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Can small and medium businesses
endure the COVID-19 crisis
through strategic philanthropy?
Ariful Islam, Sazali Abd Wahab and Ahmad Shaharudin Abdul Latiff
Putra Business School (AACSB), University of Putra Malaysia (UPM),
Serdang, Malaysia
Abstract
Purpose –Small and medium-sized firms (SMEs) are typically reported to have a limited interest in broader
societal concerns across the world. As a result, the purpose of this study is to develop a model of SME’s strategic
philanthropic performance in light of the societal reactions to the COVID-19 issue, particularly in terms of the
intervention of corporate spirituality and the solid regulatory motive behind these.
Design/methodology/approach –A systematic mixed review analysis has been executed to analyze the
strategic philanthropic performance configuration triggered by the recent COVID-19 crisis, in which over 369
publications are read and reviewed by the authors. It has also established the reliability and validity of literature
analysis. Also besides, a sho rt form of qualitative investigation has been used to support t he direction of the study.
Findings –Throughregulatory adjustments, the study’s findings effectively developed a strategic philanthropic
performance configuration for SMEs. In this case, the strategic philanthropic convergence of corporate giving,
corporate volunteering, corporate foundation and food bank has the potential to help SMEs thrive in the long run.
The study also discovers that corporate spirituality might potentially mediate between appropriate regulations
and strategic philanthropic performance of SMEs in the context of a supportive external environment.
Research limitations/implications –Prior empirical attempts are subsequently required to inquiry about
the proposed conceptualization from different perspectives.
Practical implications –The decision-makers of SMEs, with the efficient implementation of the proposed outline,
will use the understanding given for their required actions to develop the competitive advantage in terms of social
concerns. On this note, the outcomes of the study can also enhance business differentiation and competitiveness. It
can also serve as a strategic guideline for firms to develop organizational values for long-term survival.
Social implications –In the COVID-19 reality, SMEs will contribute to the concerns through philanthropy
activities that are better suited for both enhanced social good and greater corporate advantages. The idea can
also serve as a basis for SMEs to accomplish the Sustainable Development Goals (SDGs).
Originality/value –To the best of the authors’knowledge, this is the first research that conceptualizes the
influence of government regulation on the strategic philanthropic performance of SMEs while takingcorporate
spirituality into account in order to survive the COVID-19 crisis.
Keywords CSR, SME, Food bank, Strategic philanthropy, COVID-19
Paper type Conceptual paper
Introduction
The worldwide health, economic and social consequences of the COVID-19 pandemic are
becoming more severe day by day. The epidemic has interrupted all business and personal
activities across the world.The pandemic is also expected to provide an unprecedented external
shock to small-and medium-sized companies (SMEs)(Islam et al.,2021a;Juergensen et al.,2020).
Strategizing
SME’s
philanthropy in
a crisis period
© Ariful Islam, Sazali Abd Wahab and Ahmad Shaharudin Abdul Latiff. Published in Management
Matters. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone
may reproduce, distribute, translate and create derivative works of this article (for both commercial and
non-commercial purposes), subject to full attribution to the original publication and authors. The full
terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
This paper and the research behind it would not have been possible without the exceptional influence
of Ariful Islam's mother Hosna Ara Begum. Her enthusiasm, knowledge, emphatic views, and wisdom
have always been an inspiration for Ariful Islam and kept his work on track.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/2279-0187.htm
Received 11 April 2022
Revised 8 August 2022
Accepted 8 October 2022
Management Matters
Emerald Publishing Limited
2279-0187
DOI 10.1108/MANM-04-2022-0049
According to the IMF report, the pandemic would result in a nearly 9% point rise in the failure
rate of SMEs (Gourinchas et al.,2020). Despite the fact that SMEs contribute significantly to
economic growth, they are frequently the most susceptible to severe public crises (Lu et al.,
2020). SMEs, however, play a significant role in the majority of countries, since they promote
growth, create jobs and open new markets. This sector accounts for up to 40% of GDP in
developing nations and accounts for 70% of all occupational possibilities (World Bank, 2018).
According to a World Trade Organization (2016) research, SMEs also account for more than
90% of commercial setups, 60 to 70% of employment and 55% of GDP in advanced nations.
Furthermore, SMEs are well-known for their lack of resources, which limits their ability to
fulfill their social obligations (Anwar and Clauß,2021). However, given the importance of
SMEs in economic growth, it is becoming increasingly impossible to disregard the latter in
socially important issues or concerns (Larr
an Jorge et al.,2016). Interestingly, the pandemic has
compelled SMEs to develop a strategic competitiveness landscape to survive the crisis and
protect stakeholders such as employees, owners, communities, suppliers and customers in
terms of social obligations (Islam et al., 2021b;Mahmud et al., 2021;Tesfaye and
Lundstr€
om, 2021).
