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Morten Huse

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Elin M. Oftedal and Lene Foss

This chapter discusses how responsible start-ups are met in the health sector. Through following three companies, Voco, Cora and Medicus, we acquire insight into the world of challenges the entrepreneurs have when they introduce their technology/service to the healthcare sector. Using institutional theory, we look at the regulative, normative and cognitive dimension of the institutional framework. We use the term ‘institutional wall’ to denote a dense network of formal laws and regulation, informal norms and knowledge and beliefs that act as barriers for the entrepreneurs to access the market. We find that while there is a positive development in the regulative dimension: both the regulative and the normative dimension are set up to favour larger companies. The founders’ responses to the cognitive dimension indicate a lack of belief in Norwegian technology and thus tough access to finance.

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Vivek Soundararajan

Initiatives to improve working conditions in developing country supplier facilities of global production networks (GPNs) have failed to demonstrate promising impacts. While extensive research has been done to understand the underlying reason, most of it adopts a GPN perspective and fails to take into account a small business perspective. In contrast, by drawing on both the small business and GPN literatures, I develop a multi-level conceptual model of factors shaping working conditions in small businesses in developing countries that are part of GPNs. I ague that working conditions in developing country small businesses that are part of GPNs are shaped by the totality of external contextual factors, internal dynamics and owner-manager-specific aspects, and the interactions between them.

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Darla Dore

This chapter presents a case study of a food and drink cluster in England, referred to as the South Midlands Food and Drink Group (SMFDG) for reasons of confidentiality. This is a purposefully formed grassroots cluster organisation primarily comprising small and medium sized enterprises (SMEs), many of them small stockists and producers. Specifically, this study challenges Michael E. Porter’s and Mark R. Kramer’s notion that clustering can ‘create shared value’ (CSV) by using empirical data to determine if clusters can create economic and social value simultaneously. To differentiate this concept from CSV, it is referred to as ‘cluster shared value’ here. Fieldwork was conducted with 34 SMEs, larger firms and partnering institutions of the SMFDG, primarily on businesses sites in the form of semi-structured interviews, and observation of SMFDG related events and meetings. Results indicate that clustering can create economic and social benefits for SMFDG members but these benefits are not inclusive to clustering. Many firms act independently to create positive social impacts in their community. This is indicative of the notion that many SMEs practise corporate social responsibility without recognising it, viewing it as the ‘right thing to do’ while the economic benefits of their collaborations and knowledge sharing can be seen throughout the organisation’s members. However, the interactions between members are not all positive. For example, competition between similar businesses was expressed negatively and some businesses experienced resistance from communities.

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Aqueel I. Wahga, Richard K. Blundel and Anja Schaefer

As part of a broader effort to reduce environmental degradation, small- and medium-sized enterprises (SMEs) around the world are increasingly being required by different stakeholders to adopt more environmentally responsible business practices. While there is some research on what motivates SMEs to adopt environmental practices, our understanding of what enables SMEs to engage with environmental issues remains much more limited. Even less is known about motivations and enablers of SME environmental engagement in developing economies. The chapter addresses this gap by exploring the influence of human capital on environmental engagement of SMEs in Pakistan’s leatherworking industry. We found that human capital influences environmental practices in such SMEs in the form of both formal education and informal environmental learning. Environmental interventions by industry associations and other agents, such as chemical suppliers, as well as SMEs’ participation in environmental networks also had an impact on their environmental engagement. Well-designed and executed interventions by third parties have the potential to promote large scale improvements in environmental performance of this industry sector. Furthermore, awareness programmes should aim not simply to educate entrepreneurs and employees, but also to inspire them to pursue environmental opportunities.

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Ingeborg Patsch

Social businesses are unlikely to emerge without a supportive infrastructure. Nepal Social Business is the first social business incubator to enter the remote district of Jumla in Nepal. Four different social business start-ups were selected for incubation between April 2014 and December 2015. Three of these projects dealt directly or indirectly with malnutrition, which is among the pressing issues of this area. Incubation, when working in regions with a lack of basic infrastructure and entrepreneurs with no formal economic education or relevant business acumen, requires a high degree of personal involvement and relatively more resources, than when working with start-ups in a more developed setting.

