Business Case for Corporate Social Responsibility in Small and Medium Enterprises—Employees’ Perspective

Abstract

The aim of this paper is to define the business case for the involvement of SMEs in CSR from the perspective of employees. The work answers the following questions: (1) What socially responsible activities do SMEs undertake? (2) To what extent are SME employees involved in activities in the area of CSR? (3) How is the business rationale of CSR activities perceived by employees? On the basis of the conducted research, the authors decided to find out what and how socially responsible activities impact business performance. For this purpose, a structural model was estimated, using the maximum likelihood method. As a result of the research, it was found that small- and medium-sized enterprises engage in CSR activities, but their involvement is limited and focused on environmental, health-related initiatives, and social campaigns. This suggests the choice of activities that are related to the formation of responsible attitudes, which are universal but not very engaging for employees. The results also show that employees are not passive observers but are responsible for the implementation of the CSR initiatives, which may have positive and negative impacts on business performance. In the opinion of employees, the most important benefits of involvement in CSR are building trust, building relationships with clients, and image improvement. Motivators such as increased profitability or (surprisingly) sustainable development played a much smaller role. From the theory point of view, the research results define the scope and scale of SMEs involvement in corporate social responsibility activities and indicate the main benefits that result from this involvement for SMEs. The results of research allow for a more effective selection of CSR activities and areas in which companies can use CSR to support the achievement of business goals.

1. Introduction

Corporate Social Responsibility (CSR) is no longer understood as voluntary action and potential competitive advantage of the company but as a strategic obligation and necessity [1]. This change mainly affects large companies of which already over 80% communicate their social responsibility in the form of CSR reports [2]. Meanwhile, more than 90% of global companies are small- and medium-sized enterprises (SMEs) [3,4] Additionally, European small- and medium-sized enterprises (SMEs) are the prevailing form of business, constitute 99.8% of all companies, and account for 67% of total employment in the EU-28′s non-financial business sector [5]. SMEs also have a greater environmental impact per unit than large companies and are the largest contributors to pollution, carbon emissions, and commercial waste [6]. They create approximately 60% to 70% of Europe’s total industrial pollution [7]. Thus, it is of high importance to study the CSR of SMEs.

Unfortunately, most of the academic discussion on CSR has focused on large corporations, and little is truly known about the social responsibility of small- and medium-sized enterprises. SMEs are not “little big firms” [8], and they do not behave in the same way as large corporations, including CSR. Research results in this area are considered unsystematic, unstructured, and informal [9]. The situation is hampered by the diversity of SMEs in terms of size, national context, development, and structures [4,10,11], which translates into the diversified content, nature, and scope of their CSR activities [12]. Previous studies of SMEs’ social responsibility have shown the main barriers to CSR implementation in SMEs: time and financial limitations [13] and a reduced level of human, technical, and organizational resources for the implementation of the social responsibility policy [14]. However, the research on the business case for CSR in SMEs is still limited, and there are calls for more empirical work to address it [15]. The business case is understood by the authors as the bottom-line financial and other reasons for businesses pursuing CSR strategies and policies [16]. There is also the strong demand for more research on the mechanisms which SMEs go through in formulating and implementing CSR [17].

Research has also found that small business social engagement, unlike large companies, was driven by owners’ perceptions of potential intangible benefits. Although the employees, as the important CSR stakeholders group, have been studied for years and from the multiply perspectives (for example from the perspective of employee outcomes [A], workplace innovation [B], or work engagement [C]), it has not yet been studied how the business case for CSR is understood and perceived by SME employees, who are key stakeholders for this group of enterprises, much more involved than employees of large companies, and more exposed to practices, values, and organizational culture [18]. Research shows that 92% of SME employees are proud to work for their company, and 93% feel their work contributes to the success of the organization. They not only push the company towards CSR and influence CSR policies but also implement and encourage CSR, experience the outcomes or luck of CSR, and evaluate CSR approaches [19]. Therefore, this group of stakeholders can very well define the business case of undertaken CSR initiatives on the company’s performance.

To fill the above-mentioned gap, the aim of this article is to determine how the SMEs employees understand and perceive the business case for CSR engagement by their companies. To detail the research problem adopted, the following research questions have been posed:

• What CSR activities undertaken by SMEs are noticed by their employees?
• To what extent do SME employees feel involved in CSR activities undertaken by their employers?
• How employees perceive the business case for CSR activities undertaken by the SME sector?

