CSR and SMEs’ Performance: Literature Review

Topic: Management
Words: 1675 Pages: 6

Corporate Reputation

Corporate reputation is conceptually regarded as the collective evaluation of an organization’s past experiences and expectations in its future actions because of its efficiency in tackling its main competitors. It is the overall organizations image as viewed by the business stakeholders, the customers, the employees, and the shareholders of the company. According to Lee, Chang, and Lee (2017), corporate reputation is the general perception of the stakeholders of an organization’s performance over some period. Corporate reputation is an inclusive process that requires the customers’ perception and experiences regarding the firms fulfillment of their needs and their expectations. It is therefore important for any organization to enhance its reputation to ensure customer satisfaction and to develop high-standard services, including high-quality products so that they ensure high credibility for the firms image. The chief profits of having a remarkable reputation are credibility and reliability. Corporate standing defines the level of obligation and trustworthiness a shareholder has to the business. It does not matter what a company wants to do to its brands; what determines the organization’s reputation is the stakeholders needs. Therefore, managing corporate reputation is all about managing stakeholders’ perceptions.

Most employees would like to work for organizations with excellent reputations. Therefore, this will enable those with exceptional reputations to recruit more employees and maintain a skilled workforce at a very low cost. Any firm should put into consideration the interests of the stakeholders and ensure an equal and opposite outcome of benefits from the available resources rather than focusing on the competition itself.

Therefore, the resource-based view (RBV)of the firm plays an important role in this research as it reveals that a firm’s performance is determined by the resources available within the firm; the way these resources are utilized and configured enables the firm to perform well and provide a distinct competitive advantage. Consequently, understanding the firms available resources, however scarce, is the bottom line towards corporate reputation which is a valuable asset as it is hard for rivals to copy and imitate, thus, translating into a sustainable competitive advantage. Significantly, reputation is not something that can be purchased or sold; it is a continuous process that involves getting the right stakeholders, an effective approach, customer-centered, nurturing, and cultivating trust.

The central motive for quantifying assets and proficiency in a company is to create an equilibrium between the long-term and the short-term tactic. The resources help the organization improve rather than just the targets they want to achieve. It’s therefore important to measure resources and competence, failure which will impair the organizations developmental aims. Research done by Lee & Roh, (2012) and Wang, Yu, & Hsiao (2020), suggested that corporate reputation as an intangible asset distinguishes a company from its rivals and it enables the company to attract more customers to frequently purchase their goods and services with charges of premium prices which is a good practice as it gives the customers an impression that the products must have been of high quality. It is also important to explain the value to the customer and explain why it is worth the extra money. Sometimes, the quality of the product is not better, but because of the fact the seller has invested heavily in the market due to corporate reputation, it is enough to give the firm an impression of high-quality services.

Business Sustainability

Business sustainability is an essential determinant in ensuring the continued success of a firm. It involves the implementation of proactive approaches to meet the objectives and the needs of the stakeholders. It includes management and coordination of environmental, social, and financial demands and concerns to ensure ongoing success and future generations’ needs. The importance of corporate sustainability is increased productivity and reduction in cost, improved brand image, ensuring competitive advantage, government support, minimal environmental liability and legislation cost, the attraction of employees and investors and generally making the stakeholders happy. The business environment encompasses those factors that affect operations in a company, and includes competitors, customers, suppliers, regulations, and technological development. These business environments are characterized by dynamic changes and therefore, every firm must constantly monitor and assess both their internal and external environment in order to have an idea of what to expect from their target audience so that they utilize the available resources towards achieving the consumers’ expectations.

Firms should not merely concentrate on increasing stakeholders’ wealth but they should consider the influence of the business on the employees, the society, and the environment as well. Sustainable business practices include water and electrical conservation, minimizing environmental emissions, partnering with other employees, supply chains developing recycling programs, purchasing only energy-efficient products, and developing sustainable work policies. The introduction of innovative products into the firm provides the customers greater value with less harm to the environment, organizational commitment, minimal environmental liability, and legislation cost. (Le, 2022) These new products will also provide the firm with an added advantage of economic benefits by charging the customers premium prices as a result of the positive impression created in the consumers’ minds towards the firm.


