Corporate social responsibility (CSR) has become a critical focus of the modern business environment, driven by the growing emphasis on environmental, social, and governance (ESG) metrics. In response to necessary compliance with regulatory expectations and stakeholder demand, publicly listed companies have accelerated this trend since the early 2000s, largely influenced by the introduction of frameworks such as the Global Reporting Initiative (GRI), which provided standardised guidelines for reporting on CSR practices. Small and medium-sized enterprises (SMEs) play an important role in the CSR landscape. They represent the majority of all businesses in Australia, and as a group, they have a strong impact on the economy and community. However, SMEs lack familiarity with the formal concept of CSR, with many viewing their efforts as acts of giving back to society rather than as a strategic business initiative. Also, while CSR has gained considerable attention in large corporations, SMEs often face challenges in effectively communicating their CSR initiatives. This study finds that SMEs are primarily motivated by ethical considerations and a desire to ‘do the right thing’ by communicating CSR activities to their key stakeholders, particularly customers and their employees. Despite intentions, SMEs face significant challenges in CSR communication, hindered by time constraints, limited skills, and limited resources, which has resulted in a low uptake of CSR activities. Globally, SMEs are responsible for a significant proportion of global carbon emissions and social impacts but are less likely than larger companies to have the resources to measure and reduce them. Faced with increased expectations from external stakeholders, including multinational corporations (MNCs), to meet CSR expectations, this pressure is challenging for SMEs when required to engage in comprehensive CSR practices and reporting.
The connection between CSR and SMEs is particularly relevant as these enterprises often operate within local communities and have a direct impact on social and environmental issues. Unlike large corporations, SMEs may face unique challenges in implementing CSR initiatives due to limited resources and varying stakeholder expectations. Understanding how SMEs engage with CSR practices is essential for developing effective communication strategies and enhancing their overall impact on society. The problem arises from the unclear relationship between CSR activities and both financial and non-financial performance outcomes in SMEs. This ambiguity can hinder SMEs from fully committing to CSR initiatives. To address these challenges, the study reviews several theoretical frameworks and their significance for SMEs in adopting CSR communication practices. The research applies a qualitative approach through in-depth interviews to gather data on the CSR practices of Australian SMEs. Key results indicate that while many SMEs recognise the importance of CSR, their communication strategies often lack the structure and transparency seen in larger corporations. Furthermore, the findings reveal that external pressures from stakeholders, including customers and regulatory bodies, significantly influence the CSR practices of SMEs, often leading to reactive rather than proactive engagement. This study also highlights the misalignment of a one-size-fits-all model, whereby SMEs are expected to follow the path set by MNCs for CSR communication.
The key results reveal that while many Australian SMEs are undertaking CSR initiatives, many perceive these efforts as informal acts of community engagement rather than strategic business practices. The findings indicate SMEs’ lack of awareness and understanding of formal CSR communication frameworks and highlight the unique challenges SMEs face, thereby emphasising the importance of SME context-specific approaches that require partnership, targeted support, practical tools, and incentives that are tailored to the unique needs of different industries and regions and underpinned by a collaborative effort to transform business practice. The research highlights the critical role of CSR communication in shaping stakeholder perceptions and expectations among Australian SMEs and calls for enhanced support mechanisms to help SMEs articulate and report their CSR efforts effectively.