VALIDATING THE SOCIAL RESPONSIBILITY OF SMMEs IN THE AFRICAN CONTEXT: A COMPARATIVE ANALYSIS OF SMMEs IN GHANA AND SOUTH AFRICA

Abstract

Authors who support the notion that the responsibility of businesses goes beyond profit-making to include social and environmental objectives have largely found a positive relationship between business social responsibility (BSR) and firm performance. However, most of these studies have either focused on large firms or have been conducted outside of Africa. This made it necessary for this study to examine the relationship between BSR and small, medium, and micro enterprise (SMME) performance in Africa – particularly so when SMMEs have been found to be significant contributors to the economic development of nations. The study was conducted within the framework of stakeholder theory where BSR was defined as actions taken by SMMEs to address issues concerning employees, customers, community, and the environment with the view to ultimately affect firm performance positively. To test the hypothesis, a sample of 262 South African SMME owners or managers and another sample of 253 Ghanaian SMME owners or managers were surveyed. Descriptive and inferential statistical analyses were performed on the data collected. The empirical findings showed that BSR issues are significantly positively correlated with some performance variables (i.e. expected benefits and realised benefits) but not significantly correlated with other performance variables (i.e. sales growth and profit levels) in the Ghana sample. However, in the South Africa sample, all BSR issues are significantly positively correlated with all four measures of performance considered in this study. A further analysis of the relationship between BSR variables and firm performance variables was undertaken using regression analysis to test the degree to which BSR variables predict the firm performance variables. The results showed that customer and environment issues are significant predictors of realised benefits in the Ghana sample while employee, customer and community issues significantly predict realised benefits in the South African sample. Although the results of the study were mixed, in the sense that not all BSR variables had significant positive relationships with firm performance variables, they do give an indication of how BSR can contribute to SMME performance in the African context. Based on the findings, it is recommended that a formal policy and legislation aimed at bringing about uniformity and clarity in the BSR processes are instituted to regulate SMME BSR in both countries. This is expected to improve compliance and thus increase the benefits of BSR to SMMEs and the economies that they contribute to.