Structurally, this article is organized as follows: first, we present a literature review that will provide a background for the empirical part of the research, dividing it into three main parts: (1) discussion of the concept of CSR and its development from the 1950s to its current understanding, (2) characteristics CSR tools, initiatives, and practices in contemporary organizations, and (3) showing the CSR business case from the perspective of SMEs. The second part outlines the methodology employed in this study, and the characteristic of the sample. The research results are presented next, in the results and discussions section. Finally, the authors conclude with a summary of findings, limitations of study, and ideas for future research.

This article contributes to the international literature on management, in particular, to existing research on corporate social responsibility in two ways. First, previous research confirms that CSR has traditionally been associated with larger companies and that small- and medium-sized enterprises (SMEs) have unique features and opportunities that require special attention [15], and this article, therefore, focuses on small- and medium-sized enterprises’. Secondly, the article concerns research on the concept of CSR and its impact on business results from the perspective of employees. In the authors’ opinion, this is the first such study as previous studies focused on employee attitudes and behaviors such as job satisfaction, commitment to work, or retention [20].

2. Literature Review

2.1. The Concept of Corporate Social Responsibility—The Beginning and Evolution

Business or corporate social responsibility has been debated for decades or even centuries. According to Chaffee [21], the first sources of social involvement of the organization go back to ancient Roman laws and can be seen in such entities as asylums, homes for the poor and old, hospitals, and orphanages. According to Heald [22], it was already in the 19th century that we could find clear examples of the social engagement of business, such as Macy’s in the USA, which in 1875 donated funds for an orphanage, the case of the Pullman Palace Car Company, which in 1893 created a model industrial community to improve the quality of life of its employees, or the example of Cadbury’s, which encouraged its employees to drink chocolate instead of unsafe water or alcohol because they believed it was healthier. In the 1920s and early 1930s managers began to take responsibility for balancing profit maximization with the demands of their customers, employees, and community [23]. Later, with the development of business during World War II and in the 1940s, companies began to be viewed as institutions of social responsibility, and a wider discussion on the subject began [22]. Literary examples of this debate on corporate social responsibility are The Functions of the Executive, Barnard [24], and Clark’s Social Control of Business [25].

However, the academic debate on CSR began in 1953, with the publication of Bowen’s book, Social Responsibility of the Businessman, and has aroused the interest of researchers and practitioners in many fields and research areas [26]. When analyzing the literature on CSR, it can be seen that many approaches have been used over time, which have been classified by Carroll [27] as five major historical phases in the evolutionary path of CSR:

• The 1950s: the modern era of social responsibility begins, in which pioneers emphasized the need to rethink the behavior and business models of enterprises;
• The 1960s: the literature on CSR expands, with many articles contributing to the definition of CSR and its scope;
• The 1970s: definitions in which the CSR domain acquired a multi-dimensional meaning became popular, as researchers from various fields emphasized the need to adopt multi- and trans-disciplinary models;
• The 1980s: less theoretical work and more research, in which the attention of researchers and practitioners interested in the field of CSR, was related more to the implications of CSR than to its conceptual development;
• The 1990s: the role of CSR as the key element of business strategies has been clearly recognized.

To complete the evolution of the CSR concept, Caputo [28] proposed two further phases:

• The 2000s: the decade in which CSR was regarded as a potential driver of corporate communication, to promote the alignment of companies with market expectations;
• The 2010s: the regulatory era in which many normative activities were promoted to ensure a common approach to CSR and maximize its contribution to ensuring sustainable corporate behavior; also, by providing guidelines and suggestions for measuring and evaluating environmental, social, and management performance in the light of sustainable development.

The above short overview of the evolution of the CSR concept provides the scope for understanding the timeless and multi-dimensional nature of CSR and to emphasize how strongly it is based on promoting active participation of all the layers that make up the economic organization [29,30]. It also shows that from the passive and voluntary concept, it has evolved over time to the concept of obligatory active involvement. This can be illustrated, for example, by the approach of the European Union, which at the very beginning of this century defined CSR as a concept, according to which companies include social and environmental issues in their business activities and in interactions with stakeholders on a voluntary basis [31]. A decade later, the European Commission [32] stated that: “CSR is the responsibility of enterprises for their impacts on society. Respect for applicable legislation, and for collective agreements between social partners, is a prerequisite for meeting that responsibility. To fully meet their corporate social responsibility enterprises should have in place, a process to integrate social, environmental, ethical, human rights, and consumer concerns into their business operations and core strategy, in close collaboration with their stakeholders, with the aim of maximizing the creation of shared values for their owners/shareholders, and for their other stakeholders or society at large; identifying, preventing, and mitigating their possible adverse impacts” [32].

