Small steps, big impact : Navigating social responsibility with a social innovation focus in SMEs

Abstract

This study explores the characteristics that influence the adoption of social responsibility by small and medium-sized enterprises (SMEs) and its potential link to social innovation. The present study employs a qualitative multi-case study methodology in order to explore SME perspectives on social responsibility and stakeholder influence. This exploration is conducted through the medium of semi-structured interviews with ten SME representatives. In-depth analysis within and across cases reveals clear patterns. The findings highlight the availability of resources as a significant barrier to integrating social responsibility into SME business operations. The willingness to embrace social responsibility is primarily shaped by the personal beliefs of SME managers, highlighting the key role of intrinsic motivation in upholding ethical standards. The owner-managed capital structure of SMEs facilitates independent decision-making with regard to social responsibility investments. Furthermore, this study highlights an evolutionary process: Initially value-driven SMEs gradually prioritise the integration of social responsibility as they mature over business cycles. Interestingly, employees emerge as the key innovators driving societal progress, and their well-being is a key incentive for active engagement in social responsibility. Moreover, the influence of employees, customers and the community on social responsibility decisions exceeds that of shareholders and investors. While certain stakeholders have significant influence over SMEs' commitment to social responsibility, these companies often fail to recognise the strategic benefits of such integration. Bridging this awareness gap could be achieved through the active involvement of stakeholders and the strategic recruitment of professionals with expertise in sustainable management. This study lays the groundwork for future research, encouraging the investigation of the relationship between resource endowments and SME engagement in socially responsible activities, and exploring stakeholder motivations that drive participation in socially responsible endeavours.