Corporate Social Responsibility and Social Entrepreneurship of
Small and Medium-sized Businesses in Russia: Moving towards
Sustainable Development
Ekaterina Gamova
, Elena Rodionova
and Zhanna Kuzminykh
Department of Finance, Economics and Industrial Engineering,
Volga State University of Technology, Lenin Str., Yoshkar-Ola, Russia
Department of Foreign Languages and Linguistics, Volga State University of Technology, Lenin Str., Yoshkar-Ola, Russia
Keywords: Corporate Social Responsibility (CSR), Social Entrepreneurship, Small and Medium-Sized Businesses
(SMBs), Russia.
Abstract: The article deals with the matters of corporate social responsibility of Russian business, the presence and
operation of social entrepreneurship and enterprises in small and medium-sized businesses, as well as the
formation of corporate transformation strategies for achieving sustainable development in the post-
coronavirus economy. The issues addressed are relevant as the concept of social responsibility in business is
new in Russia, and, thus, it remains insufficiently studied, differentiated, and classified. Related definitions
are vague and have to be clarified; the experience gained domestically needs consolidation and evaluation.
The study analyses the transformation of corporate governance models in the new economic realities.
It is believed that the beginning of contemporary
literature on corporate social responsibility (CSR)
was marked by H. R. Bowen's bookSocial
responsibilities of the businessman’ (1953), in which
the concept was first defined. The publication was
followed by the works of such international authors
as K. Davis (1960), W.C. Frederick (1960), H.L.
Johnson (1971), T.M. Jones (1980), R.E. Freeman
(1983), E.M. Epstein (1987), and others. Domestic
research publications include works by
S. Litovchenko (2003), Yu. Blagov, A. Bukhvalov
(2010), O. Kanaeva (2013), A. Kostin (2013), N.
Krichevsky, S. Goncharov (2016), M. Koniagina, A.
Buga, A. Kirillova, V. Manuilenko, G. Safonov
(2019), K.Yu. Belousov (2020), S.A. Karimova
(2020) and others.
The approach prevailing in contemporary CSR
studies was set forth by A. Carroll, who, in 1979,
proposed to define corporate social responsibility as
‘the economic, legal, ethical, and discretionary
expectations that society has of organizations at a
given point in time’ (Carroll, 1979). The corporate
social responsibility concept is closely related to the
theory of stakeholders. From this perspective,
corporate social responsibility can be seen as a
philosophy, according to which organizations take
into account the interests of the society byaccepting
their responsibility for the impact of their activities on
consumers, business partners, employees,
shareholders, local communities and other relevant
parties (stakeholders).
An attempt to analyze corporate social
responsibility in line with the strategic management
concept was first undertaken in the article by L. Burke
and J.M. Logzdon (1996). The authors rejected the
unconfirmed hypotheses contained in the studies of
the late 1980s and the early 1990s which suggested a
direct correlation between CSR programs and short-
term profits. L. Burke and J.M. Logzdon focused on
exploring the ways for a firm to obtain a long-term
competitive advantage. They proposed to define
strategic corporate social responsibility as not only
Gamova, E., Rodionova, E. and Kuzminykh, Z.
Corporate Social Responsibility and Social Entrepreneurship of Small and Medium-sized Businesses in Russia: Moving towards Sustainable Development.
DOI: 10.5220/0010590503510355
In Proceedings of the International Scientific and Practical Conference on Sustainable Development of Regional Infrastructure (ISSDRI 2021), pages 351-355
ISBN: 978-989-758-519-7
2021 by SCITEPRESS Science and Technology Publications, Lda. All rights reserved
meeting the interests of stakeholders, but, above all,
bringing the firm itself significant sustainable
benefits associated with its business operations, i.e.,
CSR is associated with the company's ability to take
more successful strategic positions (Blagov and
Bukhvalov, 2010). Today, researchers and
practitioners agree on the vital role of corporate social
responsibility in the implementation of the
positioning of modern companies.
While the concept of sustainable development
(SD) and the ‘green economy’ ideas were gaining in
popularity worldwide, an emerging body of research
emphasized the direct link between corporate social
responsibility and the implementation of SD ideas at
the micro level. This is reflected in the international
standard ISO 26000: 2010 which defines social
responsibility as the “responsibility of an
organization for the impacts of its decisions and
activities on society and the environment, through
transparent and ethical behavior that contributes to
sustainable development, including health and the
welfare of society; takes into account the expectations
of stakeholders; is in compliance with applicable law
and consistent with international norms of behavior;
and is integrated throughout the organization and
practiced in its relationships” (ISO, 2010).
