No.

50-2007 ICCSR Research Paper Series – ISSN 1479-5124

TOWARDS SOCIALLY RESPONSIBLE SMEs?

QUALITY AWARD MODELS AS A TOOL

Semra Aşcıgil

Research Paper Series

International Centre for Corporate Social Responsibility
ISSN 1479-5124

Editor: Jean-Pascal Gond

International Centre for Corporate Social Responsibility

Nottingham University Business School
Nottingham University
Jubilee Campus
Wollaton Road
Nottingham NG8 1BB
United Kingdom
Tel: +44 (0) 115 951 4781
Fax: +44 (0) 115 84 68074
Email: jean-pascal.gond@nottingham.ac.uk
http://www.nottingham.ac.uk/business/ICCSR
TOWARDS SOCIALLY RESPONSIBLE SMEs?
QUALITY AWARD MODELS AS A TOOL

Semra Aşcıgil

Abstract

Corporate social responsibility (CSR) is a theme that is integrated to quality

management concept with increasing emphasis. Although CSR has been discussed as a
strategy applied mostly by large firms, recently the award schemes for SMEs (small and
medium sized enterprises) serve as a means to promote the concept among smaller
firms. EFQM (European Foundation for Quality Management) Excellence Model combines
social issues, strategy, stakeholders and structure in a way to support SMEs in realizing
their CSR related vision. The paper investigates to extent to which EFQM model
provides guidance in integrating CSR in quality management and then discusses the
extent to which the concept can be operationalized by SMEs giving example from two
quality award finalists in Turkey.

Key-words

SME, social responsibility, quality award models

Addresses for Correspondence

Middle East Technical University

Department of Business Administration
Inonu Blv. 06531
Ankara-Turkey
Phone: 90 (312) 210 2051
Fax: 90 (312) 210 1243
mailto:sascigil@metu.edu.tr
TOWARDS SOCIALLY RESPONSIBLE SMEs?

QUALITY AWARD MODELS AS A TOOL

Semra Aşcıgil

Abstract

Corporate social responsibility (CSR) is a theme that is integrated to quality

management concept with increasing emphasis. Although CSR has been discussed as a
strategy applied mostly by large firms, recently the award schemes for SMEs (small and
medium sized enterprises) serve as a means to promote the concept among smaller
firms. EFQM (European Foundation for Quality Management) Excellence Model combines
social issues, strategy, stakeholders and structure in a way to support SMEs in realizing
their CSR related vision. The paper investigates to extent to which EFQM model
provides guidance in integrating CSR in quality management and then discusses the
extent to which the concept can be operationalized by SMEs giving example from two
quality award finalists in Turkey.

Key-words

SME, social responsibility, quality award models

Addresses for Correspondence

Middle East Technical University

Department of Business Administration
Inonu Blv. 06531
Ankara-Turkey
Phone: 90 (312) 210 2051
Fax: 90 (312) 210 1243
mailto:sascigil@metu.edu.tr
DO QUALITY AWARD MODELS DESIGNED FOR SMALL BUSINESS

PROVIDE GUIDANCE FOR SOCIAL RESPONSIBILITY?

INTRODUCTION

It is increasingly argued that efficient use of venture capital is no longer the sole

determinant for gaining competitive advantage for SMEs. The development and survival

of SMEs are increasingly dependent on soft factors such as whether social policies are

adopted to create a broader prosperity. The forces of globalization brought CSR

concept firstly in the agenda of big businesses. This was due to the visibility of big

business that made them more vulnerable against social activists worldwide. However,

leaving small business outside the domain of CSR related expectations does not

completely eliminate large firms’ vulnerability. Similar expectations are equally placed

on small business in global markets recently due to their relationship with big business

as suppliers. In fact, SMEs are also under the scrutiny of diverse stakeholders that

increased SME accountability to internal as well as external stakeholders. In the

aftermath of these arguments, it can easily be predicted that survival for SMEs lies in

an enlarged agenda where economic, social and environmental responsibilities of

business are balanced to meet obligations beyond minimal requirements. In this paper,

the author aims to explore firstly why small firms need to focus on CSR, the drivers of

competitive advantage and where priorities of small firms should be focused given

limited resources. More specifically, EFQM Excellence Model will be used as a framework

to reflect the distinctive activities of firms with a focus on CSR. Then, approaches of two

SMEs to quality management will be explored delineating how they do things differently

from a social responsibility perspective.

CSR AND QUALITY MANAGEMENT

Carroll (1979) has provided the definition of the dimensions of corporate social

responsibility (performance) concept and operationalized the construct through

economic, legal, ethical and discretionary activities of business organizations. Among

the responsibilities that management is expected to adhere, economic responsibility

was the most well known one due to the historical importance attached in discussions

of managerial orientations. In SME literature it can be seen that major factor in survival

is explained through financial strength (Craig et all., 2006;Watkins, 2006). The thrust

behind economic responsibility in business is simply producing goods or services that

will bring profit. Despite of some reservations as to whether this category can be

considered as social responsibility, an alignment between self and other interest can be

achieved. "Providing consumers goods or services at the lowest cost with highest

quality and make reasonable level of profit" may be an interpretation that merges

consumers' right to get goods at the cheapest possible price with desire to make

profits. This is evident by the view that economic effects are at the same time social

and social effects are also economic.

