How do SMEs apply CSR in their organisations, and how does this affect conflicts between the SME and its foreign suppliers?

Abstract: Despite its name, Corporate Social Responsibility is not exclusively a concept for large corporations; however, previous studies have primarily focused on CSR within larger firms. As Small and Medium sized Enterprises both possess unique characteristics, and are important actors in the global economy, this is an area that deserves deeper research. As pressure from internal and external stakeholders are mounting, firms needs to ensure that they are following the current rules of the game. As such, firms put pressure on their suppliers, in order to protect their business. Consequently, a failure to cope with this pressure from the supplier’s part is a potential source for a conflict. Thus, the actual CSR standards used by a focal firm, has a direct link to a potential conflict within an offshoring relationship. Hence, this thesis aims to investigate how Swedish SMEs apply CSR policies and activities regarding social issues in their organisations, and how these policies and activities affect conflicts between Swedish SMEs, and their foreign suppliers. Three Swedish SMEs where interviewed, and their CSR activities, and conflict management were analysed. While all the three firms used CSR to a various degree, this research suggests that the nature and direction of the CSR activities are largely determined by the industry in which the firm operates. Furthermore, SMEs typically lack the power to enforce their CSR standards on their suppliers. However, SMEs can act in the roles of supervisors, in order to communicate that CSR is an important aspect within a relationship. The case companies also illustrated that clear goals of CSR activities within SMEs, connected to the actual business goals, aids in the establishment of CSR in small firms. Finally, none of the three case firms experienced any conflicts with their suppliers, based on social issues within CSR. Instead, this research suggests that SMEs avoid conflicts, by emphasising a careful selection of suppliers.