The new EU definition removed the voluntary element and made companies accountable for their impact on society as a priority. In doing so, the Commission has aligned its understanding of CSR with other international frameworks, such as the United Nations Guiding Principles on Business and Human Rights and the revised OECD Guidelines for Multinational Enterprises. This change of approach has been reinforced by the introduction of the EU’s Directive on the disclosure of non-financial and diversity information [33] considered as the changing point in the CSR reporting within the European Union. As a result of the NFI Directive, about 6000 large public-interest companies from all 28 EU Member States are now expected to comply with the new disclosure requirements of the locally transposed laws from 2018, meaning they will add a non-financial declaration to their annual management report or publish a separate report. According to the Directive, the required non-financial information (NFI) is “information, to the extent necessary, for an understanding of the undertaking’s development, performance, position, and impact of its activity, relating to, as a minimum, environmental, social, and employee matters, respect for human rights, anti-corruption and bribery matters, including: (a) a brief description of the undertaking’s business model; (b) a description of the policies pursued by the undertaking in relation to those matters, including due diligence processes implemented; (c) the outcome of those policies; (d) the principal risks related to those matters, linked to the undertaking’s operations including, where relevant and proportionate, its business relationships, products, or services, which are likely to cause adverse impacts in those areas, and how the undertaking manages those risks; and (e) non-financial key performance indicators relevant to the particular business”. It was not the last step of the EU to strengthen the role of CSR in Europe. In 2015, the EC organized a multilateral forum on CSR, during which it received a license to further promote CSR and support companies in implementing CSR into their strategy [34].

CSR researchers also notice the need for further evolution of the definition and understanding of CSR, especially in the context of the development of the concept of sustainable development, in which CSR is deeply rooted. According to Carroll [35], the development of CSR thought, research, and practice is very dynamic, which suggests that CSR, which has a solid past, also has an optimistic future. Acceptance of the CSR concept by companies, recently referred to as a goal of sustainable development, has been the main driver of the growth of CSR and subsequent generations of responsible corporate leaders. Munro [36] goes further and proposes CSR 4.0 in the key themes and principles are:

• The “purpose” (or cause) as an essential priority and the basis for action;
• Innovation, inclusion, and collaboration with all partners;
• Identification, engagement, and co-creation with all stakeholders;
• Shared and integrated value at a deeper level;
• Deep transformation and networking in a new ecosystem;
• Measurable Sustainable Development Goals (SDGs) with continuous assessment and renewal;
• System orientation at the managerial and employee level;
• Circular social missions with environmental loops (pp. 217–219).

2.2. CSR Practice

Although, as presented in the previous section, the academic debate on CSR began in 1953 with the publication of Bowen’s book, it has become an important topic for business practice only in the last three decades [36]. The concept had and still has many sister concepts such as corporate citizenship [37,38], corporate social responsiveness [39,40], and corporate social performance [41,42,43]. Nevertheless, their common compound is the idea that organizations should not only be profit-oriented but should also engage in “activities that seem to favor a certain social good, beyond the interests of the company, and things required by law” [44]. The key here is to understand what is important to all stakeholders, not just shareholders. The needs and expectations of stakeholders (although they are constantly changing and are often contradictory) have been characterized by Archer [45] as follows:

• Customers: they are looking for innovative, agile companies that provide products and services that meet their needs but are also responsive to changing demands and social constructs.
• Investors: they are looking for evidence-based reporting on how risk factors are expected to affect financial performance. At the heart of this inquiry is the sustainability and viability of the organization in the future, which may affect an organization’s ability to raise capital, meet shareholder expectations, and drive continued growth.
• Business partners: they expect a resilient eco-system, with minimal risks of adverse events, ranging from financial downturns to data breaches to negative social reputations.
• Regulators: they are expecting organizations to be responsible and prudent in all facets of business, from financial reporting to the impact on the environment.
• Employees: they want to work for organizations that are responsible and understand environmental and social concerns.

