THE OPPORTUNITIES AND THREATS OF CSR WITHIN
SMALL FIRMS: AN EXPLORATORY STUDY ON THE
INFLUENCE OF THE ECONOMIC CRISIS
Master Thesis, MSc Business Administration, Small Business & Entrepreneurship University of Groningen, Faculty of Economics and Business
WILLEM JAN LANNING Student number: s2053942
Robijnstraat 29 9743 KN Groningen Tel.: +31 (0)6 – 52 71 67 52 E-mail: wjlanning@hotmail.com
First university supervisor: prof. dr. P.S. Zwart Second university supervisor: dr. E.P.M. Croonen
Preface
This master thesis is part of my study Business Administration, Small Business and Entrepreneurship at the University of Groningen. I am grateful to have had the possibility to write my master thesis on a subject in which I have been interested in for years. In my opinion, we all have some sort of moral duty to behave socially and environmentally responsible to ensure the quality of living and the durability of this planet. I am pleased about the fact that CSR is currently a very popular issue among entrepreneurs and that I could combine this popular topic with another very recent research theme: the economic crisis.
I would like to thank several people who helped me to complete my master thesis. First of all, the current study could not be completed without the help of my supervisor, prof. dr. P.S. Zwart. Thanks to his support I was able to provide a good and complete master thesis within a limited amount of time.
Further, I would like to thank the five respondents that were willing to share their knowledge and experiences as input for this study. I learned a lot about how entrepreneurs are putting a theoretical concept like CSR in practice and how they coped with a period of economic downturn, something that will definitely be valuable during the rest of my career.
Abstract
The influence of the current economic crisis on the exploitation of corporate social responsibility (CSR) is an emerging area for scientific research. The conclusions of these studies are twofold; on the one hand there is an opportunity perspective which says that CSR can offer opportunities for firms in periods of economic downturn; on the other hand the threat perspective argues that CSR poses threats for firms during economic crisis. However, most of the studies that address this topic neglect the specific role of small firms. The current exploratory study addresses this research gap and contributes to scientific research by providing the first in depth knowledge on this topic.
Based on the results of five sector specific case studies within independent Dutch small firms, this study confirms that there is indeed a positive and a negative relationship between the economic crisis and the exploitation of CSR and that these relationships can be moderated by the characteristics of small firms.
The main conclusion of this study is that CSR can be an interesting escape route for small firms in times of crisis: by gathering deep understanding of the modern view on CSR and integrating it through the entire organization; by successfully establishing and exploiting a firm’s network; by strategically using internet and technology; by attaining a high degree of specialization and transparency; and finally by being extensively involved in the local community small firms are able to overcome their resource deficits and convert CSR from being a threat for the organization into an opportunity.
Finally, hypotheses for future research are developed that need to be answered in order to get detailed understanding of how small firms can strategically cope with the negative consequences of the economic crisis and how small firm characteristics can enhance CSR performance.
Keywords: corporate social responsibility; exploitation of CSR; economic crisis; small firms; small firm characteristics
Table of Contents
PREFACE ... 2
ABSTRACT ... 3
1. INTRODUCTION ... 6
1.1 CSR AND FIRM SIZE ... 6
1.2 ECONOMIC CRISIS ... 7 1.3 RESEARCH GAP ... 7 1.4 RESEARCH QUESTION... 8 1.5 RESEARCH METHODODOLOGY ... 8 1.6 CONTRIBUTIONS ... 9 2. THEORETICAL FRAMEWORK ... 10 2.1 WHAT IS CSR? ... 10
2.2 WHAT IS THE ECONOMIC CRISIS? ... 16
2.3 SMALL FIRM CHARACTERISTICS ... 19
2.4 HOW DOES THE ECONOMIC CRISIS INFLUENCE THE EXPLOITATION OF CSR? ... 22
2.5 HOW CAN SMALL FIRM CHARACTERISTICS STRENGTHEN THE EXPLOITATION OF CSR IN TIMES OF CRISIS? ... 24
2.6 HOW CAN SMALL FIRM CHARACTERISTICS CONSTRAIN THE EXPLOITATION OF CSR IN TIMES OF CRISIS? ... 26 2.7 CONCEPTUAL MODEL ... 28 3. METHODOLOGY ... 30 3.1 RESEARCH METHOD ... 30 3.2 PARTICIPANTS ... 31 3.3 DATA COLLECTION ... 34 3.4 DATA ANALYSIS ... 39
3.5 VALIDITY AND RELIABILITY ... 39
4. FINDINGS ... 41
4.1 THE EFFECTS OF THE ECONOMIC CRISIS ... 41
4.2 CSR ... 42
4.3 THE RELATION BETWEEN THE ECONOMIC CRISIS AND THE EXPLOITATION OF CSR ... 43
4.4 THE IMPLICATIONS OF THE SMALL FIRM CHARACTERISTICS ... 44
5. DISCUSSION AND CONCLUSION ... 45
5.1 DISCUSSION ... 45
5.2 MAIN QUESTION ... 50
5.3 LIMITATIONS ... 51
5.4 DIRECTIONS FOR FUTURE RESEARCH ... 51
REFERENCES ... 54
APPENDIX B: INTRODUCTION E-MAIL ... 61
APPENDIX C: QUESTIONNAIRE ... 62
APPENDIX D: DIMENSIONS OF CSR ... 68
APPENDIX E: THE NUMBER OF DUTCH FIRMS PER INDUSTRY ... 69
APPENDIX F: INTERVIEW RESULTS ... 70
4.1 FIRM A ... 70
4.2 FIRM B ... 72
4.3 FIRM C ... 75
4.4 FIRM D: ... 78
1. Introduction
The current society has an increasing awareness of social and environmental wellbeing, which can be illustrated by the adoption of the Universal Declaration of Human Rights and the Kyoto protocol, for example. Corporate social responsibility (CSR), a concept that includes these social and environmental issues, has become an increasingly discussed topic within scientific literature since the 20th century, “judging from the increasing coverage in academic journals as well as daily press” (Castka & Balzarova, 2008, p. 237). On the business level, organizations became more conscious about other responsibilities than “supplying goods and services to society at a profit” (Quazi, & O’Brien, 2000). This primary business objective is a typical example of the classical view on CSR (Quazi & O’Brien, 2000). However, the more modern view on CSR argues that CSR has many other dimensions, e.g. regarding the environment or voluntariness (Dahlsrud, 2008). Although the concept is studied for years, still no consensus is reached on the definition of CSR. Therefore, this study will try to contribute to this debate by combining several definitions into one overarching CSR definition.
