Corporate Social Responsibility and Sustainable Local Development: A case study of European Small and Medium Enterprises (SMEs) in Kenyan Agribusiness.

Abstract

ABSTRACT The concept of corporate social responsibility (CSR) over the past decades has grown in importance and significance. It has been the subject of extensive debate within academics and development practitioners who recognize it as a field with the potential of reducing poverty and enhancing sustainable development in third world countries. As important as this concept is, foreign investors particularly in agribusiness are strongly encouraged to be more economic, social and environmentally responsible. This research investigates how responsible businesses are practiced by European SMEs in Kenyan agribusiness and how their practices contribute to sustainable local development in Kenya. Also, the study examined whether these European companies complied with responsible business practices by looking at their socioeconomic and environmental commitments and the factors that drive their responsible business behavior. In doing so the study resorted to the use of mixed methodology (surveys and interviews). Mixed methodology in this research severed as complementary methods and enable the study to consolidate strengths and cross-check and triangulate any information that were central to research questions.

The study results revealed that European entrepreneurs are engaged in responsible business practices in a variety of ways which have a positive impact on sustainable local development of the local communities within which the enterprises operate. These responsible practices were centered on employees’ well-being, community involvement, environmental protection and customer and suppliers relation. On the environmental development, the negatives seem to outweigh the positives although there are some who think the other way. But, from a socio-economic perspective, the positives far outweigh the negatives. The socio-economic development impacts include: the creation of productive and decent jobs that supports the socio-economic needs and aspirations of local people and their societies. Also European investment promote growth, knowledge transfer and technology advancement, skills, capacity and standards improvement, access to new markets by domestic companies, the prospects for further FDI investments and poverty reduction. The research findings also suggested that as a result of increasing demand by consumers, government institutions and relevant stakeholders on standards of products, certification labels motivate companies to be more responsible.