As the business model evolved (Carroll et al., 2012), society modernized, customer pressure
increased, regulation acknowledged various demands and rivalry emerged, social
performance became a major source of competitive advantage for businesses (Anwar and
Clauß, 2021;Frynas, 2015). Companies have understood that corporate social responsibility
(CSR) is the key to gaining competitive advantage (Lee et al., 2016), positive reputation
(Zhu et al., 2014) and financial success (Cavaco and Crifo, 2014). Surprisingly, rather of
implementing CSR in terms of “doing good”, the duty of “avoiding bad”concentrates the
conversation on CSR (or “corporate social irresponsibility”(CSI)) on problems of insurance
and prevention (Lin-Hi and M€
uller, 2013) rather than “to promote some social good”
(von Schnurbein et al., 2016). In this context, we believe that corporate philanthropy may be a
valuable strategic component of CSR during this epidemic. Carroll and Shabana (2010) also
integrate philanthropy as part of the ethical CSR domain. Although it has been argued that
corporate philanthropy is unique to CSR, the relevance of corporate philanthropy for
businesses and society should not be overlooked but should be recognized for its economic,
motivating, creative and moral values (Aakhus and Bzdak, 2012;von Schnurbein et al., 2016).
Firms can align social activities with their own goals, objectives and markets through
strategic philanthropy. If SMEs use philanthropic strategies to respond to the COVID-19
problem, it may be a watershed moment that will be remembered for decades.
Many scholars who take a broad view of the neoclassical arguments believe that corporate
philanthropic approaches can really improve economic performance (Gautier and Pache,
2015). According to the aforementioned enlightened self-interest approach, executives’
primary reason for engaging in corporate philanthropy may thus be maximizing profits.
Corporate philanthropy, however, has frequently come under fire for lacking in strategic
value (Cha and Rajadhyaksha, 2021). Two characteristics of corporate philanthropy as it has
been practiced up to this point have drawn criticism from academics: its low degree of
participation and its detachment from the company’s primary business. Interestingly, most
socially responsible strategies fail because they emphasize the conflicts rather than the
connection between business and society (Porter et al., 2006). As a result, CSR and charitable
initiatives are not aligned with the company’s strategy and do not improve the company’s
long-term competitiveness or have any significant societal effect. These scholarly criticisms
undoubtedly reflect how managers in many businesses struggled to integrate charitable
giving into their overall business strategy.
The study of Muller and Whiteman (2009) examines the charitable strategies of Fortune
Global 500 companies from North America, Europe and Asia to search for regional
trends in three recent disasters: (1) South Asian Tsunami, (2) Hurricane Katrina and the
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(3) Kashmir earthquake. They detect evidence that a company is more likely to give, both in
frequency and volume, if it is located in a disaster-stricken area. In addition, Koehn and
Ueng (2010) discover that corporations with restated earnings are more generous in their
philanthropic donations in a sample of 384 US firms. Crampton and Patten (2008) also
discover that changes in corporate donations following 9/11 are positively and
significantly related to a firm’s pre-existing short-term profitability. Again, some
research studies show that investors reacted badly to Hurricane Katrina’sshock,
particularly for businesses seen to be socially irresponsible (Muller and Kr€
aussl, 2011).
However, because philanthropic strategy is a costly expense and represents a direct
outflow of resources (Fombrun et al., 2000), a firm’s philanthropic actions are also
influenced by its resource availability (Sasse and Trahan, 2007). A crucial stakeholder in
this context is government support, which may substantially impact corporate
philanthropy activities through business involvement (or regulatory pressure) based on
theavailableresourcebase(Albareda et al., 2009;Chen et al., 2022). Bertrand et al. (2020)
stress that businesses might obtain tax breaks through philanthropic initiatives.
In addition, Hao et al. (2020),Wang and Qian (2011) and Yang and Tang (2020) argue
that charitable actions can assist a company in eliciting good stakeholder responses
(e.g., investment) and gaining political access.
A growing amount of literature has recently focused on the necessity to regulate socially
responsible behavior and the function of legislation (Fassin, 2008;Malesky and Taussig,
2019;Situ et al., 2020). However, because there is no agreement on the nature of the duties that
corporations have under the present CSR models, imposing regulations is fraught with
difficulties. Scholars have been compelled to investigate the relationship between law and
CSR because of the rise in the number of negative externalities associated with business
operations and the limited role that voluntary approaches to CSR have played in alleviating
them (Okoye, 2016). Philanthropic components have significantly reduced the potential for
adopting regulation within CSR in this approach. They may present chances for businesses to
take advantage of such charitable gifts to later cause additional harm by circumventing CSR
commitments (Luo et al., 2018). Through such charitable giving, businesses might assert that
their CSR responsibilities have been met while failing to fully address the urgent issues.
In this situation, the two sets of obligations that inherently go along with a function are legal
and moral.
Interestingly, several studies support the concept that, rather than jeopardizing firms’
survival during a crisis, socially responsible practices may potentially provide an
opportunity for decision-makers to achieve growth for their businesses (Bocquet et al.,
2017;Islam et al., 2021b;Yelkikalan and K€
ose, 2012). In this respect, the value generated in
philanthropic activities cannot only mitigate the negative economic impact of the crisis on
a short-term basis but may also contribute to product or service differentiation and to
strengthening relationships with stakeholders, especially customers (Arco-Castro et al., 2020),
which in turn sustain long term profitability (Karaibrahimoglu, 2010). In fact, philanthropic
initiatives to prevent the local business setting from degrading can favorably affect the
competitiveness of firms in the long term. There is considerable evidence that SMEs are using
beneficial chances to effectively manage their resources for social performance (Gautier and
Pache, 2015;Memon et al., 2020). This is particularly essential in the context of the COVID-19
for the intervention of holistic personal values or psychological aspects of SME’s decision-
makers since all people do not share the same positive mentality in participating in social
activities (Anwar and Clauß, 2021;Carroll, 2021;Zawawi and Abd Wahab, 2019). The
relationship between decision-makers’spirituality and philanthropy here seems inherent as
spiritual values might affect one’s outlook on social commitments (Rahmawati et al., 2019).