1.1 CSR and firm size
Research on CSR started to focus on large firms and largely neglected the role of CSR in small firms. This is a remarkable fact, since small firms often represent a significant part of an economy (Brand & Dam, 2009; Inyang, 2013). However, more recently researchers started to acknowledge this research gap and analyzed the role of CSR within small firms. Lepoutre and Heene (2006) agree with the importance of analyzing CSR in small firms because this group of firms represents a major part of the economy and small firm behavior differs significantly from that of large firms.
When taking a closer look on small firms, one can argue that these firms are less likely to implement CSR within their organizations. Researchers like Nooteboom (1994) and Lee, Lim and Tan (1999) describe the characteristics of small firms, e.g. the small scale of operations and the resulting lack of resources. Based on the latter, one can assume that the often costly exploitation of CSR is not applicable to small firms.
argumentation, it is not per definition true that large firms are more likely and more able to implement CSR. In this perspective, it is very interesting to see what the role of small firms is in CSR research.
1.2 Economic crisis
A variable that is interesting to include in this research is the current economic crisis. Several authors already recognized the influence of the crisis on corporate social responsibility (Yelkikalan & Köse, 2012; Kemper & Martin, 2010; Manubens, 2009). The deteriorating economic climate can result in changing behavior of firms, e.g. applying more conservative strategies, reconsidering their expenses or cutting costs. The relatively high costs of exploiting CSR initiatives could therefore be an incentive for small firms to abandon this approach. This is supported by Radu (2009), who studied CSR in Romanian companies.
There is an opposite view that elaborates on the advantages of implementing CSR during crisis. As Irina-Eugenia, Laura-Gabriela, and Cosmin-Silviu-Raul (2010) argue in their research on Romanian CSR initiatives, “CSR in crisis periods can be converted from being a threat to an opportunity: CSR, as a management tool, can be helpful in identifying ways to overcome the crisis and meet the social and ecological challenges of the future” (p. 965).
These authors conclude that, to gain both environmental and organizational advantages, it is necessary to adopt a company-wide strategy in which CSR is integrated. This is supported by Manubens (2009).
1.3 Research gap
1.4 Research question
The current study will use the basic ideas of two studies as a starting point. Based on the research gap identified by Krauss et al. (2010) the framework of Yelkikalan and Köse (2012) will be adopted; these authors analyzed the influence of the financial crisis on CSR from a threat perspective and an opportunity perspective. Based on this dichotomy, the research question of this study will be:
How can the exploitation of CSR offer opportunities or pose threats to small firms in times of economic crisis?
The research question will be divided in a set of sub questions and propositions. First, theoretical research will try to give answers on the following sub questions:
1. What is CSR?
2. What is the economic crisis?
3. Which small firm characteristics are important?
4. How does the economic crisis influence the exploitation of CSR?
5. How can small firm characteristics strengthen the exploitation of CSR in times of crisis?
6. How can small firm characteristics constrain the exploitation of CSR in times of crisis?
1.5 Research methododology
This exploratory research method is supported by Marshall and Rossman (1995) because it is aimed “to investigate little-understood phenomena, to identify/discover important variables and to generate hypotheses for further research” (p. 41). Further, Fassin (2008) calls for research that is conducted in the field through case studies with people who are directly involved with the phenomenon. Therefore, focused interviews with the owner/managers of independent CSR exploiting Dutch small firms will provide in-depth knowledge about the economic crisis influencing the exploitation of CSR in small firms and about the characteristics of small firms that could strengthen or weaken this relationship.
In order to provide reasonable conclusions, the firms will be chosen from a specific industry. This is supported by Yelkikalan and Köse (2012), who come up with focussing on changes in CSR activities in a specific sector as a suggestion for further research. Due to a lack of time no more than five firms are included.
1.6 Contributions
The current study will contribute to existing literature by offering new knowledge on the effects of the economic crisis on the exploitation of CSR in small firms. Further, empirical evidence of the influence of small firm characteristics on this relationship is analyzed on the business level. The third theoretical contribution is that offering hypotheses for further research can lead to potentially interesting areas of research.
The managerial relevance of this study lies in the opportunities for small firm managers to see how the characteristics of small firms are related to CSR exploitation and how their exploitation of CSR can offer opportunities or pose threats in times of crisis. By knowing how CSR can be an opportunity in times of crisis and understanding which characteristics are key, firms can adapt their overall strategies to a more sustainable business approach in order to survive the economic crisis.
2. Theoretical Framework
In this section, an overview is provided of the variables that are included in the current research. First, a theoretical foundation of CSR will be drawn. Next, the role of the economic crisis will be discussed. The last variable that will be discussed is the role of small firm characteristics. The section ends with a conceptual model and two propositions that illustrate the possible relationships.
2.1 What is CSR?
As mentioned in the introduction, the concept of corporate social responsibility (CSR) caught the attention of an increasing amount of business researchers during the past half century. Literature on CSR can broadly be categorized in two major streams: the classical view and the more modern view (Carroll, 1999; Quazi & O’Brien, 2000). Researchers that support the former view, e.g. Friedman (1970), adopt a narrow focus on a business’ social responsibilities; an organization is only interested in satisfying its customer’s needs because it aims at increasing its profits. Carroll (1999) provided a clear historical overview in which he elaborates on the evolvement of the more modern view on CSR. This author points out that, although some elements of CSR were already separately discussed earlier, the modern literature stream on CSR started with the work of Bowen (1953), who is considered to be “the Father of Corporate Social Responsibility” (Carroll, 1999, p. 291). Since then the concept evolved, was linked to other business concepts and became a popular theme for empirical research. The modern view on CSR will be central in this study and will be discussed below.
Although CSR is used for such a long time, still numerous definitions arise and no single definition seems to encompass all relevant issues. Some authors, e.g. Van Marrewijk (2003), argue that this lack of an encompassing definition of CSR is not per definition negative; it allows firms for an idiosyncratic interpretation of CSR which can be applied to specific business contexts. However, the vast majority of literature seeks to find an overall definition of CSR. Therefore, this study explores the definitions of CSR of several researchers and tends to combine the most relevant issues into one appropriate definition.
to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society” (p. 6).
McGuire (1963) acknowledged this view and came up with a more precise definition by emphasizing that societal responsibilities go beyond “legal and economic obligations” (p. 144). These legal and economic obligations were termed as ‘social obligation’ by Sethi (1975, p. 60), one of the well-known authors that started to distinguish corporate social performance (CSP) from CSR.
Although legal and economic aspects form a basis for almost every definition of CSR, together these two terms are not sufficiently covering the current content of CSR. Besides meeting legal requirements and targeting economic goals, another important aspect, as not the most important one, is the social dimension. An interesting theoretical debate on the contents of CSR by Dahlsrud (2008) shows that the latter is the second most used dimension of CSR between 1980 and 2003, based on a set of 37 definitions. This author describes the social dimension as “the relationship between a business and society” (p. 4). From the social perspective, CSR implies that business must not only create value for the company but also for society in a broad sense.
