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Research Guide:
the other aspects, they used to exploit the natural resources, environment and the work
force to earn more and more profits. But with the passage to time the business world had
started to realize their responsibility towards the society and the environment within which
it operates. They now accept the fact that their very existence is possible with the existence
of the society, because it is the society from where they take inputs for their business and it
is the society itself where they deliver their outputs. Corporate social responsibility is not a
new thing to India, but with time it has evolved from charity/ donation to a business
strategy, where the companies plan and implement the CSR programs to gain a better
enterprise, but till date no consensus has been reached on any common or standard
definition of this term. Basically, there are two schools of thought for Corporate Social
responsibility, one argue that the businesses make profits while operating in the society and
using the resources of the society, so it is obligatory for them to utilize some of their profits
for the society. The second school of thoughts advocates that the objective of the business
is to maximize profits within legal framework and should concentrate towards their goal
There is no single agreed upon definition, globally, to the term ‘Corporate Social
Responsibility’. Many academicians and management expects have given their views on
Corporate Social Responsibilty, but the most accepted and exhaustive definition is the one
given by the World Business Council for Sustainable Development which states, “The
development while improving the quality of life of the workforce and their families as well
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as of the local community and society at large”. The European Commission considers CSR
as “Being socially responsible means not only fulfilling legal expectations, but also going
beyond compliance and investing more into human capital, the environment and relations
with stakeholders.”
1. Internal Dimension:
Internal Dimensions relates to the practices that are internal to the company, which need to
INTERNAL DIMENSIONS
management of its own work force. The internal dimension of CSR in relation to Human
flow, profit sharing & share ownership schemes, training & orientation programs etc.
Company should have recruitment policies so as to give proper representation and equal
policies should also framed to attract fresh talent by providing them opportunities for
acquiring practical training. Majority of the efforts of SME sector in relation to the internal
CSR activities are concentrated in this field. Some of the initiatives taken by them include
Interest free loans to workers, fair & timely payment of wages, gifts/bonus on festivals,
of the labour force. Most of the countries are having their own set of labour laws, which are
to be complied with by all the industries. The companies are adopting a proactive approach
to this issue and trying to provide more safety and health facilities to its workers and their
families, which in turn attracts more talents to the company and also reduces employee
turnover. In SME sector, as the scale of operation are comparatively smaller, so the
productivity of the company is directly related to its work force. The managements of
SMEs are taking many steps in this regard to ensure that there is no absenteeism in the
factory due to ill health or accident of the workers. They are providing first aid boxes, fire
monetary assistance is provided for medical care as and when required, provisions for
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c. Adaptation to Change
In current dynamic business scenario, the process of mergers and acquisitions can’t be
ruled out to consolidated and expand the business. Sometimes, workforce is downsized, as
a cost cutting measure by the firms, but they should have a humane approach towards the
workers before considering the retrenchment. The company could consider some other
alternatives like training the worker in some other work or adjustment in some other
department. According to the Green Paper (2001) by the Commission of the European
into consideration the interests and concerns of all those who are affected by the changes
and decisions. In practice the process is often as important as the substance to the success
those affected through open information and consultation. Furthermore, restructuring needs
to be well prepared by identifying major risks, calculating all the costs, direct and indirect,
associated with alternative strategies and policies, and evaluating all of the alternatives
surroundings, its image and society. Optimal use of resources and reducing environmentally
damaging effluents can reduce the environmental impact. This will also enable the firms to
save considerably in energy bills and pollution costs. Many companies are realising to the fact
that early compliance with accepted standards will provide strategic advantages in the long run
even though they may be cost inefficient in the near future. SME sector is ignorant to this
sector to some extent. Generally they don’t have in-house facilities for recycling the waste or
its disposal, but they are having separate storage facilities for waste and periodically it is being
sold to our units for re-cycling it. Sometimes the SMEs also arrange for collective waste
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disposal facilities and effluent treatment plants, which result in cost saving and utilization of
2. External Dimensions:
External Dimensions relates to the practices concerning the external stakeholders of the
company viz. consumers, suppliers, community, government etc. With the development of
international standards for business practices due to globlisation, these dimensions have
acquired a new importance as a strategic tool. The various components of the external
EXTERNAL
DIMENSIONS
a. Local Communities
The development of good relations with the local community is relevant for all companies
in general and particularly for non-local companies. These relations are being increasingly
used by the companies to support the integration of their subsidiaries into various markets.