The main theme in CSR is that business can not be thought distinct from society

who has certain expectations regarding appropriate business conduct and outcomes ( I

have not seen Bowen, yet,I will check library to have a look ). As discussed in related

literature, the relationship with society can be structured through demonstrated

accountability toward stakeholders and in case effectively done offer competitive

advantage (Freeman, 1984; Freeman & Gilbert, 1988). Socially responsible conduct

imply careful consideration of environment in which firms are operating rather than

measuring results such as defectives, inventory control, cycle times alone. In achieving
this, relevant social issues need to be identified and the managerial discretion for CSR

needs to be combined with resulting social performance (Ackerman and Bauer, 1976).

Social performance as an outcome is beyond what Friedman (1970) once defined with

the statement “the only responsibility of business is to increase profits.” At the level of

realization, CSR pertains to the development of organizational decision-making

procedures (Epstein, 1987). Since CSR is about responsibilities towards different

parties affected, such performance can be analyzed more effectively by adopting a

stakeholder approach (Clarkson, 1995; Donaldson and Preston, 1995; Carroll and

Buchholtz, 2000). Similarly, Wood and Jones (1995) also admitted the critical place of

stakeholder theory in understanding the dynamics and structure of the relations

between business and society.

However, research concludes that CSR models that are supposed to define the

construct failed in bringing a model to analyze and assess it (Clarkson, 1995;Husted,

2000). The view that early research on CSR was restricted in drawing conclusions based

on respondent perceptions rather than data on actual behaviors of firms (Thomson and

Smith, 1991) point to the problems with assessment. It can not be denied that the

subjective nature of CSR concept worked to increase the delay in translating ideas to

behaviors. More recently Mikkila (2003) also pointed to the need for further research in

making corporate responsibilities operational after observing the great flexibility with

which CSR is practiced.

One main accomplishment to this end is Preston's (1988) definition of CSR which

suggests posture toward corporate social responsibility, corporate social responsiveness

and social performance as three dimensions to be considered. Actually, the definition of

Preston implicitly identifies stages of CSR implementation as a) development of

awareness and recognition of social issues, b) analysis and planning, c) showing

response in terms of policy development and d) implementation. This definition of the

stages involved makes it easier to understand and develop a process for

implementation. Nevertheless, the prerequisite for process development is

acknowledgement of a need and devotion. To make the construct operational managers

need to analyze their current social performance and plan to eliminate the identified

gap toward ideal. Finally, such a plan needs to be implemented with subsequent review

of the accomplishments.

A group of studies concerned in developing instruments to measure social

performance aim to develop instruments for social rating of companies. KLD has been

widely referred commonly in literature during 1990s, and is used to list companies in

the U.S. along various criteria. Igalens and Gond (2005) in their study addressed

various limitations of models to measure social performance. In their discussions of

ARESE model which rests on stakeholder approach involving quantified ranking, Igalens

and Gond (2005) evaluated the reliability of ARESE model from a CSP perspective. Used

as a rating instrument to rank French companies, the model as argued by authors

proximate to CSP models with more coherence compared to KLD. However, rating

instruments that are generally based on hierarchical classification of companies are not

far from criticism. Despite of inherent capacity to operationalisable in diverse sectors,

the company gain is restricted in case of quantitative rankings. It may be difficult for

companies to interpret quantitative ranking and translate it to develop an action plan

covering all inherent dimensions. On the other hand, there are studies in literature (Kok

et all., 2001; Igalens and Gond, 2005) pointing to the potential of establishing CSR in

EFQM model. Waddock and Graves (1997) argued that despite of inherent potential of

learning from quality movement, managing responsibility differs from quality

approaches that focus on primary stakeholders leaving environmental considerations

insufficiently handled. Underlining complex nature of social performance as evident in

reporting systems such as Global Reporting Initiative, Waddock and Bodwell (2004)

argue that responsibility management needs a wider perspective of stakeholders.

However, the necessity of understanding CSP by linking principles, processes and

outcomes that was discussed by Wood (1991) has been widely supported in literature

(Waddock and Bodwell, 2004; Igalens and Gond, 2005; Gond and Herrbach, 2006)

which supports the trust behind models used in quality management.

Quality management refers to a seeking excellence in all processes in association

with principles and outcomes. It is evident that quality management concept has gained

a more sophisticated meaning since Deming's pioneering works. Recent interpretations

of Total Quality Management (TQM) make reference to concepts like learning, business

ethics, social responsibility and governance, a thrust beyond improvement in production

related processes (Goetsch and Davis,1997). Values like integrity, honesty, and

trustworthiness overlap with quality, synergy and self-development that are the values

central to excellence. Moreover, the rising importance of product liability concept made

CSR an indispensable aspect of quality (James,1996). The opportunity created in

integrating CSR to quality management can exploit immense studies related with

implementation of the latter.

SME, CSR AND EUROPEAN QUALITY AWARD MODEL

Various authors have argued that size was a determining factor in CSR activities.

Due to their extensive human and financial resources, big firms are expected to allocate

resources for CSR activities with much ease than SMEs. In support of this view, Eilbirt

and Parket’s findings indicate an association between annual sales and extent of social

responsibility related activity (1973). On the other hand, Chrisman and Fry (1982)
found that small business indicated more concern about social responsibility compared

to general public. Despite of some supportive findings (Enderle, 2004), the research on

CSR in SMEs shows that the preliminary findings need further confirmation by

replication (Thompson and Smith, 1991). Despite of contrary views as to the role

and engagement of SMEs at local level (Bolton, 1971; Curran et al., 2000), SME

survival depends on institutional networks, trust relationships developed at any level.