Probably one of the most familiar concepts used in CSR research which includes almost all of the abovementioned aspects is the triple bottom line of Elkington (1994). This famous notion, which is further developed in Elkington (1997), consists of 3 main elements (social, environmental and economic) which are referred to as the three Ps: people, planet and profit (Slaper & Hall, 2011). The triple bottom line was originally intended to measure firm performance broader than financial performance only. Although the applicability of the triple bottom line was widely accepted as a starting point for integrating CSR in organizations, its comprehensiveness can be questioned. However, for the current research it is a valuable contribution since it leads us to another important element of CSR that is not mentioned so far: the environmental dimension. Dahlsrud (2008) places this dimension as the least of five used dimensions of CSR in his research, which could be explained by the fact that this dimension was not always included in early definitions of CSR (Carroll, 1999). However, nowadays it is a widely accepted dimension of CSR and many authors acknowledge the increased awareness of the importance of a healthy environment.
define outcomes of CSR and instead it should be regarded “as a means, not as a set of ends” (p. 65). The way of how Jones (1980) defines CSR has strong similarities with the study of McGuire (1963) that is mentioned earlier in this paper. Both authors integrate the legal and economic obligations and argue that the social responsibilities go beyond the former two obligations. Jones (1980), however, is more specific and adds two important facets in his definition of CSR. First he emphasizes the importance of voluntariness in defining CSR: “the obligation must be voluntarily adopted; behavior influenced by the coercive forces of law or union contract is not voluntary” (p. 59-60). The voluntary dimension of CSR is supported by the majority of authors, e.g. Van Marrewijk (2003); or Dahlsrud (2008). The studies of Carroll (1979 and 1991), in which the author developed the well-known CSR-pyramid, support this dimension as well and integrate it into a framework of organizational responsibilities together with economic, legal and ethical categories.
Jones (1980) makes another interesting contribution by saying that CSR goes beyond shareholders, i.e. the economic obligations, towards a more stakeholder-oriented approach. In order to understand what a stakeholder actually means, the definition of Freeman (1984, p. 46) gives interesting insights: “any group or individual who can affect or is affected by the achievement of the organization’s objectives”. Although businesses had always been concerned with the interests of stakeholders (Dahlsrud, 2008), more and more authors started to acknowledge this enhanced emphasis on the interests of different groups of stakeholders as being key to CSR (e.g. Dahlsrud, 2008; Van Marrewijk, 2003; Quazi & O’Brien, 2000). As Jamali and Sidani, (2008, p. 330) illustrate, “the responsibility of a business extends beyond making profits to include protecting and improving society’s welfare or the well-being of specific constituent groups within society”. Dahlsrud (2008) even concludes that the stakeholder dimension, together with the social dimension, is one of the two most used dimensions in CSR definitions. Therefore, the stakeholder dimension will be included in the current definition of CSR.
voluntariness and stakeholder. Dahlsrud (2008) concludes that all these dimensions, with the legal aspect more on the background, have to be included in a complete CSR definition.
With the previous discussion and the conclusion of Dahlsrud (2008), one could argue that the search for an all-encompassing definition of CSR is complete. However, in the author’s opinion some aspects are interesting to include as well. First, Quazi and O’Brien (2000) come up with another interesting contribution to the definition of CSR: its long-term orientation. In their research they separate four different views of CSR and say that the more modern view on CSR acknowledges the possibility for firms to create “net benefits flowing from socially responsible action in the long run” (p. 36). This long-term orientation is supported by Jamali and Sidani (2008); Souto (2009); Brilius (2010); and Puneet and Ashish (2012), who all argue that the integration of CSR in the strategy of organizations can provide benefits on the long term.
This integration of CSR in a firm’s strategy leads us to the final dimension of CSR: the embeddedness of CSR throughout the entire organization. This ‘holistic’ dimension is supported by an increasing number of authors, e.g. Souto (2009); Manubens (2009); and Puneet and Ashish (2012). Another proponent of this view is the Commission of the European Communities (2001):
At the start companies tend to adopt a mission statement, code of conduct, or credo where they state their purpose, core values, and responsibilities towards their stakeholders”. These values then need to be translated into action across the organisation, from strategies to day-to-day decisions. (p. 15-16). Because of the emerging awareness that CSR is an all-encompassing business approach, this ‘holistic dimension’ is interesting to include this in the current definition of CSR, which is discussed in chapter 2.1.3.
2.1.1 Related concepts
2.1.2 CSR from a practical point of view: motivations and benefits
According to Van Marrewijk (2003, p. 99), firms “either feel obliged to do it; are made to do it or they want to do it”. The views on why owners, directors or managers decide to implement CSR into their organizations vary and can roughly be categorized into internal and external motivations. On the one hand, the capability of organizations to operate socially responsible can result in competitive advantage. This is a more strategic point of view; firms can enhance their company image with socially responsible behavior and reap the resulting benefits of CSR, e.g. increased profits; increased customer loyalty; or increased employee loyalty, motivation and satisfaction through a better working climate (Quazi & O’Brien, 2000; Souto, 2009; Kechiche & Soparnot, 2012). Some of these benefits are illustrated by Meiseberg and Ehrmann (2012), who performed an empirical study on CSR within the franchising context and conclude that, in line with several articles they discussed in their paper which are not specifically focused at franchising, CSR can have a positive influence on a firm’s financial performance. Other benefits of CSR can be: improved trust; improved market position and competitiveness; possibility to penetrate new markets through innovation; improved production processes and product quality; and cost savings (Jenkins, 2006; Kechiche & Soparnot, 2012)
Another factor that can play a significant role in implementing CSR within a company is the personal motivation of the owner and/or director of the business. For the current study, which is aimed at the role of small firms, Wiklund (1998) has an interesting contribution. He argues that the strategic orientation of an organization is similar to the characteristics of the owner of the organization. The assumption can now be made that for small firms the motivation of a firm’s owner/manager to behave socially responsible is a significant predictor of the degree CSR within this firm. This is supported by studies of Brand and Dam (2009) and Krauss et al. (2010).
As Van Marrewijk (2003) illustrated, firms might also feel obligated to use CSR. This is the external aspect, which is important in the stakeholder dimension. Different stakeholders, e.g. society, customers or government, can expect a firm to behave responsibly.
particularly when the construct is implemented throughout the entire organization. This cost aspect will be discussed in section 2.3.6, and more detailed in section 2.4.1.
