Corporate Social Responsibility of SMEs during Times of Turbulence : - A Case Study of Small and Medium-sized Exporters in a Changing Environment

Abstract: The increased globalization has brought increased interdependency between countries as well as markets.  The  2007  financial  crisis  impacted  companies  on  a  global  scale  and  the  need  for companies  to  be  socially  responsible  has  increased.  Corporate  social  responsibility  (CSR)  can build reputation and lead to societal and competitive advantage, which can be especially useful for  small  and  medium  sized  enterprises  (SME)  with  limited  resources.  CSR  has  traditionally been  the  domain  of  multinational  corporations  and  little  is  known  about CSR in  SMEs. Recent research  shows  mixed results  of  how  the  financial  crisis  has  affected  CSR  strategies.  The purpose of this study is to explore how stakeholders‟ issues and CSR strategies change during times  of  market  turbulence  and  SMEs  conform  to  the  changes  of  the  internal  and  external environment. This was studied through a qualitative case study of three Swedish exporting SMEs and  their  key  stakeholders.  Interviews  with  managing  directors  of  the  companies  and  key stakeholders  together  with  secondary  data  constitute  the  gathered  empirical  data.  Key stakeholders,  key  issues,  legitimacy  with  stakeholders,  company  matching  with  the  external environment and the CSR strategy,  as well as changes during crisis were analyzed based on the empirical data. We found an increased need for CSR activities during times of turbulence. Two companies  increased  their  CSR  activities  while  one  decreased the  activities.  The results  of  the study  indicate that  the  external  environment  changes  during  times  of  market  turbulence  and companies  need  to  adapt  to  the  newly shaped  environment.  CSR  activities  became  more important  for  some  stakeholders  during  market  turbulence.  Companies  which  adapted  to  the changes  of  the  external  environment  improved  legitimacy  with  their  stakeholders  and  moved toward enhancing their competitive advantage as well as improved their performance. The study contributes  to  the  knowledge  of  how  SME  form  CSR  strategy  as  well  as  how  this  strategy  is changed  during  times  of  turbulence.  We  found  CSR  strategies  of  the  studied  SMEs  to  be emergent  and  intuitive,  and  that  CSR  strategy  changed  in  a  mixed  direction  during  the  crisis. Finally,  a  recommendation  is  made  based  on  the  results.  SMEs  can  strategically  use  CSR activities  in  order  to  develop  a  competitive  advantage through  differentiation by  a  creating societal advantage.