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Posted on April 19th, 2012, by

Traditionally, small and medium enterprises (SME) were viewed as organizations which are entirely focused on the development of their own business since the survival in a highly competitive business environment was and still is crucial for them. Moreover, SME are in a disadvantageous position compared to large corporations which have consistently larger financial, human and technical resources, while SME are often oriented on the employment of a small number of employees and, as a rule, they have limited financial resources which are mainly directed on the maintenance and development of business. In such a situation, they naturally do not have large opportunities to develop efficient corporate social responsibilities (CSR) strategies. However, many SME attempt to develop CSR, in spite of numerous difficulties they may potentially face. At first glance such a strategy may seem to be paradoxical but, as the matter of fact, SME are simply forced to develop CSR because this helps them to prevent the personnel turnover and increases customers’ loyalty. These two factors are crucial in the contemporary business environment.

In actuality, social responsibilities constitute an essential part of the functioning of many companies. In this respect, large companies and multinational corporations are particularly concerned on their social responsibilities (Calder, 2002, p.211). However, even SME tend to grow more and more concerned with social responsibilities under the pressure from the part of large corporations and to meet the requirements of the contemporary social norms and standards. At the same time, the significance of social responsibility of companies and goals of contemporary business are often viewed as antagonistic notions since they contradict to each other. Social responsibility is an unnecessary burden for the business. Nevertheless, modern companies have already understood the importance of their social responsibility for the creation of the positive public images of companies and, hence, loyalty of customers.

The latter is extremely important because customers’ loyalty allows the company to maintain a positive marketing performance since they can count for their customers and, therefore, their sales rates remain stable that allows SME to develop middle and long-term strategies and facilitates the marketing planning. In this respect, it should be said that customers are very concerned with social policies and responsibilities of modern companies because modern business tends to be more and more socially oriented (Blanchard & Bowles, 1993). Large corporations develop CSR strategies and become closer to their customers since the latter feel that as they use services of these companies or buy their products they contribute to the well-being of the entire society and, indirectly, they participate in social responsibilities programs of these companies. In such a situation, SME cannot ignore the preferences and interests of customers since if they fail to introduce CSR policies customers can get a negative perception of SME. To put it more precisely, in contrast to those companies, which widely implement CSR, SME, which do not implement CSR, look like companies which are concerned with their revenues and profits solely. As a result, people feel that the only goal of such companies is the maximization of their profits, regardless of the existing social needs, including needs of society at large and employees of these companies in particular. Hence, the ignorance of CSR by SME evokes negative feelings in customers and they are unwilling to buy products or use services of companies which are irresponsible and do not care about socially important issues.

Basically, there are several categories of social responsibilities. First of all, the main category, which may be viewed as a traditional category of social responsibilities of companies, is the category of the local social responsibilities.

This is the employee safety and health category. What is meant here is the fact that companies should take care of their employees and they should provide them with social guarantees, for instance, sponsoring healthcare services their employees and members of their families need. This social responsibility focuses on the company itself and its personnel and helps create a positive organizational atmosphere within the company (Pride et al., 2008). At the same time, social responsibility of a company in relation to its employees contributes to the unification of the company and decreases the risk of the personnel turnover and loss of valuable and prospective employees. In addition, SME should avoid any kind of discriminations within the organization, including ethnic or gender discrimination. In fact, all employees should have equal opportunities within organizations.

In this respect, it is important to underline that the implementation of CSR by SME is very important for the internal relationships within companies and their organizational culture. In fact, when employees working in SME feel that their companies conduct socially responsible policies and assist them to cover health care expenses, for instance, they are more likely to keep working in these companies and, what is more they can increase productivity and efficiency of their work consistently (Breneman & Taylor, 1996). To put it more precisely, when employees feel secure they are certain in their future in the company they work at and they know that the company can support them if they have some problems, which relate to the sphere of social responsibilities of the company. Hence, they can entirely focus on the fulfillment of their duties and work that naturally increases productivity and efficiency of work. At the same time, the positive atmosphere within SME also contributes to better marketing performance of companies due to the increase of productivity and efficiency of employees’ work. In such a situation, employees can feel as if their company is a kind of family which support they can count for.

At the same time, nowadays, social responsibilities of companies are not limited by the internal social responsibilities of companies in relation to their employees. In fact, it is necessary to mention another category of social responsibilities, social responsibilities that are oriented on the domestic level which is known as “the external relations category”¯ (Benfari, 1999, p.188). To put it more precisely, SME should take social responsibilities in relation to local communities where they actually operate (Kaliski, 2001a). Therefore, SME should develop social programs which could contribute to the progress of the local community and which could form a positive public image of the company in the community. In such a way, SME should develop public relations with their customer as well as local communities at large in order to contribute to the development of their business along with the development of community and employees working in SME.

In actuality, the development of positive relations with the local community contribute to the formation of a positive image of SME within communities and local customers prefer to buy products or services of companies which are based practically next door and which implement CSR to “make the life of the community better”¯ (Kaliski, 2001b, p.173). In this respect, it should be said that the local communities and SME become closely intertwined, to the extent that SME get integrated in the local communities to the extent that local people develop irresistible habits to buy products or use services of a specific small or medium company which operates in the local community.

Thus, taking into account all above mentioned, it is possible to conclude that social responsibilities play crucial role in the interaction between business and SME, on the one hand, and society, on the other. In the contemporary business environment SME tends to develop CSR strategies and implement them in order to maintain their positive public image, develop customers’ loyalty and good business-customer relationships. In addition, CSR have a positive impact on the development of internal relationships between owners of SME and employees. The latter naturally increases the productivity and efficiency of work of employees and prevents the personnel turnover. As a result, SME can develop their business steadily and maintain their share of the market, in spite of the growing competition from the part of large corporations because they do not have internal problems and they are closely integrated into the local community due to their CSR.

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