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1 Economic, Social and Ecological Challenges in Economy

Nobody would deny any more that we find ourselves in times of global change and high uncertainty. Financial crisis, scarcity of resources, climate change, demographic development, political upheaval and technological progress are becoming the main forces of our social development. This affects the thinking and behaviour of people as well as the prevalent political systems. The framework of national and international economic systems and enterprises’ ability to compete are changing dramatically as well. More and more managers are realising that operating sustainably is becoming the central challenge for their enterprises as well as for the economy as a whole. The financial, the energy and the automotive sectors have already been challenged hard by the current developments – and some enterprises were able to survive thanks to massive governmental support (assumption of liabilities, scrapping premium) only. In other sectors of the economy as well it can already be observed that only the enterprises that cope best with the current challenges, i.e. actively take the opportunities inherent to the crisis, will be tomorrow’s winners. The current ecological, social and economic challenges and the connected market changes will therefore create winners and losers. This means for all success-oriented enterprises that they have to increase innovation (product, process, management and social innovation) and react to current challenges with proactive management approaches.

2 Management by Sustainability: Innovation and Holism

This realignment of business models and processes can, according to recent management pioneers, only succeed if they are understood as parts of a greater whole and the current dichotomy between economy and society is overcome productively.Footnote 1 Viewing enterprises as part of the solution and not as part of the problem is a big opportunity within the crisis – and presumably our only chance.

In order to view enterprises as drivers of social innovation, it is necessary not to reduce economic considerations to questions of business administration, but to always underlay them with socio-political reflection. The question of CSR as Sustainable Entrepreneurship thus becomes the central strategic question for every enterprise.Footnote 2 In the past there have been many misunderstandings and incorrect interpretations of CSR. Therefore, the goal of the following paragraphs is to highlight the key points of modern CSR in its new interpretation of Sustainable Entrepreneurship.

3 Integrative Management: Connecting Social Case and Business Case

For a long time fundamental critics of our economic system have argued with defenders of narrow profit-oriented management systems about whether economic reasoning has priority over ethics or vice versa. The participants of the discussion usually tend to think in stark contrasts, a very one-dimensional view that cannot be solved constructively and leads to never-ending conflicts. The answer to this problem caused solely by intellectual deliberations, however is relatively simple if the prevalent either-or approach is turned into pragmatic both-and thinking.

This means an integrated view on economic, social and ecological questions, instead of playing them off against each other as isolated issues. This is where the strength of the current discussion of Sustainable Entrepreneurship lies, wherein a new, productive view on the contribution of corporate responsibility to both one’s own business and social progress takes form.Footnote 3 It is based on the assumption that entrepreneurship can only be reconstructed adequately if both the individual component of ‘profit’ (business case) and the social role of ‘create added value for society’ (social case) of the enterprise are considered equally. Sustainable entrepreneurship then has the goal to create added value for both society and the enterprise itself.

The actions of successful businessmen in the times of industrialisation may serve as an example of this view. Responsible businessmen have reacted to the huge social and ecological challenges by developing, for example, corporate pension funds, employee participation, education concepts and health or social projects. These success models practised in the enterprises were taken up by the state and pension funds, and dual education and public healthcare arose.

Like in the times of industrialisation, today we are once again dependent on enterprises that actively shape our country’s framework and support the government in further developing social market economy by integrating the concept of sustainability. Enterprises are like laboratories in which new ideas are developed, tested and optimised. Often only through these experiences does it become possible to spread innovations to the whole sector or even society as a whole. In order to achieve that, social, ecological and economic questions and concerns have to be integrated systematically into management systems, thereby becoming part of the central DNA of the enterprise.

