Perspective: From SMEs to MNCs, Responsible Leadership is Key
Wednesday, July 15, 2020
An entrepreneur producing rose essence for cosmetic use has a vision to scale her business and provide jobs to refugees. Another entrepreneur, offering healthy pizza on a vegetable crust, has a mission to provide more nutritious lunch options in schools. These two entrepreneurs, Zeinab and Mahmoud, are Syrian refugees in Mersin, Turkey who have taken part in the Livelihoods Innovation through Food Entrepreneurship (LIFE) Project, funded by the U.S. government. They demonstrate how owners of small and medium-sized enterprises (SMEs) are in the position to practice responsible leadership and be agents of change in their communities.
Responsible leadership, broadly defined here as having the mindset to address societal challenges, is relevant for all businesses – no matter the size, sector, or growth stage. It is not exclusive to only those who identify their businesses as social enterprises or multinational corporations (MNCs) with a wide reach to influence. All businesses can exercise responsible leadership and seek to have a positive impact on society and the environment.
This is one of the points I made on a panel about the intersection of responsible leadership and entrepreneurship at the Academy of Management’s (AOM) Specialized Conference on Responsible Leadership in Rising Economies held in Bled, Slovenia last fall. Academics and managers convened to discuss how to support the development of responsible management and sustainable innovation in rising economies. The conference took place following the statement from the Business Roundtable (BRT) which called for a redefinition of the corporation – shifting from serving only its shareholders to realizing the need to modernize and promote “an economy that serves all Americans.” This means delivering value to customers, investing in employees, doing business responsibly with suppliers, and supporting people and the environment where businesses operate – all the while generating long-term value for shareholders.
The Coca-Cola Company, one of the 181 companies that signed this statement from the BRT, was the topic of the conference’s keynote address. Therese Noorlander, Sustainability Director of Europe at Coca-Cola, stated that sustainability is no longer a topic for academic and activist circles on the fringe – it is now a central topic for CEOs and employees at all levels. Noorlander pointed to how the past decade has been transformative as natural disasters and environmental uncertainty have contributed to an increase in activism and consumer engagement. Coca-Cola’s vision is to achieve a world without waste and, as the world’s largest beverage company, sees itself as playing a key role in inspiring people to “close the loop” and reduce, reuse and recycle.
Following the presentation from Coca-Cola, a panel representing academia, politics, and business discussed how each arena is thinking about responsible leadership for a common future. Discussion topics included:
- Critiques of corporate efforts to exercise responsible leadership:
- A gap exists between what businesses promote to stakeholders about sustainability versus what is actually understood and practiced by its employees.
- Even businesses with the best of intentions need to be aware of unintended impacts. A campaign to work with local organizations to collect waste, for instance, can displace those who rely on collecting waste for their livelihood.
- Importance of global cooperation for working toward a common future:
- The UN Sustainable Development Goals (SDGs) facilitate this by offering a roadmap and broad language for all stakeholders and countries to work together.
- The role of universities in cultivating responsible leadership:
- SDGs should be integrated into curricula, and there is a need for both professors and students to be educated on them.
- With regards to the BRT statement and its impact on business schools, one panelist commented that there was never business education without social impact, noting that some impacts are against the greater good. While discourse is currently focused on positive social impact, this is recent, and business and social impact have always been linked.
- The challenge of measuring impact:
- Facts and figures hinder success for advancing sustainability agendas. Danilo Turk, former President of Slovenia, suggested that we “go beyond this theory of what we cannot measure, we cannot manage.”
- From a business perspective, metrics are important to investors and more than anecdotal stories are needed as a basis for accountability.
As the world continues to experience extreme environmental events, global healthcare crises, and social conflicts, calling for us to scrutinize our own human actions, more companies and entrepreneurs will need to approach business practices as responsible leaders. Productive discussions involving cross-sector representation, such as the case with the AOM panel described above, will continue to bring sustainability issues to the forefront and advance the relevance of responsible leadership in business.
At the William Davidson Institute at the University of Michigan’s Entrepreneurship Development Center, we often integrate responsible leadership concepts into our programs, which are designed for entrepreneurs in low- and middle-income countries (LMIC). For example, during a four-month entrepreneurship incubation program, participants of the LIFE Project in Turkey learn about topics such as emotional intelligence, leadership roles and styles, how to develop mission statements, valuing employees, and creating a social or environmental impact through business. By covering such topics in entrepreneurship development programs for SMEs in LMICs, we equip entrepreneurs like Zeinab and Mahmoud to be responsible business leaders and make a difference in their communities.
It is clear that responsible leadership is a concept relevant to all business leaders, no matter the size or mission. SMEs practicing responsible leadership are effective in identifying local problems and serving the unique needs of their communities and employees, while responsible leadership in MNCs can result in significant changes across expansive supply chains, influence on public discourse and policy, and more. All leaders of businesses from small to large should consider how they can be responsible leaders within the context of their own businesses, with the understanding that their actions have a long-lasting impact on the people and environment around them.
 Panelists included: Danilo Türk, former President of Slovenia
Danica Purg, President and Dean of IEDC-Bled School of Management
Therese Noorlander, Sustainability Director Europe of the Coca-Cola Company
Mollie Painter, Coca-Cola Chair of Sustainable Development at IEDC-Bled School of Management
Arnold Smit, Associate Professor, University of Stellenbosch Business School
Frank Barz, Head of Industrial Internet of Things at T-Systems
Liangrong Zu, Senior Program Officer of International Labour Organziation
Moderator: René Schmidpeter, General Secretary, World Institute for Sustainability and Ethics
Kristin Babbie Kelterborn is a Senior Project Manager for Grants Management & Entrepreneurship Development Center.