enterprises that CSR activities are mainly reported by larger enterprises.
CSR and Competitiveness - European SMEs’ Good Practice - Consolidated European Report 33 To summarise these considerations, the favouring and hindering factors influencing SMEs’ decision making process with regard to their engagement in CSR can be illustrated as follows: Graph 4 Favouring and Hindering Factors in SMEs’ Decision Making Process Concerning CSR general framework conditions, e.g. �legal �legal regulations, incentives �extent �extent of public discussion �economic �economic development Source: Austrian Institute for SME Research “Strategic orientation“ �� ethical attitude �� company tradition �� stakeholder expectations “Operative impetus“ �� inquiries from potential beneficiaries �� invitation from consultants business partners �� participation in public support programmes CSR activity 5.3 Level of SMEs’ Engagement in CSR activities company-based characteristics, e.g. �endowment �endowment with human and financial resources �familiarity �familiarity with CSR �usage �usage of CSR as marketing tool Among public and policy discussion the impression is still prevalent that CSR is mainly an issue for large, multinational companies while SMEs do hardly engage in such activities. This, however, is at least partly due to the fact that many SMEs do not identify their CSR activities as such and, therefore, do report on them to a lower extent than larger business entities do (e.g. by publishing CSR reports or using their CSR practices for PR campaigns) – at least as far as formal communication channels are concerned (see, for example, Maaß/Clemens 2002 for Germany). This corresponds to the general communication strategies of SMEs, particularly the smallest enterprises (hardly any market oriented marketing/PR or annual reports etc.), which is not at least triggered by their limited financial resources and company-internal expert knowledge for such purposes. Furthermore, as many SMEs are comparatively well linked to their local stakeholders they rather rely on informal dissemination channels for their CSR activities (i.e. word of the mouth) and even deem “open communication” to result in a loss of credibility due to obviously seeking positive image effects. Nevertheless, there is no doubt that also small and medium-sized enterprises initiate CSR activities. Up to now several research studies have dealt with the question of SMEs’ engagement in CSR. The results of the Observatory of European SMEs (European Communities, 2002) show, for example, that external social responsibility activities are not only assessed by the enterprise sector to be important in general, but already are a reality for a large share of European SMEs: 48 % of the very small enterprises (0 – 9 employees), 65 % of the small enterprises (10 – 49 employees) and 70 % of medium-sized enterprises (50 – 249 employees)
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