Social responsibility helps to stabilize mutual expectations among stakeholders, thus it

acts as insurance for both internal and external parties. The increasing emphasis on

CSR for SMEs is emphasized through publications of European Union such as

Observatory of European SMEs (2002) relating SME performance with social

responsibility. Indifference to the issue may better be attributed to lack of tools for

implementation as well as failure in reporting the performance achieved. It is evident

that, the idea of integrating CSR to quality management framework is critical for its

realization, so too are creative efforts for overall quality implementation.

However, the interest of SMEs in award models as compared to big firms is

relatively new in some quality award schemes. Although SME categories have been

added to Baldrige Award scheme in late 1980s, EFQM organization added the category

in 1997 in Europe (nine years after the award process was launched for big business),

followed by Turkish Quality Association with a year delay. The model has a dynamic

nature in that recent issues in management are integrated into quality award models

through periodical-revisions. The Quality Foundation makes such adaptations by way of

incremental changes in its annual revisions as well as grand changes done every 4

years with the help of expert committees. EFQM Excellence Model, which is used both in

Europe and Turkey, is non-prescriptive and acknowledges that there is no one best way

of achieving sustainable excellence in management.

 Supporting Freeman’s (1984) pioneering work on stakeholder theory, the

structure of the model indicates a stakeholder orientation aligned with business

approaches to create synergy. Since revisions done in year 2000 and 2004, EFQM

model is addressing ethics and social responsibility related issues more explicitly.

Although CSR is defined as a voluntary engagement requiring effort even in the

absence of legal enforcement, previous research on CSR pointed to the fact that

management is more encouraged to avoid irresponsible behavior (Van Auken, 1982).

Actually, the expectation with a socially responsible conduct should be safeguarding

interests of stakeholders with an understanding of positive duty. A positive duty is the

one that goes beyond the requirements of regulations and laws. By giving a non-

prescriptive framework for management with an emphasis on proactivity, EFQM

Excellence Model allows for and encourages unrestricted management initiative in

interpretation as well as implementation. Hence, the model does allow management as

a moral agent who can exercise positive duty.

Excellence Model provides the framework whereas stakeholder management and

achievement of various performance goals are connected. Unlike Baldrige model, EFQM

Excellence model involves nine major criteria (Figure 1). The first five (leadership;

policy and strategy; management of people; management of resources and

partnerships; management of processes) are labeled enablers describing the

approaches. The last four criteria (people related results, consumer-related results, and

impact on society and results) are labeled as outcomes. The major message given by

way of the grouping of criteria into two is that without obtaining good results

approaches has no value. Stated differently, you can not change your outcomes without

changing your past approaches. This interpretation allows predictions of cause and
effect relationships and provides guidance for converting attitudes to activities through

structures, when taken altogether, constitute excellence in management.

Underlying arguments of CSR like value creation with respect to triple bottom

line (environmental friendly production systems, waste reduction programs, human

capital development policies) can be traced in the model. For example, the "results"

criterion has two subcriteria covering both financial and non-financial results. Therefore,

outcomes as a result of employing responsible management of stakeholders can be

traced with diverse measures. The excellence model is nurtured by some fundamental

concepts such as leadership and constancy of purpose, continuous improvement and

learning, stakeholder orientation, management by processes and facts, partnership

development, public responsibility, people development and involvement, and lastly

customer focus. These concepts are wrapped in Excellence Model that provides a

framework whereby concern to all stakeholders is presumed with differing weights

assigned to each. The emphasis on public responsibility and empowerment requires

pro-activity supported by consideration of stakeholder welfare beyond legal

requirements (EFQM Model, 2000). Leaders are viewed essential in giving a responsible

tone to organization through developing company mission and vision. The normative

approach is addressed under leadership criteria explaining how stakeholder interests

need to be taken into account. The value-based organizational reflection and choice

regarding CSR can be integrated to vision, mission and values mentioned under

leadership criteria. Here, leaders are specifically expected to develop ethics codes and

values in creating the culture while at the same time support to improve environment

and organization's contribution to society.

Importance of stakeholder orientation is a highlight concept whereas successful

implementation of the model rests upon balanced emphasis on identified needs and
claims of various stakeholders. In addition to stakeholder commitment, care for natural

(e.g. pollution, packaging, waste management) and physical (e.g. safety, health, and

ergonomic aspects) environment is also emphasized in the model leading to an overlap

with CSR ideals. Similarly, in the fourth criteria on partnership development,

importance of creating trust and mutual benefit in relationships with partners is

emphasized. Given the limited resources of SMEs to pay most professional services, the

networks achieved will be valuable opportunities to exchange such resources informally.

Excellence model promotes managing by processes that underlines the idea of acting

pro-actively. Firms are expected to develop processes to enable elimination of problems

at their source rather than fixing them after they occur. Such an expectation relies on

the notion of positive duty inherent in social responsibility discussions (Swanson, 1995)

against perspectives with limited expectations of negative duty or self-restraint (the

duty not to harm stakeholders) alone. This tone is even more evident in public

responsibility that enhances adopting an ethical perspective that exceeds the

expectations of society and laws.

The Model involves learning loops so that the ideas are converted to action

correctly. Further, the use of the model as a diagnostic tool aims to foster learning.

During model based evaluation, a new routine of exchange between stakeholders and

firm occurs which leads to change at different levels. Moreover, the award model

emphasizes a format where qualitative assessment is used in combination with

quantitative assessment. This increases the potential for learning and overcomes

limitations with pursuing one method of measurement. In case assessment report is

prepared for award scheme, since firm’s evaluations are evaluated by award scheme

assessors, problem of subjectivity is eliminated to a great extent. Another advantage

created by model is that the problem of disparity between policies and daily
implementation is eliminated through the concept of deployment. Deployment of

policies concept is used to describe how policies can be translated into daily activities by

way of sound processes. Therefore, it can be argued that the model enables transfer of

its understanding of responsibility into managerial decision-making and into the

processes of implementation. Finally, the results criteria trace both financial and non-

financial results encouraging the perspective of not drawing an economic boundary to

corporate social responsibility.

