Aspects of corporate sustainability, such as human rights, ethical marketing rules, fair labor standards, and environmental protection are becoming expected from all business entities. These aspects of business known as corporate social responsibility (CSR) bring benefits to both the environment and society, and have typically been developed and implemented in large companies (Snider, Hill, & Martin, 2003). However, small and medium-sized businesses (SMEs) are now facing pressure to adopt CSR programs. SMEs have an advantage over larger firms and represent a perfect opportunity for the implementation of an environmental sustainability initiative. Due to the relative size of SMEs, fewer layers of management exist in these firms. Hence, there is an absence of bureaucratic constraints which hinder the passing or corporate initiatives such as a program to focus on environmental sustainability. SMEs enjoy the advantage of being well positioned for the quick implementation of a CSR solution (Freisleban, 2011). But how can SMEs implement a CSR program to best reach the intended beneficiaries?
One way in which small businesses can implement a CSR program and have it reach its intended target is through the cluster or network approach. The challenges faced by the SMEs in implementing CSR will be minimized by being part of a network. The cluster approach relies on strong, consolidation and trusted information channels amongst other small businesses. The cluster approach is made possible by setting up specific clusters of SME’s based on a geographic location. The cluster of SME’s share in communication tools to annunciate their expertise and best practices, operational models, and guidelines in support of working towards a CSR initiative (Battaglia, Bianchi, Frey, & Iraldo, 2010).
Collaboration amongst SME’s presents an opportunity to bring together the core competencies of different businesses for the achievement of common CSR goal. However, all participating SME’s need to share in their common values and their alignment should be based on the long-term interests of each member of the formed SME’s coalition (Wall, 2008). The forming of a cluster amongst small businesses also helps in the sharing of the costs of associated with implementing a socially responsibility program (Harggett, & Williams, 2009). Thus, small businesses can look at a cluster as an chance to provide shared costs and an opportunity to be responsible, as its contributions to social and environmental programs do more than just add costs to the company.
With pressure from government agencies demanding that small businesses start to comply with CSR programs as larger companies do, some small businesses maintain a CSR program as merely a reactive-defensive strategy rather than as a concentrated effort to do good (Clarkson, 1995). By joining a cluster of SMEs with a concentrated goal, companies can do more than merely comply with the minimum regulatory requirements. The combined costs and efforts of businesses to comply with CSR initiatives can be viewed as a built-in activity, and embedding as a substantial part of business strategy, thus helping companies to not only comply with regulation but also to help generate profits (Grayson and Hodges, 2004). In using a cluster of SME’s, the sustainability of a small business as well as the achievement of a CSR program becomes enhanced.
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