A STUDY OF PARTNERING BETWEEN SMES AND NGOS IN SUPPORT OF BUSINESS SUSTAINABILITY
1. INTRODUCTION
Current business environment has led a growing level of awareness of the enterprises that can increase the chances of sustainability by developing partnerships with NGOs and by following generally accepted in society and business communities. Following this change, the emphasis on promoting new concepts, including: enterprise sustainable (Candea, 2006), corporate social responsibility (Kotler & Lee, 2005), sustainable development (McMichael, 1995), business ethics (Hoffman, 1995), organization learning (Smith, 1999) etc.
So, as a consequence of the increasing importance and deepening problems of sustainable development, in 2000, in Friibergh (Sweden) was adopted the declaration on the promotion of sustainability science (Statement on Sustainability Science), which aims to improve "the interactions between nature and society" substantially, taking into account that, during the last decades the development direction of mankind has not been sustainable and the need to reconcile social development goals with the environmental limits of the planet in the long-term, paying particular attention to how environmental changes affect society.
"The Sustainability science differs totally from other current fields of science, with regard to structure, method and content. It deals with new approaches connected to non-linearity, complexity, large gaps of time between economic and social actions and their consequences, the development of specific theories and semiquantitative models.
Addressing the challenges of sustainability science requires a clearer delimitation of the responsibilities of the government, an improvement of democracy, a stronger awareness to citizens, new styles of institutional organization to strengthen and support interdisciplinary research, in the long-term, inclusively in developing countries, involving scientists, practitioners and citizens in setting priorities, creating new scientific knowledge, assessment of possible consequences and testing them in practice"(Zamani & Gerasimos, 2007).
"Business sustainability, defined as the ability to thrive without a foreseeable timeframe, is treated as equivalent to the sustainable development concept implemented in the business world" (Cândea, et al. 2006). In the long-term, the economic and societal interests converge; this term is often used in conjunction with, and in some cases as a synonym for, other terms such as "sustainable development" and "corporate social responsibility".
Enterprise sustainability admits that corporate growth and profitability are important; they also need profit to pursue social objectives, especially those related to sustainable development - environmental protection, social justice and equity and economic development.
A review of the literature suggests that the concept of company sustainability borrows elements from four concepts: 1) sustainable development, 2) corporate social responsibility, 3) stakeholder theory and 4) the theory of corporate responsibility (Wilson, 2003). The contributions of these four concepts and their relation with sustainable enterprise are illustrated in figure 1.
Figure 1. Evolution of enterprise sustainability
Source: Adapted from Wilsen, M 2003, "Improving the practice of management", IVEY Business Journal, pp.3.
To identify and use this convergence, managers need a strategic vision to ensure on the one hand, the matching of internal factors determining success and, on the other hand, their alignment to societal determinants.
The engagement of corporate societal responsibility is the contribution that the business can make to sustainable development and at the same time, an important factor for business sustainability.
The interdependence between business prosperity on the one hand, and social prosperity and integrity of the natural environment on the other hand, shows that any discussion on business sustainability loses its meaning if there is no reference to the conditions of sustainable development. In pursuing the sustainability of the business they run, managers need to incorporate in the business strategy objectives related to the social and natural environment, because, in the long-term the business, social and environmental concerns must converge.
Why should SMEs to develop partnerships with NGOs in pursuing of sustainable business purpose?
First, because the sustainable development implies the adoption of strategies to enable the company to meet the current demands of shareholders and other stakeholders and, at the same time, protect and improve human and natural resources that will depend on its future activities.
Enterprise sustainability can be ensured only by investments made today for future results, but they are related to the business interests of the company.
2. THE DYNAMICS OF PARTNERSHIPS BETWEEN SMEs AND NGOs FOR THE SUSTAINABILITY OF THE ENTERPRISE
The business world is changing so what "used to work", which was competence in running a business, which determine the success so far, should be reconsidered.
In such an environment and given the pressures on SMEs, their efforts to survive, the problem of strategic orientation, on long term and thus of business sustainability seem to be lost.
We consider, that even now, just as in the '30s the changes induced by the business world crisis, bring with it, despite (or precisely because of) a hostile environment that can be qualified, the opportunities and the need for profound changes in the way business are viewed and managed, making business sustainability issue a more current one.
It is clear that to achieve a partnership arrangement has become important, in terms of complexity of the cooperation needs between various factors in organizations, each with prospects, resources and their comparative advantages.
