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A Closer Look at Social Responsibility Behavior in Small Companies

Rajat Panwar (DBA Graduate 2015), Assistant Professor of Sustainable Business Management in the Faculty of Forestry at the University of British Columbia in Vancouver (Canada), has defended his thesis on social responsibility behavior in small companies. The results of his doctoral dissertation have a significant policy implications for corporate social responsability promotion among small companies, especially in the USA.

SMEs and Social Responsibility

In order to advance understanding of social responsibility in small companies, Rajat Panwar's research considered three separate yet related inquiries - (a) how perception of the benefits of social responsibilities drove social engagement in small companies; (b) how small companies' social responsibility actions were related to their choice of competitive strategy; and (c) how small companies' slack resources affected their different social responsibility actions.

 Data gathered from a survey of 478 small companies representing multiple manufacturing sectors in the US demonstrated that: (i) the notion of strategic CSR has not spread throughout all small US companies; (ii) perceptions of CSR benefits are only a partial factor in driving small companies' social engagement - while intangible benefits are associated with social engagement, tangible benefits have no effect; and (iii) a decline in a small company's financial resources negatively affects CSR engagement and this decline is higher for community initiatives than environmental initiatives. 

This research proposes a unique motivation-capacity framework by integrating the business case and slack resource perspectives which are often seen as being contradictory. The research makes two notable contributions: First, it highlights that the business case perspective is not the dominant force behind social engagement. Second, it opens up a new line of inquiry by studying company social engagement, including core and peripheral initiatives, while under conditions of decline and resource constraints. 

Organisational Impact of the Research

The results of this doctoral dissertation have significant policy implications for corporate social responsibility (CSR) promotion among small companies, especially in the US. They question the efficiency of market-based approaches that use the business case as a core argument to promote CSR among small companies. Instead, Rajat Panwar recommends that one can engage small companies more effectively in social responsibility by emphasizing non-market motivations.

It could be more productive to develop policies based on institutionally-defined notions, rather than use blanket assumptions about the efficacy and appeal of market-based approaches. He also recommends that it may be worthwhile to develop mechanisms - possibly in cooperation with local governing bodies - to formalize the ways in which small companies gain local reputation through social initiatives. For example, communities may form advisory groups to guide the CSR efforts of companies operating in their areas.

Dr Panwar upholds that small companies would be more likely to embrace social and environmental issues if the surrounding community demands it. Community education is therefore vital to promote social and environmental actions among small companies.

Rajat Panwar’s dissertation on social responsibility behavior in small companies was based on three papers: 

  • "Does the business case matter? The effect of aperceived business case on small firms’ social engagement". 
  • "Does small firms’ community and environmental engagement depend on their competitive choice?" 
  • "Being Good When Not Doing Well: Examining the Effect of the Economic Downturn on Small Manufacturing Firms’ Ongoing Sustainability-Oriented Initiatives."

The first paper was presented at the Academy of Management meeting in Vancouver held in August 2015 and it was published in the Journal of Business Ethics. The second paper was presented at the annual meeting of the International Association for Business and Society (IABS) in Guanacaste, Costa Rica in March 2015. 
This paper is currently being revised and resubmitted to the Journal of Cleaner Production. The third paper was presented at the Academy of Management meeting in Philadelphia in August 2014 and was published in Organization and Environment.

Rajat Panwar's publications