Zsolnai (2015) also emphasizes that corporate ethics need a spiritual base because spirituality
connected to a strong character of social good and the public good is a practice of value
Strategizing
SME’s
philanthropy in
a crisis period
management with a strong feeling of social responsibility. The direction may serve as a
foundation to connect accountability with responsibility (see Figure 1).
In response to the preceding arguments, we anticipate that a suitable regulatory structure
strengthens holistic incentives and, as a result, can lead strategic philanthropic performance
of SMEs in surviving the current crisis through the negotiation of corporate spirituality.
Tamvada’s (2020) study establishes the ground for our understanding that his framework
provides a platform for consistent development of legislation across different nations, which
may lead to the successful discharge of social obligations. According to the study, moral or
ethical obligations are interwoven with legal responsibilities connected with the execution of
fundamental activities by a firm. While the current literature on CSR has highlighted the
necessity for an appropriate regulatory framework (e.g., Boodoo, 2020;Kinderman, 2020;
Wang et al., 2018), few studies have offered an explicit and direct investigation of the
relationship between regulation and strategic forms of corporate philanthropy (Jain et al.,
2021). Despite this, the influence of corporate spirituality of managers and owners as it relates
to philanthropic activities is frequently overlooked. Perhaps no study has yet focused on
corporate spirituality in the social obligations of SMEs during the COVID-19 pandemic. Given
the limitations, this article sets the research focus on how suitable regulation from the
government can assist SMEs in achieving corporate spirituality-driven strategic
philanthropic performance to endure the COVID-19 crisis. The study’s main goal is to add
to the corpus of knowledge about transdisciplinary approaches to the intersection of CSR and
strategic management.
Figure 1.
A framework for social
performance
regulation
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The next section would examine the study’s methodology before going into the concepts
of corporate philanthropy, corporate spirituality, government support (regulation) and
theoretical underpinnings. In addition, the study will offer a brief analysis of qualitative
results to support the predicted configuration. The study query would then be answered
using a newly conceptualized model of strategic philanthropic performance, which may
serve as a holistic path for SME’s to endure the COVID-19 crisis on basis of social
obligations.
Methodology
This study used the mixed review analysis approach proposed by Islam et al. (2021a).
The part on systematic literature review was based on previous comprehensive research in
which the authors read and assessed over 500 papers. The overall method followed
Hart’s (2001) proposed phases for performing an SLR: (1) identifying sources of
information, (2) identifying publications and (3) identifying item reviews. The authors
also began with a list of key databases, which included WoS (Web of Science), SCOPUS,
Emerald, ScienceDirect, Springer, Sage, MDPI, Google Scholar and Wiley Online Library.
We were able to generate a comprehensive list of relevant peer-reviewed publications by
using a mixed combination of databases. All of the articles were divided into the five
categories stated below: (1) essential words; (2) unit of analysis; (3) region of data collection
(i.e., contexts or settings); (4) approach (conceptual vs. empirical); and (5) application of
theoretical outline. The papers were screened by concentrating on their content relevance
by reading their abstracts and, in certain cases, the entire articles. We identified 369
articles that were relevant to our research direction. Following this assessment, we found
many pertinent topics, including (1) CSR, (2) business ethics, (3) corporate philanthropy,
(4) government assistance, (5) sustainable business, (6) the COVID-19 pandemic and
(7) miscellaneous. The literature review was conducted by two researchers, and each stage
was addressed before and after to improve inter-rater reliability throughout the literature
analysis (Seuring and M€
uller, 2008). The objective was to attain validity by sampling
articles according to accepted criteria (Hart, 2001), and constructs from previously
published literature reviews were compared, both inside and beyond the focus of study
(Fagerberg et al.,2012;Horte et al.,2008). Furthermore, continuing research on this issue
has been presented at conferences and seminars, giving other academics the opportunity
to give input on work-in-progress.
In addition, a qualitative investigation design was used in conjunction with the
purposive judgmental sampling technique to support the direction of our study. The
study’s intended goal was for 10/12 interview sessions; however, data saturation related
to our purpose was achieved so quickly that no new codes were produced from the last
few interviews. Nine semi-structured interviews were performed in all. The semi-
structured interview technique was used in this case since it was appropriate for
gatheringobservationstohelpinthestudy’s desired conceptualization. All interview
sessions were conducted by Facebook Messenger video chat and lasted around 8–10 min,
based on scheduled appointments. The entire operation took only a few weeks to
complete. Both online meetings with reflecting members were audiotaped and
transcribed verbatim and the transcripts were entered into coding and analytic tools.
The procedures for conducting interviews, capturing audio and coding activities were all
carried out by a single researcher, ensuring optimum familiarity with the collected data.
Furthermore, as research support resources, non-governmental organization
publications, theses, project documents and documentary films were used. At this
stage, the analyzed data have been triangulated in order to improve the validity and
reliability of the research process.