The model proposed by Smith (1999) on collaborative learning (Figure 2) comes only to support the idea that partnerships between SMEs and NGOs can increase the prospects for sustainability of the company.
Figure 2: Collaborative learning cycle
Source: Oncica Sadislav, D. & Candea, D. 2009, „Learning organization, strategic feature of sustainable enterprise: coordinated theoretical ", Sustainable enterprise, education and research-center series of publications Eco-management, Publisher UTPRESS, vol. IV, pp.21-31.
Learning organization develops "dynamic capabilities", namely the organizational ability to learn, to change, to renew itself in time and to adapt, using search, finding and solving problems - at organizational level. These dynamic capabilities are exercised in the tension created between the organizational need to operate on solid base, on one hand, and the organizational need for fundamental change in time (induced by the environment necessary to enable the organization), on the other hand.
When a enterprise and a nonprofit organization accept that the requirements of each of them can be met by the other one, they engage in what is called a partnership (Sagawa & Segal, 2000). A partnership is a type of cooperation to achieve common goals through joint management of network resources and with the skills and strengths of both partners. The existence of a common goal to be achieved by working together over a period of time, in accordance with the original plan, makes the difference between the two concepts: collaboration and partnership, as long as, semantically, the differences between the two words are hardly noticeable.
Therefore enterprises need to engage in cooperation with the non-profit sector to their mutual advantage. They must meet not only economic goals, but also social and environmental ones, and these partnerships, enterprises -NGOs, are regarded by businesses as an opportunity to reconcile the two aspects.
The partnerships between enterprises and NGOs are not successful by accident. There are many issues that need to be considered when one plans to start a partnership. Some of these problems are emphasized clearly by Sagawa and Segal (2000), involving, for example, a self-assessment in the initial stage, a carefully made analysis of the party that will contribute to the partnership, an analysis that will establish the common elements in the missions of both organizations, the proper alignment of their values, the correct and coherent distribution of management responsibilities, the respective competence areas, the use of resources, the open communication and genuine interpersonal relationships between the executives of both organizations, the assessment of and the predisposition to a process of continuous learning and the constant progress and performance monitoring in ways predetermined by an agreement between the organizations.
Kanter (1994) believes that individual excellence, importance, interdependence, investment, information, integration, institutionalization, and integrity are the main drivers of effective collaboration between organizations. Both attractivity and challenge, encountered in the process of planning partnerships, are generated by the notion of developing new relations between factors that have diametrically opposed interests and operate within divergent strategic and operational realities.
Therefore, expression of intent and performance are important preparations for a partnership with awareness of the requirements for cooperation between different actors in the organization, as each has perspectives, resources and their comparative advantages.
3. METHODOLOGY
To achieve the objectives of the research was conducted a questionnaire-based SMEs in Romania, from 17 January 2011 - March 30, 2011. The questionnaire included 25 items, both closed questions, which aimed at the general features of sustainable enterprise in Romania achievable through partnerships with NGOs and open, designed to capture the wide range of features of the area investigated.
By applying this questionnaire we tried to obtain information on: identifying the involvement of SMEs in partnership with NGOs; examine how the respondents have chosen to pursue such partnerships; determining key strategic objectives that respondents take into calculation to improve prospects for sustainability of their enterprise; identifying how consumer perception is taken into account on the social and environmental impact of products / services; identifying the existence of a strategy that the management team to pursue business processes; determine current situation in which the environment where SMEs are evolving; identifying the degree in which the action for environmental protection and social, finding out how the choice of resources (when done on the reasons responsible).
It distributed 35,000 questionnaires were sent to the e-mail SMEs, complemented by self. They received 508 completed questionnaires, of which 484 SMEs. This number exceeds the minimum sample size calculated below.
To determine the size of the minimal target-group, we used the following formula (Balaure, 2002):
(1)
where:
n = the size of the minimum target-group;
t = 1.96 for target-group > 400 (coefficient corresponding to the probability with which the results are guaranteed, from the statistic tables of the Student repartition – corresponding to a probability of 0,95);
p = 0,5 (the weight of the target-group components possessing the investigated characteristic; when „p”-value is unknown, it is consider to be = 0,5 - corresponding to the maximum dispersion);
∆ω = 0,05 (acceptable limit error).