4 Strategic Management: Innovation Instead of PR and Compliance Alone

It is clear that Sustainable Entrepreneurship cannot and must not be mere PR or greenwashing (as the concept of CSR has often been accused of by its critics). A modern understanding of sustainable management implies defining enterprises as part of society and systematically identifying actual and potential areas of conflict between the enterprise and its environment. These conflicts are then reduced or solved by intelligent management approaches or by product and process innovation. This aims at adapting the business model to the ecological, social and economic framework in a way that generates added value from the given resources both for the enterprise and for society.

The necessary new problem-solving approaches require entrepreneurial innovation.Footnote 4 Thus, it is evident that Sustainable Entrepreneurship is much more than mere compliance. One could call compliance the compulsory and CSR in the meaning of Sustainable Entrepreneurship the voluntary exercise. Realising that, many enterprises now face the challenge of turning a defensive, compliance-oriented form of responsibility into a proactive, opportunity-oriented view of Sustainable Entrepreneurship. To accomplish this, enterprises as citizens have to redefine both their business goals and their relations to politics and society by systematically examining the current ecological and social challenges as well as their stakeholders’ interests and integrating them into their business model. Integrated management that implements responsibility into all management processes is therefore increasingly becoming a prerequisite of economic activity.

5 Proactive Management: Turning Implicit Action into Explicit Strategy

Some enterprises still fail to see the necessity of working systematically on the topic of responsibility. Especially small and medium-sized businesses maintain that they, owing to their strong connection to their employees and their environment, work responsibly by default. This may be true in many individual points, but working this way is no substitute for an explicit management approach, which takes up and permanently develops the opportunities provided by responsible economic activity. The following paragraph will therefore show the advantages of explicit CSR management compared to implicit responsibility:

First, explicit CSR approaches allow for a stronger involvement of employees and a better incorporation of scientific findings in taking responsibility. In this way, not only are existing innovation potentials better utilised, but the identification of employees and managers with taking responsibility is enhanced. Second, an explicit CSR approach facilitates the continuity of an existing culture of responsibility when transferring a business, as a strategy of responsibility that has been discussed and developed explicitly with the successors can be passed on to the next generation with less friction. Third, an explicit strategy of responsibility can be used to convey one’s position to external partners (international customers, suppliers etc). Fourth, especially with a dynamic development of the enterprise, it is often indispensable to develop the enterprise’s role in society as well. For example, if a business is growing successfully, in most cases it is necessary for the responsibility that was envisioned by the company’s founder to ‘grow’ too. Additionally, increasing professionalism is demanded from large-scale enterprises in dealing with responsibility. This has consequences for small and medium businesses as suppliers, as they are confronted with new requirements/criteria on the part of the large-scale enterprises.

6 Conclusion: The Development of CSR into a Management Concept of Sustainable Entrepreneurship

Especially as general confidence in the economy is declining, it is becoming increasingly important for enterprises to report their position on responsibility openly and to communicate with relevant target audiences. To accomplish this, more transparency is needed but is not sufficient on its own. In the sense of the idea of social market economy, entrepreneurial activity always has to be ‘approvable’. Entrepreneurial activity will be judged increasingly by the extent to which it considers the interests of society. Therefore, without an explicit CSR strategy, enterprises lag behind the potential benefits of their responsible economic activity, this means the resulting opportunities are not taken to their full extent.

This is why CSR has developed in recent years from isolated engagement (sponsoring and donations) and legal compliance to explicit responsibility management in core business, along the triple bottom line of economic, social and ecological factors (CSR 2.0).Footnote 5 Also, the question of how profit is used is no longer the central point, but rather how profit is made. With the next step the general question of the contribution of enterprises to social innovation comes into focus. This conscious strategic positioning in society (business in society) aims at increasing social and entrepreneurial added value at the same time (shared value). Businesses as responsible corporate citizens are no longer viewed as a problem, but provide solutions for the pressing challenges of our time. This realignment of enterprises (in the sense of Sustainable Entrepreneurship) is the actual and fundamental contribution of economy to a sustainable development of our society. It is an investment in the competitiveness of enterprises and the wellbeing of future generations at the same time.