Innovation that’s recession-proof, sustainable business leaders and NGO-corporate relationships

Eco-innovation: a profitable idea?

Eco-innovation purportedly leads to more efficient processes, improvements in productivity, lower costs and new market opportunities. Based on nine years’ worth of empirical data about 128 firms, this paper asks if these benefits genuinely bring about greater profitability.

The evidence supports the obvious: successful eco-innovations primarily drive competitiveness through increased sales. What’s unexpected, however, is the tenacity with which green innovators were able to ride the 2008-9 global recession. More than just sales, eco-innovators demonstrate greater ability to transform economic crisis into opportunity. In addition, they have the added advantage of a strong innovation pipeline just when a depressed market prevents their competitors from investing in innovation themselves.

Sales don’t necessarily translate into profitability. To do innovation well takes serious investment. Better for the bottom line, the data suggests, are “incremental” innovations that tweak existing products rather than risky “radical” innovations that promise to disrupt the market. “For achieving both market-related and efficiency-related competitive advantage, the development of product innovations should be followed by the development of process innovations, and thus leading to higher innovation intensity”, the paper concludes.

Forsman, H (July 2013), “Environmental Innovations as a Source of Competitive Advantage or Vice Versa?”, Business Strategy and the Environment, 22: 306–320.

Sustainability’s all-important past

With talk of sustainability on every business leader’s lips, it would be tempting to think that corporate responsibility represents a radical new phenomenon. It’s not. And it’s not British Victorian philanthropists (the Cadburys and the Levers) to whom the movement owes thanks. The past century or so has also witnessed business leaders who weren’t private owners but sought to integrate non-financial objectives into their business approaches all the same.

The author points to American and European business leaders such as US entrepreneur Andrew Carnegie, Paul Rijkens (former chairman of Unilever) and Interface’s Ray Andersen as early pioneers of sustainability management. If nothing else, by setting today’s debates in historical context, the paper serves to defend the sustainability movement against charges of faddishness. It’s important for two additional reasons. First, it introduces western readers to responsibility-minded business leaders from other corners of the globe, such as India’s Jamnalal Bajaj (who bankrolled Gandhi), Egypt’s Ibrahim Abouleish and Japan’s Kazuo Inamori. None were “prophets crying in a wilderness”, it’s argued, although getting heard meant stepping out against the tide. A lesson for today’s captains of industry.

The paper’s second valuable contribution centres on its analysis of the private motivations for pursuing a wider definition of capitalist business. The author identifies four in total. The first, and perhaps the most obvious, is personal ethics underlined by religious or spiritual values and beliefs. The very secular creeds of self-interest and government relations (ie fending off regulation) stand as factors two and three. An inspiring minority pursues alternative approaches to business because they believe the world faces major social and environmental problems, and they resolve to do something about it.

Jones, G (July 2013), “Debating the Responsibility of Capitalism in Historical and Global Perspective”, Harvard Business School, Working Paper 14-004.

Sleeping with the enemy

Companies are eager to join with NGOs in “solutions-based dialogue” about, for example, social and environmental problems. That’s all well and good, but it becomes problematic if you believe that companies lie at the root of those problems. The way the private sector has framed the sustainability debate and its own role (ie with businesses seeking “win-win” answers within the existing capitalist system) does not allow for such critiques to occur. So should critical NGOs enter into dialogue with companies?

In this fascinating paper, Burchell and Cook argue that fears of co-optation are not necessarily well founded. The “engagement equals co-optation” argument rests on two fundamental misconceptions, it’s argued. First, dialogue is a two-way game. NGOs have as much liberty to contest the meaning and language of sustainability and corporate social responsibility as companies do. Second, NGOs are not passive agents when it comes to change. Dialogue and engagement can feasibly be used to force new ideas and consequently new practices onto companies.

Drawing heavily on Chantal Mouffe’s framework of “agonistic pluralism”, the authors show that conflict is an inevitable and continual part of all relationships. Consensus can therefore only ever be temporary. Instead of seeing engagement as an instrument of agreement, it makes more sense to see it for what it is: a to-and-fro battle over language and ideas. This is what makes “sustainability” such a contested term – and why it’s so important for all sides to thrash through what it means.

Burchell, J and Cook, J (August 2013), “CSR, Co-optation and Resistance”, Journal of Business Ethics, 115: 741-754.

From campus

The Doughty School for Corporate Responsibility at Cranfield School of Management has collaborated with the Institute for Human Rights and Business to develop a teaching module on human rights and business. A standalone masterclass or an integrated MBA course, the teaching module is available through Case Place

Denise Morrison, president and chief executive of Campbell Soup Company, is scheduled to give the opening address at this year’s Net Impact conference, October 24-26 in California’s Silicon Valley.

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