An investigation into corporate social responsibility on sustainable growth of wholesale and retail SMEs : a case study of Ethekwini Municipal Region

Abstract

In light of current business trends, social responsibility has become a strategic tool for such important outcomes as financial gains and market positioning, amongst others. However, social responsibility for businesses has been mainly associated with large corporations, and Small to Medium Enterprises (SMEs) were insignificant as they regarded social responsibility as a costly, unsustainable business initiative. Considering wholesale and retail SMEs in EThekwini Municipal region, corporate social responsibility has been growing greater importance in the minds of businesses. Given the enormity of the South African economy, social responsibility for business took centre stage during the socio-economic turbulence experienced in the country. To a great extent, social responsibility has appeared in literature covering large organisations but comparably, microscopic and scarce theoretical or empirical literature existing for small and medium enterprises. However, this scenario undermines the importance and critical role that SMEs play in the economy of the KwaZulu-Natal region. This research study aims to investigate Corporate Social Responsibility on Sustainable Growth of wholesale and retail SMEs in EThekwini Municipal region. This shall be done by assessing the attitude levels of wholesale and retail SMEs towards corporate social responsibility; investigating the practice of corporate social responsibility by wholesale and retail SMEs; exploring barriers undermining the practice of corporate social responsibility by wholesale and retail SMEs; and exploring SME owner-managers’ values key to the sustainable growth of the business.

The Stakeholder Theoretical framework guides this study and a mixed method approach was adopted where data was collected by carrying out surveys. The researcher pedantically probed participants with the same questions by means of structured questionnaires. The primary data in respect of CSR on Sustainable Growth of wholesale and retail SMEs in EThekwini Municipal region were obtained by means of self-administered questionnaires and semi-structured interviews, which followed the completed questionnaires. The research considers a target population drawn from the membership list of the Durban Chamber of Commerce and Industry. The study was carried out and consisted of businesses that employed more than 20 and less than 200 fulltime employees. This research study is descriptive in nature and will make use of a descriptive model for data analysis.

Regarding Corporate Social Responsibility on Sustainable Growth, the study mainly focused on wholesale and retail SMEs. To a large extent, the attitudes and perceptions of the respondents were negative and rather insignificant when it came to implementation of Corporate Social Responsibility. The main reason for this was the cost attached to CSR. In some instances, owner managers were not aware of the positive impact of CSR as a strategic tool in the sustainable growth of the business through participation. It emerged that majority of wholesale and retail SMEs were not fully involving Stakeholders in their business activities as required by the Stakeholder Theory. Some Stakeholders are valued more than others and many do not practice CSR towards the community and the natural environment, regarding it as extra-curricular from their core-business. In addition, majority of wholesale and retail SMEs rated their businesses as averagely successful citing the unstable economy that South Africa is currently going through which has seen unemployment rising above approximately 25 percent in 2013. The results showed that the major reason, amongst other reasons, causing wholesale and retail SMEs in EThekwini Municipal region fail to commit to CSR is the cost and the impact of practising CSR on their profit. Furthermore, SME businesses were of the belief that CSR was only for large corporations and that SMEs were insignificant since they had rather less or no impact on the environment. SMEs held the municipal authority responsible for practising social responsibility on the environment since they (SMEs) followed all the laws of the land.

This study aspired to expand and contribute significantly to the body of knowledge regarding CSR by examining CSR on sustainable growth of wholesale and retail SMEs in EThekwini Municipal region. As new knowledge, the study proposed a model based on the Stakeholder Theory which is meant to assist wholesale and retail SMEs in EThekwini Municipal region to apply positive attitude towards embracing CSR in their businesses. However, the study recommends that local authorities and chambers of commerce must play a leading role in awareness and support mobilisation to try and motivate wholesale and retail SMEs to practise CSR. In addition, it is recommended that the phrase ‘Corporate Social Responsibility’ should be re-phrased as ‘Small Business Responsibility’ or generally ‘Business Responsibility’ as a way of contextualising the whole responsible business idea, promote and refer to the social responsibility of SMEs. The phrase simply drives SMEs to think that they are excluded from the practice because of their size. The concept Corporate Social Responsibility imposes a challenging journey on SMEs, it is psychologically intimidating to SMEs, hence resistance to the practise of CSR.