Corporate Social Responsibility - Assessment of Facilitating and Impeding Factors for Small and Medium-sized Enterprises in Latvia

Small and medium-sized enterprises (SMEs) make up for similar to 99% of all companies in both Latvia and the European Union (EU), they are a significant contributor to national economies and should not be disregarded when discussing corporate social responsibility (CSR). SMEs are not smaller-scale versions of corporations and differ greatly in terms of managerial structure, revenues, resource availability and allocation, market reach, product and service lines, as well as available manpower. Given that a CSR strategy often necessitates additional investment, many SMEs might not anticipate it to increase the bottom line, however, a large part of consumers are willing to pay more for goods and services from a socially responsible company, and CSR can facilitate higher employee attraction and retention rates. This sets up the aim of this study, to analyse CSR initiatives deployment, and facilitating and impeding factors for SMEs in Latvia, a country that is considered to be in the transition process to a market economy. To classify important CSR facilitating and impeding factors, analysis and generalisation of multiple academic sources were used. Analysis of the regulatory framework, fundamental planning documents, international CSR, ESG and other indices, as well as a collateral examination of empirical CSR research in the EU member states and Latvia, was carried out to identify possible CSR development issues for SMEs in Latvia. The study shows that while CSR awareness is increasing in Latvia, the implementation of CSR by SMEs is limited, and there is a need for more guidance and support to promote CSR practices. The study identifies several facilitating factors, such as policy-regulatory support, social pressure, ethical considerations, and impeding factors, such as lack of resources, limited knowledge, and perceived low relevance of CSR for business, as well as the excessively bureaucratic approach in the public sector. The study highlights the importance of private and NGO stakeholder engagement with the public sector in the collaboration and promotion of CSR practices among SMEs in Latvia. Policymakers, business executives, and other stakeholders interested in encouraging CSR practices among SMEs could benefit from the findings of this study.