THE DEVELOPMENT OF FLEXIBILITY OF SUSTAINABLE

CORPORATE SOCIAL RESPONSIBILITY I., II.

Ing. Lubomir SmidaIng. Gabriela Hrdinova

Prof. Ing. Peter Sakal, CSc.

Двенадцатая международная конференция

Управление экономикой: методы, модели, технологии

Красноусольск

31. 10. – 02.11. 2012

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• This paper was supported by the Slovak Research and Development Agency under the contract No. LPP-0384-09: “Concept HCS model 3E vs. Concept Corporate Social Responsibility (CSR).”

• http://www.apvv.sk/agentura?lang=en

• The paper is also a part of submitted KEGA project No. 037STU-4/2012 “Implementation of the subject “Sustainable Corporate Social Responsibility” into the study programme Industrial management in the second degree at MTF STU Trnava”.

• http://www.portalvs.sk/en/prehlad-projektov/6838

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CONTENTS

INTRODUCTION1. SUSTAINABLE CORPORATE SOCIAL RESPONSIBILITY

1.1. Sustainable development1.2. Corporate Social Responsibility1.3. Creating Shared Values

2. FLEXIBLE PROCESSES OF SCSR3. STRATEGIC FLEXIBILITY OF SCSR4. FUTURE SCENARIO5. STAKEHOLDERS PARTICIPATION WITHIN SCENARIO DESIGNSUMMARY

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INTRODUCTION

• Sustainable society index (2010) – Criteria: Preparation for the future:

Post-war crisis,Financial crisis,

Raw material crisis, ...

Food crisis,

Human thinking

crisis

The need of a system that supports long-term development.

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Beginning - mid-20th century

1968 – The Club of Rome

1987 – Brundtland report

1992 – Rio declaration

2002 – Johannesburg summit

2005 – Millenium ecosystem assesment

2012 – Rio – „The Future We Want“ document

• Aimed at creating and maintaining a balance between the individual components of the Earth.

• ISO 26000: "Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.„

• The current entrepreneurship environment is characterized by Košturiak as follows:– Global markets are causing global problems and opportunities.– Even with exceptional products become commodities.– Customers receive precedence over manufacturers.– Total competition by any means.– Rapid erosion of profitability.– Overage of capacity and supply over demand.– Lack of natural resources and environmental issues.– Talent and excellence is appreciated.– It is not enough to do the right things right, it is need to do other things differently.– We are often surprised by the development, which we did not expect.

1.1. SUSTAINABLE DEVELOPMENT

1. SUSTAINABLE CORPORATE SOCIAL RESPONSIBILITY

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Growth of world population World energy consumption Sustainable society index Happy planet index

1.1. SUSTAINABLE DEVELOPMENT

1. SUSTAINABLE CORPORATE SOCIAL RESPONSIBILITY

70% of chief executives and 49% of Boards are engaged in

corporate sustainability strategy.

• Representatives acknowledge that the implementation of sustainable development will depend on the active engagement of both, the public and the private sector.

• Representatives support national regulatory and policy frameworks that enable business and industry to advance SD initiatives, taking into account the importance of corporate social responsibility.

• Representatives call on the private sector to engage in responsible enterprise practices, such as those promoted by the United Nations Global Compact.

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• Gradually have exapanded from individuals (Owen, Bata, Carnegie, Bowen) to national and global level.

• Strategy Europe 2020 - smart, sustainable and inclusive economy delivering high levels of employment, productivity and social cohesion.

• Strategy Enterprise 2020 - address the European and global challenges which are increasingly bringing into question our current patterns of living, working, learning, communicating, consuming and sharing resources.

• A renewed EU strategy 2011-14 for Corporate Social Responsibility – CSR: “The responsibility of enterprises for their impacts on society”.

1. SUSTAINABLE CORPORATE SOCIAL RESPONSIBILITY

1.2. CORPORATE SOCIAL RESPONSIBILITY

Wayne Visser – Corporate Sustainability and Responsibility• Enterprises in spite of worldwide efforts of

organizations to improve the quality of life of mankind came to CSR only as to marginal or non-economic concept that is not included in the core of entrepreneurship.

Age of greed

Age of philanthropy

Age of marketing

Age of management

Age of responsibility

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• In response to the slow development of CSR.

