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CSR: SMEs Need Strategic planning
Dr. Shri Prakash
Jul 2010
Jul 2010
Development strategies at macro level and business models at micro level pursued so far have resulted in widely spread socio-economic divides and differences; these growth strategies and business models have resulted in exclusion rather than inclusion of all groups of people and organizations in access to and distribution of benefits of growth. Thus, we have social classes based on income and wealth, lower and higher occupation groups and business organizations of different sizes at different stages of growth. SMEs constitute the largest proportion of business houses.
The following are main basic socio-economic divides and pervasive dichotomies of the socioeconomic environment of business, irrespective of organized and unorganized, and large, medium and small size of the business organizations. Important layers of dichotomy are
(i) Rural Vs Urban; (ii) Rich Vs Poor, (iii) a) Educated Vs Uneducated, Or (b) More Vs Less educated, or (c) Professionally and technically Vs General educated; (d) Professionals Vs Non-professionals; (iv) Consumers Vs Producers, or Sellers Vs Buyers.
Shifting Policy Paradigms
Market failures lured the policy makers to adopt planning as development strategy and socialistic pattern of society as the policy goal. But the slow growth made market based capitalism attractive once more. The pangs of recent economic slow down were mitigated by bail out packages to private sector financial institutions like banks, which was altogether a new policy paradigm. Now the question is who will bail out the governments and other public agencies from the financial crisis they have contracted in the battle to reverse the slow down?
Search for an answer to the above question makes new business models and development strategies imperative and even inevitable need of the hour. May be CSR should be made the pivot of new development strategies and business models to promote inclusiveness in all spheres of human activities. We may consider corporate social responsibility by SMEs in this context. But more of the same will not hold water. But what is CSR and why is CSR essential for business enterprises?
In the post independent era, government has taken over itself almost exclusive responsibility of social transformation and economic development. Both individuals and institutions looked towards the government for everything and even financial help. Private business enterprises, especially the SMEs, were no exception to this. Ultimately, government found itself having been burdened with too much of responsibility for every thing. Adoption of NEP offered an opportunity to the government to withdraw from several socio-economic fields and pass on the responsibility to the private enterprises for socio-economic development. Now public-private partnership is sought to involve people and their organizations as partners in nation building. CSR is a part of this paradigm shift.
CSR for and by SMEs
From concept to operational facets like employment, capital/investment, output, ownership and structure of organization SMEs offer a wide range of diversity and differences. This diversity is obvious from the fact that Factory Act defies SMEs in terms of number of persons employed by an enterprise, CSO’s definition focuses on employment and use and non-use of power in production process. But the department of industrial development, GOI emphasizes capital investment to distinguish SMEs from large enterprises. From ownership and liability view points, one may distinguish prprietar4y from partnership companies, while there is a distinction between private and public limited companies. All these distinctions and divisions represent diverse status and stage of development of all such companies. Naturally, CSR for and by SMEs can and should have no uniformity of concept and its application. The Gandhian principle ‘From each according to ability and to each according to need’ should guide and govern CSR for and by SMEs.
In our opinion, conduct of business operations in accordance with the laws of the land is the primary social responsibility of the corporate houses, irrespective of size or type of enterprise. The second most important aspect is the conduct of business in a manner that obviates the need for bail out package by the government. If a small or medium enterprise can conduct business without the need for subsidy or other government support, it shall be an immense advantage to the society and it will promote growth also. This aspect is much more important for SMEs. It may be noted that nearly 1 million SMEs had been closed down in the first phase of globalization in the nineties and more than 10 million people lost their jobs. So, the survival and success of a small or medium enterprise are in themselves the discharge of social responsibility.
This suggests that CSR for and by SMEs needs a different approach and paradigm than the one used for large scale enterprises.
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