The attitude of managers to CSR has been primarily criticized on their failure to

understand the concept of responsiveness (Clarkson, 1995). This problem surfaces due

to lack of an understanding the distinction between reaction and proactivity. Quality

management emphasizes deployment of mission and vision to policy and operations

whereas strategic issues are integrated into operations by means of objective setting

and identification of departmental/individual responsibilities. As regards the

performance appraisal and rewards depicted by the model, they are expected to be

structured to support the strategic posture of the company. When question of

responsiveness is an issue, it is understood as development and availability of relevant

processes in realization of the aim. Management identifies stakeholder expectations and

claims using methods like environmental scanning and process impact analysis.

Apparently, the systematic presented in quality management award model is has the

potential to make CSR operational and addresses early arguments of scholars such as

Preston (1977) and Wood (1991).

 EXCELLENCE MODEL

Figure 1

------------------- Enablers------------------- ------------- Outcomes ------------

MANAGEMENT OF MGT
L POLICY & STRATEGY OF PEOPLE RESULTS
E
A P R
D R E
MANAGEMENT OF
E O S
PEOPLE CONSUMER
R C U
RESULTS
S E L
H S T
I MANAGEMENT OF S S
P RESOURCES & E IMPACT ON SOCIETY
PARTNERSHIPS S
METHODOLOGY AND FINDINGS

Research Purpose

Research associating quality management and corporate social responsibility in

SMEs is rare. Finding SMEs practicing responsible management and gaining access is

one major challenge in this type of research. However, there is increasing number of

firms integrating social responsibility to their quality management endeavors as part of

the award schemes. In this respect, two cases studied are picked from among quality

award applicants in SME category in Turkey. Quality Association (KalDer) in Turkey has

been using EFQM Excellence Model for the national award scheme since its foundation.

The national quality award process is initiated by training of an assessor pool on cases

prepared by EFQM for the same purpose. The consistency in evaluation with EFQM

award organization is checked by having some Turkish assessors taking role in

European quality award process. High performers during training are later assigned

assessment of award applicant firms which submit a self-assessment report prepared

along Excellence Model requirements. Assessor team scores the firm based on self-

assessment report providing justifications as to strengths and improvement areas

identified for each criterion. In the next step, the finalist firms receive a site visit by

assessor team during which further evidences and explanation is requested for

clarification. The scores are finalized after the site visit and a jury formed decides on

the award winner firm(s) that is announced during the annual conference. The

endeavors of Turkish firms in national award scheme has led to success in Europe as

well, in that, based on number of finalist firms supplied to EFQM European award

scheme, Turkey ranked first among European countries as of 2004.

The aim of the paper is to study to what extent EFQM Excellence Model helps

firms to establish social responsibility perspective in the way they manage firms.
The research question is therefore structured as:

What is the content of issues within stakeholder groups that SME quality award

finalists are addressing regarding corporate social responsibility?

Research Methodology

Past research on CSR activities of large firms used companies’ self-presentations

of their CSR activities on company websites (Snider, Hill and Martin, 2003). The

fundamental problem with this approach is that the intention revealed by such means

does not assure the existence of processes to integrate them into policies and plans.

This inherent weakness and the lack of existing research on SME social responsibility

led the author to conclude that qualitative research will be the most appropriate

methodology for the study. In addition to this, since social responsibility is a concept

that has penetrated to quality award schemes only recently, the related practices are

supposed to be in their embryonic phase justifying an exploratory type of research.

Therefore, assessment framework of EFQM Excellence Model is used in analysis

following the tenets of grounded theory and qualitative content analysis.

The data used for this study is the quality management related assessments of

finalist companies applying to the quality award scheme in SME category. In analysis,

first, the data is scanned for explicit and implicit statements regarding firm's moral,

ethical, legal and philanthropy related responsibilities to all internal and external

constituencies inherent in Excellence Model. The information acquired is sorted to

organize like information secondly and then categorized by stakeholders and separate

groupings of issues. Thirdly, underlying reasons for the differences between two SMEs

are explored.
 SME category in the quality award scheme defines firm size based on the number

of full-time employees covering firms with less than 250 employees. SMEs are further

grouped as either dependent (at least 25% of its shares owned by a holding company

or a group) or independent. Self-assessment reports prepared according to Excellence

Model that are submitted to the organizing association KalDer are used as self-reports

of companies in this research. The quality award submission books are self-reports

containing in-depth explanation of firm performance along Excellence Model.

It is thought that because these companies have proven their performance in

implementing the model, the way they interpret and operationalize the EFQM model

should be enriched enough to involve social responsibility related endeavors. Among

the seven SME award winner companies contacted, permissions of two are obtained for

using award submission books in the research. Each firm has been denoted here by a

pseudonym that was in line with their market and sector to maintain confidentiality.

Case Studies

Service Domestic Firm (SDF) provides service to domestic market whereas

Manufacture Global Firm (MGF) manufactures intermediate goods for global markets. In

terms of size SDF is smaller than MGF and both are categorized as dependent firm.

SDF is providing logistical services for a foreign-based company products. Its mission is

"being the best service providing logistics center in Turkey." Their area of concern is on

distribution chain within the country and contributions to the happiness of ultimate

customers achieved through responsiveness to their increasing expectations. The firm

values are defined around "focus on human resources and customers," "technological

infrastructure," "openness to change" and "proactivity." SDF supplies products from

foreign suppliers and acts as a facilitator between domestic and foreign suppliers in
improving the parts, competitive pricing as well as dissemination and sharing of

improvement related experiences.

