While available data seems to suggest that corporate responsibility (CR) is the prerogative of large businesses, there is ample anecdotal evidence that being a small business does not impede corporate responsible behaviour. Jan Lepoutre, post-doctoral research associate at Vlerick Leuven Gent Management School, has investigated the impact of firm size on CR engagement. SMEs face particular challenges, but are not lacking in opportunities.
There is no denying that small businesses experience more difficulty than larger firms when it comes to engaging in CR. Studies show that the smaller the company, the less chance there is of it having an environmental charter or ISO 14000 certification, or being involved in social initiatives. “The barriers for SMEs to engage in CR, or responsible entrepreneurship, roughly boil down to information and power - or lack thereof,” says Jan Lepoutre.
“The Unilevers and Walmarts of this world receive a lot of feedback from their stakeholders about the legitimacy of their business and products. Small businesses often lack this advantage, because they’re less visible and therefore not on the radar of NGOs and other pressure groups. There’s also a difference in transparency and reporting requirements. In order to receive feedback and information, transparency and reporting are important, but the requirements for SMEs haven’t been clearly defined yet.”
SMEs are often just small players in the supply chain. If they want to improve the sustainability of their products and/or business processes, they are dependent on the willingness of other partners. SMEs often have less negotiating power and leverage. And if by taking the initiative, SMEs went against the flow, they could face fierce resistance from larger competitors.
So, should we then conclude that SMEs are not up to the challenge? Jan Lepoutre: “Not necessarily. What SMEs lack in power, they make up for in flexibility. More often than not it’s small companies that are proactive and innovative when it comes to environmentally and socially responsible entrepreneurship. Changing direction, altering business processes, is easier for an SME than for a large firm.”
Regardless of CR considerations, entrepreneurship requires a continual questioning of assumptions. Jan Lepoutre argues that when it comes to CR, the question both large and small companies should ask themselves is what their purpose is in society. They should look at their core competencies and analyse how to use them as effectively as possible to help tackle the challenges facing our society. “SMEs account for 99% of all businesses in the EU and the rest of the world, and for more than 60% of total employment. Their impact on the environment and society can’t be overestimated,” he says. “At most, scale poses challenges; it’s not an excuse to not engage in responsible behaviour!”
Published on 20/09/2010
