Changing Notions of Ethics in
SMEs
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
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Business Ethics
in Czech SMEs
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Dytrt Study (2011) - Survey 2500 SMEs / 18%
response rate
Key problems:
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not enough knowledge on benefits
management practices rooted in the past
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
2
EU / German Studies:
Matching Experience
1. EU Project: Mittelstand (Germany/France/Poland)
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same problems as in CZ / Dytrt study
training / workshops / teaching material etc.
had a considerable impact on the
participating SMEs
2. Leuphania University, Lüneburg, Germany:
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study with large German companies 2006 2010
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rising awareness in firms concerning CSR
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
willingness to use strategic tools and
methods to implement CSR projects
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Global Corruption in 2010:
Percentage of People Reporting that
the last bribe paid was to...
Source: Transparency International 2010 Global
Corruption Barometer
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
4
Two sets of Interrelated
Behaviors
1. Individual
2. Organizational
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
5
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Ethical Decision Making Processes:
Rational or Emotional?
Very often driven by assumptions,
unconscious belief systems (Kahneman
2010, Ariely 2011)
„What-the-Hell-Effect“ (Ariely, 2012)
ROI for CSR often generic and not
transparent
Innovation resistance (We have always
done it like that / We have never done it
like that)
Unable to deal with conflict-of-interest
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
6
Dramatic Increases in Certain
Misconduct Posing Risk
TYPE OF MISCONDUCT
2009
2011 INCREASE
Sexual harassment
7%
11%
4ppts
Substance abuse
7%
11%
4ppts
Insider trading
1%
4%
3ppts
Illegal political contributions
1%
4%
3ppts
Stealing
9%
12%
3ppts
Environmental violations
4%
7%
3ppts
Improper contracts
3%
6%
3ppts
Contract violations
3%
6%
3ppts
Improper use of competitor’s information
2%
5%
3ppts
Health or safety violations
11%
13%
2ppts
Anti-competitive practices
2%
4%
2ppts
Source: Ethics Resource Center, 2011 National Business Ethics Survey
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
7
Record Number of Employees
Choosing to Report Observed
Misconduct
Source: ECR, 2011 National Business Ethics
Survey
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
8
The Impact of Business
Ethics in SMEs
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Paradigm shift in management
practices:
• Redefining / developing a distinct
competitive strategy
• Development of a strategic CSR/CSI agenda
•Making CSR/ethics part of business strategy
•Unique value proposition
•Contributing to a reliable and transparent
business environment in the whole economy
•Accountability in business practices
•Making CSR approach integral part of firm’s
competitive strategy
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
9
CSR as Intangible
Asset for Value
Creation
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Establishing and retaining long-term profitable customer
relationships
Avoiding blackmail traps
Reliability and accountability in business practice enable all
market participants to compete on an equal and fair basis
EU will further push efforts to impose corporate governance
codes of conduct also on SMEs
Unethical - and especially illegal - behavior affects the whole
economy negatively
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
10
Creating a Corporate Social
Agenda
Source: M.E.Porter, M.R. Kramer, HBR, May 2009
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
11
Creating a Social Dimension to the Value
Proposition:
From CSR to CSI - Corporate Social Integration
•Strategic CSR unlocks shared value by
investing in social aspects of context that
strengthen company competitiveness.
•At the heart of any strategy is a unique value
proposition: a set of needs a company can meet
for its chosen customers that others cannot.
• Strategy is always about making choices, and
success in corporate social responsibility is no
different. It is about choosing which social
issues to focus on.
(Porter and Kramer, 2009)
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
12
Balanced Scorecards as a
Powerful Planning Tool in SMEs
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Align the organization and the
individual and organizational
behavior in the firm with its
strategic goals
Developing explicit competitive
strategies also in SMEs
Make planning a conscious
process linked to business
performance
Create transparency for
relevant stakeholders,
especially employees,
customers and partners
R.S. Kaplan, D.S. Norton, How to Implement a New Strategy without Disrupting your Organization, May 2009
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
13
The Importance and Impact
of Key Performance
Indicators
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Conscious accountable planning process
Setting clear goals and objectives
Creation of unique value proposition
Improved market positioning
Development of a distinct competitive
strategy
Controlled strategy implementation
Creation of a value system which is in
accordance with the overall performance
goals
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
14
Source: Kaplan, Norton, Strategy Maps, 2004
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
15
Put Strategy Maps in
Perspective
Porter on Strategy:
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Kaplan, Norton on Strategy
Maps:
A unique combination of
activities that deliver a
different value proposition
than competitors or the
same value proposition
better
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
•
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Framework that allows
companies to identify and
link together the critical
internal processes and
human, information, and
organization capital that
deliver the value
proposition differently or
better
Conclusion
• A reliable and accountable business environment is
important to ensure equal opportunities for all market
participants
• A distinct corporate and business strategy helps SMEs to
develop sustainable competitive advantage and longterm
business success
• CSR/CSI in Czech SMEs makes a difference also in the
positioning of companies in the EU and the overall value
proposition
• Ethical organizational behavior helps finding the right talents
• Strategy Maps, Balanced Scorecards and the definition of
Key Performance Indicators help SMEs to implement their
competitive strategies
BUT:
• It takes a paradigm shift for business owners, business
leaders and managers!
Irena Jindrichovska, University of Economics and Management
Gabriele Meissner, Anglo-American University
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