It is difficult to overestimate the role for CSR practice played by international and national business, economic, and political organizations. They are the ones who give direction to the business evolution of the CSR concept and promote specific practices and standards. In 2015, CSR Europe, the leading European business network for sustainable development and corporate responsibility, announced the Enterprise 2020 Manifesto, the aim of which was to set the direction of enterprises in Europe and play a leading role in the development of a sustainable and inclusive economy [46], which was a response to the EU’s CSR strategy and to the UN’s Sustainable Development Goals. The Manifesto was and is of great importance because of its strategic approach and the strength of the 10,000 companies that its network reached [46]. The so called Milan Manifesto Enterprise [47] urged businesses and governments to work together and to take action on three strategic priorities during the five years leading up to 2020:

• Make employability and inclusion a priority across boards, management, and value chains.
• Stimulate companies to engage as committed partners with communities, cities, and regions to develop and implement new sustainable production methods, consumption, and livelihoods.
• Put transparency and respect for human rights at the heart of business conduct [46].

Additionally, the Business Roundtable, the prestigious organization gathering CEOs of leading corporations, announced in 2019 an updated statement that posited a shift from shareholder primacy to a commitment to all stakeholders [48].

However, most of such statements and manifestos are very general. Due to the multi-dimensionality and multi-disciplinarity of the CSR concept, no universal set of actions or initiatives has been developed that the relevant organizations should undertake. This set of activities must be adapted to the business model, industry, and even the region. The business model and resources of the organization determine its potential while the industry and the region determine the key challenges and problems in which the organization should be involved. Needs and expectations of the stakeholders are also molded by the nature of the economy, history, and common culture. Finally, organizational culture must be considered as a decisive factor influencing all forms of engagement in CSR. Since organizational culture evolves, it may support or hinder the development of CSR within an enterprise [42].

Typical CSR initiatives include community support, charity events, non-discrimination, increased employee benefits, operational efficiency, pollution minimization, transparency, product safety, and profit generation [49]. In an attempt to classify a CSR initiative, these may be the following categories:

• Operational support (acting ethically and fairly);
• Employee support (safety, job security, profit sharing, employee participation, fair and equitable treatment of employees, etc.);
• Social support (strongly involved in activities supporting education, health, and housing as well as in co-opting and philanthropic activities);
• Product/service (product/service quality, safety, delivery, research and development, etc.);
• Environmental support (maintaining an ecological environment, producing environmentally friendly products, waste management, recycling, etc.);
• Various forms of support (e.g., active participation in the development of a foreign country) [50].

Much more specific in defining expected or required CSR business activities are sustainable development reporting (SRT) tools such as frameworks, standards, assessments, and indexes. The most popular standards and frameworks are the Global Reporting Initiative (GRI), UN Global Compact, OECD Guidelines for Multinational Enterprises, AA1000 standard, ISO 26000 standard, but also field-specific ones such as the Carbon Disclosure Project (CDP), Greenhouse Gas Protocol (GHG Protocol), UN Principles for Responsible Investing, or International Finance Corporation (IFC) rules. More and more companies are also adopting Sustainable Development Goals (SDGs). The indexes include the Dow Jones Sustainability Index (DJSI), the FTSE4 Good index, the Asian Sustainability Rating (ASR), and the Bloomberg ESG Disclosure Scores.

All standards are consistent with each other and differ from each other by narrowing down to a specific area, adapting to the specifics of the industry or activity, or reflecting different approaches in different geographic locations. Taking the UN Principles for Responsible Investing for Real Estate [51,52,53,54,55,55,56,57,58,59,60,61,62] as an example, we can distinguish the following groups and examples of CSR initiatives:

• Environmental: biodiversity and habitat, climate change, land contamination, energy consumption, greenhouse gas emissions, indoor environmental quality, location and transportation, materials, pollution, resilience to catastrophe/disaster, renewable energy, sustainable procurement, waste management, and water consumption.
• Social: community development, health and safety, human rights, inclusion and diversity, labor standards and working conditions, social enterprise partnering, stakeholder relations, and occupier amenities—showers, changing rooms, and controversial tenants.
• Governance: anti-bribery and money laundering, cybersecurity, data protection and privacy, legal and regulatory fines, ESG clauses in existing leases, social enterprise partnering, stakeholder relations.