MGF is characterized with high technological competencies. The mission of the

company identifies customer, shareholder and employee as primary stakeholders. The

customer is viewed as partner and MGF aims to develop perception of a reliable firm

consistently delivering excellently performing products. Responsibility of MGF towards

shareholders is defined as retaining competitive position and efficient use of resources.

Additionally, the mission statement emphasizes creation of open, well functioning

company in order to enhance involvement and teamwork while upgrading skills.

MGF's mission emphasizes worldwide recognition on excellence. Because it

operates globally through supplying its product to firms in various countries, its

production structure is characterized as flexible enabling production of many different

types demanded in markets. To further effectiveness, the organization has a flat

structure. Excellence Model is accepted as a managerial tool for self-assessment and

guidance in the last five years before being an award finalist.

The analysis of two cases reveals that both firms concentrate their attention on a

similar set of stakeholders imposed by the Excellence Model but with varying scope.

Both firms consider input from all stakeholders in strategic planning. However, the

emphasis varies depending on the business environment they are operating in which

affect their vulnerabilities. The social responsibility related activities of two firms are

described below within appropriate stakeholder categories.

Employee: The HR policies developed indicate a sensitivity to maintain fairness in

relations to employees. Policies focusing mainly on safety, health and training of

employees are commonly observed in both firms reflecting emphasis on proactivity with
regard to fulfillment of responsibility towards employees. Monthly safety and health

meetings, emergency planning in case of fire (alarm systems, covering floors with

inflammable material) are some examples for such activities. MGF reports on

disappearance of specific sicknesses upon adoption of certain occupational health

related policies. Training provided aims both personal developments of employees as

well as company success in both firms. The emphasis on the importance of human

capital can be observed in processes developed to upgrade human capacity. Viewing

leader training as a mean to serve the purpose of improving communication with

employees both companies vigorously utilize human resource management tools to

benefit all levels. Given the goal of enriching the understanding of model requirements,

it can be said that a tendency for broader interpretations of quality management is in

place in both firms. Both companies are sensitive in developing performance evaluation

systems that helps establishing fair relationships with employees. In MGF, employee

recognition scheme addresses different accomplishment situations with the purpose of

achieving fairness. Performance evaluation in both firms is linked to participation in

continuous improvement activities enabling consistency with firm goals. These efforts

are justified as means to improve employee satisfaction and variety of other measures

like lower turnover, sickness, and absenteeism. Both MGF and SDF manage information

resources with the purpose of assuring equal opportunity in accessing appropriate and

reliable information. Compliance to regulations is done by cross checks to respect legal

responsibilities. Social activities initiated aim to create a work-life balance as well as

enhance the spirit essential for teamwork.

Customer: In both firms, company policies identify customer as a major stakeholder.

There are processes developed to hear customer voice as early as possible and handle
their complaints. Measures concerning complaints, satisfaction, and loyalty are used

with the aim of fulfilling responsibilities to customers. The relationship with customers

continues after sales in terms of training on recent changes or obtaining feedback for

further improvement. In MGF customer relations are handled by distinguishing

commercial issues and technical issues each assigned to a separate division. The

improvement related activities are various, taking the form of meetings, quality circle

activities and improvement projects organized jointly. In MGF case, partnering with

customer on business improvement is a goal repeatedly mentioned. Improvement done

concerning a particular customer is deployed to other customers pointing to a concern

for equal treatment. Reciprocal training programs are provided with the customer firms

who are using their product as a component to enable sharing of expertise and

information for proactivity and innovation. Similarly, SDF provides training to suppliers

and exchanges market related information in order to properly address customers'

rights for a quality product. The customer relations are handled with a proactive

orientation to prevent any possible dissatisfaction from the supplied product/service in

both firms. This has positive returns concerning relations with both customers and

suppliers. An example for this is development of a system whereby information from

ultimate customers and retailers are collected through various means (call centers,

meetings, and reports) and shared with the producer firm for improvement.

Suppliers: In SDF case, the relations with suppliers of producer company are relatively

limited in scope and do not involve monitoring by way of audits. SDF facilitates

workshops whereby domestic suppliers and foreign suppliers jointly work in developing

business relations and improve efficiency and quality of products. On the other hand,

MGF manages relations with suppliers through a formal supplier evaluation system that
provides input for identification of priority improvement areas. Innovative examples for

joint improvement activities are planned and carried out together with supplier firms.

MGF has systematically included environment-related issues in purchasing decisions,

adopting a challenging policy in terms of requirements for openness. The impact that

such a policy created is not only on their own processes, but also on the business

behaviors of suppliers.

Competitors: Competitors in general are the forgotten stakeholder in any firm. Green

(1994) argues that competitors are "corporate stakeholders with a claim for fair

treatment." The cooperation and trust developed among competitors may help

understand the reasons for mutual support and collaboration between SMEs. The

relevant examples are rare in both cases. In case of MGF where innovativeness is a

prominent goal, process-benchmarking activities attended serves in building interactive

relationships with other producers, thus enabling cooperative relations with competitor

companies. In SDF case, although a cooperation is lacking, the firm is tracing

competitors to make price related suggestions to suppliers. Against limited examples

found, the relationships with competitors may be one area that can be further

improved.

