The practice of corporate social resonsibility among small, micro and medium manufacturing enterprises in the Pietermaritzburg area and how this practice is influenced by their stakeholders.

Abstract

The operations of South African SMMEs have significant environmental and social implications, and the implementation of Corporate Social Responsibilities (CSR) practices in these companies is therefore of great value, both environmentally and socially. Implementation of practices of CSR is influenced by the stakeholders of a company and thus by the socio-economic and political context in which the company operates. This study examines the practice of CSR in manufacturing SMMEs in the Pietermaritzburg area, and how this practice is influenced by their stakeholders. This is done through semi-structured interviews with representatives from key local stakeholders and a sample of eight local manufacturing SMMEs. The study shows that manufacturing SMMEs in the Pietermaritzburg area have implemented a wide variety of CSR practices and that they are managing and interacting with their stakeholders in a sophisticated manner. The studied companies do in general have a limited understanding and narrow interpretation of CSR, and CSR is often confused with Corporate Social Investment (CSI) as it is described in the South African Broad Based Black Economic Empowerment (B-BBEE) scorecard. The companies do, however, practise CSR in a number of ways. The companies have implemented practices that address all of the CSR issues examined in this study: Labour issues, B-BBEE, HIV/AIDS, environmental issues and community outreach. The nature of, extent of, and motivation for these activities do, however, vary considerably. The results of the study reveal that the motivation for undertaking practices of CSR generally can be attributed to influence from the stakeholders of the examined companies. In this study the stakeholders were identified on the basis of a contextual analysis, and the stakeholder model of Donaldson and Preston was grouped into: Civil society stakeholders and communities, Government stakeholders, Stakeholders affiliated with the companies, and Business stakeholders. All groups of stakeholders were found to be exerting a significant influence on the CSR practices undertaken by the examined companies. The degree of influence varies amongst the different stakeholders and practices, and some of the CSR practices had been undertaken as a result of influence from several stakeholders. A few of the CSR practices undertaken by the interviewed SMMEs can be attributed to influence from the local key stakeholders that were interviewed in this study. It is also possible to find examples of companies implementing CSR practices as a result of local stakeholders combining their efforts. The study shows that SMMEs in the Pietermaritzburg area are responsive to their stakeholders and that the practice of CSR is greatly influenced by what the companies consider to be their stakeholders’ concerns. The interviewed local stakeholders have, however, only a limited influence on the SMMEs. It is therefore likely that the stakeholders can deepen the practice of CSR in local SMMEs by co-operating and thus increasing one or more of their stakeholder attributes: power, legitimacy, and urgency. The study has contributed to a greater understanding of the role of stakeholders in influencing CSR practice in South African SMMEs and has revealed important hints on how this influence can be strengthened and directed through government activities and other stakeholder alliances.