CSR in SMEs: An Analysis of Donor-financed Management Tools

Small and medium-sized enterprises (SMEs) account for more than 90% of the world’s enterprises and 50-60% of employment. Their contribution to national and regional economic development and GDP growth is well-recognized (Morsing & Perrini 2009, Srinivasan & Bolar, Under Review). In fact, SMEs are thought to have enhanced local productive capacities, fostered innovation and entrepreneurship, and attracted foreign direct investment in both developed and developing countries (Raynard and Forstater 2002). However, whereas SMEs account for more than 60% of employment in developing countries, and although they are sometimes portrayed as key vehicles in the struggle against poverty in Southern contexts, (Luetkenhorst 2004), there is still a critical lack of knowledge about to the extent to which these firms may contribute to achievement of broader objectives of sustainable and equitable development (Fox, 2005). In fact, when it comes to their role in promoting corporate social responsibility (CSR) in developing countries, the verdict is still out there in terms of the extent to which SMEs engage in CSR, and whether their CSR involvement makes any difference to the profitability of firms, workers, and the environment in the South.