Strategizing
SME’s
philanthropy in
a crisis period
Corporate philanthropy
Firms have faced contradictory expectations from the public and shareholders over the last
few decades. On the one hand, the public has demanded higher standards of social
responsibility from businesses, while shareholders have demanded the maximum return on
their investments (Cha et al., 2022). According to Rangan et al. (2015), businesses increasingly
engage in a broad range of CSR activities, from pure charity to environmental sustainability to
the proactive pursuit of shared value. Businesses may try to deliberately adopt charitable
giving to balance business goals and strategies with societal responsibilities, which helps to
enhance their competitive context—the caliber of the business setting in the regions where
they operate (Cha et al.,2022;Godfrey, 2005;Porter and Kramer, 2002). In this case, institutional
settings may strengthen corporate philanthropy, enabling businesses to use it strategically
and allocate more resources to it as part of their social performance (Mithani, 2017).
At present, there has been a significant amount of scholarly study on corporate
philanthropy, which is defined as the “voluntary and unconditional transfers of cash or other
assets by corporations for public purposes”(Gautier and Pache, 2015). There are still some
uncertainties around the notion of corporate philanthropy (Liket and Simaens, 2015). Chen
et al., 2022 strictly define corporate philanthropy as monetary and supply gifts. In practice,
corporate philanthropy nowadays consists mostly of strategic donations or charities.
In truth, corporate philanthropy refers to a company’s contributions to initiatives that benefit
the community as a whole (Godfrey, 2005). These charitable activities may be financially
beneficial to businesses if corporate philanthropy is handled strategically, which means that
managers match philanthropic investments to the firm’s commercial objectives (Su and
Sauerwald, 2018). Thus, a strategic form of corporate philanthropy is viewed as a useful
business action and described as “giving of corporate resources to solve nonbusiness
community concerns that also help the firm’s strategic position and, eventually, its bottom
line”(Saiia et al., 2003, p. 170).
In reality, corporate philanthropy entails resource allocation decisions that may be
motivated by managerial self-interest. Surprisingly, the managerial motivations driving
corporate philanthropy are obscure, making it difficult to discern genuine managerial intent.
While corporatephilanthropy may increase the firm’ssocialstanding(Gardberg and Fombrun,
2006), it may also feed managers’egos (Cennamo et al.,2009). Furthermore, while prior research
has suggested that corporate philanthropy generates private returns (Koch, 2012), the majority
of the benefits derived from philanthropic investments are intangible, such as goodwill
(Surroca et al.,2010), and will only become apparent in the long run (Windsor, 2017).
Corporate philanthropy, according to strategy researchers, may positively add to
company value by allowing enterprises to amass resources that are difficult to acquire or
develop (ArcoCastro et al., 2020;Barnett, 2007). According to this strategic viewpoint, the
business value is produced when corporate philanthropy results in a resource endowment
that is desirable, unusual and costly for competitors to duplicate. From this angle, corporate
philanthropy may increase company value by supporting organizational goals or improving
the firm’s competitive setting (Luo et al., 2020;Su and Sauerwald, 2018). This may be the case
when philanthropic investment activities generate intangible resources such as business
reputation (Williams and Barrett, 2000), consumer trust (Idrees et al., 2021), employee
happiness (Bauman and Skitka, 2012) and good stakeholder connections (Surroca et al., 2010;
Su and Tsang, 2015).
Dimensions of corporate philanthropy
Corporate philanthropy may be divided into three categories: (1) corporate giving,
(2) corporate volunteering and (3) corporate foundations (Gautier and Pache, 2015;
von Schnurbein et al.,2016). In this context, corporate giving refers to all types of
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donations –both monetary and in-kind –made by the business. According to Hogarth
et al. (2018), the reasons why businesses contribute to charity include strategic profit
maximization, altruistic motivation, political motivation and managerial utility
motivation. Corporate volunteering, on the other hand, is described as encouraging
and supporting workers’efforts to do community service and activities during working
hours (Grant, 2012). It attempts to improve the company’s community and employee
relations. In addition, corporate foundations are philanthropic organizations founded and
mostly supported by for-profit corporations (Pedrini and Minciullo, 2011). These
philanthropy approaches, however, are mostly criticized for treating symptoms rather
than core causes of societal ills. Based on the critique, a method known as “scientific
philanthropy”emerged that was promoted by John D. Rockefeller and Andrew Carnegie
foundations. Its main concept is to combat societal issues by creating knowledge and
performing philanthropic research (von Schnurbein et al.,2016). However, this method
has been criticized for overemphasizing theoretical notions that do not account for the
complexities of social change processes and cultural differences (Anheier and Leat, 2006).
From another perspective, the COVID-19 epidemic reversed the previous decade’s
progress toward eradicating hunger in poor countries, and yet an increasing number of
people are turning to food banks to get by (Bidisha et al., 2021). In this respect, food bank
management may be a major value-creating philanthropy approach for companies to tackle
the rising food poverty. We believe that food banks may be envisioned as a business-founded
emergency service that assists to individuals in need during times of disaster. There are
several scholarly approaches to the notion of food banks. According to Handforth et al. (2013),
a food bank acts as a collection point for contributions of canned, fresh, frozen goods and
beverages. Again, Martins et al. (2011) recognize that a food bank is a social solidarity
organization that distributes food through a broad variety of non-profit social solidarity
organizations that feed low-income individuals. Entities that can collaborate with the firm’s
food bank initiatives include various food producers, distributors, shopping malls,
wholesalers, warehouses, retailers, transportation companies, financial entities, advertising
and communication agencies, public institutions and various types of national and
international organizations (Gonz
alez-Torre and Coque, 2016).