Society: MGF shows considerable effort to spread best practices within and outside the

holding organization by way of seminars, team presentations, publications, and

training. Philanthropy related activities are institutionalized through linkage to a

Foundation within the holding company. The company has been listed among the

highest taxpayers and received an award for its contributions to community. The

community involvement related activities are determined by a distinct policy. SDF's

approach focuses more on maintaining safety in immediate environment through

strengthening safety precautions against fire incidences. SDF is engaged in

philanthropy and the major areas of donations are education, health and cultural

development of society. To reinforce accountability in creating a desirable impact on

society, teams are designated to work on societal relations. "Societal Positive Impact

Teams" are such examples formed to develop action plans and budgeting of these

activities.

Environmental Issues: Environmental responsibility is another area where both firms

are engaged in and their related efforts can be traced under various award scheme

criteria. High stakeholder pressure and inherent potential for harming environment in

production is leveraging MGF's environment related activities. Formal processes are

developed to deal with environmental issues "due to increasing concern of firm's

customer and supplier." MGF questions environmental profile by surveys (Total

Environmental Care Survey) supported by energy saving projects, environment-related

publishing and participation in environment focused NGOs. Additionally, the supplier

audits are performed by Quality and Environment Control Section Manager pointing to

the availability of socially-responsible buying practices. The concern of eliminating air

pollution resulted with efforts converting fuel oil usage to usage of special oil with lesser

pollution impact. Similarly, MGF revealed an effort beyond legal requirements in that a

more expensive material in wastewater treatment is being used. The company focus is

decreasing both internal and external pollution. Sensitivity to environmental issues is

conveyed to employees whereas employee perceptions concerning pollution are sought

for through Vicinity Perception surveys. Along with external audits of the customer

firm, MGF has ISO 14000 and BS 7750 certification.

On the other hand, being a service providing company SDF is not faced with

environmental problems as is MGF. Eventually, the nature and scope of policies adopted

differ. Therefore, relatively peripheral projects such as reduction of indirect energy

consumption are identified as a critical goal. The major examples for environment

protection projects implemented by SDF are water distillation and recycling projects.

Others relate to paper waste prevention project whereas cardboard packaging is

replaced with steel cages, plus use of centralized air-conditioning with ozone layer

friendly gases, saving of electricity and use of LPG in heating to prevent pollution.

Majority of employees participate in "Environment Volunteers Club."

DISCUSSION

The major challenge academicians and business people are facing nowadays is to

anticipate and respond to social responsibility related issues. Concerns on CSR

revitalized interest in adapting and using various tools for implementation. By linking

operational and non-financial corporate activities within causal chains to the firm's long-

term strategy, EFQM Excellence Model provides an opportunity for alignment of

performance on social issues with decision-making strategies and structures. At the

same time, the Model helps overcome shortcomings of attempts to operationalize CSR

by integrating the three pillars of sustainability (i.e. economic, social and

environmental) into a stakeholder-based perspective of quality management. The

model provides the framework through which one can observe and enhance firm’s

social behavior while creating an incredible learning opportunity for firms. The

experience with early CSR related practices underlines that CSR is not about creating

reputation, an activity performed exclusively by public relations or communications

departments. Neither CSR is only introducing additional set of activities to support the
changing relationships between firm and its stakeholders. CSR requires fundamentally

different types of thinking and processes that so far have not commonly been part of

normal business practice.

When utilized vigorously, Excellence Model may provide a systematic framework

whereby SMEs can add CSR to firm's already existing set of organizational

competencies. In doing this, SMEs should use variety of approaches like stakeholder

approach or partnerships for aligning CSR within the dominant quality culture. Another

advantage provided by the model is that, it encourages firms to make an impact

analysis in the first place and then prioritize social responsibility areas. This focus rules

out perceptions of CSR as a mere PR activity disconnected to firm's operations. The

model at the same time brings a comprehensive approach to CSR and rejects those

reductionist perspectives in which social responsibility is understood as corporate

philanthropy alone.

Excellence Model shifts managers' attention from functional units to stakeholders

entailing actions on the whole activity chain involving suppliers, retailers, customers,

final users and other non-traditional stakeholders such as environment, government

and society. Even though quality award models are well recognized as tools for quality

implementation, current interpretations reveal that they have the potential to

accommodate many aspects of CSR. Still, companies need to show additional effort in

linking dedicated drivers of CSR with the concept of quality management. All criteria

need to be judged along a notion of CSR and a full-fledged implementation requires the

repositioning of quality efforts demanding additional competencies, skills not

necessarily those that started quality management process. One of these additional

skills is good governance as a managerial ethos in determining how authority is

distributed and used, and to what purpose.

 On the other hand, the flexibility gained by small size may enable SMEs to

handle CSR with ease through implicit and reactive actions. However, such an approach

may only provide marginal advantages. One major constraint for SMEs in implementing

CSR is that they may not have individual resources to consider the impact of their

activities on various stakeholders proactively. Since most of the functional

responsibilities are carried out by same individuals in small firms, shortage of

professional support may pose the greatest challenge. Concerning efforts beyond

reactive involvement; the more proactive the strategy, the more formal processes need

to be employed where greater stakeholder involvement becomes essential in these

processes. Therefore, in case of small firms, networking that is carefully developed are

effective means for overcoming staff related inadequacies.

