Small businesses are key to global economies, with over 332 million worldwide in 2021. As their influence grows, so does the pressure to show social responsibility. But for small businesses with limited resources, adopting responsible practices can be challenging. Their unique operations and often hybrid approaches mean a one-size-fits-all solution doesn’t work. Understanding how small businesses approach social responsibility can help create better support systems and policies.
Unlike larger companies, small businesses often operate informally, with decisions made directly by owners or managers. These choices are shaped by personal goals, like lifestyle or family values, which often lead to community- and environment-focused practices. However, without clear plans, these efforts can be inconsistent and may struggle to balance different stakeholder needs.
Failure to connect
Corporate social responsibility (CSR) frameworks often fail to connect with small businesses. The word “corporate” itself feels irrelevant to them, and existing concepts rarely reflect their realities. This raises an important question: how can small businesses be better supported in meeting their social and environmental commitments while honoring their unique structures and relationships?
To explore this, researchers from IE Business School studied small, independent food service businesses. Their findings revealed three approaches to social responsibility:
- Growth-Oriented Businesses prioritize profitability and compliance. They see economic survival as a foundation for investing in employees and supporting society. Partnerships with other businesses are key to their strategy.
- Value-Oriented Businesses focus on direct relationships, like creating a family-friendly work environment. They believe that happy employees deliver better customer service, benefiting both staff and clients.
- Social Entrepreneurial Businesses aim to drive societal change, addressing issues like food accessibility and inequality. Their efforts go beyond traditional charity to create inclusive spaces and provide essential services.
Balancing stakeholder needs is a challenge, especially for small businesses with limited resources. Recognizing their unique contexts is critical to helping them succeed. Owners’ close connections with employees, local communities, and partners allow them to create meaningful relationships, which shape their social responsibility efforts.
A key role
Employees play a vital role, especially in service businesses, where their engagement influences the success of responsible practices. Supporting employees means more than offering training or rewards—it involves creating positive, meaningful work environments that reflect the business’s values.
Many small businesses embody “hospitableness,” creating welcoming, authentic spaces for stakeholders without expecting anything in return. This approach builds trust and strengthens connections beyond economic transactions.
The growing impacts of climate change and social inequality demand action from all businesses. Small businesses are stepping up, supported by initiatives like the SME Climate Hub, the Federation of Small Businesses, and the Small Business Charter. Certifications like BCorps and campaigns like the Better Business Act further encourage socially and environmentally responsible practices.
However, more tailored support is needed. Small businesses face barriers like bureaucracy, limited resources, and time constraints. Instead of applying corporate-style frameworks, guidance should reflect the realities of small businesses. This includes using language and tools that resonate with them while recognizing their diverse approaches.
Looking ahead, it’s clear that different small businesses need different types of support. By embracing their unique strengths and focusing on non-financial goals like people and the planet, they can drive positive change while maintaining profitability. The research highlights the importance of “hospitableness” in building a better future—an approach that fosters loyalty and long-term success.
