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they need a stable, ideally prosperous environment to create demand for their products and services. In turn, society needs companies that provide jobs for its citizens. However, this connection easily gets lost nowadays, since jobs and production facilities can easily be relocated elsewhere. Still, it is possible to enhance competitiveness while advancing the local social conditions at the same time. Only, management ethics are rarely seen to provide an additional benefit to improved reputation and going in line with the law, unfortunately (Porter & Kramer, 2011, pp. 65–66). On the other hand, managers with a rather philanthropic mindset can be found particularly in SMEs. In these smaller companies, often family-businesses, altruistic values, ethical considerations, and trustful relationships with stakeholders and the community very often build the core of a company.
Thus, a lot of SMEs have accorded with the CSR concept for a long time, although it is not always explicitly part of their strategic orientation, happens in an unstructured and less formalized way and hardly takes economic viewpoints into account (Vázquez-Carrasco & López-Pérez, 2013, pp. 3211–3212). Further, it was found that people with high incomes and extraordinary career opportunities are less likely to believe in supporting others. Nevertheless, managers as well as non-managers state the importance to care about others and society rather often nowadays. Thus, including different hierarchical levels into the concept may come as an encouraging force to increase understanding about the importance of ethical values (Factor et GCBF ♦ Vol. 11 ♦ No. 1 ♦ 2016 ♦ ISSN 1941-9589 ONLINE & ISSN 2168-0612 USB Flash Drive 283 Global Conference on Business and Finance Proceedings ♦ Volume 11 ♦ Number 1 al., 2013, pp. 154–155). Overall, CSR activities must go in line with a company’s business products, services, and procedures in order actually create value (Husted & Allen, 2009, p. 791).
Luo and Du (2014) conceptualize that CSR does have a positive impact on innovation. In their research, they state that CSR programs usually enhance broad and deep relationships with stakeholders, which results in sharing and exchanging knowledge with these stakeholders. As an outcome, these stakeholders’ knowledge strengthens a company’s internal knowledge and brings in new perspectives (Luo & Du, 2014, p. 1). However, it depends on competitive pressure and R&D investments as well. Of course, a highly competitive marketplace forces companies to be more innovative and higher R&D investments certainly contribute to more innovation capabilities as well. Still, the authors’ research clearly brings to light an interrelation between CSR activities and firm innovation via correlation and regression analysis (Luo & Du, 2014, pp. 4–9). Thus, it is concluded that CSR does not only help to make customers perceive a company in a positive way, it also boosts innovation. In that, managers can actually use CSR as an enhancement for innovation performance and are supposed to build a path to bring external stakeholders’ experience and creativity into the organization (Luo & Du, 2014, p. 10).
For Porter and Kramer (2011, p. 64) the creation of shared value for businesses and society does not have anything to do with philanthropy, rather it is a revolutionized way to economic success. They argue that working on the fundamental needs of customers, instead of just trying to increase buying quantities or frequencies, for example, open up a whole new range of possibilities for innovation. To explore societal needs might lead to recognition of overlooked market needs and opportunities to real differentiation and repositioning. Further, society benefits as well, because businesses are much more efficient at marketing healthier or environmentally friendlier products, for example (Porter & Kramer, 2011, pp. 67–68). It is clear for the authors that productivity – and in that, process innovation – is sacrificed when prices are not transparent or unfair, and when workers or suppliers are exploited. Thus, “Not all profit is equal.” is one of the authors’ main statements arguing that when profits involve a social benefit, it leads to a higher level of capitalism – it results in an advanced society where companies grow even more and endurably (Porter & Kramer, 2011, pp. 73–75). In fact, an interesting number of companies state that sustainability even contributes to their profits. It is less clear, however, how it results in innovation (Gobble, 2012, p. 64).
Actually, managers start to realize that social problems constrain their operations on the one hand. They also provide rich possibilities for growth, on the other hand, though.