Corporate spirituality
Spirituality is concerned with logic and views of human existence, community and
psychological activity. Indeed, the idea of spirituality provides “a more open viewpoint to
seek meaning in oneself, one’s life, and one’swork”(Rozuel, 2013, p. 685) by emphasizing the
interconnectedness of all living entities. Spirituality, according to Zare and Beheshtifar
(2013), is an expression of our need to find meaning and purpose in our lives, and it is a
process of carrying out one’s strongly held personal beliefs. In this note, Giacalone and
Jurkiewicz (2003a,b) define spirituality in the workplace as a set of organizational values
reflected in the culture that encourages employees to experience transcendence through
their work, enhancing their sense of being connected to others in a way that gives them a
sense of completeness and joy. Spirituality at work is also defined by Dehler and
Welsh (2010) as a search for purpose, greater self-knowledge or transcendence to a higher
level. In this view, corporate spirituality is essentially anchored by virtuous and optimistic
managers who lead to smart decision-making, which is critical to the organization’slong-
term growth (Zawawi and Abd Wahab, 2019). The directive essentially acknowledges that
individuals work with their emotions and spirits as well as their hands. We believe that
people can discover a sense of meaning and purpose, a sense of fulfillment when they work
with a devoted spirit, which implies the workplace can be a place where people can express
their complete or entire self.
Strategizing
SME’s
philanthropy in
a crisis period
There has not been much research in the disciplines of spirituality and CSR, but those that
have been done have shown that spirituality and socially responsible business practices
interact well (Ghosh and Mukherjee, 2020). Giacalone and Jurkiewicz (2003a,b) conducted a
poll of US businesses to learn more about their views on socially responsible business
practices. This study found that individuals’perceptions of whether specific business
activities were ethical or not were significantly influenced by their spirituality. However,
Kumar and Giri (2020) contend that there are many parallels between ethical business
practices and the role of spirituality, which will aid in changing current management
discourses and addressing crucial concerns. In this course, the importance of spirituality in
directing businesses, leaders, and organizations toward ethical excellence and sustainable
ideals is crucial.
Petchsawang and Duchon (2009) highlight five themes in corporate spirituality:
connection, compassion, mindfulness, meaningful work and transcendence. Here,
connection is feeling a member of the community and being able to identify with the
group’s common goal. In addition, the idea of compassion is defined as a strong awareness of
and sympathy for others, as well as a desire to alleviate their suffering. Mindfulness is a
condition of inner awareness in which one is cognizant of one’s thoughts and actions in the
present moment. Meaningful work, on the other hand, is described as one’s perception that his
or her work is a major and meaningful aspect of one’s life. Furthermore, transcendence
denotes a link to a higher power (Petchsawang and Duchon, 2012). However, strategic
management academics have looked at the role of spiritual dimensions in fulfilling a firm’s
social duties to a limited extent, mostly from the standpoint of spiritual leadership and
workplace spirituality (Rahmawati et al., 2019). Spiritual beliefs may affect one’s perception of
the environment and society, thus the connection between spirituality and philanthropy may
appear fundamental in this sense. Indeed, corporate spirituality has the capacity to reshape
moral standards and, as a result, a company’s philanthropy mission.
Government support (regulations)
Governments can design regulatory regimes for businesses that are more or less
advantageous. Given this assumption, donations may be utilized by businesses to foster
an environment that is conducive to doing business as well as to shield them from increased
taxes or trade restrictions (Gautier and Pache, 2015). In fact, Government regulation’s
influence on companies is a major policy concern for economies all over the world. Regulation,
according to the BRTF (2003), is any government measure or intervention aimed at changing
the behavior of individuals or groups. It can grant individuals rights (such as equal chances)
while also limiting their behavior. In addition, the OECD (1994) defines regulation as “... a
system of ‘incentives’established by the legislature, government, or public administration
that requires or bans individuals’and businesses’activities’. The clear prospect of penalty for
noncompliance underpins regulations. All actions or interventions implemented by central
and local government agencies that impact business activity are included in these definitions.
Regulations that impact responsible business practices may also differ by industry, with
each area subject to its own set of conventions, attitudes and beliefs, as well as, in certain
circumstances, specific compliance (Vashchenko, 2017). Companies are likely to participate in
socially responsible activities and projects that are in accordance with industrial norms to
secure organizational long-term survival (Graafland and Bovenberg, 2020) and societal
“license to operate”(Livesey, 2001). An appropriate regulatory structure is widely thought to
be required for stable business circumstances and the development of business trust, both of
which are beneficial to SME growth (Islam and Abd Wahab, 2021;Jiang and Nie, 2014).
