A Model of a Large Company’s CSR and Transformational Community Engagement Strategy for SME Development

Abstract

This article presents a framework of transformational community engagement strategy which has been implemented by Dharma Bhakti Astra Foundation (YDBA). It discusses the process under which a large company institutionalizes its CSR strategy, policy and actions in developing small and medium enterprises (SMEs). Since 1980 the company has strengthened the capacity of 10,374 SMEs which created 65,855 jobs by 2017. The paper shows the linkages between the concepts of corporate social responsibility (CSR), transformational community engagement, social capital and sustainability performance of a company. This study applies a qualitative case study to investigate why and how one of the largest public listed companies in Indonesia decides to play a role in developing SMEs as its CSR program; how the transformational community engagement strategy is used in implementing the CSR program; and how the SME programs contributes to the company’s triple bottom line through social capital development. The study finds that a large company can complement the government’s roles in SME development, by sharing its knowledge and expertise, providing finance and market access, as well as building social capital for SMEs. By doing so, the company enables SMEs to participate in economic activities and work collaboratively with the company in achieving sustainability performance for both the SME and the company. The conceptual framework developed from this study contributes to the theory by clarifying the linkages between the concepts of CSR program, community engagement and social capital. In practice, the framework can help business practitioners to design their CSR programs through community engagement. In reality, the ASEAN Business Advisory Council meeting in 2017 had considered YDBA’s SME development program as a role model for other large companies operating in the region.