We can also find some recommendations of CSR for small companies, such as those by the Digital Marketing Institute:

• Reducing carbon footprints;
• Improving labor policies;
• Participating in fair trade;
• Diversity, equity, and inclusion;
• Charitable global giving;
• Community and virtual volunteering;
• Corporate policies that benefit the environment;
• Socially and environmentally conscious investments.

However, there are only general guidelines and tools supporting the selection of actions and initiatives consistent with the organization’s strategy and the needs and expectations of stakeholders. Their selection and level of implementation depends on the organization itself. As practice and numerous studies show, the most effective is a strategic approach to CSR, i.e., one that results from the vision and values of top management and is not considered an expense but a strategic initiative aimed at distinguishing itself from the competition [63,64].

2.3. CSR Business Case for SMEs

As already demonstrated, currently CSR is no longer perceived as a potential competitive advantage for a company but as a strategic necessity [1]. If the company does not declare and communicate its commitment to CSR, it may send a negative signal to employees [65], consumers [66], investors [67], and other stakeholders [68]. However, the declaration itself is not everything and cannot be perceived only as an element of public relations [69]. What is more, if communication is too intense or moralizing and is not consistent with the actual commitment, it may be considered hypocritical [70]. Thus it is critical for business and especially SMEs to ‘find a balance between resisting external drivers which undermine their own practice, and acceptance of engaging in more explicit CSR communication and the associated temptation—or necessity—to double-talk when exposed to governmentality dilemmas’ [71].

According to Fatima and Elbanna [72], CSR implementation, like any other strategy implementation, is of crucial importance to ensure the successful attainment of the business goals. As this strategic dimension requires substantial investments one of the basic problems for practitioners was and is the search for a ‘win–win’ scenario, i.e., business justification for CSR investment, defined as various benefits that companies can derive from their social engagement. This topic has become one of the most studied aspects of CSR [73,74,75]. The empirical research on the business case has looked at the impact of community involvement on a company’s bottom line and examined the relationship between CSR and marketing related to customer causes and reactions [76], CSR and employee relations [61,65], and risk reduction [77]. Both empirical reviews [74,78] and meta-analytical studies [79,80] show a positive, albeit mild, relationship between social commitment and the company’s financial performance. However, these studies have not produced a consensus, and there is no universal business case for CSR [81]. What is more, most of these studies focused on large companies with huge budgets. SMEs, on the other hand, are characterized by limited resources and the need to invest these resources very carefully, which often translates into making compromise decisions, for example, between the choice of CSR investment, innovation, and internationalization [82].

Numerous studies have shown that CSR can benefit organizational stakeholders, in particular shareholders [83] and investors [84] but also employees [85], management [86], and customers [87]. Understanding how stakeholders might interpret a company’s CSR practices may help to explain how the company can benefit from them. For example, Gilbert and Malone [88] and Rupp et al. [89] argue that some stakeholders may care less about organizational practice than the motives for their investment, which may differ significantly. These can be: long-term financial strategy, eco-efficiency, competitive advantage, good corporate citizenship, image, delaying or avoiding regulatory actions, and stakeholder pressure [90]. These different motivations fall into two categories: internal and external. Intrinsic motivation is understood as a company that engages in CSR because it is the right thing to do. External motivation is viewed as the belief that commitment to CSR leads to positive outcomes for the company and brings business advantage [91]. Research shows that SMEs are motivated both internally to implement CSR but also externally by economic benefits [3,92]. Coppa and Sriramesh’s [93] study of 105 Italian SMEs revealed that CSR is mainly practiced through informal, internally oriented and relational methods, with very little strategic focus. Additionally, according to Vázquez-Carrasco and Lopez-Pérez [3], SMEs are more focused on philanthropy compared to large enterprises, which employ more strategic CSR. SMEs focus more on relationships with stakeholders, pay more attention to the local community, and have strong ethics and owner values. Thus, the stakeholders are considered to be the principal driver for SMEs to engage in CSR. Other motivators of SMEs engaging in CSR are: the desire to develop community and employee relationships, company image and reputation [94], promotion of a climate of trust with internal stakeholders [10], compliance with related CSR legislation [95], promotion of long-term survival and business performance [96], and cost reduction [97]. The most current research results show that CSR activities targeted on society, environment, employees, and other stakeholders translated into enhanced customer retention and business continuity leading to a better firm performance [98], that stakeholder salience supports the CSR–financial performance relationship during economic downturn [15], and that CSR activities stimulate SMEs for product and process innovations [80,99]. Despite all these research results, in the light of the growing involvement of SMEs in CSR (only in the European Union, 97% of SMEs engage in activities that can be characterized as corporate social responsibility (CSR) [100]), it is believed that the role of CSR in SMEs has received very little research attention [101], and we need much more knowledge to support this key sector for every economy in a deeper, wider, and more effective engaging in activities for the benefit of society and the natural environment.