2.1.3 Defining CSR
Regarding the previous debate about the contents of CSR, for the current study CSR consists of eight dimensions: environmental; social; economic; stakeholder; voluntariness; long term orientation; holistic; and legal. An overview of the definitions used in this study is included in the appendices. When looking at the definition that suits this dimensions most, the studies of the European Commission (2001), Van Marrewijk (2003) and Radu (2009) give the most complete one. These definitions are combined into the following definition of CSR, which answers the first sub question:
The voluntary integration of social and environmental concerns into a firm’s strategy and operations which go beyond legal requirements and serve the purpose of creating sustainable value for both the firm and its stakeholders.
2.1.4 Criticism on CSR
Theoretical confusion can arise when looking at the terminology of CSR. Krauss et al. (2010) and Pojasek (2011) argue that the term corporate social responsibility can make people assume that CSR is only applicable to larger firms or corporations. The contrary, however, is true; CSR is indeed applicable to other organizations as well. This is illustrated by numerous studies, e.g. Jenkins (2006) who argues that CSR can be applied in small firms as well. Further, the Commission of the European Communities (2001) adds:
It is relevant in all types of companies and in all sectors of activity, from SMEs to multinational enterprises (MNEs). Its wider application in SMEs including micro-businesses is of central importance, given that they are the greatest contributors to the economy and employment. (p. 7)
For the purpose of this paper we hold onto the term CSR, assuming that its content is applicable to small and medium-sized firms as well.
2.2 What is the economic crisis?
Before analyzing the actual implications of the economic crisis in the Dutch context and on the exploitation of CSR, it is important to summarize the contents of a crisis. An interesting study is the one of Yelkikalan and Köse (2012) who analyze the role of the financial crisis on the exploitation of CSR. Before analyzing the implications of the crisis on small firms and CSR, it is interesting to look at their definition of a crisis in general:
A sequence of events caused by internal or external factors of the organization, most probably unexpected, rapidly developing, and undesired. When analyzed in terms of emergence points, crises arising from external factors most of the time may lead to situations that are more threatening for businesses. (p. 294).
Yelkikalan and Köse (2012) distinguish an economic crisis from a general one by relating the crisis to the changing behavior of “different units of an economy”; applying it on national level; adding the variable “inadequate or improper managerial choices” as one of the causes of crisis; and withdrawing the term ‘undesired’: "macro-economic depressions emerging in certain periods unexpectedly or due to inadequate or improper managerial choices" (p. 295). According to this theoretical reasoning, the current economic situation in Europe, and more specifically in The Netherlands, broadly fits into this definition and mainly stems from an important historical event in the 21st century: the collapse of the global financial markets.
The European economy suffered from this American crisis by that many European financial institutions invested heavily in the previously described “mortgage-backed securities” (Karanikolos et al., 2013, p. 1323). This resulted in a negative impact on the financial situation of e.g. European banks which was comparable to that in the USA; banks started to make huge losses, struggle with their financial systems and ultimately went bankrupt.
As a result, in the late 2008 financial institutions and governments were forced to invest heavily in order to restore these markets (Kemper & Martin, 2010). The capital injection of 10 billion euros by the Dutch government in the ING Bank in October 2008 is a good example. After 2008 the crisis continued; because of the ongoing problems especially in the European Union serious problems occurred at the global, national and business level. More and more national governments started to struggle with their economies. One major example was the crisis in Greece in 2009. Preceded by years of governmental mismanagement, which is one of the abovementioned characteristics of an economic crisis, this country started to move towards a national bankruptcy. Only with the help of the EU and the International Monetary Fund (IMF), through multiple capital injections of about 240 billion euros in total, this disaster could be prevented. Still it remains unclear whether Greece will be able to repay these funds and what the effects will be for the EU economy on the long run. Another major concern of the EU is that Greece does not seem to be the only country with serious financial problems. The IMF expressed its concerns about the situation in e.g. Portugal, Spain and Ireland and it remains unknown what the consequences will be for the European Union when other economies will also need comparable support.
2.2.1 Consequences on the business level
Yelkikalan and Köse (2012) argue that, likely driven by the tightened capital market, one of the most used management practices by firms to survive in times of crisis is the adoption of saving strategies. This is supported by the study of Krauss et al. (2010), who argue that in times of crisis SMEs are likely to adopt the “survival mode” (p. 639). Yelkikalan and Köse (2012) elaborate on that survival mode and say that when the existence of a firm is in danger due to environmental crisis this firm will aim at surviving first, and perform all other tasks with lower priority later. This is supported by the study of Irina-Eugenia et al. (2010) which is mentioned in the introduction. The survival mode can be applied within a certain firm, i.e. internally, but also within its corporate clients or suppliers, i.e. externally.
A third factor that is caused by the economic crisis is a decrease in private or corporate consumption. This is supported by Li et al. (2011). Ultimately, lower demand results in lower production levels and vice versa; both aspects influence each other simultaneously and firms are therefore often forced to restructure and downsize the business. This downsizing results in higher unemployment, and together with other negative impacts like bankruptcies the business environment suffers heavily from the economic crisis (Li et al., 2011). This is illustrated in a recent press release of the Dutch Central Bureau for Statistics ([CBS], 2013). The number of bankruptcies in the Netherlands during the first half of 2013 has increased with 14% compared with the first half of 2012. The number of bankruptcies, 4,983 in total, has reached the highest point since 1981 and mainly the construction sector and the trade sector suffered heavily, with a number of 985 and 1,040, respectively. Geographically, the biggest relative increase in bankruptcies is measured in the region of Groningen.
The study of Manubens (2009) supports the view of Yelkikalan and Köse (2012) and sets out that a decrease in consumption and increasing importance of price creates higher priority for the economic dimension of CSR. This leads us to a more customer-oriented perspective on the crisis where customers are more short-term oriented: they are likely to seek for products with a low price ‘to satisfy basic needs on short term’ (Manubens, 2009, p. 52).
The previous discussion answered the second sub question about the economic crisis and results in a set of consequences of the economic crisis that will be central in this study: problems with acquiring adequate resources; survival mode of firms, both internally or externally; lower demand; and customers with a stronger price-orientation.
analyze the influence of the crisis on the current exploitation of CSR: how are small firms coping with the consequences of the economic crisis in their exploitation of CSR? In order to answer this question, the role of small firms has to be discussed first.
2.3 Small firm characteristics
After having discussed CSR and the economic crisis in general, it is important to highlight the role of small firms within this context. As mentioned, the purpose of this study is to determine which characteristics of small firms lead to opportunities or threats in their exploitation of CSR in times of economic crisis. Although the small business community is believed to be very heterogeneous (Lepoutre & Heene, 2006), in general small firms are associated with a set of characteristics that distinguish them from large firms (Lepoutre & Heene, 2006). First of all, the boundaries of small firms are set. Next, a set of important small firm characteristics will be discussed. Based on this theoretical foundation, the third sub question can be answered.
