Developing CSR Strategy for SMEs in Thailand
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Added on 2020-10-22
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This report is on "corporate social responsibility and SME's". This paper aims to discuss how the importance of adapting the concept of CSR to an SME context and understand the stakeholders’ perspective towards CSR strategy for SMEs in Thailand. The objectives of this report are to evaluate the concepts of CSR in the context of an emerging economy, to examine to what extent CSR is related to SMEs performance, to identify what are the key factors for SMEs in Thailand.
Developing CSR Strategy for SMEs in Thailand
Added on 2020-10-22
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Developing CSR strategy for SMEs inThailand
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................11.1.Research Background.......................................................................................................11.2.Research Problem.............................................................................................................21.3.Research Aims and Objectives.........................................................................................31.4.Dissertation Structure........................................................................................................3CHAPTER 2: LITERATURE REVIEW.........................................................................................52...................................................................................................................................................52.1.Corporate Social Responsibility........................................................................................52.2.Definition of SME in Thailand and its characteristic.......................................................72.3................................................................................................................................................8CHAPTER 3: RESEARCH METHODOLOGY.............................................................................93.1 Introduction............................................................................................................................93.2 Research philosophy..............................................................................................................93.3 Research approach...............................................................................................................103.4 Research design...................................................................................................................103.5 Data collection:....................................................................................................................113.6. Sampling.............................................................................................................................123.7 Data analysis........................................................................................................................123.8 Ethical consideration...........................................................................................................133.9 Research limitation..............................................................................................................13CHAPTER 4: DATA ANALYSIS AND DISCUSSION..............................................................144.1 Introduction..........................................................................................................................144.2 Thematic analysis................................................................................................................144.2.1 Analysis of employee’s survey results.............................................................................154.2.2 Analysis of customers’ survey results..............................................................................234.3 Interview analysis................................................................................................................314.4 Discussion of the findings in relation to literature review...................................................34CHAPTER 5: CONCLUSION AND RECOMMENDATION.....................................................365.1 Conclusion...........................................................................................................................365.2 Recommendations................................................................................................................38References......................................................................................................................................40Appendix........................................................................................................................................42Questionnaire for employees.....................................................................................................42Questionnaire for customers......................................................................................................44Interview........................................................................................................................................47