Experts think, however, that the regulatory burden’s nature may have an impact on
SMEs’competitiveness and productivity (Akinboade and Kinfack, 2012). Djankov et al. (2003)
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and Tamvada (2020) believe that public enforcement through regulation can be a separate
technique of control if the government wants to manage companies to achieve specific social
obligations. In reality, the government may play an increasing role in supporting and
promoting favorable rules for a company’s societal duties in areas where private actors and
initiatives have historically governed. Nevertheless, according to Lee et al. (2012), the most
effective method to enhance SMEs’social performance is to implement an adequate
regulatory outline. Unfortunately, SMEs appear to be unaware of and uninformed about
different rules affecting their social performance (Jamali et al., 2017). The intricacies of
regulation may further confound issues and discourage businesses from properly
comprehending their ethical duties in times of crisis.
Theoretical underpinning of the study
The Neo-Institutional theory discusses institutional changes that are methodically,
uniformly, organized or institutionally produced, resulting in homogenous or similar
behaviors or characteristics in an organizational outline (Tina Dacin et al., 2002;Lounsbury
and Zhao, 2013). This theory describes how institutional variables influence the process of
institutionalization. The neo-institutional approach may also be used to describe the
complexity of CSR features by exposing the process of how corporate and community
borders are formed (Aggarwal and Jha, 2019;Brammer et al., 2012). This concept, according to
Karyawati et al. (2020), connects corporate actions, particularly CSR practices, to the values
and conventions of the society in which they operate. This link eventually leads to a need for
an organization to retain, obtain and recover credibility. In addition, Chiu (2018) highlights
that the institutional account of corporate regulation continues to be able to explain
regulatory changes, emphasizing the institutional modifications that are required to link the
efficacy of corporate regulation to satisfying social duties.
During the mid-1990s, on the other hand, John Elkington attempted to assess
sustainability by incorporating a new framework for measuring performance in corporate
USA (Slaper and Hall, 2011). The triple bottom line (TBL) paradigm goes beyond standard
profit, return on investment and shareholder value measurements to incorporate
environmental and social elements. Business ethics and CSR, it is suggested, cannot create
a meaningful organizational performance without the TBL as a social grammar that
establishes integration of economic, environmental and social elements (Painter-Morland,
2006;Pan et al., 2021). Businesses must take care of social responsibility in this situation to
obtain long-term advantages and societal acceptability (Masud et al., 2019). As a result, using
the TBL methods, proactive organizational strategic planning and policy enhances a firm’s
social performance. Later, according to Zawawi and Abd Wahab (2019), an extra component
called corporate spirituality should be included in the configuration based on the quadruple
bottom line (QBL) idea. The QBL has implications for the creation of sustainable business
models by providing corporate spirituality assistance to decision-makers so that they may
make smart judgments in their operations while considering environmental, social and
economic factors (Islam and Abd Wahab, 2021).
A brief analysis of the interview outcomes
In the demographic part, two of the nine interviewees are female. Several SMEs stakeholders
are interviewed, including: (1) CEO or director (two participants), (2) manager (four
participants) and (3) senior executive (three participants). Bangladesh, India, and Pakistan
are among the nations represented in the interviews. Garments and textiles, e-commerce (IT)
and health are among the industries covered. All of the competitors have at least a bachelor’s
degree, according to their academic credentials. The majority of the people interviewed are
Strategizing
SME’s
philanthropy in
a crisis period
between the ages of 30 and 35. They have all worked in management for at least three years.
The majority of them expressed a desire to link business operations with philanthropic
ideology when we explained our planned idea of the firm’s responsible practices during the
COVID-19 issue. Some respondents also believe that the COVID-19 will create local economic
uncertainty, pushing local businesses to become more conservative in their resource
allocation decisions and reduce charitable spending costs. Our sessions indicate that
government assistance and social responsibility context components have a more positive
impact on today’s company growth for SMEs, whilst spiritual context aspects can drive
management effectiveness in charitable actions for the community.
Several SMEs are now actively structuring their social performance-related initiatives,
according to our interview findings. Surprisingly, the majority of firms began humanitarian
projects to help disadvantaged populations by giving food, clothes, masks, sanitizers,
ambulance service and oxygen supply. One respondent also mentions that her firm is one of
the sponsors of a local COVID-19 patient isolation unit. In reality, this company collaborates
closely with local government officials. However, as compared to others, some of the
participants show a strong desire to engage in social activities. Four interviewees strongly
feel that their social activities can help them build a favorable reputation and satisfy
stakeholder expectations in this pandemic scenario. Corporate philanthropy may serve as a
tool for some SME decision-makers to better position themselves within their competitive
context (Bruch, 2005).
Our findings, on the other hand, suggest that a firm’s philanthropic efforts might be
guided by the decision-personal maker’s values, attitude or even spiritual views. Given his
own spiritual values, one of our chosen participants has created a charity donation-based
crowdfunding site to assist the local community with food supplies. This participant
believes that “....those who undertake charity deeds are the first to join Heaven”.He
describes humanitarian activities and the need to aid as religious responsibilities that all
humans, wealthy and poor, must fulfill. The example illustrates how a manager’s good
values based on spiritual views may drive him to assist the community through charitable
actions that go beyond government expectations. We have also seen that when these
contribution acts are motivated by one’sownholisticvaluesorbeliefsystem,theyareless
likely to be publicized or reported. This makes determining the whole effect of a company’s
strategic philanthropy in pandemic-affected countries, as well as how to manage or enhance
it, challenging.
