Smart CSR Can Drive SME Strategy

Does your small business lack a formal strategy? CSR may be the answer.

Steven MacGregor and Joan Fontrodona of the IESE Business School (Universidad de Navarra) investigated the influence of CSR initiatives on SMEs (small and medium enterprises). They found that incorporating smart CSR initiatives into operations can help SMEs develop more focused, effective business strategies.

The researchers illustrate their findings through the case study of a Catalan, family-run firm Metalquima, which specializes in the design and manufacture of meat processing equipment. A costly failed product launch in the 1990s forced Metalquima to scrutinize its operations.

By instituting CSR initiatives in both their workforce and their value chain, Metalquima formalized processes that foster the creativity and sense of community the company was founded on.

Workforce CSR: Empowering Employees

To boost creativity and innovation, the company focused on developing a committed and satisfied workforce. Metalquima encourages employees to think of their job as a “job for life” and shares 20 percent of profits with them. Metalquima also regularly consults with employees, encouraging them to propose solutions to problems they witness on the production floor.

This consultative approach enabled Metalquima to maintain existing productivity levels while reducing the overall number of worker hours. The company also enriched non-work time through cooking classes and cycling excursions. In addition to boosting morale, the activities mixed employees from different departments and with differing levels of responsibility.

Value Chain CSR: Collaborating with Partners

Metalquima also established a system to regularly solicit customer and supplier feedback on products. This collaborative approach produced a new meat drying technique called Quick Dry Slice (QDS), which reduces the drying and curing time of meat from three to six months down to 60 minutes.

Today, Metalquima has revenues of €22 million a year, 90 percent of which comes from exports and 50 percent of which comes from products launched in the last five years. The authors credit this to the company’s focus on producing a “motivated, creative workforce and a strong innovation culture.”

Tips for Using CSR to Shape SME Strategy

• Have a vision. Metalquima’s vision was one of community and creativity, so they focused on employee morale and new product innovation.

• Stay true to your business. Pick CSR initiatives that are appropriate for your firm’s size, sector and location. For example, a small catering business might offer cost-price catering for a local school fair. A training company could offer work experience and a free training course for the long-term unemployed.

• Ask for feedback. Get input from employees, key customers and suppliers to understand how your business generates value and reveal areas for innovation. Metalquima’s stakeholder consultations led to improved products and processes for the company.

• Think long-term. Focus on long-term efficiencies, not short-term cost-cutting. In the wake of a sales slump, Metalquima engendered employee loyalty by reducing worker hours rather than firing employees.

Methods and Future Research in this Area

To produce this research, the researchers exploited their participation in several research and consulting projects conducted over the past five years, including the RESPONSE project in Europe, which explored links between CSR and innovation and the current CSR IMPACT project.

Future research could investigate the role of supply chain CSR in generating sustainable profits and future sustainable advantage for all supply chain members, including SMEs.

MacGregor, S.P., & Fontrodona, J., (2011). Strategic CSR for SMEs: Paradox or Possibility? June 2012. Universia Business Review, 30:80-94.