Ubuntu or Compliance? Knowledge, Attitudes, and Practices of Owners of Small- Medium-Sized Enterprises in Johannesburg, South Africa Regarding Corporate Social Responsibility

ABSTRACT

There is a paucity of studies demonstrating how small and medium-sized enterprises (SMEs) adopt CSR interventions to enhance social and economic conditions of communities within which they operate. There is also a prevailing stereotype that Corporate Social Responsibility is only applicable to big, multinational companies. The study therefore explored the knowledge, attitudes, and practices of 10 owners of SMEs in Johannesburg, South Africa regarding CSR. Guided by a social development lens, the study adopted a qualitative case study research design. Thematic analysis of interview responses revealed that most of these owners considered their SMEs to be practising CSR, and were motivated primarily by the intrinsic spirit of Ubuntu rather than extrinsic compliance with regulatory requirements. While some CSR interventions (such as skills-transfers as empowerment) were found to be consistent with the social development approach, others, such as philanthropy, were not necessarily developmental but nevertheless important in a developing country such as South Africa with its high levels of poverty. The key contributions of the study to knowledge are first, that it debunks the misconception in the literature that SMEs are too small and financially incapable of implementing CSR interventions; and second, that it enhances understanding from a developing world perspective of the factors motivating SME owners to engage in CSR.

KEYWORDS:

• Corporate social responsibility
• small-medium sized enterprises
• South Africa
• social development
• Ubuntu

Introduction

There is a plethora of studies in the field of Corporate Social Responsibility (CSR) that focus on big corporations, mining companies, and other large firms in the private sector, and their contributions to social and economic development in South African communities (Patel & Mushonga, 2014; Siyobi, 2016; Trialogue, 2017). Moreover, many major organizations consider CSR as relevant only to big multinational enterprises (Grimstad et al., 2020), which reinforces the prevailing stereotype that SMEs are too small and financially incapable of implementing CSR interventions. Within this context, CSR can be defined as the responsiveness of corporates and/or enterprises through policies, rules and laws by means of interventions that are aimed at ameliorating the socioeconomic needs of people who consume business products (Hinson & Ndhlovu, 2011).

While literature is replete with research studies on CSR for big and multinational companies, there would appear to be a research gap regarding the knowledge, attitudes, and practices of CSR for small- and medium-sized enterprises (SMEs) even though SMEs contribute meaningfully to the Gross Domestic Product (GDP) in this country (Khoza, 2014; The Small Enterprise Development Agency, 2018). The Small Business Institute uses size to categorize SMEs based on the number of individuals employed (Stefan & Visser, 2021). According to Stefan and Visser (2021), micro enterprises employ 0–10 individuals, small businesses employ 11–50 individuals, medium-sized businesses employ 51–200 individuals, and large corporates employ more than 200 individuals. However, the spectrum of SMEs extends from medium-sized enterprises employing over 100 people to informal sole proprietors (Kalitanyi, 2019), highlighting the inconsistency in SME classifications (IFC, 2021).

It is noteworthy that in March 2019, Statistics South Africa released findings indicating that “the entire formal business sector generated R2.39 trillion in turnover in Q1: 2019,” and of this amount, it is reported that large businesses contributed approximately 62% while small businesses contributed 29% and medium sized businesses contributed only 10% in turnover (StatsSA, 2019a, p. 1). The quarterly report on the economy and particularly on SMEs for 2019 compared to that of 2015 indicates that for Q1: 2019, SMEs generated over a quarter of the total turnover in business services (lawyers, psychologists, general medical practitioners, estate agents, etc.), trade (corner cafes etc.), as well as social, personal and community services (mechanics, hairdressers, dry cleaning services, etc) (StatsSA, 2019b). In addition to this turnover, SMEs are playing a significant role in the creation of employment and in the development of new skills (The Small Enterprise Development Agency, 2018). The impact of SMEs, specifically in ameliorating the prevailing volatile socio-economic growth, undermined by issues, such as high poverty levels, unemployment, and rising inequalities in this country leading to a shrinking/weakening state purse/government fiscus, cannot be overemphasized. Moreover, ways in which CSR practices can assist in leveraging the functions of SMEs in efforts to boost the socio-economic development in this country remain quite fundamental.

However, even though there is general consensus that SMEs play a crucial role and contribute meaningfully to the economic growth of this developing country; the ways in which they understand how they can fundamentally contribute to the social development agenda specifically through CSR in contexts within which they operate, remains under-researched (Khoza, 2014). Given the knowledge gap as revealed by the paucity of studies on CSR by SMEs, prevailing misconceptions regarding CSR, and barriers to practising CSR, the fundamental question that the study sought to answer was: “How do owners of SMEs in Johannesburg understand CSR and its implications for social development and what are their attitudes and practices in relation to CSR? Objectives were: (1) to understand the knowledge that owners of SMEs have regarding CSR; (2) their attitudes towards CSR; and (3) how they either practised or did not practise CSR and whether it was practised simply in compliance with specific policy and legislation in South Africa or as a form of Ubuntu. Ubuntu can best be described as an African moral philosophy that places emphasis on collective responsibility and “being self through others.” “It is a form of humanism which can be expressed in the phrases ‘I am because of who we all are’ and ubuntu ngumuntu ngabantu in Zulu language” (Mugumbate & Nyanguru, 2013, p. 82).

Empirical literature review

From a global perspective, Oduro et al. (2021) conducted a systematic review of 136 studies on CSR in SMEs and found that quantitative surveys and panel designs dominated the field with fewer qualitative studies. Dixit and Priya (2021) used interpretive structural modeling to explore the structural relationship barriers experienced by Indian SMEs in implementing CSR initiatives. They found that the main factor hindering active CSR engagement was their limited knowledge about CSR. In Asia, Yuen and Lim (2016) found that lack of resources, lack of strategic vision, and an unwillingness to pay for CSR were further barriers to implementing CSR.

