Our key research objectives in this study are: 1: to examine whether firms’ sales growth is positively and significantly affected by CSR implementation? and 2: to examine whether the relationship between corporate social responsibility and firm’s sales growth is mediated by competitive advantage. A total of 107 (out of 843) SMEs in manufacturing and consumer product industry from Iran were engaged in this study. Structural equation methodology based on AMOS path modeling was applied to test both hypotheses of the study. The first part of the results reveals that firms’ sales growth is positively and significantly affected by CSR implementation. The second part discloses that the positive effect of CSR on sales growth is positively mediated by competitive advantage. Taken together, these findings suggest a role for CSR in indirectly promoting firms’ sales growth through enhancing competitive advantage.