1 Chapter I Introduction This chapter explains research background, research objectives and research questions along with the methods used in this research. This chapter also explain the key assumptions and research limitations following with research outline of the study. This chapter intends to inform the reader about the foremost topics to be discussed. I.1 Background The Covid-19 pandemic that hit Indonesia is predicted to last 4-5 years, as quoted by detik.com regarding the statement of the World Health Organization (Tunio et al., 2022), so that it can bring about a new normal in all aspects of life in Indonesia, including the economic sector. In times like this, companies are required to survive by being more adaptive in responding to community needs, in order to maintain profitability (Barrio-Fraile & Enrique-Jiménez, 2021; MacGregor Pelikanova et al., 2021). In running its business, companies no longer only think about how to manage production, sales, and brands well in increasing or maintaining profits, but companies are also required to carry out moral responsibilities to the community and the surrounding environment in order to maintain the continuity of the company (García-Santiago, 2022). This is motivated by various company activities that directly or indirectly affect the social life of the community and the environment, so that companies are encouraged to develop Corporate Social Responsibility (CSR). CSR in Indonesia is regulated in Undang-Undang Nomor 40 Tahun 2007 tentang Perseroan Terbatas (Z. Wang & Le, 2022). CSR is considered a form of the company's mandatory commitment to help improve the environment and social life of the surrounding community. The implementation of CSR is not a cost, but must be calculated as an investment by the company, because CSR indirectly makes it easier for companies to adapt to their surroundings, because it keeps companies connected with their stakeholders (Dharmacahya et al., 2022). 2 In recent times, CSR is no longer focused on large companies, but has begun to be applied to SMEs.Despite numerous studies related to Corporate Social Responsibility (CSR) within Small-and-Medium Sized Enterprises (SMEs) few studies have considered firm survival and, resilience during economic downturn and the possible link to associated CSR activities (Grimstad et al., 2020). This is an important and overlooked area of study as there are many reports of SME closures during the economic crisis of countries as small firms have limited resources, making them more vulnerable to unexpected changes in the environment, and especially financial hardship. The issue of corporate social responsibility. As a result of increased interest in the concept of CSR in the last decade (Stekelorum, 2020), the research area has been expanded, and CSR issues relate to a wide range of an organization’s activities, from environmental issues (EFRAG SR TEG, 2022), through corporate social marketing and socially responsible production processes (Huovinen, 2022) to philanthropic programs (Maksymiv et al., 2021; van Zanten & van Tulder, 2021), and the very concept of CSR begins to go beyond the economic and regulatory obli- gation of enterprises, imposing the need for a comprehensive approach to the implementation process (Chakraborty & Biswas, 2020) The results of research conducted in the area of CSR suggest that socially responsible activities are beneficial for enterprises (Antwi et al., 2021; Belas et al., 2021) though they do not necessarily translate directly into financial results (Bielawska, 2022; Nur Rozak, 2021). It is also indicated that although the benefits of implementing CSR are usually delayed, they influence the development of the company’s potential in key areas (Jakob et al., 2022; Sipilä et al., 2021; Sterbenk et al., 2022). The question of the potential benefits of implementing CSR becomes extremely important from the perspective of SMEs, which have more limited resources than large enterprises (Bae et al., 2021; Freeman & Dmytriyev, 2020; Gamerschlag et al., 2011), and in which, due to the capital structure, the key decision-makers are most often manager-owners, i.e., people who make decisions 3 relating to the use of their own capital, and not of someone else’s capital, as in the case of large enterprises. Therefore, it can be expected that activities carried out in SMEs differ from activities carried out in large enterprises. The essence of this conceptualization lies in the fact that an organization that can accommodate CSR and innovation simultaneously refers to ambidexterity, the organization's ability to be aligned and efficient in managing today's business while adapting to the changing environment (Bocquet et al., 2019; R. Wu et al., 2023). Although previous research has established the importance of ambidexterity as a desirable status for achieving organizational performance and remaining high in the long term (Hou et al., 2020; Zhang et al., 2022), from an operational perspective, exploration and exploitation are difficult to reconcile (Chowdhury et al., 2019) to ambidexterity thinking (Nielsen et al., 2021). The above conceptualization highlights that although previous research has explained the impact of CSR or innovation on firm performance, research is still needed on the concurrent relationship between these concepts. Recent studies show that CSR is very challenging for small and medium enterprises (SMEs) to compete in the market (B. Li et al., 2021), therefore further research is needed to enrich the existing literature and avoid the scarcity of approaches to developing CSR implementation theory in contexts. SMEs.