Partnerships as recent examples of such structures are also means for enabling

effective exchange of information and experience. Successful partnership facilitate

supply of stakeholder feedback as to company's impact on stakeholders which

otherwise may not be recognized at all. The successful implementation examples in the

above cases are mostly the outcomes of joint improvement projects allowing the firms

to consider stakeholder claims proactively. However, it should be acknowledged that

being dependent SMEs, both firms are experiencing privileges of being a member of a

group of firms. A CSR integrated quality management initiative may call for significant

financial and non-financial commitment to gain competitive advantage. In case of

independent SMEs that lack adequate financial resources and such a group support,

access to managerial know-how on CSR may not be possible all the time. Eventually,

independent SMEs may be complacent with reactive strategies that may lag behind

stakeholder expectations.
 The examples for partnerships in the two cases are performed with

organizational stakeholders involving primary stakeholders; i.e. customers, employees,

shareholders, and suppliers. No major examples for partnerships with regulatory

stakeholders (including local and national government, professional organizations, and

competitors), community stakeholders (environmental and human rights groups,

consumer advocates) and media are found in the two cases. One exception is the

support obtained from Turkish Quality Association, which was a sort of hidden partner

in both cases through its contributions to organizational learning and growth.

Considering the above two success stories, it is evident that having access to expertise

on development of management systems to enable informational diffusion is critical for

SMEs. Quality Associations may thus play an important role in the development of SMEs

through guidance and consultancy provided for free or at a minimal price.

One major limitation of the study is the fact that two cases studied represent

dependent firms' experiences. The award scheme defines SMEs merely along number

of employees that impose reservations on the discussions made so far. Independent

firms may be slower in adopting CSR because of financial shortages. Some social

performance assessment techniques require external audit and involvement of business

assistance. Or due to lack of sufficient understanding, CSR may be adopted for

marketing value rather than gaining a competitive advantage. However, the study of

the model within the framework of two quality award submission books to SME

category reveals that both CSR and quality management may be adopted concurrently,

social responsibilities allied with strategic planning creating an alternative competitive

advantage for SMEs.

 The above cases reveal stakeholder sensitivity in social and environmental

responsibilities, willingness to adopt a broader agenda in implementing quality

management, and availability of a tool and guidance in the process of implementation

as important factors in launching CSR in SMEs. As can be seen, the stakeholder

pressure due to inherent vulnerability to environmental issues is more prominent in

MGF than SDF. Therefore, it can be argued that CSR may be more readily adopted by

virtue of SMEs' position in the supply chain whereby pursuit of social standards may be

imposed by customer firms. In the absence of such requirements, firms' engagement in

CSR may not necessarily be formalized through audits, social reporting, etc. In other

words, those efforts will be voluntary and informal rather than collaborative responses

involving formal partnerships. The existence of values enriching excellence such as

social duty, sensitivity to rights or justice will serve as driving forces in integrating

social responsibility to quality management concept. This implies the importance of

accountability, transparency and integrity upon which effective governance is built.

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 Research Paper Series
International Centre for Corporate Social Responsibility
ISSN 1479-5124

Editor: Jean-Pascal Gond

The ICCSR Research Papers Series is intended as a first-hand outlet for research output
of ICCSR. These include papers presented at symposiums and seminars, first drafts of
papers intended for submission in journals and other reports on ongoing or completed
research projects.
The objective of the ICCSR Research Papers Series is twofold: First, there is a time
goal: Given the quality of ICCSR publication, the targeted journals normally require
large time spans between submission and publication. Consequently, the ICCSR
Research Papers Series serves as a preliminary airing to working papers of ICCSR staff
and affiliates which are intended for subsequent publication. By this, research output
can be made available for a selected public which will not only establish ICCSR’s lead in
advancing and developing innovative research in CSR but will also open the opportunity
to expose ideas to debate and peer scrutiny prior to submission and/or subsequent
publication. Second, the ICCSR Research Papers Series offers the opportunity of
publishing more extensive works of research than the usual space constraints of
journals would normally allow. In particular, these papers will include research reports,
data analysis, literature reviews, work by postgraduate students etc. which could serve
as a primary data resource for further publications. Publication in the ICCSR Research
Paper Series does not preclude publication in refereed journals.
The ICCSR Research Papers Series consequently is interested in assuring high quality
and broad visibility in the field. The quality aspect will be assured by establishing a
process of peer review, which will normally include the Editor of the ICCSR Research
Papers Series and one further academic in the field. In order to achieve a reasonable
visibility the ICCSR Research Papers Series has full ISSN recognition and is listed in
major library catalogues worldwide. All papers can also be downloaded at the ICCSR
website.

