Corporate social responsibility commitment of small‐to‐medium enterprises and organizational competitive differentiation: Stakeholder pressure, market orientation, and socioeconomic context effects

• Date: 01 May 2019
• Author: Jamshed Raza,Yuxin Liu,Muhammad Usman
• DOI: http://doi.org/10.1002/pa.1897
• Published date: 01 May 2019

ACADEMIC PAPER

Corporate social responsibility commitment of small‐to‐

medium enterprises and organizational competitive

differentiation: Stakeholder pressure, market orientation, and

socioeconomic context effects

Jamshed Raza |Yuxin Liu |Muhammad Usman

Business School, University of International

Business and Economics, Beijing, China

Correspondence

Jamshed Raza, Business School, University of

International Business and Economics, Beijing

100023, China.

Email: jamshed4u@gmail.com

This paper aims to examine the role of stakeholder pressure and market orientation in

explaining the corporate social responsibility (CSR) commitments and the organiza-

tional competitive differentiation of small and medium enterprises. The socioeco-

nomic context, that is, favorable versus unfavorable, was used as a moderator in

above links. The results verify the strong influence of stakeholder's pressure on CSR

commitments and the influence of stakeholder pressure and market orientation on

organizational competitive differentiation. The socioeconomic context confirms to

have a significant moderating role in the hypothesized links. In a favorable context,

stakeholder pressure turns out to be relevant in explaining CSR commitments and

the organizational competitive differentiation, and CSR commitments itself also have

a significantly positive effect on organizational competitive differentiation. In an unfa-

vorable context, market orientation provides a significantly positive support to CSR

commitments and organizational competitive differentiation.

1|INTRODUCTION

In recent years, research on organizational competitive differentiation

(OCD; Lowitt, 2011; Tay, 2003) showed that one of the subjects of

motivation for small‐to‐medium enterprises (SMEs) is corporate social

responsibility (CSR; Abebe & Angriawan, 2014; Arendt & Brettel,

2010; Saeidi, Sofian, Saeidi, Saeidi, & Saaeidi, 2015). Organizations'

choice to add to society and environment on voluntarily grounds is

considered as CSR, which consecutively gives higher profit and com-

petitive differentiation. Raza and Majid (2016) reported that those

SMEs committed to CSR activities can mobilize the social order

through their key social and economic effects on social development

and employment. However, at present, SMEs are operating in

extremely competitive socioeconomic settings with greater economic

limitations (Stoian & Gilman, 2017; von Weltzien Høivik & Shankar,

2011). SMEs' CSR commitment (CSRc) is considered an appropriate

solution to operate in such a competitive socioeconomic environment

to meet social objectives along with attaining organizational perfor-

mance goals (Gelbmann, 2010). Accordingly, CSR notion is under dis-

cussion from the last few years. Nevertheless, practitioners and

investigators are still out‐lying to recognize a commonly reliable as

well as acceptable conceptual model to explain CSRc and OCD. Con-

sequently, the current study is devised to formulate a model that links

CSRc and OCD among SMEs.

Another rationale for studying CSRc among SMEs is that CSR is a

concept that characterizes large enterprises that has already been

explored, particularly in developed countries (Freeman, Harrison,

Wicks, Parmar, & De Colle, 2010; Gjølberg, 2009), but it is needed

to shift the focus from large enterprises to SMEs, which has recently

grab the attention on CSRc in developing countries (Jamali,

Lund‐Thomsen, & Jeppesen, 2017). As a result, several studies have

been conducted to evaluate the CSR notion among developing coun-

tries, but a comprehensible representation of the focal concerns perti-

nent to such a strategic inclination for SMEs remains to be attained.

Given the above rationales, this study focuses on increasing prac-

tical and theoretical knowledge of SMEs regarding OCD and extend-

ing the knowledge of stakeholders' pressure (SP), market orientation

(MO), and CSRc. At an organization level, the general view exists that

stakeholders drive business performance strategies (Wolf, 2014), and

the extent of stakeholders impact on organizational competitiveness

Received: 4 November 2018 Accepted: 17 November 2018

DOI: 10.1002/pa.1897

J Public Affairs. 2019;19:e1897.

https://doi.org/10.1002/pa.1897

© 2019 John Wiley & Sons, Ltd.wileyonlinelibrary.com/journal/pa 1of11