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Social Investment Makes Sense for SMEs

Is CSR for SMEs?  Resoundingly yes. It’s often central to the way businesses grow and evolve.  Below, the four-part ‘TAAR’ formula and examples will help you think about, justify and improve your social investment.  


But, as a preliminary, please ignore that CSR label! Agreed, ‘corporate social responsibility’ seems to say: ‘big guys only’. It feels bureaucratic and ponderous. Even – the alternative, ‘corporate citizenship’ – faintly Stalinist!

99% of European businesses are SMEs. Most, as the EU points out in excellent guidance, probably don't know these terms. For them, (preferred label) social investment is ‘informal and intuitive’.  Here’s how.

First, T for trading 

Most basically, pragmatic SMEs respond to context.  They do not put major contracts in jeopardy, risk liability suits or face a consumer boycott willingly. Enlightened self-interest guides judicious social investment. They smooth their own path.   

Example: small suppliers to a major sponsor of a local sports club I know well also ‘contribute’. It costs them little. It secures their key relationship. And it achieves helpful community ‘resonance’.

Second, A for adapting 

Moving up, the SME adapts to, and extends, its context. Social investment – perhaps unconsciously - builds, or sustains, a competitive advantage.  ‘Value creation’, in current management jargon, occurs as the entrepreneur’s intuitive engagement reaches out. 

Example: over 20 years my village garage-owner has turned round an originally failing business. He is certainly very good at what he does.  But he also advertises with, and participates actively in, many village groups.  It costs him little and, he says, rarely generates direct leads.  But, that’s not the point.  Indirectly and daily, word-of-mouth ripples and resonates. The business is part of the village fabric. 

Third A for aligning

Next CSR becomes conscious. The entrepreneur identifies customers’ social motivations. Following brand association principles, he applies ‘cause-related marketing’. Now he aligns publicly with, say, a major charity. 

Example: my area hosts a justly famous and hugely-respected hospice. Many individuals donate privately. Often and willingly they support fund-raisers. So wise SMEs, with perfectly genuine social motivations, align activity to this ‘brand’ and build their own reputations.

Fourth, R for relating 

At the top level, CSR is more than conscious. It is calculated and consciously ‘win-win-win’ or ‘value-creating’ for many parties. Social motivation and conventional business investment fuse together.

Example: a current favourite is a church. It has reconfigured its layout and opens daily to the community. Not just the obvious – coffee, books, childcare group – but other services from fresh veg to post-office.  It creates a vibrant hub and connects many micro businesses in a marketplace. And, for the CSR promoter itself? It has restored the church to its place at the centre of community life. It generates revenue to support its own charitable work. And, yes, it puts more backsides on the pews!

And finally? 

Don’t get hung up on motivation. When you set up - and set out - to meet some local need, social intuition and cash motivation can, and  do, go hand-in-hand.  Or more formally, the newly-minted entrepreneur is, as Kakabadse and colleagues at The Institute for Small Business and Entrepreneurship (ISBE) note, “rarely motivated by short-term economic factors” alone.  “Values and attitudes towards the social context”, they report, are embedded in the “vision and the entrepreneurial formula”. 

Now if you’ve discovered that you’re already a social investment expert, think about how you apply those insights on a more significant scale. 

To the benefit of your business. And of your community.

Dr. Bill Nichols
About the Author

Dr. Bill Nichols

Dr. Bill Nichols is a marketing specialist and former entrepreneur who is now senior lecturer in marketing at Buckinghamshire New University and on visiting faculty at Henley Business School.

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