How are the SMEs Committed to their Local Communities in the Term of Sustainability?

Abstract

Abstract Research purpose. Local communities play a crucial role in the entrepreneurship ecosystem. The role and massive influence of the local environment raise several questions. This paper aims to answer the following questions: (1) how and why the local communities affect SMEs’ sustainability, (2) which pillar of sustainability plays a stronger role in this matter, (3) which internal and external motivators drive a firm’s sustainability actions, and (4) whether company and personal characteristics have a significant effect on local patronage. Design / Methodology / Approach. A representative sample of leaders (n=300) from the Hungarian SME sector was investigated through a validated survey. The survey explored activities, motivations, organizational characteristics, and leadership factors in CSR and sustainability in the SME sector. Both Likert scaled statements and reasonings for open-ended questions were examined using qualitative and quantitative methods. Findings. SMEs regularly support various organisations, and communities, mainly if those are in the close region of the enterprise. They regularly promoted culture, education, youth, sport, and vulnerable groups in their local area. Moreover, businesses feel an obligation to support the local communities in which they operate. This activity seems to be divided into a conscious and a hidden part. When we asked for the reason for activities, most answerers expressed that donating to healthcare organisations or education institutes is an obvious civic duty (i.e., pressure from society) but in terms of local communities, the motivation is rooted in personal engagement (i.e., an essential part of social sustainability). Originality / Value / Practical implications. SMEs poorly express their sustainable activities; they adopt more informal strategies in comparison with large companies. SMEs’ social sustainability lies in engagement and close links with local communities, where companies are targeted towards supporting charitable projects in their surroundings. Even though these actions are less formalised or strategically planned, that is why this research provides a better understanding of the integration of environmental and social concerns of sustainability reflecting all of those benefits.