The Importance of Corporate Social Responsibility in Small Business

in Growing by Nick Petrovic
(2 Ratings)
Corporate social responsibility

When running a business, there are a variety of laws, guidelines and regulations that must be adhered to. Certain mandatory ethical, financial and even environmental requirements are put in place to ensure businesses are able to operate without causing harm or discrimination.


However, many businesses are now beginning to go beyond what is required and are working towards long-term goals aimed at improving society. This principal underpins corporate social responsibility (CSR), which sees a business commit to behaving ethically as well as improving the lives of its workers, their families and the broader community.


CSR comprises  4 factors:


  1. Legal: A responsibility to adhere to current laws.

  2. Ethical: Acting in a way that is fair and just rather than simply for profit.

  3. Economic: A responsibility to generate profits for owners.

  4. Voluntary and philanthropic: A promotion of human welfare and goodwill.


Why is CSR Important?


While generating profits for shareholders is a primary goal for any business, the benefit of acting in a socially responsible fashion is fast becoming an important part of running a small business:


  • Improved public image – Consumers have become increasingly aware of the environmental and social impact of companies. Incorporating CSR can help attract ethically minded customers and involvement with the local community creates great opportunities for positive press coverage.

  • Reduced need for excessive regulation – When businesses are run ethically and responsibly, the need for mandated regulations is reduced and corporate freedom maintained.

  • Attractive to investors – Green and ethical investment opportunities are encouraged and alliances with likeminded businesses are made possible.

  • Positive relationships with local authorities – It is much easier to conduct business and build networks when relationships in the community are positive.

  • New products and services – Understanding the wider impact of your business can aid in the development of new products and services.

  • Increased employee motivation – Staff are more likely to support the business if they feel it is reducing harm and contributing in positive ways to society. CSR can also assist in attracting and retaining staff.

  • Increased competiveness – Being socially minded can make you more attractive to investors. It gives your business an edge as it reduces the chance of sales lost due to sudden damage to reputation.


Integrating CSR into small business


Running a small business can be a costly task, and although owners are often willing to act in ways that benefit society, the matter of expense is a real and justified concern.


Small businesses, however, are naturally oriented towards social responsibility when considering their close relationships with staff, the local community and business partners. Making changes needn’t be a costly task – even small steps can help make a difference. However, it is important to remember that any changes made should be reported in an honest fashion, as your business reputation could be compromised in the event that the status of social responsibility is fabricated.


Below are a few ways to integrate CSR into your small business:


  • Reduce resource use, waste and emissions – Taking an active approach to improving levels of waste is not only beneficial to the environment, it can also help you save money.

  • Choose responsible suppliers – Supporting those who pollute the environment can have the same effect as if you were doing it yourself.

  • Deal with customers responsibly – Ensure information distributions (e.g. brochures) are honest and written in plain language. Aim to be honest and open about your products and services and be willing to answer customer questions truthfully.

  • Work with the local community – Whether it’s supporting a local charity or sponsoring local events, creating a positive image in the community can reap a variety of benefits, from increased sales to improved staff recruitment. It is best to get involved in activities that relate to your product so that your expertise can be showcased.

  • Treat employees positively – Rather than adhering to the minimum requirements, act in ways that help your staff members to achieve their goals and feel fulfilled both professionally and personally.


Corporate social responsibility is a way for businesses to aim for long-term corporate and societal improvements. Perhaps more importantly though, it is a way to improve the lives of your staff and customers – and a happy customer will not only provide you with repeat business, they will also be a great source of publicity in the community.

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This article represents the views of the author only and not those of American Express.

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Nick Petrovic

Nick Petrovic is a registered psychologist and head of clinic at the Mind Profile Psychology Clinic and has more than 10 years' experience in the allied health and business. Nick has contributed to regular columns in more than a dozen business magazines and newspapers, advising on issues such as mental health, work related stress, strategic planning, business analysis and human resources.

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Poll Results

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