2.3.1 Boundaries of a small firm
Since the focus of the current study is on small firms, it is of major importance to understand when a firm can be categorized as a small firm. First of all, quantitative boundaries are set. The number of employees is commonly used within small business research, e.g. by Jenkins (2006); Uhlaner, Berent-Braun, Jeurissen, and De Wit (2012); and Inyang (2013). Therefore, this criterion will be central in this study and the focus will be on firms with at least 5 and at most 20 employees. To ensure a significant scale of CSR exploitation, it is not practical to include firms with fewer than 5 employees. Further, an upper limit of 20 employees ensures the small scale of the firm and the closeness of the owner/manager to the organization. This small scope is important since it avoids that size differences influence the results as well.
2.3.2 Small firm characteristics
Now that the boundaries of a small firm are clear, it is important to focus on the small firm characteristics that could be important for the exploitation of CSR in times of crisis. Literature on the characteristics of small firms is broad. As mentioned by Lepoutre and Heene (2006), the small business sector is very heterogeneous and so numerous characteristics can be found. For the purpose of this study, not all these characteristics will be discussed but only those which are supported by the majority of studies included in this research. Firstly four main characteristics will be introduced generally in chapter 2.3.3 to 2.3.6: the small scale of operations; the low visibility; the extensive involvement in local communities; and the lack of resources, respectively. In section 2.5 and 2.6 these will be related to the exploitation of CSR in times of crisis from an opportunity and a threat perspective, respectively.
2.3.3 Small scale of operations
Nooteboom (1994) offers an important contribution to illustrating the characteristics of small firms. In his study the small scale of operations is one of the main characteristics of small firms, together with personality and independence. This is supported by a large group of researchers, e.g. Brand and Dam (2009), who argue that small firms are believed to have smaller scale of operations compared to larger firms. Therefore, larger firms are more able to create advantages due to economies of scale and scope. However, the smaller scale could be beneficial for small firms as well because it can offer “greater potential flexibility and closeness to the customer” (Nooteboom, 1994, p. 344). Further, with a small scale of operations the attitude and beliefs of the owner/manager can more easily be diffused throughout the organization.
Jenkins (2006) agrees with this flexibility and relates it to a high adaptability to changing circumstances. With the adaptability and flexibility, small firms are able to adopt an innovative stance. Firms that are able to quickly respond to new market opportunities can “develop products and services that incorporate social and/or environmental benefits” (p. 247) and so strengthen their social or environmental image.
small firms to cope with stakeholder pressures, both internally and externally, more effectively.
Another characteristic that is discussed by Nooteboom (1994) is the independence of small firms. As mentioned before, the role of the owner/manager is very important in small firms. When firms are independent of parent companies, stakeholders or other firms, the owner/manager is able to autonomously organize the firm.
Taken together, the small scale of operations distinguishes small firms from larger firms by: high adaptability and flexibility; closeness to the customer; innovativeness; simplified internal structure and decision making processes; and independence. Therefore, small scale of operations is the first main characteristic of small firms for this study.
2.3.4 Low visibility
Lepoutre and Heene (2006) discuss the visibility of firms, which can be described as the extent to which their actions can be perceived by internal and external stakeholders. These authors say that the visibility of firms influences the “the magnitude of the consequences of irresponsible behavior” (p. 260). In general, small firms have a lower visibility than larger firms. This is supported by e.g. Jenkins (2006) and Darnall et al. (2010). This lower visibility has implications for the exploitation of CSR, which will be discussed in section 2.5.2 and 2.6.2.
2.3.5 Involvement in local communities
A characteristic that is related to the visibility of small firms is their extensive involvement in local communities. Although small firms might have a lower visibility, they are often more involved in local communities compared to larger firms (Brand & Dam, 2009). Because employees, customers and suppliers are often strongly embedded in the same communities, small firms can perceive high pressures from these stakeholders (Jenkins, 2006; Lepoutre & Heene, 2006; Brand & Dam, 2009).
2.3.6 Lack of resources
The previously discussed small firm characteristics will be central in the current study. Through exploratory empirical research, which is further described in chapter three, the presence and influence of these characteristics will be analyzed. Further, because “the literature examining the effects of the crisis on CSR does not have an extensive scope yet” (Yelkikalan & Köse, 2012, p. 295), other optional characteristics will be explored as well.
Now that the three main variables of this study are elaborated, it is important to understand the relationships between them. Thereafter, the influence of the small scale of operations, the low visibility, the involvement in local communities and the lack of resources will be linked to this relationship.
2.4 How does the economic crisis influence the exploitation of CSR?
As can be read in section 2.2.1, four main consequences of the economic crisis are central in this study: problematic resource acquisition; internal and external survival mode of firms; lower customer demand; and customers with a stronger focus on price. Literature on the effects of the crisis on CSR can roughly be divided into a threat perspective, which includes the revival of the classical view on CSR, and an opportunity perspective, which is tending towards strategic management. This dichotomy is supported by the study of Yelkikalan and Köse (2012), which is already mentioned as the starting point for this study.
2.4.1 Negative effects
First it is important to understand a major drawback of CSR that is already introduced in section 2.1.2: the involvement of high costs. The most general conclusion that authors on CSR drew so far is that the implementation of CSR involves high costs and could therefore lower profit (Friedman, 1970; Baron, 2001; Souto, 2009; Giannarakis & Theotokas, 2011).
All consequences of the economic crisis can be related to this cost aspect. Since small firms are believed to perceive more problems with acquiring the necessary financial resources, this can force small firms to lower their exploitation of CSR because of the high costs. Souto (2009) supports this view and says that, because implementation of CSR generates costs and creates a need for financial funds, “the consequence is evident: CSR in periods of crisis is a threat for firms’ survival and such a strategy is not expected in these times of uncertainty” (p. 43).
Yelkikalan and Köse (2012), in times of crisis small firm owners/managers are likely to adopt short-term oriented survival strategies and to perform primary tasks first. Since CSR can be considered as a secondary business activity by small firm owners/managers, CSR initiatives can be put on hold or in the worst case be abandoned in times of crisis.
The assumption of Manubens (2009) that customers are more seeking to find cheaper products for meeting their short-term demands can be a constraining factor for small firms to exploit CSR as well. In order to meet those price-oriented demands in an environment where the overall customer demand is already decreasing, firms can in some way be forced to lower their prices. This results in a tradeoff for firms to choose between selling at a lower price and operating socially or environmentally responsible, which is often more expensive and results in higher prices and so a decrease in sales.
A number of authors agree to this negative impact of the economic crisis; Radu (2009); Manubens (2009); and Giannarakis and Theotokas (2011) all argue that CSR exploitation is under pressure in times of crisis. However, scientific literature on the implications of the economic crisis for the exploitation of CSR within small firms is twofold and there seems to be an interesting escape route for small firms out of the economic misery.