In the Global South, research on CSR in SMEs is emerging. In Kampala, Uganda, Turyakira et al. (2012) conceptualized a CSR model with which to harness the developmental benefits for communities while enhancing the longevity and the competitiveness of SMEs. In Zambia, a quantitative study by Choongo et al. (2019) surveyed SMEs to investigate the motivations for employing CSR in a developing country and found that moral and ethical reasons were the determining motivating factors. In Cameroon, Demuijnck and Ngnodjom (2013) used a hermeneutical approach to explore the conception of CSR by SMEs within a developing Sub-Saharan context. While responsibility toward the planet is central to CSR, Demuijnck and Ngnodjom (2013) found that business managers of SMEs in the Cameroonian context did not perceive any significant obligation to the natural environment. Chanakira and Masundu (2019) examined CSR engagements of 16 Zimbabwean SMEs and found that while CSR was appreciated mainly from an altruistic perspective, this understanding was incomplete. More recently, Bello and Kamanga (2020) found that barriers to CSR adoption in Malawi included a lack of resources, a lack of clear policy and government support, and lack of awareness. Therefore, while compliance for adopting CSR is crucial for big companies in many contexts and is well-regulated by laws, emerging research within the Global South on CSR in SMEs suggests that owners use their own prerogative to determine implementation.

Within the South African context, a study by Khoza (2014) in the township of Alexandra sought to investigate the practices of CSR by SMEs at the bottom of the pyramid. The study found that some of the reasons why SMEs do not practise CSR are due to deeply rooted negative misconceptions of what SMEs are, and what constitutes CSR. Some of these common misconceptions were: 1. SMEs are too small to undertake CSR projects or social interventions and/or initiatives when compared to large firms; 2. SMEs are unregulated and not compelled to practise CSR in their businesses; and 3. SMEs are largely unsustainable and therefore, are unlikely to contribute fundamentally to sustainable social development (Khoza, 2014). Another study involving 79 large companies by Trialogue (2019) revealed that of the total participating companies, 86% identified a reciprocal benefit between themselves and the beneficiaries; significantly, 96% reported that CSR was directly linked to the improvement of their brand and reputation, while 88% reported that CSR improved stakeholder relations. The current study endeavored to build on this existing research by focusing on the knowledge, attitudes and practices of SME owners to CSR from a developmental perspective.

Theoretical framework

This study employed the social development approach as a theoretical framework. Social development can be understood as a holistic process intended for the attainment of human development by creating structural and institutional conditions that use evidence to enable a policy environment where the distribution of material and non-material (social and economic) resources is just, and/or equitable (Taylor & Triegaardt, 2018). In a developing country such as South Africa, the conditions in which to achieve social development are at the heart of the developmental social welfare system, which was propagated through the White Paper for Social Welfare in 1997 (Taylor & Triegaardt, 2018). Therefore, through different processes of planned social change (policy), the social development approach prioritizes the development and the welfare of previously disenfranchised individuals, families, and communities that find themselves mired in abject poverty, and places them at the heart of all developmental considerations.

According to Patel (2015), there are five key features central to South Africa’s developmental approach to social welfare policy. The first feature is that of integrating the nexus between social and economic development (Patel, 2015). The current study explored how SMEs align their practices of CSR and the economic needs of their businesses with the social and economic needs of their communities. The second feature is the rights-based approach. This feature is considered to be the bedrock upon which the other features are embedded and which has strong roots in the Constitution of the Republic of South Africa (Patel, 2015), with a specific recognition of human capabilities to enhance social justice which is a key factor in CSR. In this sense, the social development approach is concerned with promoting the human rights of the most vulnerable individuals who continue to be systematically excluded and suffer the dire consequences of the legacy of apartheid (Patel as cited in Aucamp & Lombard, 2018). The Broad-Based-Black-Economic-Empowerment Act compliments the social development approach. Hence, the study explored the knowledge and understanding of owners of SMEs regarding CSR as a means of redress, rather than simply being a form of compliance with legislation.

The third feature is democracy and participation in socio-economic development; including active citizenship and civic engagement in achieving human development. The study endeavored to ascertain whether SMEs were actively committed through their attitudes to encouraging participation of local communities in their CSR initiatives. The fourth feature of social development is collaborative partnerships that entail social welfare pluralism. This process “describes the engagement of a range of stakeholders in the mutual promotion and achievement of common development goals and outcomes for the marginalized sectors of society (Taylor & Triegaardt, 2018, p. 68). This pillar was considered to be particularly applicable when trying to understand both the attitudes as well as the practices of CSR regarding collaboration with various stakeholders. The final feature is that of bridging the micro-macro divide. This feature was addressed through a consideration of how micro-level CSR projects of SMEs can potentially contribute to macro socio-economic policies in this country. This feature was incorporated within the present study through exploring the knowledge, attitudes, and practices of SME owners regarding CSR projects in potentially bridging the micro-macro divide.

While Patel and Mushonga (2014) used the social development approach to examine CSR in a large South African corporation, there would appear to be a dearth of studies employing this theoretical framework to study CSR in SMEs in South Africa.

Materials and method

A qualitative approach was used to elicit the subjective responses from enterprise owners on how they experienced CSR, in terms of their knowledge, attitudes, and practices of CSR in their enterprises and in relation to the communities within which they operate. Within the qualitative approach, a case study research design was adopted.