By introducing the values t, p and ∆ω in the formula, we obtained the value: 384 enterprises for the minimum target-group (3):
enterprises (2)
Detach from this finding that the willingness of SMEs to communicate information on the development of partnerships with NGOs for sustainable enterprise is limited. Although the opinion of those interviewed is statistically representative of the population of SMEs in Romania on the development of partnerships with NGOs for sustainable enterprise, exploring answers give some assumptions and even without being able to identify trends on a rigorous generalization.
The purpose of this survey was to capture the views and perceptions of SMEs engaged in partnerships with NGOs the perspective of sustainability of the enterprise, on the positive and negative assessments of practice and considerations on the benefits of programs and campaigns that are subject of such partnerships.
In the research conducted we wanted to verify the following assumptions:
H01 - At least 25% of the SMEs have started partnerships with NGOs.
H02 - Within at least 25% of the partnerships the communication between the company managers and NGOs is the main impediment in the partnership development.
H03 - Most of the inquired SMEs consider the small number of developed projects as being the main impediment in choosing an NGO.
H04 - At least 25% of the SMEs neither collect their waste selectively, nor recycle it.
H05 - Most SMEs use neither alternative energy, nor own technologies of waste recycling.
H06 - Most SMEs are reducing the discharges in the environment.
H07 - Most SMEs entrust their waste to other enterprises.
H08 - At most 25% of the SMEs are concerned with the recovery of the social environment.
H09 - Most SMEs agree about trying to launch or use new ways, administration or organization techniques, regarding the environment.
To assess the responses was used a scale with five levels of appreciation, from "strongly disagree" to "strongly agree" (as appropriate).
4. FINDINGS
4.1 Evaluation of strategic objectives regarding SMEs development
These aspects of the questions that went in this category focused on the idea that an organization clearly defined strategies and organization values are starting points in implementing sustainable development concept. Strategies identified are in fact a clear and consistent guidance to address future situations and those involving dilemmas or conflicts of interest.
Organisations should consider the objective to support sustainable development and transform them into policies and current actions, to integrate the mission and vision.
You must include the internal and external stakeholders, and their current and future needs in developing, reviewing and adjusting policies and strategy.
Partnerships can play a multiplier role in solving many societal problems facing SMEs.
Analysis of survey data showed a wide range of issues, synthetic, we present below. In some cases the sum of columns of figures not cumulative percentage of 100%, the difference being between 2-3%, as is shown rounded value without decimal point two decimal places.
As can be seen in Figure no. 3, 44% of respondents in Romania SMEs disagrees business to move to another region if the situation would be unfavorable.
From the perspective of sustainable enterprise, SMEs investigated in Romania (94%) agree with this criterion, considering it important. One problem that was highlighted by comparing these results is that 84% of SMEs said that it is important to survive.
The result is that 10% of SMEs will be sustainable but I do not necessarily survive outlined hypothesis can be linked to understand how some business sustainability. We can say that they meant by "sustainable" that must "protect the environment" and not as SME to last very long.
Thus, even if they do not necessarily SME to survive, thinking that it would "liquidate" as long as the SME will work they consider it better to protect the environment and non-renewable resources (that is to be sustainable).
Figure 3: Opinion of the inquired SMEs about development
With a percentage of 86%, investigated SMEs agree that profit maximizing firm is its main objective.
Most respondents in Romania (84%) totally agree that their company to survive. However, there are companies (9%) who consider that they should not survive, either because they have goals with deadlines relatively close to reaching deal that would transform radically, either because the developer believes that the work does not longer meets the aspirations and wishes to close.
A proactive approach have 87% of SME investigated considers that the firm must develop. By applying the concept of sustainable development into strategic option, a company can benefit both community members and the company itself, something to which Romanian SMEs need to more work.
4.2 Development of partnerships between SMEs and ONGs
Partnerships between business and NGOs is an advantage for both parties and should be strongly used, unfortunately this is not the case in Romania where such partnerships are less frequent. Confirmed by the response of over 32% of SME investigated presented in Figure no.4.
Thus the hypothesis "At least 25% of SMEs have formed partnerships with NGOs" is confirmed.
Figure 4: SME opinion on the implementation partnerships with NGOs
4.3. The responsibility of SMEs regarding environment practices achieved for company sustainability
To access the European market globalized, companies will be increasingly concerned with environmental protection and follow good management of resources.
It also will increasingly insist that they have increased responsibilities in environmental protection, and to take precautions.
Small social involvement increases their reputation in the community to improve personal image of the owner and administrator, to increase confidence in the company, to increase loyalty to the company.
All this guarantees the stability of relationships with business partners, employees and community.