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Mukesh Gulati and Ruchita Sanwal

Micro, small and medium enterprises (MSMEs) have a pivotal role in the socio-economic development of India owing to their vast number and their employment generation potential. However, most of the enterprises are typically small and unregistered. Provision of social security through legal measures is limited due to weak enforcement of regulatory policies and entrepreneurial attitudes. A development project funded by the European Union, ‘Scaling up sustainable development of MSME clusters in India’ (2012–16), undertaken by the Foundation for MSME Clusters (FMC) in partnership with various institutions to promote energy efficient measures in foundry clusters in the states of Punjab, Rajasthan and West Bengal, significantly benefited the foundries economically. As a result of the project, the enterprises were more receptive to the otherwise perceived non-business cases of social issues. Occupational health and safety (OHS) and labour welfare were targeted as part of the corporate social responsibility (CSR) activities adopted in the project. This chapter draws on the lessons learned during this project to highlight key factors that can trigger adoption and scaling up of CSR activities among MSMEs. The chapter demonstrates that entrepreneurs’ lack of awareness about the potential business case arguments for CSR activities is the first hurdle. Second, the role of local industry leaders and business membership organisations is crucial in establishing a business case among industry. Lastly, ensuring continuity of interventions through cost reduction by standardisation of such activities, local institutionalisation, and linking up with other funding options in industrial clusters, is important for scaling up such interventions.

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Mukesh Gulati, Peter Lund-Thomsen and Sangeetha Suresh

In this chapter, we investigate corporate social responsibility (CSR) in industrial clusters in the Indian context. We use the definition of CSR as given in the Indian Ministry of Corporate Affairs’ National Voluntary Guidelines (NVGs) for Business Responsibility: ‘the commitment of an enterprise to operating in an economically, socially and environmentally sustainable manner, balancing the interests of diverse stakeholders’. Our choice of India as the focus of our chapter is justified by the fact that the Indian economy has grown tremendously in recent decades. Moreover, not only do Indian enterprises sell their products successfully in international markets, but there is also an increasingly large consumer base within India. Indeed, Indian industrial clusters have contributed to a substantial part of this growth process, and there are several hundred registered clusters within the country. At the same time, several attempts have been made at promoting the adoption of CSR in MSMEs in Indian industrial clusters. In fact, India has proved to be a kind of laboratory for experimenting with different types of cluster-based CSR and is thus an interesting location in relation to the broader aim of this handbook, which focuses on the role of CSR in MSMEs. Hence we contribute to the literature on CSR in industrial clusters and specifically CSR in Indian industrial clusters by investigating the drivers of CSR in India’s industrial clusters.

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Emmanuel Benjamin, Ebele Maduekwe, Maarten Punt and Gertrud Buchenrieder

Climate change adversely affects agriculture and thus societal welfare in parts of developing countries. However, despite being credit constrained, some smallholder farmers in developing countries are adopting conservation agriculture or climate-smart agriculture involving agroforestry, which improves environmental quality and makes their agri-enterprise more climate resilient. These actions can be interpreted as corporate social responsibility (CSR), leading to corporate sustainability (CS), which is partly remunerated with payment for ecosystem services (PES). PES, CS, and CSR may have important implication for agriculture financing. This chapter extends the theoretical model set forth by Hediger in 2010 related to capital and welfare theories of CSR and CS. Our model is designed to capture the overlapping concepts of CSR, CS, and conservation agriculture. We express CSR and CS as constrained optimization problems, showing their relations and differences and their link with PES and the quality of land. We also incorporate important smallholder constraints such as arable land size. The theoretical results suggest that in the short term, CSR can be interpreted as a societal welfare constraint on the farmer’s profit maximization objective and that PES alone may not be enough to induce a farmer to observe this constraint. The fact that farmers still observe this constraint implies that they account for other things. In the long run, agri-enterprise CS (land productive capacity) is related to long-term profit maximization given the initial land endowment and land quality. These are important factors relevant to the credit risk management strategy of formal financial institutions in accordance with international banking standards. We argue that farmers who implement CSR and CS, and especially if they go beyond PES, account for more than just short-term profit maximization. They care about reputation and long-term profit maximization. Therefore, we speculate that PES, CSR, and CS can serve as important indicators for banks that they are dealing with responsible, trustworthy, and especially creditworthy individuals.