2.4.2 Positive effects
It is interesting to see whether a firm that exploits CSR can survive a ‘shake-out’ like the economic crisis. Giannarakis and Theotokas (2011) conclude that firms can translate a threat into a business opportunity to “build or sustain their brand name, consumers’ trust and redefine the relationship between companies and society” (p. 6). Although this study is aiming at a certain group of large firms, this makes it only more interesting to analyze the role of small firms. The positive aspect of the crisis is confirmed by Irina-Eugenia et al. (2010), which is already mentioned in the introduction of this paper. These authors say that “successful CSR policies might contribute to the sustainability of companies in times of global economic crisis, by rehabilitating their corporate image on the market and by positively involving all the interested stakeholders” (p. 964).
A major strategy to overcome these negative consequences can be that a small firm tries to differentiate from its competitors through the exploitation of CSR. By targeting a niche they are aiming at customers who are willing to buy durable products for premium prices rather than having a focus on price.
Further, because firms face more problems with resource acquisition, they might exploit a network approach by searching for alternative sources for financial resources. Another possibility is that firms might use this network approach to gain knowledge about CSR. This network approach will be elaborated in section 2.5.4.
Further, in times of crisis the question arises whether CSR is viewed as a primary or secondary business activity. Based on the discussion in section 2.4.1 it is likely that small firms consider it to be secondary. However, when CSR is of major importance for small firms it is likely that the survival mode of firms will not decrease the exploitation of CSR; it is rather plausible that it will be exploited more extensively.
Whether, and how, these consequences of the crisis are influencing the exploitation of CSR will be explored in the empirical part of this paper. In the next section the moderating role of small firms’ characteristics will be discussed and whether these facilitate or constrain the exploitation of CSR in times of crisis.
2.5 How can small firm characteristics strengthen the exploitation of CSR in times of crisis?
The way of how the small scale of operations, the low visibility, the involvement in local communities and lack of resources of small firms could strengthen the exploitation of CSR in times of economic crisis will now be discussed.
2.5.1 Small scale of operations
internal structure facilitate this by being more able to quickly respond to the changing market circumstances.
Jenkins (2006) argues that due to the simplified structure of small firms, the owner/manager is more able to implement and communicate his or her vision on CSR throughout the company. This is supported by Nooteboom (1994). In that sense, it could be easier to inform and convince the employees about the benefits of CSR or to involve them in CSR activities. Together with the independence of the firm, this simplified structure creates a high degree of organizational flexibility which allows the owner/manager to decide on, and exploit, the optimal CSR strategy. Especially during an economic crisis this seems to be very relevant; the firm may decide to pursuit other opportunities to enhance their image and due to the flexibility and simplified structure they are able to quickly adapt the organization to the new strategy.
2.5.2 Low visibility
In literature, the lower visibility of small firms is not related to the crisis and CSR in detail. One of the reasons why small firms exploit CSR is that they want to gather legitimacy. Udayasankar (2008), one of the authors that support this argument, argues that adopting CSR may offer legitimacy and reputation to small firms. It can therefore be argued that during economic crisis, small firms are more willing to adopt CSR in order to gain more legitimacy and reputation and survive the crisis.
2.5.3 Involvement in local communities
As mentioned in section 2.3.5, generally small firms are extensively involved in the local community and their stakeholders often are involved in the same communities as well. Being involved in a local community means that small firms are heavily dependent on their local stakeholders. Especially in local communities, reputation is crucial for small firms; they cannot afford to behave socially or environmentally irresponsible and so lose their reputation. According to Inyang (2013), gaining reputation is an important driver for small firms to engage in CSR: “SMEs offer improved services and undertake responsible practices to maintain reputation and integrity to retain and attract customers on a continuous basis” (p. 127).
Therefore, to meet these pressures firms can enhance their CSR behavior. It is therefore plausible that this extensive involvement in local communities can strengthen the exploitation of CSR in times of crisis.
2.5.4 Lack of resources
In the study of Udayasankar (2008) the author hypothesizes that “firms with constrained or inadequate resource access may approach CSR as a strategic means to garner critical resources” (p. 170). This networking approach was already discussed in section 2.4.2 and may especially be relevant for small firms in times of crisis. Small firms can be affected by the crisis by experiencing a decrease in their already low resource base (Nooteboom, 1994; Lepoutre & Heene, 2006), can be more willing to exploit CSR to overcome this resource constraint and get the necessary resources across firm boundaries, i.e. through cooperation with other firms via networks. Therefore, the crisis can be an incentive for small firms to exploit CSR more extensively.
Based on the previous discussion, it can be argued that the small firm characteristics can have a positively moderating effect on the positive relationship between the exploitation of CSR and the crisis.
2.6 How can small firm characteristics constrain the exploitation of CSR in times of crisis?
Now that the positive implications of the small firm characteristics are elaborated, it is interesting to see how these characteristics can have a moderating effect on the negative relationship between the exploitation of CSR in times of crisis.
2.6.1 Small scale of operations
2.6.2 Low visibility
The lower visibility of small firms does not solely have positive implications; rather it could be seen as a constraining factor as well. Although little is known about the effects of the visibility of firms in detail, Udayasankar (2008) argues that firms with low visibility have relatively low external pressures. Further, their activities are not perceived by internal and external stakeholders to a large extent. Because of this and the low external pressures there could be fewer incentives to exploit CSR for small firm owners/managers. In that case, the negative effect of the crisis on the exploitation of CSR can be strengthened by the low visibility of firms.
2.6.3 Involvement in local communities
The assumption that small firms are heavily influenced by the local community can be interesting to analyze in times of crisis. When customers from the local community become more focused on price and satisfying their short-term needs rather than, for example, buying durable products, this lower interest in CSR together with a decrease in demand could result into an incentive for small firms to lower or abandon CSR activities and focus on more profitable business opportunities.
2.6.4 Lack of resources
As mentioned in section 2.3.6, the lack of resources, especially the lack of financial resources, is probably the most discussed drawback on CSR for small firms. It is widely known that integrating CSR into an organization requires significant investments. As mentioned in the introduction, a low amount of financial resources can let small firm owner/managers decide to not adopt the costly exploitation of CSR. Numerous authors integrate this barrier to CSR exploitation in their studies, e.g. Lepoutre and Heene (2006); Udayasankar (2008); Brand and Dam (2009); and Darnall et al. (2010). Although this is especially relevant for firms considering starting to apply CSR, it is reasonable that the amount of available financial resources influences the exploitation of CSR as well; even abandoning CSR seems a plausible result. Especially during economic crisis, this relation is believed to be strengthened; it is reasonable that the relatively low resource base of small firms is affected in times of crisis which strengthens the negative effect on the exploitation of CSR.
and lacks specialization, in depth knowledge is believed to be lacking (Lepoutre & Heene, 2006). According to Brand & Dam (2009), a low amount of available managerial time and a lack of knowledge could result into a lower propensity to innovate and this can be a barrier to experiment with CSR: managers will not spend their valuable time on CSR activities of which the outcomes are unknown. This lack of time is especially relevant in times of crisis, where firms apply the survival mode and need all the available time to guarantee the survival of the firm.