3. Materials and Methods

For the purpose of this study, the authors adopted the definition of SME that is used in the EU: namely, enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding EUR 50 million and/or an annual balance sheet not exceeding EUR 43 million.

The empirical part of this paper is based on the structured survey conducted in January, 2022. During this period a survey questionnaire was distributed to respondents, following the standards of the CAWI technique. Survey results were compiled using SPSS Statistics.

The survey was distributed among part-time students of several non-public universities in Poland, who declared work in the SMEs sector with CSR engagement. The study involved 720 respondents. Socio-demographic data of the respondents are presented in

Table 1. Socio-demographic data of the respondents.

Variable		N	%
Gender	Female	434	60.28
	Male	286	39.72
	Total	720	100
Place of residence	Rural areas	123	17.08
	City up to 20 thousand inhabitants	92	12.78
	City with 21–50 thousand inhabitants	77	10.69
	City with 51–200 thousand inhabitants	51	7.08
	City with more than 200 thousand inhabitants	377	52.36
	Total	720	100
Financial situation	Very good	67	9.31
	Good	421	58.47
	Average	198	27.50
	Bad	34	4.72
	Total	720	100
Professional activity	I work fulltime	425	59.03
	I work part-time	145	20.14
	I work occasionally	150	20.83
	Total	720	100

Source: Own.

.

The survey questionnaire was covering 10 questions—4 socio-demographic and 6 focused on the research problem. Due to the fact that the research was conducted among employees of small- and medium-sized enterprises, we did not use the sets of available indicators (such as those used in the KLD database, GRI, or Fortune Ranking [102]) to assess social responsibility engagement. Instead, based on the existing literature on CSR initiatives, we first compiled a list of 20 typical initiatives, based on the previous literature review. Many of these initiatives, however, were barely related to the activities of small and medium enterprises in Poland—for example, the issue of child labor is not particularly relevant to companies in Poland, as this issue is regulated by the law. That is why we conducted preliminary research among a group of 100 part-time students working in the SMEs sector, with a request to indicate the importance of these initiatives for small companies in the industry they represent. This step helped us to select 8 initiatives, including 4 targeted at internal stakeholders and 4 targeted at external stakeholders (Table 1), to measure their popularity among SMEs in Poland.

Then, following the same scheme, we listed the 20 most important business cases for CSR engagement amongst SMEs from the perspective of employees and extracted 10 business cases most often pointed out in the preliminary research among a group of 100 part-time students working in the SMEs sector. We used these 10 factors to assess their impact on the business performance of small- and medium-sized enterprises, asking respondents to rate this impact on a 5-point Likert scale, where 1 meant definitely ‘no impact’, and 5 meant ‘very high impact’.

4. Results and Discussion

4.1. What Socially Responsible Activities Do SMEs Undertake?

First, the respondents were asked to mark a maximum of three socially responsible activities implemented in their workplace. The most common were environmental initiatives, which is consistent with the growing interest of Polish society with the climate change and net zero strategies. The environmental initiatives were followed by social campaigns and health-oriented initiatives. The activities indicated the least frequently were local community initiatives and employee volunteering, which may be the result of the limited human resources typical for SMEs. The exact distribution of responses is shown in

Table 2. Socially responsible activities implemented in respondents’ workplace.

Types of Social Projects	N	%
Environmental initiatives	196	18
Social campaigns	168	15
Health-oriented initiatives	163	15
Building the organisation’s culture	142	13
Codes of ethics and ethical trainings	133	12
Philanthropic initiatives	133	12
Employee volunteering	104	9
Local community initiatives	73	7
Total	1112	100

Source: Own.

