CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE GOVERNANCE IN ITALIAN SMES: THE EXPERIENCE OF SOME "SPIRITED BUSINESSES"

Businesses are increasingly finding themselves reflecting on the possibility of embracing corporate social responsibility (CSR) as an opportunity and a challenge around which they can transform their governance. Where an adhesion to multiple declensions of CSR is present, corporate governance positions itself at the center of relations among stakeholders, strategic profile and internal processes, and human capital and is experienced as enlarged governance. Departing from this premise he study proposes to individuate the relationship between social engagement, social statements and governance of SMEs. The research questions that orient the study is: “Does an adhesion to the philosophy and to the practices of CSR - which are reflected in a firm’s mission and accountability - positively influences its governance? Is it possible to affirm that socially oriented businesses are characterized by the ‘‘best’’ systems of governance? If so, is this influence more or less significant for SMEs with respect to large-sized firms? And on which specificities of SMEs is the evolution of socially-oriented management philosophy based? The paper winds itself around these questions and describes the principle findings that have emerged from a qualitative investigation focused on a selected group of ‘‘cohesive’’ Italian SMEs, in which their management complies with both economic and social issues. The explication of the research question can be articulated this way: to individuate the particular traits of the mission, systems of governance and of accountability that characterize the SMEs that carry a business culture in which social responsibility is lived within the governance of the firm. The central proposition is that in the presence of a solid ethical framework, which is promoted and shared by the entrepreneurs and managers who guide the business in carrying out socially responsible practices and towards adopting methods communicating them (such as a charter of values, a code of ethics, social report, etc.), the arrangement and quality of governance can mitigate tensions and dedicate more energy towards the good of the business, of its workers, and of the society and environment in which it operates. The empirical analysis of such cases, conducted with reference to a double interpretative framework (Lamont, 2002; Molteni and Lucchini, 2004) permits one to verify a second proposition: SMEs’ orientation towards CSR and the coherence between mission-governance-accountability which follows are facilitated by environmental factors—that is, of an anthropological and socio-cultural nature—present in the territory from which the entrepreneurs and the SMEs come. This makes it possible to trace the features of a Marchegian model of socially responsible orientation centered on the best practices of SMEs who are excellent examples of ‘‘spirited businesses’’. The study utilizes a dual analytical perspective: deductive and inductive. The former is based on a review of the contributions in the literature and of the empirical researches conducted on the theme of CSR, corporate governance and business ethics in small and medium-sized businesses, attempting a comparative reading with respect to large firms. The latter is developed through a qualitative study focused on several case studies conducted through a semi-structured questionnaire on a sample of SMEs in the Marches Region. The empirical analysis forms a part of a more robust research project based on the qualitative and quantitative study of a sample of Italian SMEs, located in the Marches Region, started in May 2008. The study on the field first attempted to identify the central values present in the companies interviewed, the translation into a mission and, consequently, the impact on relationships with stakeholders, the reflections on the structure of government, and the presence of instruments of accountability. The empirical study finds that the diffusion of CSR is tied above all to the entrepreneur’s values and orientation and to the company embeddedness to the local socio-economic environment. The propositions emerged from the study are the following: Proposition one: CSR reinforces and facilitates the convergence between mission, governance, and accountability; the orientation towards CSR is therefore reflected positively on the governance of SMEs. Proposition two: Among SMEs, the orientation towards CSR begins with the entrepreneur and is a manifestation of both the values tied to personal goals as well as the values tied to cultural and social variables in the territory from which he comes. The concluding reflections trace the features of a territorial model of socially responsible orientation centered on the best practices of SMEs who are excellent examples of ‘‘spirited businesses’’ and are part of a network (which includes institutions, trade associations, non-profit organizations, etc.) that contributes to the diffusion of an orientation towards CSR and to sustainability across the territory. In the face of large-scale corporations’ power and impact, however, one cannot but mention the possible new and important role of small and medium-sized businesses in providing examples of, and ‘‘driving,’’ real means of good governance—many of which truly spring from that family-based world of capitalism, often criticized—which hosts precious testimonies of integrity strategies, capable of generating trust towards the firm and the entrepreneurial conduct. This permits us to conclude by affirming that between CSR and corporate governance there exists a successful nexus. Abstract The study proposes to individuate the relationship between social engagement, social statements and governance of SMEs. Does an adhesion to the philosophy and to the practices of CSR, which are reflected in a firm’s mission and accountability, positively influences its governance? If so, is this influence more or less significant for SMEs with respect to large-sized firms? This paper winds itself around these questions and describes the principle findings that have emerged from a qualitative investigation focused on a selected group of ‘‘cohesive’’ Italian SMEs, in which their management complies with both economic and social issues. The empirical study finds that the diffusion of CSR is tied above all to the entrepreneur’s values and orientation and to the company embeddedness to the local socio-economic environment. The concluding reflections trace the features of a territorial model of socially responsible orientation centered on the best practices of SMEs who are excellent examples of ‘‘spirited businesses’’ and are part of a network (which includes institutions, trade associations, non-profit organizations, etc.) that contributes to the diffusion of an orientation towards CSR and to sustainability across the territory.