CSR Strategies of SMEs and Large Firms. Evidence from Italy

Abstract

While corporate social responsibility (CSR) is becoming a mainstream issue for many organizations, most of the research to date addresses CSR in large businesses rather than in small- and medium-sized enterprises (SMEs), because it is too often considered a prerogative of large businesses only. The role of SMEs in an increasingly dynamic context is now being questioned, including what factors might affect their socially responsible behaviour. The goal of this paper is to make a comparison of SME and large firm CSR strategies. Furthermore, size of the firm is analyzed as a factor that influences specific choices in the CSR field, and studied by means of a sample of 3,680 Italian firms. Based on a multi-stakeholder framework, the analysis provides evidence that large firms are more likely to identify relevant stakeholders and meet their requirements through specific and formal CSR strategies.

Appendix 1

Factor analysis

Factor analysis has been used to identifying groups of CSR strategies that characterize Italian firms. In the following table, factors identified and variables included in the analysis, and loadings for each variable are presented.

	Factor	Definition	Variable	Definition	Loading
1	Environmental management	Firms implement specific CSR strategies that focus on protecting and safeguarding their natural environment	Pollution reduction	Did you implement programmes for pollution reduction beyond legal requirements?	0.69
			Noise reduction	Did you implement programmes for noise reduction beyond legal requirements?	0.68
			Energy reduction	Did you implement programmes for energy reduction beyond legal requirements?	0.65
			Water reduction	Did you implement programmes for water reduction beyond legal requirements?	0.64
			Waste management	Did you implement programmes for waste management beyond legal requirements?	0.61
			Packaging recovery	Did you implement programmes for packaging recovery beyond legal requirements?	0.50
			Alternative energy	Did you implement programmes for developing alternative energy beyond legal requirements?	0.50
			EMAS (Eco−Management and Audit Scheme) and ISO14001	Do you have EMAS and/or ISO14001 in your firm?	0.46
2	Employment	Employees are in central position within the firm; firms implement specific CSR strategies to improve employment and working conditions	Briefing with employeesCorporate internal	Do you have periodic briefings with your employees?	0.69
			communication	Do you facilitate internal communication (e.g. intranet, corporate magazine, newsletter, etc.)?	0.69
			Corporate activities for employees benefit	Do you organize corporate events (e.g. travels, tournaments, etc.)?	0.64
			Training activities	Do you implement training programmes for your employees?	0.60
			Integrative medical care	Do you provide your employees with integrative medical care?	0.58
			Flexible working time	Do your employees benefit from flexible work time?	0.53
3	Supply chain	Firms are likely to promote CSR culture outside the firm, since specific CSR policies (i.e. certifications such as self-certification, ISO 9001:2000, SA8000 and other certifications; product quality; waste recovery; ethical code) are required along the supply chain to suppliers and customers	Suppliers’ selection	Do you ask for specific certifications from your suppliers?	−0.85
			Customers’ selection	Do you ask for specific certifications from your customers?	−0.83
4	Local community	Firms promote their CSR strategies outside the firm and enhance their relation with local communities through specific instruments and activities	Corporate advertising	Did you communicate social messages within your advertising?	0.67
			Sponsorship	Did you carry out sponsorship activities?	0.65
			Cause-related marketing	Is your company involved in cause-related marketing?	0.62
			Giving	Did you make donations to the community?	0.54
5	Controlling and reporting	Firms are likely to implement social, environmental and sustainability reporting and disclosure through specific instruments	Ethical code	Do you have a public available ethical code?	0.57
			Social report	Do you have a social report?	0.56
			SA8000	Do you have SA8000 certification?	0.55
			Environmental report	Do you have an environmental report?	0.53
6	Community volunteering	Firms support and motivation of employees toward specific socially responsible behaviours outside the firm	Volunteering	Do you encourage your employees toward volunteer activities?	0.65
			Subsidised financing	Do you provide your employees with subsidised finance?	0.43

Each variable refers to the questions posed to the Italian firms to identify CSR strategies generally implemented. Variables have been measured as follows. A discrete variable was created for each CSR␣strategy and coded 1 if firms implement a specific strategy, 2 if firms are going to implement a␣specific strategy, 3 if firms do not implement, but are considering the opportunity to implement a specific strategy, 4 if firms do not implement a specific strategy, 5 if firms do not answer the question. Running the factor analysis, we first check for multicollinearity among variables. Looking at correlation matrix, the variable “Do you hire disadvantaged persons?” was eliminated since it correlated with no other variables. We also looked at the determinant of the correlation matrix that was 0.025, extremely greater than the necessary value of 0.00001. Therefore, we concluded that multicollinearity was not a problem for these data. We also controlled for the Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy, which was 0.837, suggesting distinct and reliable factors, and Bartlett’s test of sphericity, which was strongly significant (p < 0.01), suggesting that there are relationships between the variables we include in the analysis. Then, looking at scree plot and eigenvalues, we decided to extract six factors, accounting for about 42% of the variance in our research model, but presenting better results than the 8 factors obtained considering those factors with eigenvalues above the rule of thumb of 1. To make clearer which variables relate to which factors, we decided to choose the direct oblimin method of oblique rotation, since there were good reasons to suppose that the underlying factors could be related in theoretical terms. For example, consider that it would be obvious that firms taking into due account environmental management are also more willing to publish an environmental report. While extracting the six factors, we checked for reproduced correlations, with the knowledge that there are 117 (33%) non-redundant residuals with absolute values greater than 0.05, a good result that illustrates the difference between observed and reproduced correlations in our analysis. Finally, in the above table we reported the loading factors above 0.4, ignoring the plus or minus sign, obtained in the structure matrix; the same results were obtained in the pattern matrix, providing evidence of the good results of this analysis.