Corporate social responsibility in small and medium enterprises: Benefits and challenges

Abstract

Corporate social responsibility (CSR) is a business management concept that originated in the early 1930s after the Wall Street crash of 1929 exposed corporate irresponsibility in large organisations. Since then, social responsibility has continued to be the focus of business operations and a popular topic of investigation for practitioners and academics from a range of disciplines. Whilst the initial interpretation of CSR has been modified and refined since it was first used, the significance of this multidimensional concept for the small and medium enterprise (SME) sector has continued to be overshadowed by its application to large and multinational organisations. Small and Medium Enterprises (SMEs) have played a crucial role in India’s economic growth. With over 30 million units, SMEs accounted for 17 percent of the country’s GDP in 2011 and employs around 60 million people, the second largest workforce in the country after the agricultural sector. SMEs always represent the model of socio-economic policies of Government of India which emphasized judicious use of foreign exchange for the import of capital goods, labour intensive mode of production, non-concentration of economic power in the hands of few and discouraging monopolistic practices. In this paper the implications of CSR and its linkages with SME sector have been discussed. Unlike large scale organizations, SMEs have many constraints e.g. financial limitations, less government support and lack of knowledge. So they are not much familiar with the concept of CSR and its advantages.