• Based on previously overlooked opportunities for:– designing customer needs,

products and markets,– the new definition of

productivity in the value chain and

– enabling the development of local clusters.

• Based on these facts, it is necessary to create conditions for successful advancement of USZP on global, the products oversaturated market. The contribution in this area is the development enterprise flexibility.

Michael Porter and Mark Kramer CSR CSV

Added value Financial support of socially responsible activities

Economic and at the same time societal benefits from the main activities

Manifestation Philanthropic activities, care for the environment, corporate citizenship

Cooperation in the development of shared values

Application As a voluntary autonomic response to requests from outside independent from effort to increase business performance

Integral part of the implementation of enterprise strategy, in direct connection with the fulfilment of financial goals

Agenda Defined by external standards and requires separate reporting, prepared by established organizational unit

It is part of the specific measures contributing to the implementation of business plans by standard departments

1.3. CREATING SHARED VALUE

1. SUSTAINABLE CORPORATE SOCIAL RESPONSIBILITY

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• Sustainable corporate social responsibility is based on the idea of enterprise oriented to economic development aimed at promoting social and environmental development.

• Social innovation means new ideas, business models, products and services resolving existing sustainable challenges, such as demographic change, human rights violations, financial crisis, environmental degradation, and poverty.

http://www.csreurope.org/pages/en/enterprise2020.html

1. SUSTAINABLE CORPORATE SOCIAL RESPONSIBILITY

• "The system of interconnected activities performed by the entrepreneur long-term, independently and on own responsibility with participation of stakeholders,

• able to self-management and participating on created sustainable added value and

• serving to promote social and environmental development in order to create a suitable local environment for long-term development of sustainable corporate social responsibility

• and in line with global aspirations of mankind to maintain a balance between all elements of the global ecosystem.„

Implementation to the practice is a systematic and long-term process.

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2. FLEXIBLE PROCESSES OF SCSRThe flexibility of the process is divided into:• Flexibility given by design of a process. The ability to incorporate alternative proposals of process to the

definition of the procedure, allowing selection of the best alternative according to the occurring circumstances.

• Flexibility given by deviation from the process. The ability to change the startup sequence of tasks for a particular process without changing its original definition. It is not, however, a change of tasks in the process.

• Flexibility given by specification of process. Ability to carry out the process without a full definition of the process, i.e. without complete information, allowing the process to complete.

• Flexibility given by a temporary change. The ability to modify the process definition during the implementation of process according to circumstances that were not anticipated in advance.

• Flexibility given by permanent change. The ability to modify the definition of the process during the realization of the process according to new circumstances that have occurred, so that all parts of the process will be incorporated into the new process definition.

The process of change of business processes consists of the following three phases:• Analysis of impacts.• Process redesign.• Implementation. Successful realization of changes within the business processes and complex change of processes is dependent on the ability of people who are involved in the operations of the enterprise systematically evaluate the enterprise environment.

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3. STRATEGIC FLEXIBILITY OF SCSR

• Strategic flexibility is the ability of enterprises to quickly and in innovative way respond to opportunities and threats and exploit them for their own benefit.

• In relation to SCSR many opportunities from potential areas of the development of strategic flexibility intertwined with the opportunities of the market environment, which focuses on the concept of CSV.

CSV Strategic flexibility

New designing customer needs, products and markets

New industries and customers, fast and innovative product solutions

New definition of productivity in the value chain Fast and innovative product solutions

Supporting the development of local clusters Development within clusters

• Follows from the foregoing, SCSR based on the core of entrepreneurship focuses on the development of strategic flexibility of entrepreneurship. Improving conditions for the development of strategic flexibility can be increased dynamics of its development.

• The company as a learning organization: "The organization skilled at creating, acquiring, and transferring knowledge, and to change its behaviour to reflect new knowledge and insights."

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3. STRATEGIC FLEXIBILITY OF SCSRApplying the principles of the learning organization is linked to the creation of feasibility assumptions, which can be divided into four groups:1. Entrepreneurial environment.

• Creating atmosphere of changes triggers to continuous development.• Supporting creativity and innovation.• Openness to experimentation.• Promote teamwork and cooperation between departments.• Creating opportunities for learning.

2. Organizational security.• Empowerment.• Horizontal organizational structure.• Close link between corporate strategy and strategy of corporate learning.• The integration of work and learning processes.