. The number of responses does not agree with the size of the research sample because the question allowed multiple choices, so the respondent could select a minimum of one and a maximum of three given responses. The total number of answers suggests that the number of CSR initiatives implemented by SMEs is rather low, and this is what differentiates SMEs from the large-scale organizations, which usually offer a wide palette of initiatives.

4.2. To What Extent Are SME Employees Engaged in Activities in the Area of Corporate Social Responsibility?

Finally, the respondents determined the level of their engagement in the company’s business operations and then in CSR activities. The distribution of respondents’ answers for this question is shown in Figure 1.

Descriptive statistics of the issues discussed above are presented in

Table 3. Descriptive statistics of the level of engagement in a company’s business and social activities.

Descriptive Statistics	Level of Engagement in Business Operations	Level of Engagement in CSR Activities
Mean	4.6	5.1
Median	4	5
Standard deviation	1.9	2.1
Min	1	1
Max	10	10
Quartile 1	4	4
Quartile 2	5	5
Quartile 3	7	7
Variance	3.6	4.4
Square root of variance	1.9	2.1

Source: Own.

.

From the above data set we can conclude that the SMEs employees’ engagement in CSR activities is rather high. We do not have comparable research results from large companies, but the fact that employees feel more engaged, on average, in CSR activities than in business operations suggests two conclusions. On one hand, employees’ engagement is a positive aspect, as it may improve job satisfaction and develop social competences. On the other hand, such high involvement may be due to limited human resources (particularly in micro and small companies, employees perform multiple roles [103]), and such multitasking may have a negative impact on work productivity, as employees may be pulled away from their main duties. This would explain the low number of CSR activities revealed in the previous question compared to the large companies which usually offer a wide palette of CSR initiatives managed by the dedicated employees. However, these are only assumptions and should be the subject of further research.

4.3. How Is the Business Rationale of CSR Activities Perceived by Employees?

Finally, the respondents were asked to determine how much CSR activities, in the given areas, impact business performance. Responses assessed the business case based on the 10 previously selected factors on a 5-point Likert scale, where 1 meant definitely ‘no impact’, and 5 meant ‘very high impact’. In this question, the most frequently mentioned areas were building trust and customer relationships. A detailed listing of the factors assessed is shown in

Table 4. Employees’ assessment of the CSR activities impact on the business performance.

	1	2	3	4	5
Improved image	61	35	63	343	218
Increased profitability	52	62	185	311	110
Improved market position	61	41	66	296	256
Increased competitiveness	63	83	114	326	134
Building trust	59	39	51	240	331
Building customer relationships	64	46	33	266	311
Promoting social engagement	63	49	82	273	253
Improved sustainability	70	23	163	313	151
Improved business ethics	71	43	132	312	162
Increased investor interest	68	53	150	283	166

Source: Own.

.

On the basis of the conducted research, the authors decided to find out what and how socially responsible activities affect business performance, from the perspective of the SMEs’ employees. For this purpose, a structural model was estimated using the maximum likelihood method (Figure 2). There were no grounds to reject the null hypothesis that the residual values of the empirical and theoretical matrix are equal to zero (χ² = 1073.35; p = 0.001).

The root mean square error of approximation (RMSEA) value = 0.098 indicates that the model is a good fit for the data. The structural model, estimated by the maximum likelihood method, includes:

• Observable endogenous variables: X1—improved image, X2—increased profitability, X3—improved market position, X4—increased competitiveness, X5—building trust, X6—building customer relationships, X7—promotion of social engagement, X8—improved sustainability, X9—improved business ethics, X10—increased investors’ interest, X11—social campaigns, X12—environmental initiatives, X13—health-related initiatives, X14—employee volunteering, X15—local community initiatives, X16—building the organization’s culture, X17—codes of ethics and ethical training, and X18—philanthropic initiatives.
• Unobservable endogenous variables: Z1—external motivation of social responsibility engagement on business performance and Z2—internal impact of CSR initiatives on business performance.
• Unobservable exogenous variables: e1, e2, e3, e4, e5, e6, e7, e8, e9, e10, e11, e12, e13, e14, e15, e16, e17, and e18.

The unstandardized and standardized model coefficients are summarized in

Table 5. Unstandardized model coefficients *.

