First Stage Research on Australian Corporate Responsibility & SMEs

The personal values of owners and managers are a key factor in affecting leadership and engagement with responsible business practice in small to medium enterprises (SMEs), according to new Australian research.

This is one of a number of key findings from the first stage of a national research project into responsible business practice in SMEs conducted by the Allen Consulting Group for St James Ethics Centre.

The Federal Government, through Treasury, has commissioned St James Ethics Centre to undertake a three year project to expand responsible business practice.

The funding will allow St James Ethics Centre to engage many more Australian businesses in identifying and adopting more responsible business practices – particularly small and medium sized companies, whose resources are often more limited.

Responsible business practice and corporate social responsibility (CSR) has focused on large companies to date.

However the Centre says aspects of the agenda are shaping the market in ways that are at least as relevant to SMEs as they are to larger companies – the impact of climate change, increasing consumer awareness, supply chain pressures, changing societal values, the importance of reputation, attraction of skilled workers and the increasing regulatory framework.

Unlike corporations, SMEs traditionally have greater levels of trust, connectedness and responsiveness to their communities in Australia and it is likely that they currently underestimate their collective power.

Rosemary Sainty, Head of the funded project says with SMEs making up more than 95% of all businesses in Australia it is important to give them a voice in the CSR conversation, and an opportunity to lead.

Assisting St James Ethics Centre in this process will be The CRI Leaders Network (comprising companies that have achieved consistently high scores on the Corporate Responsibility Index) with a particular focus on sustainable supply chains.

Outcomes from discussions held at the 9th National Business Leaders Forum on Sustainable Development in Canberra in May on the research report indicated that business leaders were keen to take a mutual approach with SMEs – particularly those in their supply chains – to share and build capacity and widespread take-up of responsible business practices including the development of tools around CSR indicators, whilst taking care not to impose cumbersome reporting measures.

Other findings from the first stage of research include:
– responsible business practice needs to be not thought of as an additional burden, but as a core part of the SMEs daily operations;
– the need to reach SMEs through their existing networks and specific sector/industry associations when promoting or communicating responsible business practice;
– practical, action orientated language should be used to engage SMEs that is specific to their business as opposed to the terminology used by the large corporates in their CSR frameworks;
– instead of mandating or forcing responsible business practices, government and industry should engage in leadership initiatives that will guide, support and encourage SME responsible business practice.
– there is a range of innovative initiatives already underway in Australia although the extent is difficult to measure due to the lack of data and coordinated effort.

The second stage of the Centre’s research will provide a more detailed and in depth action research focus based on the findings from the first stage, with results reported early in 2009.

For more information go to www.ethics.org.au