Corporate Social Responsibility and Performance of Small and Medium Enterprises in Damauli

Abstract

This study examines the relationship between the four dimensions of Carroll’s (1991) CSR model—economic, legal, ethical, and philanthropic responsibility—and the performance of small and medium enterprises (SMEs) in Damauli, Nepal. A descriptive-causal, cross-sectional design was used, with data collected via a structured questionnaire from 240 SMEs sampled through simple random sampling from a population of 634 registered SMEs. All four CSR dimensions and firm performance were measured on a five-point Likert scale. Multiple regression analysis (SPSS v.27) showed that economic (β = 0.24, p < .001), legal (β = 0.14, p < .001), ethical (β = 0.27, p < .001), and philanthropic (β = 0.34, p < .001) responsibilities were significant predictors of SME performance, jointly explaining 68% of the variance (R² = .68, F(4,225) = 231.23, p < .001), with philanthropic responsibility emerging as the strongest predictor. The findings suggest that CSR functions as a strategic resource that supports revenue growth, stakeholder confidence, and competitive advantage among SMEs in resource-constrained rural settings. The study offers practical implications for SME managers and policymakers seeking to design compliance, ethics, and community-engagement programs, and recommends longitudinal and multi-regional research to strengthen generalizability.