Published Papers

No. 01-2003 Wendy Chapple & Richard Harris

Accounting for solid waste generation in measures of regional productivity
growth
No. 02-2003 Christine Coupland
Corporate identities on the web: An exercise in the construction and
deployment of ‘morality’
No. 03-2003 David L. Owen
Recent developments in European social and environmental reporting and
auditing practice – A critical evaluation and tentative prognosis
No. 04-2003 Dirk Matten & Andrew Crane
Corporate Citizenship: Towards an extended theoretical conceptualization
No. 05-2003 Karen Williams, Mike Geppert & Dirk Matten
Challenges for the German model of employee relations in the era of
globalization
No. 06-2003 Iain A. Davies & Andrew Crane
Ethical Decision Making in Fair Trade Companies
No. 07-2003 Robert J. Caruana
Morality in consumption: Towards a sociological perspective
No. 08-2003 Edd de Coverly, Lisa O’Malley & Maurice Patterson
Hidden mountain: The social avoidance of waste
No. 09-2003 Eleanor Chambers, Wendy Chapple, Jeremy Moon & Michael Sullivan
CSR in Asia: A seven country study of CSR website reporting
No. 10-2003 Anita Fernandez Young & Robert Young
Corporate Social Responsibility: the effects of the Federal Corporate
Sentencing Guidelines on a representative self-interested corporation
No. 11-2003 Simon Ashby, Swee Hoon Chuah & Robert Hoffmann
Industry self-regulation: A game-theoretic typology of strategic voluntary
compliance
No. 12-2003 David A. Waldman, Donald Siegel & Mansour Javidan
Transformational leadership and CSR: A meso level approach
No. 13-2003 Jeremy Moon, Andrew Crane & Dirk Matten
Can corporations be citizens? Corporate citizenship as a metaphor for
business participation in society (2nd Edition)
No. 14-2003 Anita Fernandez Young, Jeremy Moon & Robert Young
The UK Corporate Social Responsibility consultancy industry: a
phenomenological approach
No. 15-2003 Andrew Crane
In the company of spies: The ethics of industrial espionage
No. 16-2004 Jan Jonker, Jacqueline Cramer and Angela van der Heijden
Developing Meaning in Action: (Re)Constructing the Process of Embedding
Corporate Social Responsibility (CSR) in Companies
No. 17-2004 Wendy Chapple, Catherine J. Morrison Paul & Richard Harris
Manufacturing and Corporate Environmental Responsibility: Cost Implications
of Voluntary Waste Minimisation
No. 18-2004 Brendan O’Dwyer
Stakeholder Democracy: Challenges and Contributions from Accountancy
No. 19-2004 James A. Fitchett
Buyers be Wary: Marketing Stakeholder Values and the Consumer
No. 20-2004 Jeremy Moon
Government as a Driver of Corporate Social Responsibility: The UK in
Comparative Perspective
No. 21-2004 Andrew Crane and Dirk Matten
Questioning the Domain of the Business Ethics Curriculum: Where the Law
ends or Where it Starts?
No. 22-2004 Jem Bendell
Flags of inconvenience? The global compact and the future of United Nations
No. 23-2004 David Owen and Brendan O’Dwyer
Assurance Statement Quality in Environmental, Social and Sustainability
Reporting: a Critical Evaluation of Leading Edge Practice
No. 24-2004 Robert J. Caruana
Morality in consumption: towards a multidisciplinary perspective
No. 25-2004 Krista Bondy, Andy Crane & Laura Browne
Doing the Business: A film series programmed by ICCSR in conjunction with
Broadway Cinema
No. 26-2004 Stanley Chapman
Socially Responsible Supply Chains: Marks & Spencer in Historic Perspective
No. 27-2004 Kate Grosser and Jeremy Moon
Gender Mainstreaming and Corporate Social Responsibility: Reporting
Workplace Issues
No. 28-2004 Jacqueline Cramer, Angela van der Heijden and Jan Jonker
Corporate Social Responsibility: Balancing Between Thinking and Acting
No. 29-2004 Dirk Matten and Jeremy Moon
'Implicit' and 'Explicit' CSR: A conceptual framework for understanding CSR in
Europe
No. 30-2005 Nigel Roome and Jan Jonker
Whistling in the Dark
No. 31-2005 Christine Hemingway
The Role of Personal Values in Corporate Social Entrepreneurship
No. 32-2005 David Owen
Corporate Social Reporting and Stakeholder Accountability The Missing Link
No. 33-2005 David Owen
CSR After Enron: A Role for the Academic Accounting Profession?
No. 34-2006 Judy Muthuri, Jeremy Moon and Dirk Matten
Employee Volunteering And The Creation Of Social Capital
No. 35-2006 Jeremy Moon and Kate Grosser
Best Practice on Gender Equality in the UK: Data, Drivers and Reporting
Choices
No. 36-2006 Amanda Ball
Environmental Accounting as ‘Workplace Activism’
No. 37–2006 Kenneth M. Amaeshi & Bongo Adi
Reconstructing the corporate social responsibility construct in Utlish
No. 38-2006 Aly Salama
The ICCSR UK Environmental & Financial Dataset 1991-2002
No. 39-2006 Kenneth M Amaeshi, Bongo C Adi, Chris Ogbechie and Olufemi O Amao
Corporate Social Responsibility (CSR) in Nigeria: western mimicry or
indigenous practices?
No. 40-2006 Krista Bondy, Dirk Matten and Jeremy Moon
MNC Codes of Conduct: CSR or Corporate Governance?
No. 41-2006 Jan Jonker and Michel van Pijkeren
In Search of Business Strategies for CSR
No. 42-2006 Stephanos Anastasiadis
Understanding corporate lobbying on its own terms
No. 43-2006 Nahee Kang
Analysing ‘System Change’: The Role of Institutional Complementarity in
Corporate Governance
No. 44-2006 M. Shahid Ebrahim and Ehsan Ahmed
Cooperative Home Financing
No. 45-2006 Nahee Kang
A Critique of the “Varieties of Capitalism” Approach
No. 46-2007 Kenneth Amaeshi, Onyeka Kingsley Osuji and Paul Nnodim
Corporate Control and Accountability in supply chains of Multinational
Corporations: Clarifications and Managerial Implications
No. 47-2007 Jean-Pascal Gond & Dirk Matten
Rethinking the Business-Society Interface: Beyond the Functionalist Trap
No. 48-2007 Jean-Pascal Gond, Guido Palazzo and Kunal Basu
Investigating Instrumental Corporate Social Responsibility through the Mafia
Metaphor.
No. 49-2007 Kenneth Amaeshi, Abel Ezeoha, Bongo Adi, Manson Nwafor
 Financial Exclusion and Strategic Corporate Social Responsibility: A missing
link in sustainable finance discourse?
No. 50-2007 Semra Aşcigil
Towards socially responsible SMEs? Quality award models as a tool