When a company’s mission includes the aspect to create shared value for itself and society, it channels resources to the enhancement of innovations that contribute to the solution of social problems (Pfitzer et al., 2013, pp. 101–102). The Austrian Chamber of Economics is convinced that when companies invest in CSR, they not only give something back to society and the environment, they also reduce risks, increase employees’ motivation, strengthen their customer relationships, grow innovation potentials and, thus, generate competitive advantage (Austrian Chamber of Economics (Wirtschaftskammer Österreich - WKO), 2015). Further, a higher willingness to pay more for environmentally friendly products, for example, can no longer be denied in industrialized societies. Therefore, companies actually face the challenge to innovate in sustainable solutions. Full business models that focus on reducing the carbon footprint and launching ecological products have evolved in the last couple of years, although organizations need to be very flexible for this. In fact, response times to changed market needs and adopted customer interests must be reduced when putting efforts into sustainable innovation (Slotegraaf, 2012, p. 350). Nike, for example, introduced a sustainability committee in their board a couple of years ago. Of course, it was born out of pure pressure from the labor force to improve working conditions in their factories. However, it provides a main source of innovation today.
In fact, its main task is not only to improve operations, but mainly to find solutions for future growth in the light of macro-environmental challenges such as scarce resources, changing climate and shifting demographics. Their basic idea is to find ways that solve a problem without having to put all efforts in GCBF ♦ Vol. 11 ♦ No. 1 ♦ 2016 ♦ ISSN 1941-9589 ONLINE & ISSN 2168-0612 USB Flash Drive 284 Global Conference on Business and Finance Proceedings ♦ Volume 11 ♦ Number 1 monitoring and overseeing operations afterwards. Much more, they want to innovate in terms of building a more sustainable business model for the company (Paine, 2014, pp. 92–94). At Dow Chemical Co., sustainability is seen as a main pillar of the overall business model. The company is convinced that it boosts collaboration and, in that, modernizes innovation. In fact, it is stated here that when business models are supposed to be successful in the future, they must find creative solutions that improve bottom line performance, but bring value to society at the same time. Further, consumers increasingly demand sustainable products, so investments in appropriate R&D efforts are more than justified (Kepler, 2011, p.
50). However, Dow Chemical Co. expects and gets a return on sustainability investments, too: safer workplaces, cleaner facilities, more efficient energy use, and stronger governance are some of the positive outcomes that are addressed. In that, the concept of sustainability certainly contributes to the overall business performance (Kepler, 2011, p. 53).
In previous studies on success factors for innovation, particularly relating to the soft factors in an organization, such as organizational values, different authors mention an altruistic mindset to be decisive.
Altruism itself can be seen as the focus of making the world a better place, being of service to society, contributing to humanity while emphasizing equal opportunities for all, including the values of integrity and loyalty (Egger, 2015, p. 29). It also may include unplanned behaviors to help a special individual with a certain task. It stimulates interaction in order to help, assist, and cooperate with others. In that, altruism facilitates communication, the exchange of information, and interaction with external company environments and stakeholders. Thus, an altruistic climate can be seen as enhancing risk-taking, shared decision-making, discussions, and experiments. Further, altruism creates an emotional bond between the parties involved. With that, the likelihood of interpersonal conflicts and disagreements in the job context decreases. Thus, employees face fewer conflicts in work relationships and the emotional connections that they build facilitate organizational learning and dialog (Guinot, Chiva, & Mallén, 2015, p. 4-5).
Guinot et al.’s (2015) results clearly suggest that altruism supports organizational trust, decreases relationship conflicts and with that highly supports organizational learning. Their results go in line with the recent management view to see organizations in a more humanistic and compassionate way, which includes interconnectedness, service, and stewardship. Consequently, the authors recommend creating altruistic work environments to prevent from counterproductive work affiliations and ensure organizational knowledge. As a result, altruism in organizations realizes long-term competitive advantage (Guinot et al., 2015, pp. 11–12). Jassawalla and Shashittal (2002, p. 44) introduce an additional altruistic idea: they label unequal distribution of power on low innovation-supportive settings. They see equality of team members and stakeholders as an attribute of highly innovative companies and encourage fostering a social environment of integrity (Jassawalla & Sashittal, 2002, pp. 44–51). Others see good citizenship behavior in terms of voluntarily helping each other and preserving and protecting the organization as enhancing innovation (Schneider, Gunnarson, & Niles-Jolly, 1994, p. 17). Where participants view others as equals and organizational characteristics include loyalty and integrity, innovation is more likely to occur (Brooke Dobni, 2008, p. 48).