The development and elaboration of the ideas of
corporate social responsibility have resulted in the
emergence of the new concept, that of “social
entrepreneurship” (SE), which is associated with the
social function of business operations. The formation
of SE as a special type of economic activity started in
developed countries in the 1970s. The European
approach to social entrepreneurship was implemented
through the creation by civil society actors of new
social enterprises in the segments that experience a
shortage of public services. In the USA, social
entrepreneurship is viewed as a market activity
having also a societal goal, which is carried out in
various sectors by existing enterprises of various
organizational and legal forms (Popov et al., 2019).
For conducting the present study, the authors have
studied a body of national and international research
literature on corporate social responsibility,
sustainable development, and the transformation of
corporate governance in the context of moving
towards sustainable development.
In order to achieve the goal and objectives of the
study, a set of general scientific methods and special
methods was employed on the basis of the principles
of dialectics as a scientific approach considering the
phenomena under study in their holistic universal
interconnection and interdependence:
At the level of generalization, the following
methods were used: the transition from the abstract to
the concrete, system analysis, generalization, subject-
object, historical and system methods;
At the specific scientific level, theoretical analysis
of the literature on the subject was utilized at the stage
of studying the research problem; interviewing
owners of small and medium-sized enterprises
(SMEs) was also conducted;
For summarizing the research data, the authors
used data analysis and systematization, as well as
analysis and generalization of empirical management
The selection of the research methods and tools
was based on the principle of their necessity and
sufficiency to attain the research goal, ensure the
required depth and detail of exploring the key aspects
of the tasks set, and reliability of the results obtained.
In 2018, the Russian Federation launched the national
project "Small and medium sized businesses and
support of individual entrepreneurial initiatives",
which includes five Federal projects:
1. Improving the business environment.
2. Increasing the access of small and medium-
sized enterprises to financial resources, including
concessional financing.
3. Acceleration of SMEs.
4. Promoting entrepreneurship.
5. Creation of support system for farmers and
development of rural cooperation.
The main goal of the National project is to
propose measures to support Russian
entrepreneurship at every stage of its development,
from the initial process of developing a business idea
to expanding the business and entering export sites.
Performance benchmarks have been set to indicate
the implementation of the National project by 2024,
in particular, increasing the number of people
employed in small and medium-sized enterprises
from 19.2 million to 25 million, or by 30%; increasing
the share of SMEs in the national GDP from 22.3%
to 32.5%; increasing the share of exports by the
entities in the total non-resource exports from 8.6% to
One of the most significant outcomes of the
Federal project "Improving the business
environment" is the legal establishment of the "social
ISSDRI 2021 - International Scientific and Practical Conference on Sustainable Development of Regional Infrastructure
entrepreneurship" concept. Within the framework of
the Federal project "Acceleration of small and
medium-sized enterprises", we should note the
support provided to social entrepreneurs by the "My
Business" centres, the sites that integrate all the
necessary infrastructure organizations and
development institutions in the regions.
The Federal Law No. 245On amendments to the
Federal Law "On the development of small and
medium-sized businesses in the Russian Federation"
in terms of consolidating the concepts of "social
entrepreneurship", "social enterprise" dated July 26,
2019 defined the concepts of "social
entrepreneurship" and "social enterprise" and
incorporated the terms into law (On amendments to
the Federal Law, 2019). As a result of the adoption of
this law, small and medium-sized enterprises can seek
the status of a social enterprise, provided that the
business aims to achieve socially relevant objectives
and contributes to solving the problems of the citizens
and the society.
The need for the legislative regulation of SE in
Russia emerged because commercial organizations
engaged in societal projects were severely limited in
the range of sources available for attracting financing,
and the profitability of such companies was usually
low. Non-profit social organizations, however, did
not suffer from this disadvantage as they had more
opportunities to generate financial resources, such as
donations and grants. To redress the imbalance, the
changes were introduced to the legislation.
In contrast to a non-profit organization, SEis
continuously involved in economic and production
activities, the results of which ensure the company’s
profits and existence. At the same time, the company
as a commercial organization is aimed at gaining
financial results, specifically for solving societal
problems, serving the public interest; thus, the idea of
making a profit appears to be secondary. If a company
obtains the status of a "social enterprise", it can count
on financial assistance (subsidies), property,
information and consulting support from the state.
