Corporate social responsibility: a competitive strategy for small and medium-sized enterprises in Uganda
Turyakira, Peter K
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In view of the important role small and medium-sized enterprises (SMEs) universally play as the backbone of national economies and the survival and competitiveness challenges that they face, the purpose of this study was to develop specific models of corporate social responsibility (CSR) for SMEs in Uganda as an avenue to enhance their competitiveness and foster economic development. The primary objective was to gain insight into the deployment of CSR in SMEs, including investigating CSR factors and their potential impact on competitiveness. This study integrates previous findings and theories on CSR activities and SMEs‟ competitiveness into a comprehensive hypothesised model. A comprehensive literature study revealed potential factors that could influence the Increased competitiveness of SMEs in Uganda. Four independent variables (Workforce-oriented, Society-oriented, Market-oriented and Environmental-oriented CSR activities) and three mediating variables (Employee satisfaction, Business reputation and Customer loyalty) were identified as variables influencing the Increased competitiveness (dependent variable) of SMEs. Independent variables were categorised as CSR factors while mediating and dependent variables were categorised as outcomes factors. Furthermore, hypotheses were formulated for possible relationships between the independent, mediating and dependent variables. All the variables in the study were clearly defined and operationalised. Reliable and valid items sourced from various measuring instruments used in other similar studies, were used in the operationalisation of these variables. Furthermore, several items were generated from secondary sources. A structured self-administered questionnaire was made available to respondents identified using the stratified and purposive sampling techniques, and the data collected from 383 usable questionnaires was subjected to several statistical analyses. The validity and reliability of the measuring instrument was ascertained using an exploratory factor analysis and Cronbach-alpha coefficients respectively. An exploratory factor analysis using SPSS 18 for Windows was conducted to identify the unique factors available in the data before applying structural equation modelling (SEM). The data were categorised into models of independent variables (CSR factors) and the mediating variables (Outcomes factors). The items measuring Market-oriented CSR activities and Workforce-oriented CSR activities loaded as expected. The items measuring Environmental-oriented CSR activities loaded onto two separate factors which were renamed Environmental-oriented CSR activities and Regulated CSR activities. One of the items originally expected to measure the construct Society-oriented CSR activities loaded onto Environmental-oriented CSR activities, leaving three items which loaded together onto the Society-oriented CSR activities factor. Four factors constituted the outcomes submodel, namely Customer loyalty, Stakeholder trust, Business reputation, and Employee satisfaction. In this study, SEM was the main statistical procedure used to test the significance of the relationships hypothesised between the various independent and dependent variables. Owing to the sample size limitations, the hypothesised model could not be subjected to SEM as a whole. Consequently, six sub-models were identified and subjected to further analysis. The following independent variables were identified as influencing the dependent variables in this study: • Workforce-oriented CSR activities • Society-oriented CSR activities • Market-oriented CSR activities • Environmental-oriented CSR activities • Regulated CSR activities To establish the influence of the various demographic variables on the mediating and dependent variables, an Analysis of Variance (ANOVA) and Multiple Linear Regression (MLR) analysis were conducted. The respondent’s position/title in the business, form of enterprise, branch/sector of business, level of education, and the size of business were found to have an influence on the mediating and dependent variables of this study. This study has therefore added to the underdeveloped body of business research in Uganda by investigating a particularly limited segment of the literature, namely SMEs. The study has also identified and developed various models that explain the most significant CSR factors that influence the competitiveness of SMEs. Consequently, this study has put forward several recommendations and suggestions that can enhance the competitiveness of SMEs locally and globally. Further research is encouraged on action-oriented areas such as: the success of different policies and techniques to increase the uptake of CSR amongst SMEs; the economic, social and environmental impact of CSR at sector level; and a typology of SMEs with regard to their engagement in CSR.