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CSRD: SMEs and CSR 11 October 2010

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Page 1: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

CSRD: SMEs and CSR

11 October 2010

Page 2: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

Introduction

Summary – Codes of Conduct and workers SMEs and CSR

* Understanding SMEs

* Importance of SMEs & CSR issues The Business Case (?) CSR as a means of exclusion Exam/evaluation requirements

Page 3: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

Summary: Codes of Conduct & Workers

Codes of conduct Ethical guidelines for company behaviour Self-regulation, Private Authority A means to respond to ’sweatshop critique’, image, branding Company claims: Fulfilment of Codes = Proper working conditions Few investigations, little knowledge (ETI + Nelson et al) IA: Some improvements to some (outcome rights) The limited improvements often counteracted by ’market development’

(pressure to deliver, lowering of prices, Increasing informalisation, absence of proper government policies

Page 4: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

SMEs and CSR

Perceptions:

SMEs don’t care about CSR SMEs lack resources to do CSR SMEs are main polluters

Page 5: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

SMEs and CSR

Understanding SMEs (Jenkins (2004)) Norms, models, thinking, agendas derived from

large companiesSMEs are little big companiesSMEs are alike – homogenousSMEs don’t care about CSRImpacts SMEs policies (which are insufficient etc)

Page 6: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

SMEs and CSR

Understanding SMEs (Jenkins (2004)) All myths!Situation among SMEs is differentNeed to understand SMEs and their situation

What is a Small and Medium-sized Enterprise (SME)?

Page 7: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

SMEs and CSR

Understanding SMEs (Jenkins (2004)) SMEs are many different things – heterogeneous Quote (by Wilkinson):

‘..if what constitutes ‘smallness’ is contextual and possibly subjective and interpretational, then we need to examine what factors combine to explain patterns of ‘small’ business behaviour ...’

Page 8: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

Understanding SMEs & CSRFrom To

Size One person 200-250 employees

Sector Agriculture Manufacturing, Service

Market Village, town City, regional, global

Product Standardised Specialised

Management Hierarchical (top-down)

Flat (bottom-up)

(Jeppesen, 2009)

Page 9: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

Understanding SMEs and CSR

Vives (2006):Know little about practicesSMEs do numerous CSR practices (Often) informallyPractices differ

* Medium-sized more than small

* More internal than external and environmentalRole of culture (religious values and norms)

Page 10: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

Understanding SMEs and CSR

Vives (2006):Why such practices? SMEs Different Motives

* Profits, Making Products, Helping OthersCommitment of Founder/Owner highly influentialContext mattersAge (old vs. young), market, sector matter

Page 11: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

SMEs and CSR

Importance of SMEs and CSR:Given that SMEs constitute 90% or more of all

enterprises in an economyWhat are the implications for CSR in

development?Why is it important to investigate CSR-issues

relating to SMEs?

Page 12: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

Importance of SMEs and CSR

Implications for CSRD?Most/all cases investigated will include SMEsInvolve environmental issues (Kasur), working

conditions (safety and health, wages and freedom of association etc), and

Employment and growth (poverty and economic development)

Page 13: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

Importance of SMEs and CSR

Why is it important to investigate CSR-issues related to SMEs?Possibilities for spreading ‘good practices’, win-

win situations etcReveal problems of ‘win-win’, disclose power,

conflicts, exclusion etc, understanding obstacles View of Southern Voices (SMEs) –

key to poverty and economic development

Page 14: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

The Business Case Luetkenhorst 2004:

SMEs majority of firms (+90%) Key to economic development, growth and employment (30-50% of

output and 50-60% of employment) Labour intensive Important to social cohesion (reduce poverty, ensure more equality) Innovative Make economies more resilient Produce in niche markets, flexible Foster economic cohesion

Page 15: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

The Business Case Luetkenhorst 2004:

Three types of SMEs

A: In supply chains, B: Own export, C: Nationally oriented

Note: States that type A is the interesting category!? Support SMEs (linkages, capacity development) Use PPPs

Exploit the win-win options!