Figure 5: According investigated SMEs on environmental practices they carry
As figure no. 6, most SMEs investigated other companies entrust waste (71%), 75% of respondents say they reduce discharges into the environment, and 78% energy saving policy lead and water.
Hypothesis "Most SMEs waste entrust other enterprises" can confirm that.
Regarding hypothesis "Most SMEs reduce discharges into the environment", it is confirmed by 75%. Most respondents say they use proprietary technology to reuse waste or alternative energy.
Thus the hypothesis "Most SMEs do not use any alternative energy, but no proprietary technology to reuse waste" is confirmed.
Most respondents say they practice selective waste collection (71%) and have made an environmental assessment of the enterprise (53%). Hypothesis "At least 25% of SMEs do not practice selective waste collection or recycling" and it is confirmed.
Figure 6: Opinion SMEs investigated the prospects for sustainability
The responses outlined in figure no. 6 shows that 71% of respondents agree with the concerns of restoring the natural environment and 66% agreed with concerns about the social rehabilitation. Thus, SMEs contribute to improved living and working conditions, income, educational level, etc., The extent of activities that take place in that community, turned on that small number of employees.
Hypothesis "Not more than 25% of SMEs are concerned with restoring social environment" is disabled.
Advising clients on the responsible use of products to minimize environmental impact of their use, 69% of respondents agree and 72% of them affirm their agreement to the idea of taking into account customer perceptions on the social and average products / services provided.
A fraction of 78% of respondents are interested to launch or use new products / services or technologies that take into account environmental and 82% are considering reducing negative environmental impacts of products / services. Hypothesis "Most SMEs are willing to try to launch or use new methods, management techniques and organization, respecting the environment" is confirmed.
Even if an SME develops programs to support sustainable development, their success will not be achieved unless the target audience is informed of these actions. In this sense, communication practices has taken a leading role.
Establishment of partnerships between business and NGOs is a must increasingly necessary, as by their collaboration can achieve remarkable results in terms of prospects for sustainability of the enterprise.
European strategies and policies for sustainable development is promoted as a solution to problems more difficult facing SMEs as the European market and the global.
CONCLUSION
In spite of all problems and the process complexity, especially in the stage of partnership initiation, the CSR projects provide new opportunities and challenges for the companies and it is expected that they sharpen in the coming future. Among these we mention:
• Raising the performance target. The innovations, once brought outside of the partnership, can create a competitive advantage for the company.
• Raising the value of the business and of the ecologic benefit. A partnership between the business sector and an NGO can bring immeasurable benefits regarding the business and the environment, as well as low costs, low risk, the development of a new market and an increasing brand value.
• Obtaining new abilities and prospects not available within the company. The partnership with an NGO can help the company address problems, for whose resolution it otherwise does not possess the necessary experience, abilities or resources. The NGOs also provide a valuable prospect by solving these problems.
• Favouring the long-term orientation. Though the vast majority of companies and organizations have long- and middle-term objectives and visions, many times they let themselves be overcome by the daily issues, with immediate priorities. A partnership planned to address a long-term problem can provide the external incentive necessary to a change of perspective, in the sense of favouring a long-term orientation.
Therefore, a partnership between SMEs and NGOs, although it may be difficult, especially when addressing sensitive or intractable problems can benefit both businesses and society, creating shared value.
The concept of sustainable development thus offers new ways to guide SMEs in terms of competitiveness. When an SME chooses to develop its strategy to support the sustainable development, this concept will be reflected in all company activities. An SME can develop strategies for sustainable development, regardless of the field and area of activity.
In this era of rapid globalization, of the ever-changing mentality of the consumer and of the stakeholders’ communication demands, the progressist companies believe that the corporate social responsibility must be administrated as seriously as the business itself, since it affects in a high degree the image and reputation of a company. From the developed research it comes out that more and more companies understand that their role is no longer reduced to making profit at all costs; now, the ways of making profit count too. The partnerships formed between the business sector and the NGOs and the performance of corporate social responsibility bring their contribution to a broader sustainability perspective of the enterprise.
Note: This work received financial support through the project "Increasing the quality of doctoral studies in engineering sciences to support knowledge-based society", contract: POSDRU/107/1.5/S/78534, project co-financed by European Social Fund Resources Development Operational Programmer human 2007-2013.
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Author(s):
Dr.ing.,ec. Elena-Simina LAKATOS
Prof.dr.ing. Dan CÂNDEA
Technical University of Cluj Napoca
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