Data were collected through semi-structured interviews from a purposive, non-probability sample of 10 owners of small enterprises operating within Johannesburg. Given the diversity in SME definitions, encompassing factors such as sector, size, age, asset value, and profitability, this study adopted the definition provided by the South African National Act for Small Business of 1996, amended in 2003 and 2004, that defines small enterprises as having fewer than 50 employees and less than R10m annual sales revenue depending on industry sector. However, it was not possible to use annual turnover as a criterion as this information was not available to the researchers and there was reluctance to elicit this sensitive data from participants. The sample included both owners of SMEs who practised CSR in their businesses as well as those who did not.

With regard to the sample size, (Cobern and Adams 2020, p. 77) argue that “deciding on how many subjects to interview is a value judgement and requires an explanation.” In the current qualitative study, a sample size of 10 was considered reasonable, based on the overall value judgment of the researchers that in-depth interviews with this number of participants was likely to yield rich qualitative insights. On the other hand, Guest et al. (2006) argue that literature in qualitative research is nebulous regarding the adequate number of participants to be interviewed, and from whom data saturation (informational redundancy) would be feasible. According to Fusch and Ness (2015), data saturation appears to depend on a number of factors, and one can identify data saturation when no more codes, themes, insights on the data generated and analyzed can be developed. In the current study, data saturation appeared to have been achieved after interviewing 10 SME owners. Moreover, unlike quantitative studies, the aim of the present study was not to achieve generalizability of findings which would have necessitated the use of a larger, more representative, non-probability sample. Instead, the intention was to obtain findings that might be relevant to other SMEs in similar developing contexts.

Demographic profile of participants

The sample was made up of nine SME owners who were male and one owner who was female. All 10 participants were Black Africans. Six out 10 participants fell within the age category 30–34 years, one participant was between 35 and 39 years, two participants were between 40 and 44 years, and only one participant was between 45 and 49 years. Two out of the 10 had a master’s degree, four had a bachelor’s degree, and one participant had a National Diploma while two of the participants had a grade 12 or matric and one of them had no matric. The businesses spanned various sectors including marketing and advertising, logistics, construction, and business management, retail (clothing), business management services, furniture manufacturing, food, and beverages. They varied in terms of years of operation with the minimum period of operation being 2 years, and the maximum being 10 years. All 10 SMEs were registered as Propriety Limited companies (Pty (Ltd.) and one SME was additionally registered as a Close Cooperation (CC). Lastly, all the SMEs in the sample had at least 10 employees. As there are no accurate statistics on the number and characteristics of SMEs in South Africa, the sample was not necessarily representative of the population of SMEs.

Due to the COVID-19 pandemic, eight interviews were conducted telephonically and two were conducted face-to-face. Prior to collecting the data, an interview schedule was developed and employed as a data collection tool and as a guide for the semi-structured interviews. Before starting with the data collection, the research tool was pre-tested and was found to be appropriate for use in the research process. The first author conducted all the interviews, whether face-to-face or telephonically. After going through the Information Sheet with potential participants and explaining the purpose and procedure of the study and their rights as research participants, he obtained written consent for participation in the study and for audio-recording of interviews. Data were subsequently collected regarding their knowledge, attitudes, and practices of CSR and audio-recordings were transcribed in preparation for data analysis.

Braun and Clarke’s (2006) six-step model was employed for conducting thematic analysis. This inductive process involves familiarization, coding, generating themes, reviewing themes, defining and naming themes, and lastly writing up. The first author familiarized himself with the data by reviewing all his interview notes, listening to the audio recordings, transcribing them as well as reading and re-reading them in preparation for the second step which was coding. This step involved repeated observations of recurring phrases and patterns from responses of the participants and translation of these into codes. The codes were then grouped into meaningful themes derived from the similarities of the responses of the participants. The themes were then generated through thematic mapping, that is, by grouping codes to inductively develop meaningful themes emerging from the data that were relevant to answering, or/and within the parameters of the core research question. All these themes were reviewed and re-named in discussions with the second author (the student’s supervisor) and in the write-up of the study, efforts made to link the findings to social development theory and the research literature.

In ensuring the trustworthiness of the study, efforts were made to address Guba and Lincoln’s (2005) four criteria of trustworthiness, namely: credibility, transferability, confirmability, and dependability. Credibility (truth value) was enhanced through a detailed description of the methodology and theoretical framework, pre-testing the research instrument, thick descriptions of participants’ responses, and keeping an audit trail. Transferability (generalizability) was enhanced through thick descriptions of the data. Confirmability (objectivity) of findings was enhanced through correspondence checking whereby the researcher checked whether his categorization of themes corresponded with those of his supervisor. Dependability (reliability) was enhanced through pre-testing the interview schedule and the use of the same researcher and a similar set of questions.

As the study involved human participants, the following ethical principles were considered: informed consent, voluntary participation, confidentiality and anonymity, feedback to participants, avoidance of deception, non-maleficence, and ethical clearance from a university Human Research Ethics Committee.

In terms of limitations, first, the selection of the SMEs was based only on size as it was not possible to ascertain annual turnover. Second, there is the possibility that some participants may have furnished socially desirable responses to some of the questions. Third, while generalization is usually not an issue in qualitative research, it must be acknowledged that the small, non-probability sample precluded generalization of the findings to the broader population of SMEs. Fourth, the study was conducted during the COVID-19 global pandemic. South Africa was in lockdown for several months and this lockdown created disruption in the business and enterprise environment. Most business owners were affected and this limitation posed possible threats to the validity of the data obtained. According to the StatsSA (2020b) report on business impact surveys conducted during the first month (between March 30 to April 13 for the first Survey and again from the 14^th of April to the 30^th of April in 2020 for the second survey) of the national lockdown, 9 out of 10 companies reported reduced turnover (profits). Furthermore, the survey results indicated that other factors such as the ability of businesses to retain their workforce was negatively impacted, contributing to the rapidly growing unemployment rates as well as increasing the vulnerability of these businesses. All these factors impacted on the ability to recruit participants for the study as their priorities were on surviving the lockdown. Nevertheless, despite these limitations, the study yielded important findings.

