Journal of Business Ethics 109 (4):483-500 (2012)

Abstract
Proactive corporate social responsibility (CSR) involves business strategies and practices adopted voluntarily by firms that go beyond regulatory requirements in order to manage their social responsibilities, and thereby contribute broadly and positively to society. Proactive CSR has been less researched in small and medium enterprises (SMEs) compared to large firms; and, whether SMEs are ideally placed to gain competitive advantage through such activity therefore remains a point of debate. This study examines empirically the association between three specified capabilities (shared vision, stakeholder management and strategic proactivity), proactive CSR and financial performance in SMEs. Using quantitative data collected from a sample of 171 SMEs in the machinery and equipment sector of the Australian manufacturing industry, we find that all specified capabilities are positively associated with adoption of proactive CSR by SMEs, and that proactive CSR is, in turn, associated with an improvement in firm financial performance. Evidence of a fully mediating role for proactive CSR on the association between capabilities and financial performance presented in this study aligns with RBV theory that suggests adoption of value-creating strategies that make the most effective use of a firm’s capabilities is essential to financial success. The study contributes to the CSR literature by demonstrating a case for SMEs being able to maximise financial returns whilst proactively making progress towards CSR.
Keywords Proactive corporate social responsibility (CSR)  Capabilities  Financial performance  Resource-based view (RBV)  Small and medium enterprises (SMEs)
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DOI 10.1007/s10551-011-1141-1
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References found in this work BETA

Small Business Champions for Corporate Social Responsibility.Heledd Jenkins - 2006 - Journal of Business Ethics 67 (3):241-256.
Does Size Matter? The State of the Art in Small Business Ethics.Laura J. Spence - 1999 - Business Ethics, the Environment and Responsibility 8 (3):163–174.
SMEs and CSR: An Approach to CSR in Their Own Words.David Murillo & Josep M. Lozano - 2006 - Journal of Business Ethics 67 (3):227-240.

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