Drivers of corporate social responsibility and sustainable firm level growth : a case of small and medium enterprises in KwaZulu-Natal

Abstract

The study investigated the role of firm level resources in adopting corporate social responsibility (CSR) strategy and firm level growth. Firm resources drive specific CSR strategy selection, implementation, and drive firm level growth. This premise was drawn from the consensus that Small and Medium Enterprises (SMEs) are critical for economic growth in developing and developed economies. For Instance, in South Africa, aggregate economic growth is influenced by the micro-level performance of individual firms. Thus, in this vein, there is growing recognition of SMEs' important role in economic development. They are often described as efficient and prolific job creators, the seeds of big businesses, and the fuel of national economic engines, with much hype placed on their ability to create employment. Nevertheless, for a multiplicity of reasons, the success rate of SMEs in South Africa is low, and several studies have identified a lack of finance as one of the main reasons for the low success rate. This study used literature and data to capture the nexus of firm level resources, CSR strategy and firm level growth. For instance, in the present study, the theory of the growth of the firm and Resource Based Views (RBVs) was used as a theoretical framework to illuminate the firm level resources that inform CSR strategy and enhance firm level growth. From the total population of SMEs in KwaZulu-Natal (KZN), this study developed a stratified sampling process that showed the major economic sectors, such as the manufacturing, mining, retail and technology sectors. Primary data were collected through a cross-sectional survey using a closed ended research instrument and analysed using advanced econometric estimations, the structural equation model (SEM) and the path analysis (PA). The evidence suggested a bidirectional causal influence between firm level growth imperatives and CSR strategies in SMEs in KZN, albeit the intensity of causality seemingly varied per industry and the implemented CSR strategy.