Results

Results are presented in accordance with the objectives of the study.

Objective 1: knowledge of CSR among owners of SMEs

Nine out of the 10 participants claimed to know what CSR meant, while one participant was not too sure of the meaning of CSR. In terms of their understanding of CSR, the following themes emerged:

Theme 1: CSR as social/community development/empowerment over profiteering

Nine of the 10 participants perceived CSR to mean the social responsiveness of their SMEs to social and economic issues which they considered as pivotal in meaningfully helping people and communities. When asked what they understood about the concept of CSR, Participant F indicated, “I suppose it’s a proactive where companies participate in the upliftment of, of communities or local people over and above, you know, the normal activities of the business.” When asked the same question, Participant B responded, “I think private companies have a responsibility beyond just making profit … . It becomes mandatory to then be able to give back to society or contribute in a certain way to society”. His rationale was that when owners of SMEs invest in the community, they are also indirectly re-investing back into their own businesses as they are increasing the capability of individuals and families within that particular community. This capability can manifest in the ability of these individuals to engage in social and economic activities in the community. Another participant commented: “What I understand about the social responsibility is that as a company operates in different areas it must make sure that it has a CSI programme. Where it looks at social issues to assist in the community, socially” (Participant J).

CSR was also viewed as a community development strategy. According to Participant A, “we have been taught that it is more about community development.” Participant C was of the view that any enterprise grows through the support of its community and the nature of its character is built by the values and the general social and economic conditions of the community from which it operates, “So at the end of the day it is a responsibility of a small and medium-enterprise like mine to ensure that it does not only grow on its own but it grows with the people that surrounds.” Some of the participants articulated that real empowerment does not mean some kind of “periodic relief.” Participant B indicated that “community upliftment” was important to him, and that he also agreed “with all of these things of providing food and what not, but for me if I am going to help, I want to empower the community.”

Even though most participants viewed CSR as a community/social development/intervention strategy, when asked about the role of government as a partner in CSR initiatives, most participants seemed to have lost faith in government, and its role as a partner in the overall development process. Participant A commented, “We know that the government has failed us a number of times and yes the government they are not here to save us but I believe also that they have such an important role to play”. These kinds of responses suggest that the Public and Private Partnership in the context of advancing the social development agenda between the SMEs (Private) and government (public) was not particularly strong. However, Participant B felt that Public-Private partnerships still had a role to play. “So, for me I think CSR/CSI has an element of partnership where we work together over time to really create a sustainable impact.”

Theme 2: CSR as Ubuntu

Some participants considered CSR pertaining to SMEs as being more of a moral obligation (social responsibility or Ubuntu) than being a legally enforceable activity. For example, Participant I perceived “CSI as part of Ubuntu, Ubuntu is more of taking care of others, helping others, taking responsibility to nourish your own community, your own people, and people around you by investing on them.” Participant G responded, “I would like to somehow merge or link CSI with the bedrock of us as the African people, black people, Ubuntu you know.”

Theme 3: CSR as non-monetary and skills-transfer that ensures sustainability

Participants articulated the idea that social investment is not only linked to monetary contributions but also involves the contribution of non-financial resources to achieve real empowerment and build on people and communities’ capabilities. This theme was reflected by Participant E who indicated that people must “ … not think that corporate social investment means contributing a R100 000 or a R20, 000. It’s just about what resources do you have that can benefit somebody else.” In fact, most of the participants stated that if CSR is not practised correctly and if money is not spent appropriately, CSR interventions may remain fruitless and may not produce the desired sustainable development or real empowerment of communities. In this regard, Participant G mentioned, “You know, they [owners of SMEs] can just come in and offer, you know, their time then where they can also offer, money in the right way, not just throw in money, sometimes just throwing money into things doesn’t assist with anything.” In terms of knowledge of CSR, Participant A commented, “Corporate Social Responsibility for me is mainly about skills-transfer.” What this particular participant seemed to be referring to was the dimension of CSR that is concerned with building people’s capabilities, creating independence and achieving what he termed “real empowerment.”

Eight out of the 10 participants in this research echoed the view that SMEs that are not mandated by the law/policy to practise CSR, may also play their part. In this respect, Participant E indicated: “Everybody has a skill that somebody else does not have. So, if you don’t have the monetary resources, but you’ve got a little bit of time, you know, you’ve got 30 minutes a month, you can surely mentor somebody else and transfer a skill that they need and that can contribute to them getting employment, for instance.”

Here, the participant appeared to recognize that time, skills, and mentorship are non-material resources that could help in uplifting people who in this context are disempowered through unemployment, to being empowered, through securing employment. Participant A expanded on this idea when he stated, “I definitely believe that small-medium businesses need to do their part to really (you know) engage in social corporate investment or to do their part to … it might be to empower, it might be mentoring, it might be skills transfer, it might be hosting mentorship programmes.