According to the Federal Law No. 245, small and
medium-sized enterprises that have become social
enterprises must meet the following criteria:
labour integration (ensuring the employment of
disabled people, single parents or parents
raising three or more children, pensioners and
citizens of pre-retirement age, orphanage
graduates, refugees and internally displaced
persons, low-income citizens or other
categories, provided that their share is at least
50% of the total number of employees, and the
costs on their salaries are at least 25%);
disposal of commodities produced by
representatives of the categories above (the
share of income from the activities is at least
50% of the total income, and the reinvestment
of profits is at least 50% of the total profit);
production of goods for persons from the above
mentioned categories in order to compensate
for the obstacles to their everyday activities
(the share of income from activities is at least
50% of the total income, and the reinvestment
of profits is at least 50% of the total profit) in
the following areas: provision of social welfare,
socio-medical, socio-psychological, socio-
pedagogical, socio-labor and other services;
activities aimed at achieving socially relevant
goals and contributing to the solution of
societal problems (the share of income from
activities - at least 50% of the total income,
reinvestment of profits - at least 50% of the
total profit) in the areas: providing
psychological and pedagogical and other
services aimed at strengthening the family,
family education of children, maternity and
childcare support; organization of recreation
and health improvement for children, services
in the filed of preschool education and general
education, supplementary education for
children, training of employees and volunteers
of socially oriented non-profit organizations,
cultural, educational and other activities and
A social enterprise can not carry out activities
with regard to the production and / or sale of excisable
goods, or the extraction and / or sale of minerals.
The introduction of legislative changes provided
a legitimate basis for involving SMEs in the area of
social responsibility of business, which used to be
mainly within the prerogative of large enterprises and
corporations due to their broader financial
The issue of social responsibility of business in
Russia remains insufficiently studied or differentiated
due to the youth of business itself in the country, as
well as the absence of established historical traditions
of doing business. Moreover, this area is often "in the
shade" because many business people are inclined to
avoid publicity surrounding social project funding;
they tend to provide the latter in a private manner.
Based on the analysis of the period of the
"coronavirus" and "post-coronavirus" economy, the
authors have identified four main problems that
hinder a wider spread of corporate social
responsibility and sustainable development in the
Corporate Social Responsibility and Social Entrepreneurship of Small and Medium-sized Businesses in Russia: Moving towards Sustainable
small and medium-sized business sector in Russia and
its regions.
1. A lack of financial capacity to finance social
projects and programs. The coronavirus pandemic has
hit all types of businesses, with many companies
lacking financial resources for their core business
activities. This is especially true for small and
medium-sized enterprises, which appear to be more
volatile. The strategies used by many businesses
today are sequestration and accumulation of financial
resources in order to compensate for the decline in
incomes caused by the pandemic and related
restrictive measures. Funding social initiatives
always means spending on the part of the
entrepreneur; moreover, the expenditures are not on
the list of eligible expenses, and therefore, the income
tax is paid from these amounts. A business can choose
to agree to the expenses and transfer them to the end
consumer in the form of higher prices for goods,
works, and services.
2. The existing paradigm of the development of
social responsibility of Russian business puts
forward, as its main and only type, full payment of
taxes without using informal schemes. Then the state,
redistributing the received tax revenues, holds the
social responsibility before its citizens by financing
the social areas from the public budget.
3. A lack of norms of social and public
supervision over business activities. Carrying out
their financial and economic activities, commercial
organizations are not accountable to public and
civilian control. Inspectors, supervisory bodies, and
fiscal authorities monitor the key activities of
enterprises without, however, dealing with the issues
of social involvement and social utility of the
businesses. In their turn, businesses are not ready to
participate in social activities for which they do not
find themselves accountable.
4. As a result, there is a lack of understanding of
the essence of social responsibility and its
relationship with the outcomes of business
development among the representatives of SMBs;
there is also a deficit of experience in solving social
problems of the city / region, as well as a shortage of
qualified full-time social workers capable of solving
societal problems.
On the other hand, the survival of companies in
the new economic realities associated with the
pandemic is only possible in the presence of well-
established relations with the major stakeholder
groups. Therefore, the concept of corporate social
responsibility remains relevant today and serves as an
important component and theoretical basis of
corporate strategies in the context of moving towards
sustainable development.
In the Russian Federation, the concept of corporate
social responsibility is still at the stage of its
formation. The initial ideas about CSR as the
implementation of one-time charitable events not
related directly to business objectives are gradually
giving way to a broader understanding of corporate
social responsibility as an integral part of the
enterprise strategy. Through achieving a balance
between the company interests and societal
expectations, the strategy contributes to the
development of long-term competitive advantages of
the business in line with the corporate goals.
Corporate social responsibility can be defined as
a new ideology of sustainable development of an
organization creating a basis for a socially oriented
model of corporate governance and business
development. The legal establishment of the concepts
of "social entrepreneurship" and "social enterprise"
contributes to further development of corporate social
responsibility, its moving beyond large businesses
and spreading among SMBs. Potential challenges
here are associated with the negative effects of the
factors characteristic of the "coronavirus" and "post-
coronavirus" economy. Therefore, of particular
importance for Russia is the state support provided to
sustainable development through various instruments
of financial and non-financial assistance.
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