INTRODUCTIONResearch BackgroundIn general, many firms participated in corporate social responsibility (CSR), initiativesthat drive economics as well as social or environmental agendas, as a key strategy for creatingvalue that benefit themselves while also rewarding society and environment in return. As aconsequence of this, the number of companies that operate their business in CSR increasesignificantly. Many firms try to engage with the activity that can assist business and environmentto be better. Thus, CSR has become an essential concept in many organisations include bothlarge or small, domestic or international, to take it into account by improving their social andenvironmental practice. Clearly, evidences of its applications have been expanding across theworld (Carroll, 2016). Especially multinational enterprises (MNEs) operating in emergingcountries, the key players to widen the concept, aim to distribute their business in resource-richdeveloping countries and being good corporate citizens (Jamali and Mirshak, 2007; Perrini,2006). However, small and medium-sized enterprises (SMEs) also play a significant role tomotivate business in each country, both developed and developing. Hence, many organisationsare expected to operate their business in the right way displaying moral behaviour andmanagement to be virtuous as good citizens in society. Additionally, CSR is a crucial part ofmany organisations, it attempts to be beneficial for all group of stakeholders and can supportcompanies to achieve in their business by increasing sales, attracting talent staff and improvingthe company’s recognition. In present, the stakeholders such as customers, investors andcommunity concern about firm’s activities in form of charity, the ethics of advertising andenvironmentally friendly products. In other words, there are different expectations from differentstakeholder based on what they are interesting from the company. Most organisations understandthat the stakeholders demand the action relate the field of CSR and to satisfy stakeholders theyhave to follow or even lead the ever-growing field of CSR.The concept of CSR means that organizations have four basic elements includeeconomic, legal, ethical, and philanthropic responsibilities assembling to their responsibilities toadd value on their products or services in which a fair return for investors and comply with theregulations. In other words, organisations required to adopt a broader perspective of itsresponsibilities in order to an effective response to the stakeholders that involve not onlyshareholders, but also many other stakeholders, including customers, employees, suppliers,community, governments and other related groups. Nevertheless, CSR in the dimension of SMEsaims to pursue responsible business practices without the need for budgets or money. Theconsideration of CSR in this dimension involves a cultivation on everyone in every department,1
sector and part of the organisation to have knowledge, understanding and participation in CSRactivities in terms of work environment, strengthening morality, ethics, generosity, regards andwork in their full capacity as well as the environmental protection and maintenance (Thaipat,2012). In 2008, the Securities and Exchange Commission Thailand (SEC) published “CorporateSocial Responsibility Guidelines” for using as a guideline to the implementation of CSR bywhich CSR can be classified into 8 categories including organizational governance, fairoperating practices, human rights and labour practices, consumer issues, community involvementand development, the environment, innovation and its disclosure on CSR, and sustainabilityreporting.Subsequently,Although CSR has traditionally become an integrated part of the corporate sector, anincrease in the number of initiatives intended to engage SMEs in the CSR agenda hasdemonstrated the recognition of the growing importance in CSR that led to a focus on the socialand environmental impact of SMEs. The CSR that addresses large companies has been wellresearched, but in SMEs context has a limited number of research on the relationship amongSMEs and CSR. In order to develop a new concept of CSR, it should be more relevant to SMEscontext that based on SMEs aspect rather than large companies (Jenkins, 2004). According toThaipat (2018), CSR in perspective from Thai’s SME entrepreneurship is the concept that mighthave impact on their business, it can provide benefits to the firm but not prioritise CSR as themainstrategy.Research ProblemIn spite of the fact that corporate social responsibility (CSR) is not a new concept, manyresearch are still far away from determining a generally accepted and reliable theoreticalframework in order to interpret issues related to a wide range of firms’ activity. While most ofthe research in this area has focused attention on large organisations (Carroll, 1979; Bowen,1953; Kreps, 1940; Clark, 1939), there is a limited number of research examining on the CSRpractices of SMEs in general and Thai SMEs in particular. In addition, many research discussabout the concept of CSR in developed countries might be inappropriate for the emergingeconomies due to the complexity of the business environment, the challenges for SMEs, andtransitional nature of the economy. Moreover, most of SMEs still misunderstanding in theconcept of CSR from the owner or the management down to employees. They do not realise theimportance of activities related to CSR or what are the benefits of CSR. Most of them perceiveCSR is an activity that enterprises create to reward community, society and environment in formof charity or donation in return to society so when the business is not profitable, there is nointention to do CSR and believe that CSR activities are a responsibility of large enterpriseswhich have high profit (Thaipat, 2012).2
Research Aims and ObjectivesThis paper aims to discuss on how importance of adapting the concept of CSR to an SMEcontext and understand the stakeholders’ perspective towards CSR strategy for SMEs inThailand.Theobjectivesare:To evaluate the concepts of CSR in the context of an emerging economyTo examine to what extent CSR is related to SMEs performanceTo identify what are the key factors for SMEs in ThailandDissertation StructureWhile undertaking a research topic, the researcher is required to follow a sequentialpattern by adhering to a well defined and appropriate structure. This structure can bedemonstrated by following a series of chapters that can be undertaken as a part of the researchstudy. The following are the various chapters:Chapter 1: Introduction – It is the first chapter that lead to provide a clear framework ofthe selected topic of investigation. It will consist of an overview in which topic of thestudy is well-defined. Following this aims and objectives will be framed with researchproblem. In the end of the introduction chapter potential significance of the selected topicwill be provided. Chapter 2: Literature Review – In second chapter a detailed outline of the concepts ofCSR in the context of an emerging economy will be provided. further to what extent CSRis related to SMEs performance will be examined. Therefore this, section will layemphasis on covering aims and objective of the investigation. Further it will be donethrough undertaking an assessment of the various area of research. All the publishedarticles and journal of authors will be considered. Chapter 3: Research Methodology – In this section a description of the different methodswill be provided which can be used by the scholar to carry out dissertation in a rightdirection. Along with this validation of selecting a particular technique will be provided.3