“By sitting with somebody having that conversation and then you understand his problem you give him [advice on] how to think or whatever answer you give to him he is learning a lot from there, from those conversations” (Participant D). For this participant, CSR can happen at a micro (individual) level, where empowerment of an individual can have a ripple effect and thus equate to community development. He elaborated on this idea by providing the following example, “I am having Kagiso [pseudonym] here, I need to help him understand what business is, [and] I am not expecting him to work for me for the rest of his life. He needs to understand and establish his own business. Because the more I empower Kagiso, Kagiso will be able to employ more guys that are not working [unemployed]” (Participant D). Participants seemed to rationalize the significance of this dimension of CSR as a strategy that ensures sustainability. In this sense, most participants considered the transfer of skills and mentorship as empowerment strategies of CSR with the goal of sustainable community development.

An additional benefit of sustainability for the business was in terms of its customer base. “If the community is sustainable, and if the community keeps developing then that means I consistently have customers as well. So, for me, I believe in impact, I believe it contributes to sustainability as well because you are telling a good story” (Participant B).

Theme 4: CSR as a branding or marketing strategy

Participants B, J and I expressed the view that while giving back to the communities through CSR is beneficial to the empowerment of these communities, it also creates an opportunity to market their brands and the visibility of the kind of products and services that they provide in their businesses. In light of this theme, Participant J, expanded, “I have a responsibility, and then whilst I have a responsibility to contribute to the course (referring to CSR), but I have to brand my organization, my company, my business.” Essentially, this participant recognized the duality of his role as an entrepreneur and as a socially responsible business owner. “If I do my CSI, I need to do it in such a way that it ensures the maximum impact and it positions my company well in a marketing point of view, so whether from a Branding or PR point of view you know” (Participant B).

Theme 5: lack of knowledge of policy

Despite practising CSR, when asked if they were aware of any policies or legal requirements for SMEs to practise CSR, most (8 out 10) owners of SMEs indicated that they were not aware of any policy or law that required them to practise CSR in their business. Participant J indicated that he was aware of the existence of policies and laws but was not clear as to which ones were applicable to SMEs. He was of the opinion that government lacks mechanisms to adequately implement these policies and that there are no proper systems for ensuring compliance with these policies. “Our government they have been talking about the policies but there is no one that is making sure to implement those policies that are formed to make sure that all of these companies practise CSI” (Participant J).

Objective 2: attitudes towards CSR

The second objective was to explore the attitudes of owners of SMEs toward CSR. Within the ambit of this objective, the study explored the owners’ opinions of the relevance of CSR for SMEs, their views regarding policies and laws, and their attitudes to what they perceived as benefits and barriers to practising CSR in their businesses.

For all SMEs that reported practising CSR in their businesses the study looked at what they perceived to be benefits, for them, for their business and for the communities where they operate. For those participants who reported that they did not practise CSR, the study looked at what they perceived to be barriers. In order to determine their attitudes, the researcher also encouraged them to imagine what CSR activities they would want to undertake if there were no barriers. It is noteworthy that most of the SMEs that participated in the study were not under any legal obligation to practice CSR.

Theme 1: relevance of CSR for SMEs

Contrary to the common belief that CSR is irrelevant for SMEs, eight out of 10 participants considered CSR as relevant for various reasons including community development, building relationships and managing stakeholders and marketing, while the other two either stipulated the conditions under which it would be relevant or they were simply not sure of its relevance. What was also of interest is that none of the participants perceived the practice of CSR as something that was irrelevant for SMEs.

Among those who felt that CSR was relevant for SMEs, Participant F commented, “I definitely think that any business, whether it’s big or small should play a role in some way in helping other people, other communities … ” Therefore, an understanding of what CSR constituted, was linked to the attitude that the owner had toward determining whether or not to practise it. Participant E indicated, “I think it would be pertinent even for small businesses to contribute to corporate social investment. Other responses included: ”Yes. It seems that it is necessarily, even though what I know is that normally the small companies they are struggling at this present moment” (Participant J), who articulated clearly that despite numerous challenges faced by SMEs, CSR remains relevant in the process.

The attitude of determining the relevance of CSR in SMEs seemed to be linked to community development as something that is a responsibility of everyone in every type of a business in society. There was a shared concern for overall social development. For example, “So definitely CSI is important, but I think in a realistic and African way, we never label things. It should just come from within us to see the betterment of our communities. And everybody should play a role in that space” (Participant G).

Theme 2: attitudes towards CSR policies and laws

Participants expressed a mix of some statism (state intervention being central) and some neoliberal views on the intersections between CSR practices and policies/legal requirements. In this sense, most owners seemed to prefer a more neoliberal policy approach to CSR, which then seemed to favor a more laissez-faire attitude to policy. Most owners articulated the view that it should be the prerogative of the respective SMEs to determine whether or not to practise CSR in their communities, as opposed to having stringent government rules, laws and policies that would be enforceable, and thus, compel their businesses to practice CSR. They articulated the notion that introducing more “red-tape” would result in the overregulation of the markets. They indicated that this practice would overburden and weaken the growth of enterprises, threaten the longevity of SMEs that were already struggling and hinder the emergence of new SMEs.

While those with views on statism considered it relevant for government legislators to regulate the market in relation to social responsibility for SMEs, they felt that government should not adopt too strong a role of over-regulating the markets through introducing and propagating unnecessary policies and laws. “I think compliance is important right because it regulates and it is able to standardize and it is also able to create processes which are fair, but at the same time compliance adds a certain burden to small companies you know? … You don’t want to overregulate the markets because it increases barriers to entry” (Participant B). Participant E commented: “I think we must have policy, but they must be structured in a way that allows for flexibility, particularly in small businesses. Small businesses are fighting for resources all the time.” Participant E stated: “So if you’re going to impose regulation on a business that is trying to survive and gather the resources to survive, it’s going to be tricky”.

