Corporate Social Responsibility: Small Businesses and Small Towns

This paper is a review of previous scholarship on the social responsibility of small businesses in small towns with the addition of findings from recent research on the subject conducted by the authors. We focused on the responsibility of businesses to work for community betterment which includes a wide variety of charitable and social causes. The extant literature and new research lead to several general conclusions. First most small business owners believe they have an obligation to work for community and societal betterment, but it is proportional to their size compared to other businesses in the same location. While the values of top management have a significant impact on the social performance of businesses of all sizes, in small businesses, social performance is more directly and personally shaped by the owners than is the case in large businesses. Small business owners are more socially and economically embedded within the community in which they operate than are managers of big businesses. Moreover, in small towns, they are more visible than similarly sized businesses in metropolitan locations. For this reason, size of town is a key intermediary variable between size of business and level of social performance. Partially as a result of their greater embeddedness and visibility, small business owners in small towns are likely to conform to the local patterns of civic engagement. For many of the same reasons, small business owners’ social performance is affected by the expectations and prevailing patterns of social performance displayed by members of the business networks to which they belong.

Past research supports the argument that doing good is good for business in large and small firms alike although the relationship is less well documented for small businesses. We expand the research to consider the rewards and penalties of business social responsibility for the business owner personally. This is an important outcome of business social performance for all sizes of business, but for small businesses where owner discretion may be the only factor determining the community involvement of the business, it is critical. We end by advocating for more research attention directed toward small business social performance, the impact of town size on business social performance, and the personal costs and benefits of business social performance for the owners themselves.