The research was done using the cross-section methodology in which a data collection was undertaken using a structured quantitative survey to measure and determine the impact of entrepreneurial orientation, marketing capability, and market orientation on business sustainability in both small and medium-sized enterprises. The SMEs selected to conduct the survey included firms from different business sectors including manufacturing, restaurants, wholesale and retail enterprises which were further classified into 3 major categories; manufacturing, services, and trade. The selected personnel underwent a series of introductory sessions on the objective of the case study before they carried out the research. They were told to ensure confidentiality and that answers to the information gathered are achieved. A total of 171 managers and owners of the SMEs participated in this research and they were able to file the survey within the data collection period.

The measurement items provided were adapted from the previous literature with minimal implementations done so that it fits the context of the study. In general, the construct of business sustainability was measured by an appropriate scale that fits the study to be carried out in which the participants were required to rate the sustainability practices based on environment, economic, and social, each having four items. They were also required to measure corporate reputation with four items adapted from prior studies. On the other hand, entrepreneurial orientation was measured using seven items from previously tested and validated research done in 2019 by Chavez. Similarly, six other items were drawn from a study done in 2012 on the Ngo to measure and test marketing capability (Le, 2022). The above items were then measured on a five-point Linkert scale 1, which rated the items as either strongly disagree or strongly agree.

Analysis of Results

The analysis of the results was conducted by the Statistical Package for the Social Sciences software to determine the character of each participant. The analysis of the results showed that 72.4 percent of the respondents were managers, while 27.6 percent were owners. Concerning professional experience, 9.6 percent of the participants had less than 5 years of experience, 32.2 percent had 6 to 10 years of experience, 17.8 percent had from 10 to 15 years of experience and 39.4 percent had 16 and more years in the industry. With regard to the number of staff in the firm, the analysis of the results indicated that 46.1 percent of the participants were from a firm that had from 5 to 25 staff. Statistical results showed that the majority of the participants were from the service industries followed by the trade sector and the least from the manufacturing sector.

For the assessment of how reliable the measurement scale was, Cronbach’s alpha coefficient was used due to its accuracy in determining the internal consistency among measurement items. The Cronbach’s alpha for entrepreneurial orientation was 0.841, market orientation was 0.866, marketing capability was 0.833, and business sustainability was 0.941. All of them excessed the tolerable value of 0.7. Additionally, composite reliability was calculated to support the reliability assumptions and the results indicated that the values for all the constructs were within a tolerable range. The discriminant validity test for all the constructs was performed. The authors suggested that discriminant validity can be achieved when the value of the square root of the Average Variance Extracted from each construct surpasses the inter-construct correlations. The findings obtained generally revealed that the discriminant validity assumptions were fulfilled.

Lastly, a confirmatory factor analysis (CFA) was performed using the partial least square logarithm. This was conducted after all the incomplete questionnaires were removed and replaced by all the missing values for all the items. The reason for conducting the confirmatory factor analysis was to ensure that all items for measuring each variable were free from any errors. Furthermore, the CFA was executed in order to test for unidimensional items of each construct and estimate the measurement model before proceeding to structural model and hypothesis testing. This whole process was conducted to ensure that the factor loading of the measurement items exceeds the threshold value of 0.5. Only one item for business sustainability was removed because its loading was below 0.5. Therefore, from the analysis, the final results of the CFA fulfilled the assumptions of convergent validity because the measurements are theoretically related.

In conclusion, a corporate reputation is an important tool in ensuring the success of a business. Any firm must ensure continuous achievement of productivity to their consumers and be able to predict the future needs of their customers. A sustainable business ensures the inclusivity of all the stakeholders towards the generation of ideas and wishes of the organization. It should focus more on the available resources and ensure effective utilization of the assets towards the realization of the company’s success. A proactive approach should be implemented with continuous changes in the technology sector so that new inventories are achieved. Case studies from previous literature are essential in rating different items important in business sustainability. It ensures that organizations take the right direction in corporate reputation.


Le, T. T. (2022). Corporate social responsibility and SMEs’ performance: the mediating role of corporate image, corporate reputation and customer loyalty. International Journal of Emerging Markets, ahead-of-print(ahead-of-print).

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