3. Learning.• Investment in learning (perception for money as an investment).• The manager's role in mentor or coach.• Promotes the learning of others.• It is created environment for information sharing and knowledge to others.• Supporting technical support training.

4. Knowledge.• In the organization are defined processes of creating, sharing and using knowledge.• Employees have free access to information.• Employees are motivated to use opportunities to acquire knowledge.

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4. FUTURE SCENARIO

Creating Futures - WISE Future Scenario Earth 2050 - ABC News

Scenario Planning: Understanding how to interpret the future

Visualising the Future: Scenarios to 2050

According to Raynor framework of strategic flexibility of the enterprise requires:• Expect several scenarios.• Formulate a strategy for each scenario.• Gain the ability to implement those strategies.• Run the strategy most likely scenario.• Be ready to launch a new strategy if market

conditions change.Good quality scenarios are [7]:• Reliable.• Internally consistent.• Interesting and inspiring enough to influence

decision-making.

• The term "scenario" comes from the drama.• The first time included scenarios in military and strategic studies RAND

Corporation in the 50th the last century. • In the 60th years were further popularized by director of Hudson Institute

in USA. • In subsequent years, the use of scenarios significantly extended in the

public and private sectors

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4. FUTURE SCENARIO

Scenario creating can further specify through these phases as follows:Preparation.

Defining boundary and study area. It is necessary to accurately and thoroughly describe the studied area.Design.

Defining driving forces. Based on the definition, and then choose the relevant drivers, whose development is directly related to the shape of the field. In the election of two independent driving forces, their combination resulting a total of four alternative scenarios, which is an ideal number of scenarios. Among drivers belongs economic growth, legislative environment, competitiveness, technological development etc.Defining events. Each scenario must contain a list of events that affect the driving forces, change the causal chain leading from the present to the future and affect how policy is chosen. Probability of occurrence of the event is of course different in each scenario.Designing driving forces. It shall apply the analysis of the impact of the trend.Preparation of scenarios. From quantitative predictions of development of driving forces, most causal chains becomes apparent and thus possible proceed to create their own alternative scenarios.

Application.Documentation. At the beginning of each scenario, it is appropriate to bring in the form of a brief summary of the situation in the study area, the development of critical and major events that led to that future progress in this direction. Helpful in this case are graphs.The formulation of the consequences of alternative scenarios.

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5. STAKEHOLDERS PARTICIPATION WITHIN SCENARIO DESIGN

• Cooperation and participation of stakeholders simultaneously to create scenarios is beneficial on condition that the enterprise makes real action in the event of changes in the environment. This represents regular review of enterprise strategy and possible implementation of an alternative strategy.

• To stakeholders who are able to participate in the design of scenarios for entrepreneurs can be classified research institutions able to identify the key driving forces of specific industries.

• Cooperation in the design of scenarios is possible at each stage of the process, i.e. the preparation, design and application of scenarios.

• Transfer of knowledge to research institutions about future development will allow reduce the risk of unforeseen changes in entrepreneurial environment and preventively prepare local communities, but also states for future changes.

Amoeba systemThe elements of the system are:• Internal stock. It consists of employees of the

enterprise.• External stock. It consists of stakeholders other than

employees.• Production. The process of compiling amoebas from

internal (1) and external stock (2).• Interconnection. Amoebas build market relations (3).• Disintegration. The break-up of amoebas, which do

not create added value. Employees return to stock, or leave the enterprise (4), (5).

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CONCLUSION

• Fast and innovative response of entrepreneurial entities to new challenges in the environment is an opportunity for their future development.

• Development, which should not be avoided aspect of sustainability and social responsibility is appropriate drawn to the conditions that lead to the development of entrepreneurial strategic flexibility.

• The main advantage of the development of strategic flexibility is long-term persistence of the undertakings in the market and constantly expanding the scope.

• In this way it is possible to spread the idea of SCSR into new areas and thus raise awareness and contribute towards global sustainable development philosophy.

• Thanks to the acquisition of the knowledge and knowledge gained through the development of employees it is possible to develop not only the enterprise, its processes, but also its surroundings thanks to an early adaptation to future changes.

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lubomir.smida@stuba.skpeter.sakal@stuba.sk

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