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Capabilities, proactive CSR and financial performance in SMEs: empirical evidence from an Australian manufacturing industry sector


Torugsa, NA and O'Donohue, W and Hecker, R, Capabilities, proactive CSR and financial performance in SMEs: empirical evidence from an Australian manufacturing industry sector, Journal of Business Ethics, 109, (4) pp. 483-500. ISSN 0167-4544 (2012) [Refereed Article]

Copyright Statement

Copyright 2011 Springer Science+Business Media B.V.

DOI: doi:10.1007/s10551-011-1141-1


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 valuecreating strategies that make the most effective use of a firmís 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.

Item Details

Item Type:Refereed Article
Keywords:proactive social corporate responsibility (CSR), capabilities, financial performance, resource-based view (RBV), small and medium enterprises (SMEs)
Research Division:Commerce, Management, Tourism and Services
Research Group:Business systems in context
Research Field:Business systems in context not elsewhere classified
Objective Division:Manufacturing
Objective Group:Machinery and equipment
Objective Field:Machinery and equipment not elsewhere classified
UTAS Author:Torugsa, NA (Dr Ann Torugsa)
UTAS Author:O'Donohue, W (Dr Wayne O'Donohue)
UTAS Author:Hecker, R (Dr Rob Hecker)
ID Code:78342
Year Published:2012
Web of Science® Times Cited:240
Deposited By:Australian Innovation Research Centre
Deposited On:2012-06-22
Last Modified:2018-03-07

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