Doing well by doing good in the community: Evidence from some south african small businesses

Abstract

Researchers and policy makers worldwide are convinced that only clear empirical evidence of the economic benefits of business social responsibility (BSR), rather than normative assertions, can motivate small businesses enough to accept and adopt it as an integral business practice. Unfortunately, empirical research so far has yielded mixed results, such that smaller businesses are right to be skeptical about adopting BSR. This paper reports the findings of empirical research on patterns of BSR engagement practices and growth in firms’ sales and gross profit among small and micro enterprises (SMMEs) in a South African setting. This is to determine how a small firm’s economic performance varies (if at all) with the degree of its BSR performance and the kind of BSR activity it engages in. The results suggest a high degree of BSR activity among firms with substantial portions of profit dedicated to BSR. However, contrary to expectations, very weak (minor) link was found between BSR performance and economic performance among the sample of small businesses on some but not all dimensions of BSR considered in the study. Nonetheless, it is recommended that managers and owners of small businesses be encouraged to adopt and practice BSR. Even if they do not do so for economic reasons, they would be right to do so to ‘atone’ for the widely acknowledged detrimental impacts of business on society.