In addition, majority of participants emphasize that appropriate government backing may
motivate firms to enhance their performance and promote socially responsible actions. One of
the most efficient methods to address societal problems during this epidemic is for the
government and the corporate sector to work together. However, the data also point out that
the effectiveness of the partnership is contingent on how the government provides low-
interest loans, incentives, pay-check protection programs and tax breaks to socially engage
businesses. Obviously, some interviewees believe that voluntary measures might be a means
to increase corporate accountability without resorting to additional governmental pressures
during the current pandemic. Our findings, however, are somewhat comparable to the
outcomes of Rahmawati et al. (2019) and Zou et al. (2020,2021).
Proposed conceptual model
For SMEs, social performance has a broad strategic reach. In this context, accountability
refers to an obligation and a duty to do what a company is expected to do. However, there
have lately been demands to provide regulatory support for businesses’social activities
(Kara, 2018;Tamvada, 2020).
Skare and Golja (2014) detect that governments that
substantially promote social obligations through supportive regulation experience better
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economic growth rates. In addition, based on a cross-sectional analysis, Amran and
Devi (2008) based on the Malaysian CSR outline suggest that the government’s support and
commitment to social obligations is likely the most appropriate motivator for firms’
responsible business practices. In fact, many businesses have discovered that being socially
conscious may increase their competitiveness. With the assistance of the necessary
government measures, UK businesses are currently among the leaders in this area when it
comes to disclosing their social performance (Elmaghrabi, 2021).
From another angle, while a firm’s reputation can be tarnished by violating numerous
government rules, the severity of the tarnishment can be greatly mitigated by philanthropic
contributions (Williams and Barrett, 2000). Gao and Hafsi (2015) look at the role of
government assistance in corporate philanthropy using data from a national survey
of Chinese SMEs. The findings demonstrate that government support, in the form of
appropriate legislation, boosts SMEs’corporate philanthropy practices (both giving
probability and amount). In general, community peers appear to be a clear reference for
SMEs and exercise a strong isomorphic impact in regard to government funding. As a result,
we present a hypothesis regarding the relationship between government regulation and
SME strategic philanthropic performance in the face of the COVID-19 pandemic.
Again, external and organizational contexts may impact corporate spirituality and
responsible business practices, while also assisting the corporation in changing dominant
values in the economy and society. In this course, the study of Islam and Abd Wahab (2021)
demonstrates a clear relationship between government laws and corporate spirituality,
resulting in a long-term business configuration.
Rahmawati et al., on the other hand, show that spirituality is important in three aspects of
social obligations: (1) as a key element of the broader social and cultural context in order to
create a conducive external environment for social performance; (2) to inspire business
leaders; and (3) as a complement to sustainable governance. Taking into consideration the
entire setting, we try to propose that corporate spirituality may be capable of mediating the
link between regulation and strategic philanthropic performance in SMEs (see Figure 2).
Theoretical contributions
The idea adds to the growing body of knowledge in the field of corporate philanthropy
(Gautier and Pache, 2015). Theoretically, the importance of corporate spirituality in the
equation between government assistance and charitable actions of a business is established
in this study. Although we cannot anticipate the quantity of philanthropic giving, we do
believe that the relationship between rules and strategic corporate philanthropy will only
develop under the guidance of owners or managers who have high moral principles. Because
it is concerned with efficiently employing existing resources for social duties, management
effectiveness founded in corporate spirituality plays an essential role in this situation (Islam
et al., 2021b;Sharma et al., 2013). By adjusting the present legal system, the direction also
Figure 2.
A strategic
philanthropic
performance model
of SMEs
Strategizing
SME’s
philanthropy in
a crisis period
enhances our understanding of the link between spirituality-focused strategic philanthropy
and firm value. In other words, the study emphasis that successful corporate spirituality
development may redirect managerial efforts to strategically deploy charitable funds, which
will eventually be reflected in company value. However, the businesses’unique path may fail
if they do not establish close links with local governments and other stakeholders.
Our research also challenges the literature’s institutional interpretation of the strategic
philanthropic performance of a firm based on the QBL. We show how companies might
respond to economic uncertainty in the local business environment in response to criticism of
philanthropic studies’misunderstanding of “institutional”(Gautier and Pache, 2015, p. 362)
and “spiritual”(Rahmawati et al., 2019) factors. Because of the interaction between
institutional and organizational variables, each firm’s philanthropic actions will be based on
its own strategic calculations. Our study provides early evidence on the under-researched
philanthropic decision-making processes engaged in social activities during the COVID-19
crisis in this regard.
Practical and social implications
Given the growing concern about the COVID-19 crisis throughout the world, our research has
immediate implications for policymakers, senior management and practitioners. The
obtained model aids in understanding the relationship between strategic philanthropy and
competitive environment in order to determine where firms should focus their social
performance. It directs how strategic philanthropy produces value and shows how
businesses may have the greatest social and economic effect through their social efforts
throughout the crisis. The where and how, as we will see, are mutually reinforcing. The
developed approach has the potential to provide a comprehensive form of company
differentiation and competitiveness among SMEs.
