Social Responsibility

Small businesses can encounter several problems related to Corporate social responsibility due to characteristics inherent in their construction. Owners of small businesses often participate heavily in the day-to-day operations of their companies. This results in a lack of time for the owner to coordinate socially responsible efforts. Additionally, a small business owner's expertise often falls outside the realm of socially responsible practices contributing to a lack of participation. Small businesses also face a form of peer pressure from larger forces in their respective industries making it difficult to oppose and work against industry expectations. Furthermore, small businesses undergo stress from shareholder expectations. Because small businesses have more personal relationships with their patrons and local shareholders they must also be prepared to withstand closer scrutiny if they want to share in the benefits of committing to socially responsible practices or not⁹.

Job Quality

While small businesses employ over half the workforce and have been established as a main driving force behind job creation the quality of the jobs these businesses create has been called into question. Small businesses generally employ individuals from the Secondary labor market. As a result, in the U.S. wages are 49% higher for employees of large firms¹⁰. Additionally, many small businesses struggle or are unable to provide employees with benefits they would be given at larger firms. Research from the U.S. Small Business Administration indicates that employees of large firms are 17% more likely to receive benefits including salary, paid leave, paid holidays, bonuses, insurance, and retirement plans. Both lower wages and fewer benefits combine to create a job turnover rate among U.S. small businesses that is 3 times higher than large firms. Employees of small businesses also must adapt to the higher failure rate of small firms. In the U.S. 69% last at least 2 years, but this percentage drops to 51% for firms reaching 5 years in operation¹¹. he U.S. Small Business Administration counts companies with as much as $35.5 million in sales and 1,500 employees, depending on the industry. Outside government, companies with less than $7 million in sales and fewer than 500 employees are widely considered small businesses.

Small Business Management

Ownership and Management

The manager of a small business is usually the founder and owner, who will usually take a detailed interest in most management decisions. This centralized control could eventually impose a constraint upon the growth of the organization as there is a limit to the ability of an individual to manage larger enterprises.

Planning and Control

Jobs are not so rigidly defined as in a large organization and there is more flexibility between jobs. There will be less formality than in larger organizations. Decision making will be quicker and rules and procedures less rigid.

Motivation

Individuals will closely identify themselves with the organization and pay and reward systems may be more personalized than in larger organizations. There may be a wider range of duties for individuals and this could give greater satisfaction than the narrower range which is more likely in larger organizations. The training and development of managers tend to be less well organized in smaller companies.