Capabilities, Proactive CSR and Financial Performance in SMEs: Empirical Evidence from an Australian Manufacturing Industry Sector

By N. Torugsa, Wayne O'Donohue, Robert Hecker. Journal of Business Ethics, 2011

481 citations recorded by the source corpus.

Proactive corporate social responsibility (CSR) involves business strategies and practices adopted voluntarily by firms that go beyond regulatory requirements in order to manage their social responsibilities, and thereby contribute broadly and positively to society. Proactive CSR has been less researched in small and medium enterprises (SMEs) compared to large firms; and, whether SMEs are ideally placed to gain competitive advantage through such activity therefore remains a point of debate. This study examines empirically the association between three specified capabilities (shared vision, stakeholder management and strategic proactivity), proactive CSR and financial performance in SMEs. Using quantitative data collected from a sample of 171 SMEs in the machinery and equipment sector of the Australian manufacturing industry, we find that all specified capabilities are positively associated with adoption of proactive CSR by SMEs, and that proactive CSR is, in turn, associated with an improvement in firm financial performance. Evidence of a fully mediating role for proactive CSR on the association between capabilities and financial performance presented in this study aligns with RBV theory that suggests adoption of value-creating strategies that make the most effective use of a firm’s capabilities is essential to financial success. The study contributes to the CSR literature by demonstrating a case for SMEs being able to maximise financial returns whilst proactively making progress towards CSR.

Subfields: Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/c756a515bc01436b5d43be2c41084a3cf1a37456

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Citations in the corpus

Environmental Management, Climate Change, CSR, and Governance in Clusters of Small Firms in Developing Countries (2015, methodology): “Nevertheless, this condition provides developing country SMEs with an opportunity to construct a CSR differentiation strategy with a focus on the emerging CSR issues related to EM practices (Cruz, Boehe, & Ogasavara, 2013; Torugsa et al., 2012).”
The Healthcare Sustainable Supply Chain 4.0: The Circular Economy Transition Conceptual Framework with the Corporate Social Responsibility Mirror (2019, background): “The regulatory, ethical, and social responsibility aspects support CSR use [26,28].”
Relationship between Corporate Social Responsibility and Competitive Performance in Spanish Smes: Empirical Evidence from a Stakeholders’ Perspective * (2016, methodology): “The validity of each one of the indicators used can be also corroborated according to other CSR measures developed from different approaches, such as the triple bottom line perspective (Torugsa et al., 2012; Gallardo-Vázquez and Sánchez-Hernández, 2014a).”
Achieving Shared Triple Bottom Line (TBL) Value Creation: Toward a Social Resource-Based View (SRBV) of the Firm (2018, background): “More recently, along the same lines, Aguinis and Glavas (2012) concluded, based on a comprehensive literature review, that the micro-foundations of CSR and multi-level (individual, organizational, institutional) predictor-moderator/mediator-outcome relationships need more research.”
Do Stakeholder Orientation and Environmental Proactivity Impact Firm Profitability? (2017, unknown): “2008) and between stakeholder management and economic performance (Coff 1999; Ben Brik et al. 2011; Kaufman and Englander 2011; Torugsa et al. 2012; Costa Lourenço et al. 2012).”