Theme 3: benefits versus barriers to CSR for SMEs

When asked if there were benefits for practising CSR in SMEs, Participant B responded, “I think the benefits are multiple.” Participant C spoke of increasing brand visibility. Participant J mentioned that another benefit was boosting the company’s scorecard on the code of good governance. He said, “according to the legislation the issues be between BEE and the CSI programmes is also giving them the score and the points to say, which company is offering a CSI programme?” (Partcipant J). Participant G indicated, “So there definitely is gain. And some of that gain sometimes it’s not immediate in the long term and you might not see it.”

With regard to barriers, lack of support and empowerment of SMEs were perceived to be barriers to implementing CSR. For example, Partcipant A commented, “we don’t get a real empowerment or support. It’s quite difficult for us to really focus on social corporate investment or even implement a policy”. Participant E indicated, “it’s definitely something that as a small business, it seems a bit far-fetched, um, it seems far-fetched because small businesses at the stage where they are, they require support”.

Theme 4: CSR impact versus ticking boxes

Most participants indicated that CSR strategies need to be more impactful and sustainable. They were mostly against the status quo that seems to exist in the field where people seem to engage in CSR simply as a matter of compliance. They were alluding to cases where entrepreneurs use CSR as a marketing ploy or a conduit for increasing brand desirability by also aiming to attain better scorecards in respect of the B-BBEE Act (No. 53 of 2003) as amended by B-BBEE Act (Act No. 46 of 2013) They described this practice as “ticking boxes.” In terms of this approach, Participant E indicated, “A lot of the times the CSI projects don’t work because the intention is not right. You know, people are just doing it to tick the box, and therefore there’s no commitment from the funder and there’s no impact.”

Objective 3: practices in relation to CSR

The third objective was to ascertain the practices of owners of medium-sized enterprises regarding CSR in their business activities.

Theme 1: CSR practised through donations and philanthropy

Nine out of the 10 participants reported practising CSR in their businesses, contrary to the typical view that SMEs do not practise it. Most owners of SMEs indicated that they practised the kind of CSR that was closely associated with offering free services (typically in line with what the activities in which their respective companies engaged), providing monetary donations, food parcels and other charitable services to the most vulnerable members of their communities.

For example, Participant A explained, “Oh so for me lucky enough I had a foundation and the foundation it was formalised as a non-profit making company” … “we were doing bursary campaigns where we got students at UJ, Wits, and TUT that we were able to help them get bursaries.” Participant B reported that “during COVID-19 we were just assisting families we were not doing something big because we didn’t have a big budget but we identified certain families that had a need and we provided food parcels” (Participant B). Participant D explained: “Where I am coming from there is a crèche (pre-school), my mother established the crèche with the other women so every month I am donating R10 000. Sorry, after every 3 months.”

Participant I gave an example of how he had identified children in need of care in his community and he had assumed the social responsibility to help them. “When I looked at them, they were dressing like street kids, they were not street kids but you could see from the family. The situation is bad, I had to buy clothes for them.” He also indicated that most of his activities included identifying people in the community as well as his own family who struggle by linking them to relevant resources or personally helping them financially or otherwise.

Theme 2: CSR practised through empowerment and skills transfer

Through his CSR programmes, Participant A indicated that he used CSR to support the youth of his community and beyond. He said, “I think our biggest one (career expo) was enterprise development … where we used to do tours across all the townships and that is where we sort of stimulate the minds of a black child. That is where we share opportunities”. His practice of CSR included engaging communities in the process. He indicated that through his CSI initiatives he was then able to create mentorship and empowerment opportunities for young people by linking them to relevant mentors and experts in various fields. He concluded that, apart from his foundation, through his holding company/the SME, he was able to “create jobs for young people” and he considered this activity as “[his] way of social corporate investment” (Participant A).

Participant C indicated that his company employed over 11 young people who were university students. He indicated that he viewed this practice as CSR as he was helping to curb youth unemployment. Furthermore, he explained that his company (a retail enterprise) sub-contracts services from young people whom he mentors or has mentored in the past. According to this participant, he provides opportunities by equipping the youth with enterprising skills. During the interview, he indicated, “So, the printing company that I use is owned by a 23-year-old graduate from UJ, the one who graduated last year. So, for me that is my little CSI or contribution towards society” (Participant C). Participant E, whose enterprise focusses on helping companies by providing various services such as giving professional business advice, indicated that she used some of her free time to offer her services to relevant people who need training in the small enterprise space. She mentioned that she offers online workshops and webinars to equip aspiring and new business owners.

Theme 3: CSR practised through the provision of services and information to the community

Participant B related that he offers his business expertise, professional (administrative) services to an orphanage in one of the townships his company has identified where they assist with documentation and NGO compliance checks. “We hosted the webinars where we provide people with free information and knowledge on how to navigate their ways around lockdown: looking at what they should change, you know, how they should manage” (Participant E). Irrespective of the needs that these SMEs have (typically financial), they still in some way or another managed to give back to communities within which they conduct their business activities and they considered this contribution as important.

Theme 4: CSR practised through collaborative partnerships

Some participants in this study indicated that they practised their CSR interventions through collaboration with various stakeholders. For example, Participant H indicated that during the lockdown period he would collaborate with others in the community who were helping to provide relief to the needy. He indicated that he would provide his cooking services by assisting a lady in the community who runs a soup kitchen. “I would go there and cook for her and she would take the food and go to the community hall to give out. So, this was the only help I could give.” Providing CSR initiatives/interventions through partnerships was also echoed by other participants. For example, Participant A indicated, “I am blessed that I have got such a great team, remember that most of my corporate social investment projects is that I do through partnerships.” He explained that he does not plan the interventions by himself but instead involves other stakeholders, and they try to find synergies and thereby integrate their separate CSR visions into a single one. Another participant mentioned that he also works with partners to implement CSR activities. “Even with food parcels, we didn’t create our own food parcels. We engaged them and understood what they needed” (Participant B). This participant further related that they involved their recipients (the orphanage) in determining what they needed.

