The relationship between corporate social responsibility and stakeholder prioritisation in terms of SMEs’ financial performance in a crisis period

Abstract

The major notion that was tested in this study was to determine if CSR activities have any impact on SMEs' financial performance during a crisis period. The learnings from stakeholder theory provided the base for what to look for, to assure that the maximum possible rewards are extracted from these CSR activities as SMEs’ resources are generally limited during crisis periods. The study focused on CSR activities, attending to different stakeholders to determine which would provide financial benefits, as well as the owner-managers’ focus on stakeholders during crisis periods. The claims that long-term relationships with stakeholders and satisfying the most salient stakeholders would produce the biggest rewards, were also tested. This explanatory quantitative study involved 161 owner-managers and tested the claims made in stakeholder theory, to find the sought-after link to financial performance. Electronic surveys were used to collect data, targeting owner-managers of SMEs. A combination of descriptive statistics and linear regressions was used to analyse the data. Descriptive statistics provided results that indicated that SMEs were indeed involved in CSR activities during the COVID-19 crisis period, but attention to different stakeholders differed depending on of the longevity of the relationship. Linear regression could not produce evidence of a relationship between SMEs’ CSR activities and their financial performance, neither could a moderating effect of the salience of stakeholders on the relationship between CSR and financial performance be confirmed. Therefore, even though CSR activities were undertaken, the associated benefits seem of an informal nature, and more geared towards satisfying the owner-manager.