From an evolutionary perspective, it can be stated that we need and we want to know how to deal with all the people sharing this planet with us. However, it is assumed that altruism emerges from the fact that we are the creatures with the longest childhood amongst all creatures. In that, we build special bonds with our parents and family. Therefore, altruism results from giving care to weak descendants. Naturally, we do not have any altruistic feelings towards strangers – we do not desire to be kind to them. In fact, adults living in small societies even are scared by strangers and develop hatred towards them. Consequently, it must be seen as a great achievement of mankind to have developed social responsibility and altruistic mindsets in order to make this world a better, friendlier place (Bloom, 1963, pp. 171–178). From a psychological point of view, it can be argued that people help others or treat them equally, mainly because humans feel uncomfortable when watching someone else suffering in general (Pinker, 2011, p. 575). Therefore, altruistic behavior can perfectly include the hope or expectation to receive something back for one self (from the GCBF ♦ Vol. 11 ♦ No. 1 ♦ 2016 ♦ ISSN 1941-9589 ONLINE & ISSN 2168-0612 USB Flash Drive 285 Global Conference on Business and Finance Proceedings ♦ Volume 11 ♦ Number 1 organization or from society) according to Steven Pinker (2011, p. 583) – this might actually include enhanced social recognition, improved image or status, or higher achievements for managers. However, that does not undermine altruistic behavior in itself at all, because a later benefit is not the explicit aim of behaving unselfishly. Further, experiments indicate that in absentia, we tend to help others or treat them good to relieve our own pain and feeling of responsibility. But, as soon as we empathize with a wounded the motive to reduce the victims suffering is much stronger – no matter if it lightens our own distress or not (Pinker, 2011, pp. 583–584). Looking into the concepts of treating others altruistically with fairness and equality does reveal it is not only about making the world a better place, although it certainly does help to do so. Much more it is about creating agreements that are long lasting and durable. If one side finds out later that an arrangement or an organizational responsibility is unfair, they might not be willing to work on it, and most likely, will conclude things to be untrustworthy (Fisher, Ury, & Patton, 2011, pp. 157–158).
On the other hand, voluntary CSR measures and therefore altruistic organizational behavior is not necessarily associated with value creation in Mexico.
In fact, Mexican multi-national enterprises stated that they rather find it valuable to conform to the legal requests and common industry practices. However, one must know that Mexico regulates employee education, for example, which clearly can be seen as an altruistic activity (Husted & Allen, 2009, p. 791).
Thus, although altruism seems a very complex concept, it is included in studies about innovation success in the sense of treating others with fairness and equality, helping others and working on a social environment. Claver et al. (1998) even state that an innovation-based culture relates to ethical behavior in research (Claver, Llopis, Garcia, & Molina, 1998, p. 65). Eigenstetter and Löhr (2008) explicitly researched the interrelationship of ethics and its contribution to innovation-supportive culture. Their findings reveal a positive correlation between social responsibility and innovation culture (Eigenstetter & Löhr, 2008, p. 26).
The idea of treating employees and customers ethically also forms whole chapters in recent management literature (Bowie & Werhane, 2005, pp. 40–78), because it is believed that this impacts on organizational performance positively. In a recent study that takes a sample of 302 Chinese employees, it was found that employees’ perception of ethical leadership was positively related to innovative work behavior such as brining up new ideas, contributing to discussions, and participating in decision-making (Yidong & Xinxin, 2013, p. 449).