Theme 5: impact of COVID-19 on the practice of CSR

COVID-19 was the most prominent factor which stifled the market with effects manifesting in the lack of adequate revenues as business activities were restricted under the regulations of the national lockdown due to the global pandemic. In this respect, Participant F indicated, “So initially after the first hard lock-down level 5, you have to shut down and there was no business for the month of April, which was a huge setback for us.” This factor emerged from the data across the 10 participants who were interviewed. While other factors were also noted in interviews such as the downsizing/retrenchment of staff and lack of procurement deals, the aforementioned factor is key as it is directly linked to the functioning of the SME as whole and was thus, a determinant in the likelihood of an SME being able to practise CSR. Regarding the effects of COVID-19, Participant H mentioned, “So during that time I could not do enough to help out of my business to the community. But the only thing that I was giving was supporting other people who were giving help.” Nevertheless, SMEs that reported to be doing well financially seemed to be more likely to practise some form of CSR activities (monetary/non-monetary).

Discussion

In terms of knowledge of CSR, the SME owners who were interviewed appeared to understand not only the ideological and practical underpinnings of CSR as it pertains to SMEs, but also what it means to do business responsibly in a society through investing in human development. This result refutes Bilankulu’s (2012) finding that SME owners lack knowledge of what CSR represents. Furthermore, the participants’ perceptions that CSR is crucial for development over profits is supported by Chapple and Moon's (2005) assertion that CSR is concerned with going above and beyond core business activities in responding to social issues and needs.

Participants’ views regarding CSR as community development, were consistent with the observation of representatives from CSI Solutions, who viewed CSI as a component of CSR that concerns itself with centralizing the improvement of quality of life through community development programmes and interventions (CSI Solutions as cited in Vertigans et al., 2016). Community development is linked to social development which is holistic and multifaceted, and recognizes the significance of various stakeholders meaningfully contributing in the development process (Patel, 2015).

Consistent with the findings regarding CSR as Ubuntu, this concept is described by Johannes (2016) as a moral code for good corporate governance that finds expression in key legislative frameworks pertaining to CSR in South Africa such as the King Reports and others, from which it is propagated. Ubuntu is a moral code of basic concern for others by showing respect, mutual support for the welfare of others through egalitarian activities that are proactive and responsible, and is crucial for human development (Johannes, 2016). Therefore, participants’ views of CSR as Ubuntu have crucial implications for the practice of social development as they suggest that for SMEs where CSR is not a legal requirement, it would be possible to undertake such activities with a view of advancing Ubuntu in society and thus social development.

The perceptions regarding CSR as non-monetary skills transfer, were consistent with the social development approach which centralizes the use of existing assets, strengths and/or resources to inform development interventions. This perspective recognizes that in order to enable people to tap into or build on their capabilities, money is not the only immediate panacea; there are other non-monetary resources that can be offered to people such as time, skills and mentorship. Indeed, one of the scorecards (scorecard number 3) of ensuring compliance with Codes of Good Practice in terms of the B-BBEE Act (Act No. 46 of 2013) is the Skills Development Specialised Scorecard, although this scorecard requires large corporates and qualifying SMEs to spend money on training programmes.

With respect to the view of CSR as a marketing strategy, international and local literature show that CSR is also performed on a voluntary basis (not through policy or legal enforcement) as a marketing strategy for corporations of various sizes and revenues as these businesses seek to maximize profit (Bilankulu, 2012). In this study, while CSR was perceived to be about social development and building communities, it was also regarded as a strategic tool that SMEs use to leverage their business endeavors. Martin and Thompson (2010) further indicate that while the need to maximize profits while taking care of the environment and empowering the people can seem quite complex, it can be simplified and achieved through synergizing an enterprise’s social (or ethical) responsiveness ethos with its financial capability as well as its marketing strategies. However, in this study, not all participants articulated these views. This finding is consistent with the findings of a study conducted by Chiloane-Tsoka and Rasivhetshele (2014) in a township under Tshwane, which revealed that there was a lack of adequate awareness (education) regarding how CSR can be used as a marketing tool for SMEs in order to ensure sound viability of their enterprises and for the advertising of their services in the markets.

The finding that eight out 10 of the owners were not aware of any policies pertaining to CSR, is in line with what Chiloane-Tsoka and Rasivhetshele (2014) observed in their study, namely, that most owners of SMEs were not aware of the implications of good governance as a policy principle, and as a crucial factor for enterprise development, and that there was still a need to educate SMEs about what this aspect means for their businesses. Educational awareness and training programmes could potentially play a vital role in this regard.

The participants’ diverse views regarding what CSR means is consistent with Carrol’s early observation regarding the concept of CSR. Carroll (1979) argued that CSR is defined differently by different people for different reasons. As these companies varied in terms of the industries and overall business ethos or owners’ values, it is therefore not unusual that their views of what CSR means would also differ.

With regard to attitudes towards CSR, in contrast with Khoza’s (2014) findings on misconceptions about SMEs, the findings from the current study seem to dispel the misconception that SMEs are too small to undertake CSR projects when compared to large firms. Most of the SME owners considered CSR as something that was relevant for all businesses irrespective of size. This result is similar to Bilankulu’s (2012, p. 64) finding, namely, that “Business has the necessary money to engage in social action programmes irrespective of size, and business has a responsibility to contribute to social issues.” Therefore, while SMEs are faced with manifold material and non-material issues that threaten their sustainability, and weaken their ability to undertake CSR initiatives, most SME owners in the study recognized the relevance of participating in CSR activities as these activities were linked to community/social development. They also appeared to be motivated more by the spirit of Ubuntu than by a need to comply with government requirements.