The COVID-19 crisis has sparked a broad demand in the corporate sector for
socially motivated activities (Anwar and Clauß, 2021;Bae et al., 2021). From this
perspective, our study serves as a roadmap for businesses to respond to this problem
and manage current resources via managerial effectiveness. Consider contributing
funds to charities in the firm’s name from a central account to guarantee the concern’s
brand is closely associated with philanthropic efforts, which may boost the firm’s reach
and reputation. During the COVID-19 crisis, this reputation may aid management in
attracting more investment. We also believe that because of their social, relationship-
focused conduct, managers with corporate spirituality may do better in the acquisition
of external resources (Zawawi and Abd Wahab, 2019). On the other hand, not only does
this assist the community, but it also benefits SMEs and their employees. Employee-
initiated charity initiatives foster stronger ties and improve employee engagement
(Arco-Castro et al., 2020). Employee involvement, in turn, boosts productivity and
business outcomes.
SMEs’business success might become more intimately entangled with local institutions
and other contextual factors as a result of our conception. And, as manufacturing and
marketing become more globalized, context is increasingly essential for a company not just in
its own country but also in foreign markets (Sasse and Trahan, 2007). Along with the findings
of this study, policymakers will be able to better structure the government’s role in promoting
social duties inside SMEs as a means of boosting economic growth. We also note that the
findings of this study give the beginnings of a roadmap for SMEs’evolving expectations of
philanthropic duty in the SDGs era (ElAlfy et al., 2020). So far, our research has also focused
on no poverty (SDG-1), excellent health and wellbeing (SDG-3), economic growth (SDG-8),
responsible production/consumption (SDG-12) and collaboration (SDG-17), according to the
obtained model.
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Final thoughts
There is no inherent conflict between enhancing the competitive environment and making a
genuine commitment to helping society. Indeed, as we have shown, the more tightly a
company’s strategic philanthropy is tied to its competitive context, the greater the company’s
societal impact. In this regard, the research has developed a corporate spirituality-focused
strategic philanthropic performance model for SMEs to accomplish company development
while taking regulatory adjustments into account. In summary, it has the potential to assist
both societies as whole and responsible SMEs in navigating the COVID-19 dilemma. The
model’s strategic core stresses the concept that, rather than jeopardizing company existence,
SMEs’strategic philanthropic performance may actually represent a chance for businesses to
move to a better position during a crisis. Furthermore, corporate spirituality at the
managerial level promotes the firm’s transition into a community through social obligations
(Wrenn, 2020). Firms may use proactive methods, such as the strategic form of philanthropy,
to restrict COVID-19’s spread and reduce the resulting economic instability because
businesses cannot survive in a damaged environment. Increased economic uncertainty, on
the other hand, may compel SMEs to examine their resource allocation decisions via an
economic lens (Islam et al., 2020). During this tough period, certain businesses with limited
resources may be more worried about their short-term survival and, as a result, adopt cost-
cutting tactics and cut back on social activities.
Moreover, the conception incorporates an institutional viewpoint based on Tilcsik and
Marquis’research (2013). With this methodology, the government’s resource allocation
procedure may fulfill two political goals: (1) to assist communities during COVID-19
through SMEs and (2) to improve SMEs’competitiveness to promote sustainable growth.
Strategic philanthropy actions at the firm level might vary depending on political and
reputational considerations. Even when altruism is taken into account, corporate
philanthropy is projected to rise as the local epidemic spreads. Some firms may have
significant incentives to obtain government backing and cultivate political ties that may be
translated into future profits, particularly in nations with weak property rights
(Gautier and Pache, 2015). It is worth noting that the value of political resources gained
through strategic philanthropic activities is higher for businesses that aren’t government-
owned or politically linked because “gaining political resources is more essential for such
businesses”(Wang and Qian, 2011). Given the immense pressures that governments
experienced during the epidemic, philanthropy efforts might be seen as assisting
governments.
In reality, the extensive literature on a firm’s social performance has incorrectly assumed
voluntarism and diminished the duties that are otherwise inherently inevitable in the absence
of accountability through direct regulation (Tamvada, 2020). In agreement with this
viewpoint, we think that regulation is a requirement for the efficient fulfillment of a range of
corporate requirements for strategic philanthropy methods, without which both legal and
moral commitments have weak grounds. It implies that social obligations and economic
objectives are comparable to moral and legal duties that are inextricably connected to one
another. However, a lack of direction, clarity and voluntarism may result in the selection of
social obligations at random rather than in response to community needs (Sheehy, 2015).
We admit that our study has a number of flaws that should be addressed in future
research. Because this is a conceptual research article with little exploratory support (from
interviews), no suitable empirical data to generalize any region is obtained. The topic of
whether the negative charitable response to SMEs at the provincial level is illogical or not is
not addressed. As a result, managers’concern about the pandemic may be reflected in the
negative bias in philanthropy during the COVID-19. Another component of the strategic
philanthropic performance model that is often ignored is communication tactics. A future
study might look into how cross-national differences in institutional characteristics impact
Strategizing
SME’s
philanthropy in
a crisis period
charitable reactions to crisis scenarios at this point. Researchers should also look into the
relationship between strategic philanthropy and a firm’s sustainable growth.
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Corresponding author
Ariful Islam can be contacted at: farhan_ctg2012@yahoo.com
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