Clarity of CSR orientation and firm performance: case of Japanese SMEs

Purpose The purpose of this paper is to examine how clarity of corporate social responsibility (CSR) orientation of Japanese small and medium enterprises (SMEs) achieves constructive firm performance outcomes. Design/methodology/approach On the basis of the literature review, the authors present a research model that defines key constructs and provide propositions that explain the interrelationships with theoretical rationale and practical implications. Using careful selection criteria, the authors have further conducted the in-depth interviews of the executives of two prominent Japanese SMEs. Findings The results suggest that CEOs with strong CSR orientation are more likely to influence their firms to achieve effective firm performance. If CSR philosophy is strategically formulated, clearly communicated, and widely accepted, then such firm is more likely to attain desirable business performance outcomes for larger stakeholders. Furthermore, CSR implementation of SMEs is not necessarily too costly; in fact, the long-term rate of return on SMEs’ CSR investment, with proper priority and prudent focus, is quite competitive. Research limitations/implications In spite of the specificity of the two case studies, the research model and the study findings give valuable insight on the role of CEO’s philosophy on CSR implementation in the international market. The linkage mechanism between business operation and CSR by these SMEs is applicable to many innovative entrepreneurial firms that target beyond domestic markets. Originality/value The authors highlight how the clarity of CSR philosophy in terms of firm orientation and linkage mechanism aids SMEs in overcoming their resource constraints. Furthermore, well-implemented CSR activities may become instrumental in achieving long-term desirable performance in the form of customer loyalty, employee’s sense of pride, and corporate socio-economic reputation.