Most participants were not in favor of a regulated policy approach (statism). This finding appeared to cohere with the findings of a previous study conducted by Christensen et al. (2016) which revealed that the costs of complying with “red-tape” is detrimental to the development of SMEs in South Africa. When it came to their attitude toward policy, they appeared to have liberal views that were fundamentally rooted in a laissez-faire kind of approach. In other words, they felt that policies or the introduction of a policy to regulate the practice would tend to increase “red-tape” in the market space. Hence, they preferred the practice of CSR among SMEs to be a self-driven process, as this approach would allow those that did not qualify or were required to do so by law or policy, to practise CSR (B-BEE Act no.46 of 2013).

Regarding the benefits of CSR for SMEs, the findings of this study are in line with those of Maldonado et al. (2016), which revealed that an adaptation of CSR in SMEs correlated positively with the performance of small enterprises. Another benefit reported was that of boosting a company with achieving compliance in terms of the scorecards for B-BBEE. With regard to barriers, findings echo previous research studies such as those of Mukhavhuli (2017), Khoza (2014) and Bilankulu (2012). Bilankulu (2012) found that a lack of return on investments is a barrier to practising CSR among SMEs. In Asia, Yuen and Lim (2016) found that lack of resources, lack of strategic vision and an unwillingness to pay for CSR were further barriers to implementing CSR.

The views regarding the need to focus on the impact of CSR rather than use it as a tick box exercise, were consistent with the findings of Rajput, Oberoi and Bharti (2015) who recommended that impacts of CSR strategies should be prioritized over a mere compliance activity. This research suggested that impact is vital and achievable though CSR. With the social development approach being concerned with empowerment and building independence, infusing social development principles into CSR strategies could be useful, particularly when companies consider designing CSR programmes for local community development (Taylor & Triegaardt, 2018).

With regard to the practice of CSR, findings indicated that most of these owners considered their SMEs to be practising CSR in one form or another, contrary to the dominant discourse and misconception in the literature that claims that SMEs are too small and are financially incapable of executing CSR interventions (Khoza, 2014). While the theoretical underpinnings of CSR emphasize the significance of ensuring that businesses provide sustainable CSR interventions, most of these owners used their prerogative of not being bound by the law to only provide the kind of CSR interventions that seemed to be feasible for them (Rodriguez et al., 2002). In essence, a proper CSR programme would concern itself with creating long lasting impacts, irrespective of the requirement or the absence of the requirement to adhere to rules and standards enforced by any law or government (Chapple & Moon, 2005). This approach was contrary to the way in which some of the companies practised their CSR, which was focused predominantly on philanthropy. Nevertheless, although philanthropy does not embody the cornerstones of social development such as building capability, empowering, and creating self-reliant communities, philanthropy is particularly important in a resource-poor country such as South Africa, where poverty, unemployment, and inequality are pervasive. It is also plausible that these kinds of philanthropic approaches were exacerbated by a variety of issues including the global COVID-19 pandemic, when many people lost their livelihoods, According to Shuai et al. (2019) the realities and/or cultural context within which CSR strategies are designed, not only determine the behavior of the market economy, but also determine the philosophies and perceptions of CSR.

In summary, the key contributions of the study to knowledge are twofold. First, the research debunks the misconception in the literature that SMEs are too small and financially incapable of implementing CSR interventions as most of the SMEs in this study did indeed practise CSR and employed a variety of innovative approaches. Second, the study enhances understanding from a developing world perspective of the factors motivating SME owners to engage in CSR. A key finding was that SME owners were motivated by the spirit of Ubuntu rather than as a form of compliance with legislative imperatives. The originality of the study lies in its use of social development theory as the theoretical framework for the study, as well as the focus on the African ethical framework of Ubuntu. In this way, the research contributes to the body of knowledge on SMEs and CSR.

In terms of recommendations for CSR practices in SMEs, there is a need to encourage a discourse around the practice of CSR and to educate more SMEs about the significance of conducting business responsibly and in ways in which they and their communities can potentially benefit. As highlighted in the findings, CSR can potentially improve the performance of SMEs, boost their BBBEE scorecards and enhance quality of life of society and local communities. Owners of SMEs also need to be educated on ways of translating the theory of CSR into practice. Moreover, findings from the study highlighted the need to encourage the practice of non-monetary CSR for non-qualifying SMEs so as to ensure that empowerment happens through skills-transfer, which has the potential of alleviating unemployment. Given the precariousness of the market/s, encouragement of multi-sectoral collaboration in executing CSR interventions would seem to be crucial for SMEs and the sustainability of these interventions.

In terms of recommendations for policy, the B-BBEE policy could look into ways around how big corporations could consider partnering with SMEs while conducting their CSR programmes. The Department of Social Development as the main driver of the social development approach together with other departments such as the Department of Small Business Development, need to develop policy guidelines regarding the manner in which SMEs may be supported by big corporations in implementing CSR in communities. Finally, given the finding that many SME owners were unaware of any policies pertaining to CSR in SMEs, there is a need for educational workshops in this regard.

One way forward in terms of research is to explore whether SMEs in other African countries are also motivated by Ubuntu but possibly describe it under a different term or philosophy. A related area is the need for cross-cultural studies focusing on the cultural beliefs of SMEs regarding CSR. Another research topic could be the link between CSR projects of SMEs and climate justice initiatives.

Disclosure statement

No potential conflict of interest was reported by the author(s).