Does it pay to be social responsible? Portuguese SMEs feedback

Abstract

Purpose: The research on corporate social responsibility has been focused mainly on Anglo-Saxon countries and big companies. Most scholars agree there is a positive relationship between companies social and economic performance, however, this is not unanimous. Moreover, during economic downturns, companies struggle for survival and might consider corporate social responsibility efforts should be postponed. This research investigates if there is a positive relationship between social performance and key business results using a large sample of small and medium Portuguese companies over an extended period of time.

Design/methodology/approach: The investigation is made by using survey responses from a sample of 2.222 small and medium companies (SMEs) over a 10 year period, from the Portuguese IAPMEI – Public Agency for Competitiveness and Innovation Benchmarking and Good Practices database. The hypothesis that there is a positive relationship between social and key business results performance was tested with correlation analysis and was complemented with semi-structured interviews of key Portuguese Sustainability Managers.

Findings: The research results support the existence of valid positive relationships between companies’ social performance and key business results, confirming it does pay to invest in corporate social responsibility even in less favorable economic scenarios and for small and medium companies across all business sectors.

Research limitations/implications: It was not possible to use more powerful statistical methods such as Partial Least Squares (PLS) or Structural Equation Modelling (SEM) due to data constraints and more qualitative research should be done to triangulate the results and better understating of the cause and effect relationships.

Practical implications: Both managers and academics should be aware of the relevance of corporate social responsibility to assure companies enduring success and create benefits for stakeholders and society at large.

Originality/value: This research makes contributions for the social and economic relationship body of knowledge with a particular emphasis on small and medium companies in Portugal and a potential application to other similar European countries, by using a large sample basis over an extended period of time.