2.7 Conceptual model
Now that all these relationships are discussed, a conceptual framework can be developed which will be central in the empirical part of this report. In short, where section 2.5 discussed the possible effects of the small scale of operations, the low visibility, the involvement in local communities and the lack of resources on a positive relation between the crisis and the exploitation of CSR, section 2.6 illustrates how these characteristics could influence a negative relationship between the crisis and CSR exploitation. Since these moderating effects are not explored earlier, the moderating effect has an open character and the empirical part of this paper will explore the actual effects.
Based on this conceptual framework, two propositions can be developed that are based on the study of Yelkikalan and Köse (2012):
1) The exploitation of CSR can offer opportunities for small firms in times of economic crisis.
2) The exploitation of CSR can pose threats to small firms in times of economic crisis.
3. Methodology
In this chapter, the research methodology will be addressed through five paragraphs. First, the research method will be discussed. Next, the participants will be elaborated; the data collection and analysis will be discussed and the validation and reliability of the research will be addressed.
3.1 Research Method
As mentioned in the introduction, exploratory qualitative research will be applied in order to gather an in-depth understanding of the role of small firm characteristics in the exploitation of CSR in times of economic crisis. This is in line with the Marshall and Rossman (1995). In order to get the necessary knowledge on this subject, primary and secondary data is collected.
The primary data is collected by case studies via focused interviews with owners of Dutch small firms. This is in line with the suggestion of Fassin (2008), who calls for the use of case studies to gain first-hand knowledge, and the theory of Yin (2009), who argues that focused interviews are most appropriate when a set of questions need to be answered that stem from a the case study protocol (p. 107).
The secondary data is collected through desk research which covers the topics that are addressed in the theoretical section: CSR; the economic crisis; and the characteristics of small firms. The desk research is performed via electronic databases like Business Source Premier and Google Scholar. For analyzing the concepts, information is acquired through a selection of scientific peer-reviewed papers from well-known journals. The most important journals that are used for this study are mentioned below.
A more narrow timeframe is relevant for analyzing the economic crisis, because the crisis is believed to be erupted in 2007. Therefore, only the papers after this year are interesting for the current study. The most important journals that are used here are: Economics and Management; European Management Review; Global Business and Organizational Excellence; International Journal of Business and Social Science; International Journal of Economic Sciences and Applied Research; International Journal of Marketing Studies; Journal of Economics & Management Strategy; and Young Economists Journal.
The small firm characteristics and the relationships with CSR are mainly based on the next journals: Business Ethics: A European Review; International Business Research; Journal of Business Ethics; Journal of Management Studies; and Small Business Economics.
3.2 Participants
For a firm to be included in this research it must possess certain characteristics. These characteristics are also mentioned in the introduction and the theoretical framework. First of all, the boundaries of the firms are set quantitatively, i.e. a minimum of 5 and a maximum of 20 employees. Further, the qualitative measures are that the firms must be independent and managed by the owner. The independence of the firm means that it is not owned or controlled by a parent company, franchising organization, etc. This, together with the major role of the owner, ensures that the CSR behavior of the firm entirely stems from and can be explained by the owner/manager. A final requirement is that the firms already exploit CSR to some degree.
Another issue in the selection of participants is that this study will be sector-specific “in order to increase the comparability between different firms” (Graafland, Van de Ven & Stoffele, 2003). Firms are chosen from the industrial sector. Brand and Dam (2009) and Uhlaner et al. (2012) broadly categorize three sorts of sectors measured by its tangibility: tangible products, tangible services and intangible services, where the first category consists of agriculture, manufacturing and construction. Industrial firms clearly can be categorized to the tangible product sector.
recession” (p. 401). Clearly, these can be seen as tangible product sectors according to the categorization of Brand and Dam (2009) and Uhlaner et al. (2012). Although the study of Li et al. (2011) is performed with a narrow geographic focus, their focus on tangible product sectors seems to be a plausible focus group and because these firms are believed to be heavily influenced by the economic crisis the tangible product group is central in this study. A recent publication of the CBS (2013) supports the effects of the crisis on the industrial sector. With a total of 508 bankruptcies this sector belongs to the top-3 of sectors with the most bankruptcies. In the first half of 2013 the increase in the number of bankruptcies in the industrial sector was 13.4% compared with the first half year of 2012 (CBS, 2013, p. 2), which makes it interesting to analyze this sector.
The selection procedure is twofold: firms were acquired via the website of MVO Nederland and personal networks of the author. MVO Nederland (CSR Netherlands) is an overarching knowledge and network organization for Dutch firms that are exploiting CSR. Because the requirement for firms to be involved in the study was that these firms must be exploiting CSR, the online member database of MVO Nederland is a good instrument for the acquisition of participants. A total of 11 firms from the industrial sector were acquired from this database and an mail was send to these firms in which the study is introduced. This e-mail can be found in appendix B. Ultimately one week after this e-mail was sent the firms that did not respond yet are contacted by phone with the purpose to arrange an appointment with the owner/manager of the firm. In the end, three of these firms were willing to participate.
The personal network of the owner was also used in the search for participants. An open invitation was communicated through social media, e.g. LinkedIn and Twitter, to find firms that fitted the profile. Further, four owners/managers from the personal network that fitted the profile were called without an introducing email. Two firms from the personal network of the owner were ready to participate in the study.
The respondents of the study are elaborated below: 3.2.1 Firm A
3.2.2 Firm B
This is a furniture manufacturer. The firm is established in Hattem (The Netherlands) and has about 18 employees. The firm is founded by the parents of the current owner around 1958. With their craftsmanship, they started with manufacturing wooden products and developed the company into a complete manufacturer of wooden furniture and kitchens. The firm is managed and owned by the son of the founders and his wife, while the father partly owns the firm without active involvement. The firm is actively exploiting CSR. The interview was conducted with the latter. The interviewee has completed higher professional education, which is called HBO in the Netherlands. The firm is connected via the personal network of the author.
