SMEs and the fallacy of formalising CSR

Abstract

There exists increasing pressure for small and medium‐sized enterprises (SMEs) to engage in corporate social responsibility (CSR) practices, including social reporting. Curiously in this promotional programme of CSR reporting, the only group whose ideas are not sought in this debate are the SME leaders themselves. The present ethnographic field analysis, based on discussions within entrepreneurs' circles, tends to suggest that the argument for expanding formalisation of CSR to SMEs rests upon several fallacies. It implicitly assumes that an apparent solution for large multinationals can be transposed to SMEs, and it underestimates the drawbacks of bureaucracy. Moreover, many SMEs experience inconsistency between the idealistic CSR communication of some large companies and their actions, especially in the supply chain. The author concludes that reports do not constitute the validation for real CSR, nor the proof of superior ethical behaviour. Formalisation can even be counterproductive. Conversely, the absence of social reporting does not imply that SMEs do not behave responsible. CSR in SMEs needs a specific approach, adapted to the informal nature and entrepreneurial character of the small business. The essence of CSR lies in the implementation of responsible business practices. It lies in the right attitudes, in the corporate culture, not in formalisation.