Corporate social responsibility in Danish small and medium-sized enterprises: A mixture of institutional, ethical and economic motives

Abstract

The interest in this thesis lies in the current redistribution of CSR-related responsibilities of the state, market and society – with environmental and social problems being on the rise as manifested by the risk of the Millennium Development Goals not happening – and thus an increased focus on CSR initiatives, not only by the government, but also with 75% of consumers considering CSR in their purchases, and 75% of Danish Small and Medium-sized Enterprises (SMEs) conducting CSR. Focusing on the business side, research in the vastly diverse area has shown different theoretical viewpoints – institutional, ethical and economic – as to motives. With this as a starting point, the research question is thus: "In the light of the rising use of CSR in Danish SMEs, why is CSR used?" Qualitative research and an interpretative approach are applied to interviews made with ten Danish SMEs. The process has been attentive to true interpretations, with a semi-structured interview guide and by having companies review transcription notes for further comments. It is not about looking for and verifying the coherence between statements and concrete results, but rather searching for and interpreting motives according to theory. First of all, the thesis maps out the SMEs’ management and anchoring of CSR as well as the most worthwhile actives, using Kramer, Pfitzer and Lee (2005) and the “People and Profit” practical guide (Erhvervs- og Selskabsstyrelsen, 2006). Next, Powell and DiMaggio’s institutional theory of isomorphism is used to characterise this organisational movement towards this same concept of CSR. Then, Hemingway and Maclagan (2004) and Le Menestrel (2002) are used for the ethical part, to respectively, determine underlying values and ethical positioning. Last but not least, Neergaard and Pedersen (2007) and Porter and Kramer (2006) are used for the economic part, respectively, to determine cost, benefits, a comparison of these two and methodological difficulties, as well as to determine strategic CSR. Results-wise, all three main theoretical viewpoints have been useful in shedding light on these companies’ motives. Institutions such as the government and society coercively promote an impetus for CSR and the SMEs are also mimetically and normatively inspired towards CSR. However, the companies sense that there is not enough support due to – respectively unfair regulations and price still standing in the way of CSR related purchases – posing a problem for small companies already struggling with CSR’s different costs, due to time, size, certifications and help issues. Benefits are of both internal and external acknowledgement and differentiation, as well as mostly indirect economic benefits, partly tied to methodological issues existing as to determining actual CSR results. Nonetheless, companies persevere with CSR, even with the economic crisis, and many ethical values – mostly personal and decision-maker driven – are to be found contributing to a positioning as ethical businesses, combining ethics and business. Indeed, the SMEs, varying in their approaches, all strategically adapt CSR to their company and their competitive context. To sum up, it is concluded that the Danish SMEs used CSR due to a mixture of institutional, ethical and economic motives. As to theoretical implications, the thesis serves to shed light on the institutionalisation of the CSR concept, which on one hand has progressed, but can also be said to be somewhat stalled in the light of CSR missing concrete bottom line-effect. Institutional isomorphism, however, seems to be based not only on myth and symbol, but also to a certain extent on rational function and efficiency. More specifically, mimetic processes should also consider positive admiration, rather than merely referring to ambiguity and uncertainty, as reasons for mimetism. As to the ethical theory, communication – serving as a factor distinguishing ethical business from unethical business – is not always a given due to several complications, such as lacking resources. Concerning specifically strategic economic theory, there has been good reason to include chance, as SMEs interact strategically with this factor also. Research as to motives may especially be interesting to conduct across EU countries and in comparison with the US, bringing into consideration the influence of varying institutional settings on CSR. As to practical implications, one could hope for more emphasis and walking the walk as to CSR, with governmental regulations perceived as fair and encouraging to SMEs, which may entail cheaper CSR products, with thus more consumers choosing these, all in all, sustainaining the CSR agenda.