Zeitschrift für Wirtschaft und Finanzen

Is CSR a Luxury that SMEs in Africa Cannot Afford?

Abstract

James AP

Corporate Social Responsibility (CSR) is a subject that divides academic opinion. The current literature on the subject provides a dichotomy of views from the perspective of supporters who argue that businesses do well by doing good. Critics, from mainly the free enterprise movement, argue that CSR is ‘just a fad’ and that by diverting valuable resources into activities that have no direct bearing on a company’s bottom-line is unscrupulous and unprincipled. There is also the argument that CSR engagement place undue burden on SMEs in Africa that can ill afford them while protecting foreign companies. The cost associated with the phenomenon is one of the key reasons for the current position which is also not helped by the lack of scientific measurement of the impact of CSR engagement on a company’s performance. However, there is evidence from CSR literature which supports the view that there are long-run benefits for companies adopting CSR strategies including enhanced reputation, enhanced staff loyalty and cost savings. This paper argues that there is a strong business case for CSR engagement by SMEs in developing countries in spite of the associated costs and concludes that CSR engagement enhances SMEs in developing countries’ social, environmental and financial performance.