Motivation for Responsible Behavior Among Russian SMEs

Motivation for Responsible Behavior Among Russian SMEs

Bela Bataeva (Finance University Under the Government of Russian Federation, Russia), Liudmila Cheglakova (National Research University Higher School of Economics, Russia) and Olga Melitonyan (National Research University Higher School of Economics, Russia)
DOI: 10.4018/978-1-7998-2193-9.ch008

Abstract

This chapter focuses on identifying motivation for socially responsible behavior in small and medium enterprises (SMEs) in Russia. It also investigates the attitudes of owners and executives of Russian SMEs toward the concepts of business ethics and social responsibility of business. A research set the background of this chapter, including the gathering of primary data through 57 focused interviews. Results of a critical analysis conclude that top managers and owners of Russian SMEs do not thoroughly understand these concepts. However, it also shows that they do not neglect them. Research findings point to a growing level of adherence to the principles of business ethics and responsible behavior. There is strong evidence showing motivation for following principles of ethical and responsible behavior. In addition to an understanding of legal requirements, company owners and top managers are finding that positive relationships between firms and stakeholders are crucial for sustainable performance.
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Introduction

In research and publications dedicated to business ethics and corporate social responsibility (CSR) or social responsibility of business, the discussion of related practice of small and medium enterprises (SMEs) is usually considered apart from the rest of the corporate world. In the late 1990s, (Vyakarnam, Bailey, Myers & Burnett, 1997, p. 1625) expressed a point of view that business ethics of SMEs “remains a largely uncharted area of ethics”. This statement remains true for many countries. However, the role of SMEs in economic development continues to grow. Surveys on specifics of business ethics and CSR in SMEs are rare compared to the number of research papers dedicated to CSR and business ethics of large corporations (Chan, Fung & Yau, 2010).

Authors from developed countries pay some attention to this topic. SMEs constitute a dominant form of starting and doing business in many economies within the Organization for Economic Cooperation and Development (OECD, 2002), providing over 50% of jobs in the private sector. In Russia, the economic role played by those enterprises is still much weaker – the contribution of Russian SMEs to the country’s GDP in 2019 according to the statistical data from the Russian Ministry of Economics and Development is 21,9%, while in developed economies this indicator reaches 50-60% (RBC, 05.02.2019).

A limited volume of publications by Russian researchers exists on aspects of social responsibility and responsible behavior among SMEs. This situation may be explained by an opinion spread among researchers that social responsibility and business ethics are not essential for SMEs in Russia. This view was based on economic and business situations, including complications related to surviving and breaking even (Savicheva, 2010). Another reason may be an absence of traditions among new Russian entrepreneurs. In fact, most of these entrepreneurs represent SMEs. It can be explained by the relatively young age and early stage of these companies, which is common with private businesses in Russia (the oldest companies “born” as start-ups are no more than 25 years old).

Nevertheless, practical examples and cases show that Russian SMEs follow certain ethical principles in their behavior. They are, in fact, involved in responsible practices, including charity initiatives or assistance programs to employees and families in need (Dzhindzholiia, 2011; Ivashina, 2016; Nikitina, 2015; Pletnev & Nicolaeva, 2016).

Features of social responsibility of business in Russian SMEs include several aspects within the business environment, corporate governance practice, and labor conditions. Savicheva (2010) felt that business practices of Russian SMEs are characterized by a shadow approach to conducting business, constant attempts to circumvent the law, lack of systematic approach to regulating socially responsible behavior, narrow scope of stakeholders, poor labor conditions, and insecurity in the process of dealing with local authorities. The process of assessing the development dynamics of social responsibility in Russia consider the historical background, including the perception of issues that were typical for Soviet plants and almost complete negation of ethical behavior and socially responsible performance in the 1990s (or years of transition). In addition, it considers the transformation of the economic model during the same period.

The goal of this research is to identify features of socially responsible behavior and business ethics in Russian SMEs. The following research questions were set in the course of the study:

  • 1.

    How do representatives of Russian SMEs (i.e., top managers, owners) perceive the terms “social responsibility,” “business ethics,” and “corporate social responsibility”?

  • 2.

    What shapes the motivation of Russian SMEs to follow certain patterns of socially responsible behavior and principles of business ethics?

  • 3.

    What are the priorities of SMEs with regard to seven most common practices of responsible behavior according to the Russian National Standard, Guidance for Social Responsibility GOST R ISO 26000-2012?

Key Terms in this Chapter

GDP: The country’s gross domestic product.

CSR: Corporate social responsibility is a corporation’s responsibility for the consequences of its decisions and activities for the society and environment expressed through following high standards of transparent and ethical behavior. According to the Civil Code of the Russian Federation, large businesses, especially public limited companies, meet the features of a corporation. Meanwhile, small and medium businesses cannot be considered corporations, thus an application of the term “corporate social responsibility” to SMEs is not justified, and the term “social responsibility of business” seems to be more appropriate in this case. Social responsibility of business presumes that an organization voluntarily demonstrates ethical approach embodied in activities.

Business Ethics: As a special set of norms and rules of behavior that influence business decisions. Business ethics presents a result of an individual’s or an organization’s critical thinking about a particular attitude and constructing arguments “in favor” or “against” a certain pattern of behavior.

Motivation of Russian SMEs to Follow Socially Responsible Behavior and Principles of Business Ethics: Altruistic or rational reasons of Russian businessmen from SMEs to participate in activities related to solving social or ecological problems by offering solutions that are built into their operations or presume direct interaction with stakeholders in order to meet their interests.

CIS Countries: Community of Independent States (CIS) is established by former Republics of the Soviet Union which became independent in 1991.

Guidance for Social Responsibility GOST R ISO 26000-2012: Russian National Standard based on ISO 26000. This document contains seven areas to assess business responsibility: (1) responsible management practices; (2) human rights; (3) labor relations; (4) environmental issues; (5) compliance practices; (6) consumer relations; and (7) participation in the life and development of local communities.

SMEs: Small and medium enterprises, criteria for categorizing particular enterprises as the ones belonging to the group of small and medium businesses in most countries include the number of personnel and an annual turnover.

Socially Responsible Behavior: Voluntary demonstration of social and ecological issues’ inclusion into business operations of a company and its interaction with stakeholders. It presumes both systematic and episodic activities and projects. In the study it is used as a synonym for “social responsibility of business”, since authors take into account the dynamic nature of both. Socially responsible behavior goes beyond the norms and requirements set by authorities and/or the community. Its voluntary nature is important (voluntary contribution and/or initiatives).

Morality: A set of rules and attitudes (what is considered good or bad) passed on from generation to generation within a particular culture. It includes an individual moral consciousness (feelings, the rational basis, and the purpose), as well as an individual moral practice (i.e., behavior based on individual values).

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