Page 16: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

The Business Case Luetkenhorst 2004:

The Business case: Cost savings Enhanced staff loyalty Improved government relations Innovation and learning Enhanced reputation Consumer response

Page 17: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

The Lack of Business Case Jenkins 2004:

Few stakeholders (mainly customers) Risk, reputation and consumer pressure limited

* No brands, little public awareness and contact

* But consumer pressure at large firms going to SMEs! Limited employee motivation & management time CSR = costs & no extra markets Limited profits & financial resources No enforcement of regulation – why go beyond?

Page 18: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

CSR a means of exclusion Fox (2004):

SMEs heterogeneous Most SMEs are micro firms in the informal (service) sector Little interest in tools and framework from large firms SMEs in value chains – concerns only a minority of SMEs!

* Either engage and implement codes etc – some do

* Or not engage – others do Supply chains (GVCs) are ‘rationalised’ = exclusion The agenda needs to be changed!

Page 19: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

Making sense of CSR to SMEs Fox 2004:

SMEs and CSR linked to the Sustainable Development agenda

BOP, Clusters and linkages, Business support & institutions Make existing CSR-incentives relevant to SMEs Assist in the transition (from informal to formal) Make CSR more relevant

* SMEs do carry out CSR practices (informally)

* Provide appropriate incentives

Page 20: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

SMEs and CSR: Summing up

Business Case versus CSR as a means of exclusion?

The business case is there – however in most cases not realised Need to understand SMEs and their situation(s) Focus on SMEs advantages (if engaged: quick to change & flexible,

set strategies regardless of shareholder pressure, existing practices (though ad-hoc and informal) scaled up)

Beyond Large firms’ agenda (set conditions, define rules of the game, down-ward pressure in GVCs)

CSR (Codes of conduct, fulfilment of standards and requirements) intends to raise standards, but becomes a means of exclusion

Page 21: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

Business Case versus CSR as a means of exclusion?

Promoting the SMEs case: The role of governments and international organisations

key (National) Governments to outline relevant

industrialisation policies and (local governments) to implement programs (support to SMEs, incentives etc)

International organisations to assist, e.g. Voice the concerns regarding GVCs (market development)

Relate to Reed & Reed: What type of development?

Page 22: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

Exam/evaluation requirements

Essay exam: Written Max. 10 pages Assessed by course teachers and internal examiners

Evaluation criteria:Learning objectivesKnowledge on the course curriculum

Page 23: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

Exam/evaluation requirements

Evaluation criteria (Learning objectives): Understanding CSRD Concepts Strengths and Weaknesses Cultural and Social Contexts Implications

Firm Profitability Workers’ Conditions Environmental Conditions

Page 24: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

Exam/evaluation requirements

Evaluation criteria:Knowledge of the curriculum:Relate to most if not all lectures and many/most of

the textsEssay – clear structure:

E.g. (short) Abstract, Clear Line of Argument, Substantiated by Evidence, Sufficient Use of References, Solid Conclusions, Future Implications

Page 25: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

Exam/evaluation requirements

Examples of former essay titles:

Three types1. The topic/curriculum related2. The cross-cutting3. The case/example based

Page 26: CSRD: SMEs and CSR 11 October 2010. Introduction Summary – Codes of Conduct and workers SMEs and CSR * Understanding SMEs * Importance of SMEs & CSR issues

Next session (week 44)

Challenges to Ethical Trade and Fair Trade in South Asia: Child Labour and Caste-Based Discrimination

Barrientos and Smith (2005). Fair Trade and Ethical Trade – Are the Moves Towards Convergence?

Nicholls (2005). Thriving in A Hostile Environment – Fair Trade’s Role as a Positive Market Mechanism for Disadvantaged Producers

The Economist (2006). Voting with Your Trolley – Can You Really Change the World by Just Buying Certain Foods?

National Campaign on Dalit Rights (2008). Dismantling Decent-based Discrimination – Report on Dalits’ Access to Rights

Khan (2007). Representational Approaches Matter