At the last of this chapter limitation and ethical consideration of the research will bedescribed. Chapter 4: Data Analysis and Findings – All the information which is collected fromprimary and secondary sources will be analysed. Chapter 5: Conclusion and Recommendations – It is the last chapter that will be provideconclusion based on secondary research. After that recommendation will be providedbased on findings for improvement. 4
CHAPTER 2: LITERATURE REVIEWCorporate Social ResponsibilityTo begin with, enterprises conduct business to gain profit and return it to the shareholdersbut the concept of CSR contradict that the firms have responsibilities for providing services toothers, particularly social and environment. There are several implications of CSR, depending onthe nature of the company used to define CSR. It can be a behaviour of an organisation thatinfluence on society, economic and environmental (The European Commission, 2017). Inaddition, McWiliams and Siegel (2001) said that CSR is activities in which the company providesome benefit to a society above the business interests of the company and need to comply with orexceed therequirement of the legislation. These in line with Balabanis, Phillips and Lyall (1998)that CSR consists of various activities in different dimensions such as environmental protection,charities and participation in social causes.The concept of CSR developed from two aspects which include CSR as business ethicsand CSR as part of sustainable development programs contributed by the United Nation butmerged as a business norm (United Nations, 1992). The idea of CSR that the goal of thecompany should be in a broader perspective than focus on growing shareholder value was arguedthrough discussions on business ethics since the 1950s (Carroll, 1999). This argument based onan assumption that emphasises appropriate methods profitability so that the enterprise gainslegitimacy for existence in society (Wood, 1991). Collier and Esteban (2007) claimed that AdamSmith explains morality in the Wealth of Nations but when the introduction of mathematicaltools was applied to examine economic theories, most economists were convinced into a worldof measuring. Therefore, ethics became less prioritised due to it cannot be measured certainly.An enterprise required to adopt a broader perspective of its responsibilities rather than achievingeconomic goals in order to gain effective response to the stakeholders that involve not onlyshareholders, but also many other stakeholders, including customers, employees, suppliers,community, governments and other related groups (Thaipat, 2012; Hogan, 2009).The most well-known theory of CSR is Carroll’s pyramid of CSR. Carroll (1991; 1979)demonstrated the set of four basic responsibilities which are economic, legal, ethical andphilanthropic can shape the basis framework for CSR as a pyramid. Firstly, the foundation of thepyramid is the economic responsibility, he mentioned that the basic requirement of business fromsociety is the organisation should be strong to sustain the business, maintain profitability toinduce the investment from shareholders. In social perspective, “the business organisations areinstitutions that will produce and sell the goods and services to meet their needs”. Organisationscan make profits by adding value on their products or services to provide benefit to thestakeholders. Secondly, legal responsibility, the companies should obey the laws and comply5
with the regulations. Thirdly, ethic responsibility, the expectation from society that companiesmust do to minimise risk. The concept of legal and ethical seem to be related, however, ethicalcomprises “activities, standards, policies and practices” that do not present in legal codification.Finally, philanthropic responsibility, society desires the business organisation to providesomething back to the society and “to be good corporate citizens just as individuals are” (Carroll,2016, p.1). On the other hand, there are several rationales for companies to participate in CSRsuch as “moral obligation, sustainability, license to operate and reputation” (Porter and Kramer,2006, p.78). For moral obligation, companies must operate their business in the right wayperforming like good citizens in society and sustainability focuses on environmental problemsand regards society. License to operate is a condition that companies need to follow and also anapproval from communities, stakeholders and governments to conduct their business. Indeed, thesignificant reason for companies to engage in CSR is to improve the brand image and reputationas well as increase stock value (Porter and Kramer, 2006).Figure1: Carroll’s pyramid of CSR (1979)Consequently, the key factor that can be used to investigate the profitability of thecompany from CSR activities is the effect of CSR on a variety of stakeholders which are primarystakeholders include customers, employees, suppliers, investors and community (Lech, 2013).The research from Fiedler and Kirchgeorg (2007) is similar to Hillenbrand and Money (2007),they argued that different stakeholders expected the CSR of the company from differentperspectives depend on what they are interesting from the company. To begin with, CSR towardscustomers by which the firm should emphasise on the ethics of advertisement, customer healthand safety and transparency policies. These seem to enlarge the brand image, firm reputation andcustomer loyalty so the firm can earn more sales and profits. (Waddock and Graves, 1997).Generally, the managers worried about operating CSR activities might have an effect on6
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