Good understanding of the local community and their social customs is an asset which can
be utilized by the companies to gain strategic advantage in the areas they operate. This is
more relevant for the SME sector because of the availability of cheaper labour from the
local communities and it also results into lesser labour problems. Companies would find it
in their interest to substitute capital substitution with labour and reap the cost benefits.
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b. Business Partners
Building long term relationships with suppliers and customers with a sound ethical
foundation will enable companies to meet customer expectations better by offering the
products as per their requirement at the desired price. The effect of corporate social
responsibility activities will not remain limited to the company itself, but will also touch
upon their economic partners and their CSR practices will be judged taking into account
the practices of their partners and suppliers throughout the supply chain. Companies in the
outsourcing opportunities in the form of suppliers and outsourcing agents. Also as part of
their social responsibility companies are expected to provide high quality products and
services, which meet customer expectations in a manner reflecting the company’s concern
for the environment and the local conditions. Thus, consumer based business strategies of
SMEs would enable them to build long lasting relationships with consumers based on trust.
c. Human Rights
Amnesty International states: “Companies have a direct responsibility to ensure the
protection of human rights in their own operations. They also have a responsibility to use
their influence to mitigate the violation of human rights by governments, the forces of law
and order or opposition groups in the countries in which they operate.” According to
Robbins (2000), “Companies operating in countries where human rights are regularly
violated may experience a climate of civil instability and corruption that makes for uneasy
relations with government officials, employees, local communities and shareholders.” The
Caux Round Table Principles state that companies have a responsibility to respect human
The operations of companies should not impinge on the land rights of the local community.
The company needs to make sure that people are not forcibly removed from their homes
and their livelihoods are not endangered. There is the growing need to develop proper
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consultative processes with local groups protesting against projects or operations in which
they are involved. Firms also need to build confidence in the local community that people
participating in peaceful protests against company operations are not intimidated, arrested
or in any other way threatened. Also, companies can take steps to ensure forced labour is
not used in their own, or their suppliers’ operations. Companies need to ensure that human
rights principles are withheld in all their operations and related activities.
CONCLUSIONS:
Corporate Social Responsibility is not just a buzz word in management studies, it is indeed
a very important aspect of corporate reality. It is closely linked with the principle of
a vision regarding the relationship between business and the society. It is a voluntary role
and contributions that a business organization makes towards a better social and
environmental development, apart from its investment for its own development. As far as
SMEs are concerned they recognize CSR with the internal dimensions and are making
majority of their contribution towards it. Their focus is mainly on the labour welfare and
health care and they are lesser concerned about the external dimensions like environment
due to high cost of pollution control devices and also lack of government control. In case of
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References
United Nations. 1987. Our Common Future, Brussels: “Report of the World
commission on Environment and Development.”
(http://www.un.org/documents/ga/res/42/ares42-187.htm) General Assembly resolution
42/187, 11 December 1987.
CSR Perceptions and Activities of Small and Medium Enterprises (SMEs) in seven
geographical clusters, A Survey Report, published by United Nations Industrial
Development organization.
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SEMINAR
PRESENTATION SLIDES
CORPORATE SOCIAL RESPONSIBILITY
PERCEPTION OF SMEs
DIMENSIONS OF CSR
INTERNAL DIMENSIONS
EXTERNAL
DIMENSIONS
3. Agents etc.
Corporate Social Responsibility – Perception of SMEs
Conclusions
• It is voluntary role.
Thanks
Deepak Kumar Singla