	Variables	Estimated Value of Parameter	Error of Estimate	Critical Value
Variables influencing Z1	X1	1598	0.085	18,587
	X2	1241	0.084	14,326
	X3	1427	0.057	15,587
	X4	1587	0.068	15,987
	X5	1627	0.085	18,861
	X6	1635	0.086	18,874
	X7	1487	0.075	16,874
	X8	1385	0.098	16,587
	X9	1421	0.087	15,985
	X10	1458	0.082	16,521
Variables influencing Z2	X11	1607	0.103	15,388
	X12	1624	0.103	15,457
	X13	1627	0.102	15,872
	X14	1171	0.084	13,524
	X15	1255	0.105	12,894
	X16	1148	0.088	14,784
	X17	1178	0.074	14,856
	X18	1124	0.071	14,876

* p-value for all variables was <0.001. Source: Own.

and

Table 6. Standardized model coefficients *.

Variables	Estimated Value of Parameter
X1	0.935
X2	0.698
X3	0.921
X4	0.725
X5	0.941
X6	0.946
X7	0.892
X8	0.735
X9	0.741
X10	0.712
X11	0.867
X12	0.907
X13	0.845
X14	0.601
X15	0.568
X16	0.784
X17	0.687
X18	0.688

* p-value for all variables was <0.001. Source: Own.

.

The interpretations are applicable only when the values of other variables remain unchanged. The coefficient values, therefore, describe the positive or negative direction and strength of the effect of the explanatory variable on the explained variable. The strength of impact on the explanatory variable can be compared with explanatory variables using standardized coefficients. This is because the values of the non-standardized coefficients depend on units, in which, the variables are measured [104].

On the basis of standardized coefficients of the model, it turned out that variable Z1—external motivation of social responsibility engagement on business performance is most strongly influenced by variables: X6—building customer relationships, X5—building trust, and X1—improved image, whilst the weakest influence was variable X2—increased profitability and X8—improved sustainability.

On the basis of standardized coefficients of the model, it turned out that variable Z2—internal impact of CSR initiatives on business performance is most strongly influenced by variables: X12—environmental initiatives and at the same level X11—social campaigns and X13—health-related initiatives, whilst the weakest influence was variable X15—local community initiatives.

Thus, we may conclude that the impact of CSR activities on business performance is conditioned by a whole group of factors. Therefore, enterprises should put the emphasis on external factors such as building relations with clients and building trust, taking into account the fact that increasing profitability is not the most important objective in CSR engagement of the company. An extremely important role is played by the implementation of socially responsible initiatives in the workplace, among which employees consider the most impactful to be environmental initiatives, social campaigns, and health-related initiatives. This suggests the choice of activities that are related to the formation of responsible attitudes, which are universal (i.e., also transfer to private life) but at the same time are not very engaging for employees.

5. Conclusions

Despite the long history of the concept of corporate social responsibility, its understanding in the context of small- and medium-sized enterprises is very limited. Due to the spreading economic, environmental, and social challenges and the role played by the SMEs sector, it is necessary to undertake a wide range of studies, the results of which will allow small- and medium-sized enterprises to apply responsible and diversified initiatives.

As a result of the research, it was found that small- and medium-sized enterprises engage in CSR activities, but their involvement is limited (often only one or two initiatives) and focused on environmental, health-related initiatives, and social campaigns. Much less popular are activities involving human resources (e.g., employee volunteering), which in the case of the SME sector are significantly limited. The results of the research also show a very strong commitment to the response to CSR initiatives—employees are not passive observers but are responsible for the implementation of these initiatives, which may have positive and negative impacts on business activities. In the opinion of employees, the most important benefits of involvement in CSR are building trust (especially important in times of a lack of trust, according to Edelman Trust Barometer 2021) and building relationships with clients. The image and profits, as well as the influence on investors, are not as important here as in the case of large companies.

Our study has some limitations that suggest directions for further research by the team. The first limitation results from the narrowing of the research to the territory of Poland. Due to the fact that the CSR concept depends on the country and culture, it is worth expanding the research to other countries in the future—e.g., the region of Central and Eastern Europe or the European Union. Additionally, the research captured the opinion of one stakeholder group at a time, and the authors realize that these opinions may change over time. Third, the study focused on SMEs although there are significant differences between small- and medium-sized enterprises. Thus, the future research could focus only on micro or small companies only.