3.2.3 Firm C
This is also a manufacturer of all sorts of interior products and is established in Groningen, a city in the northern part of the Netherlands. The firm is initially founded by the interviewee and his wife in 1983. They combined the knowledge and craftsmanship of several self-employed furniture makers that were initially working independent on the same location. Nowadays, firm C is established at exactly the same location, which is of historical value. The interviewee and his wife currently run the business together with a third owner who joined the firm about three years ago. The firm offers custom made products to both the private consumers and corporate clients with a team of 7 employees in total. Firm C is acquired via the personal network of the author.
3.2.4 Firm D
This is a manufacturer of plastic cards. It is founded in 2003 by two entrepreneurs who started with the manufacturing of plastic cards. Since then, the business has grown tremendously and in 2005 the owners decided to move to their current location in Groningen. The firm changed their name in 2007 to improve their international image. Nowadays the firm has ten employees and offers a broad range of products that are all related to the firm’s former core activity of manufacturing plastic cards, e.g. card printers, gift card packages and badge accessories. The firm is currently owned and managed by the two founders. The firm is a member of MVO Nederland as well and so the contact information is again acquired via the website of MVO Nederland.
3.2.5 Firm E
printing books, but the firm grew significantly. In 1975 the firm expanded with a first offset printing press, and in 2000 the firm moved to a new factory to facilitate the growth of the firm. Nowadays, the firm offers all sorts of printed products such as labels for bikes, suitcases and clothes; stickers; and all sorts of printed material for corporate purposes. The firm has six employees and is currently owned and managed by the interviewee. He is 40 years old and has completed technical education. The firm is contacted because of their involvement in the network MVO Nederland.
3.3 Data collection
The interviews with the firms mentioned above are conducted in July and August 2013 and are based on a questionnaire. This questionnaire can be found in Appendix C and consists of questions that are derived from the variables discussed in the theoretical section of this paper. The questionnaire is structured as followed: first, four general questions are drawn about the firm: the number of employees; the year the firm is founded; how the management of the firm is organized; and the education of the owner/manager, respectively. Second, questions will deal with the degree to which the firm is influenced by the economic crisis. Third, the concept of CSR will be discussed and the role it has within the firm. Fourth, influence of the economic crisis on the exploitation of CSR will be discussed. The fifth and final part deals with the effects of the characteristics of the participants that influenced the relationship between the crisis and the exploitation of CSR.
The operationalization of the concepts economic crisis, exploitation of CSR and small firm characteristics are discussed below.
3.3.1 Economic crisis
In the theoretical section, four consequences of the economic crisis are elaborated: problems with acquiring adequate resources; survival mode of firms; lower customer demand; and customers with a stronger price-orientation. For analyzing the economic crisis, a time frame is set for the last five years since the crisis erupted around 2008.
- Problematic resource acquisition: Question 5.a tests whether the firm experienced increasing difficulties with acquiring the necessary resources during the past five years, e.g. from banks or investors.
be performed with lower priority. For this study, the survival mode has internal and external implications: the internal aspect means that the respondent itself has applied the survival mode; the external aspect means that respondent perceived a survival mode at its corporate customers or suppliers. Question 5b deals with the internal survival mode, question 5c with the external survival mode.
- Lower customer demand: question 5.d tests whether the firm suffered from the crisis by a decrease in sales or a decrease in turnover within the past five years. - Price-orientated customers: the fourth variable measures the degree to which the respondent’s customers are focusing more on price, based on the past five years. As a consequence of the crisis, people start to be more critical about their financial expenses and seek for cheaper products. Question 5.e measures this item.
The five items of the economic crisis are measured by a five-point Likert-scale: a score of 1 implies that the respondent did not perceive the consequence; a score of 5 implies that the consequence was strongly present. The degree to which firms have suffered from the economic crisis is calculated by the average of the scores on question 5.a – 5.e. Question 6 is added to determine other consequences of the crisis. The answers on this question are not taken into account in the average score since the interviews are not conducted simultaneously; the firm that is analyzed first cannot be asked about the additional effects that are perceived by the last firm that is interviewed.
3.3.2 Exploitation of CSR
integrated in the business. This is measured by question 11. The 8 sub questions will again be answered with a five-point Likert-scale. For operationalizing the dimensions of CSR, Dahlsrud (2008) is mentioned to have interesting contributions. This author summarizes the five dimensions into a clear table (see Appendix D). This table will be used in the current study; the other three dimensions are added.
- Environmental: question 11.a measures the degree to which firms are responsible to the natural environment. Dahslrud (2006:4) comes up with example of ‘a cleaner environment’, Uhlaner et al. (2012:426) with ‘monitoring waste’ or ‘searching for or producing environmentally friendly products’.
- Social: the degree to which a firm acts responsible towards its society is measured with the social aspect in question 11.2. A firm can contribute to society by integrating social concerns, which can be related to the People-dimension of Elkington (1994), into its business operations (Dahlsrud, 2008). An example of the social dimension can be improving the living standard of employees or customers.
- Economic: This dimension is about ‘socio-economic or financial aspects; it measures the degree to which CSR is aimed at ‘preserving the profitability’ (Dahlsrud, 2008:4). This is answered via question 11.3.
- Stakeholder: Kechiche and Soparnot (2012) give a useful operationalization of the stakeholder dimension. They argue that the involvement of stakeholders means that firms ‘take into account the expectations of all its stakeholders, namely employees, suppliers, clients, consumers, the local community, environmental associations and NGOs’ (p. 97). This is measured through question 11.4.
- Voluntariness: According to Dahslrud (2008), this variable measures the CSR activities of firms that are not prescribed by law, e.g. because of ethical values that are central in the firm. Therefore, question 11.5 is added.
choose to implement and exploit CSR with the aim at gaining long term benefits. This is explored via question 11.6.
- Holistic: question 11.7 measures the degree to which the firm has implemented CSR throughout the organization.
- Legal: question 11.8 measures the degree to which the firm applied CSR due to legal demands or pressures.
The degree to which the firm exploits CSR is measured by the average score on the 8 dimensions of CSR.
As questions 5.b and 5.c measure the degree to which the firm perceived the survival mode internally and externally, respectively, it is interesting to see whether the firm considers CSR to be a primary or a secondary business activity. Therefore, question 12 is added.
With question 13 the interviewee is asked whether he or she has applied CSR more, less or equally extensive during the past five years. Question 14 is added to ask how the economic crisis influenced the exploitation CSR.
3.3.3 Small firm characteristics
When the relationship between the economic crisis and the exploitation of CSR is clear, it is important to find characteristics of small firms that made these firms exploit CSR more or less extensively. First of all, question 15 is about the characteristics of the participant’s firm that resulted in more or less extensive exploitation of CSR. Question 16 until question 23 go more into depth about the four characteristics that are explored in the theoretical framework: the small scale of operations; the lower visibility; the extensive involvement in local communities; and the lack of resources.
