Increasingly, we have seen a growth in small and medium-sized entities (SMEs) throughout the globe, to the point that they now constitute 95% of all businesses[1]. With this, it is evident that these enterprises cannot be considered small-time players and that they should be at the forefront of sustainable development. The problem is that many companies are convinced – or try to argue that – with limited resources they cannot make a big impact, so it is needless to try. This is where large corporations come into play. With their financial resources and human capital, these companies should be the ones spurring on SMEs whilst simultaneously widening their CSR portfolio.
Such a model has been adopted by Walmart, a large corporation heavily dependent on SMEs. Given the growing responsibility companies face over issues in any section of their supply chain, companies like Walmart have come to realise that they can be held liable for their suppliers’ behaviour. They can also be the driving force behind their suppliers’ shift towards sustainability. Walmart’s approach involves an evaluation of each of their business partners, graded according to a standardised scorecard, followed by specific recommendations for improvement. This last point is essential, for often companies are told that they are not acting in a sustainable manner, but are not given the means with which to change. Additionally, it is important for such measures to remain optional, rather than something that is imposed upon a company.
Unfortunately, though the relationship between large corporations and their suppliers ought to be a symmetrical one, bigger companies tend to hold more power as their business does not depend on one sole partner. Hence, there is a danger of large corporations, incited by their stakeholders, to force SMEs to change their business models. Such pressure, without adequate support can induce SMEs to place a heavy burden on their employees’ shoulders and negatively impact on their output. Forbes warns of the danger of ‘presenteeism’, where unlike absenteeism, employees are physically present in the office, but do not have the motivation to contribute fully[2]. In order to avoid this, large corporations ought to facilitate the implementation of sustainability measures and ensure that SMEs take steps to involve all their staff members without putting too much strain on them.
For this, large corporations ought to carry out capacity building and training programs so that SMEs are not overwhelmed by the task ahead of them. These companies in turn can improve their corporate image and ensure that the life-cycle impacts of their products are minimised. In this scenario, the likely success of a project is increased, as each type of enterprise can contribute its own advantages. Often in SMEs, there is less hierarchy and employees have a closer connection both to the local community and to the top management. This makes it simpler to involve everyone and pool together ideas. Once a valid idea is put forward it can be implemented using the resources of the larger corporation. Hence, by creating a partnership and stimulating an active – versus passive – response, through incentives rather than regulation or contracts, large corporations can work alongside SMEs to create the changes society demands.
[1]http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/EXTCENFINREPREF/0,,contentMDK:22685794~menuPK:7518274~pagePK:64168445~piPK:64168309~theSitePK:4152118,00.html
[2]http://www.forbes.com/sites/siimonreynolds/2014/03/30/how-your-self-image-determines-your-wealth/
Comments Off on Large Corporations & SMEs Walking Hand in Hand /
20 Apr 2014
por
anabeatriceacuna
IMSD /
Increasingly, we have seen a growth in small and medium-sized entities (SMEs) throughout the globe, to the point that they now constitute 95% of all businesses[1]. With this, it is evident that these enterprises cannot be considered small-time players and that they should be at the forefront of sustainable development. The problem is that many companies are convinced – or try to argue that – with limited resources they cannot make a big impact, so it is needless to try. This is where large corporations come into play. With their financial resources and human capital, these companies should be the ones spurring on SMEs whilst simultaneously widening their CSR portfolio.
Such a model has been adopted by Walmart, a large corporation heavily dependent on SMEs. Given the growing responsibility companies face over issues in any section of their supply chain, companies like Walmart have come to realise that they can be held liable for their suppliers’ behaviour. They can also be the driving force behind their suppliers’ shift towards sustainability. Walmart’s approach involves an evaluation of each of their business partners, graded according to a standardised scorecard, followed by specific recommendations for improvement. This last point is essential, for often companies are told that they are not acting in a sustainable manner, but are not given the means with which to change. Additionally, it is important for such measures to remain optional, rather than something that is imposed upon a company.
Unfortunately, though the relationship between large corporations and their suppliers ought to be a symmetrical one, bigger companies tend to hold more power as their business does not depend on one sole partner. Hence, there is a danger of large corporations, incited by their stakeholders, to force SMEs to change their business models. Such pressure, without adequate support can induce SMEs to place a heavy burden on their employees’ shoulders and negatively impact on their output. Forbes warns of the danger of ‘presenteeism’, where unlike absenteeism, employees are physically present in the office, but do not have the motivation to contribute fully[2]. In order to avoid this, large corporations ought to facilitate the implementation of sustainability measures and ensure that SMEs take steps to involve all their staff members without putting too much strain on them.
For this, large corporations ought to carry out capacity building and training programs so that SMEs are not overwhelmed by the task ahead of them. These companies in turn can improve their corporate image and ensure that the life-cycle impacts of their products are minimised. In this scenario, the likely success of a project is increased, as each type of enterprise can contribute its own advantages. Often in SMEs, there is less hierarchy and employees have a closer connection both to the local community and to the top management. This makes it simpler to involve everyone and pool together ideas. Once a valid idea is put forward it can be implemented using the resources of the larger corporation. Hence, by creating a partnership and stimulating an active – versus passive – response, through incentives rather than regulation or contracts, large corporations can work alongside SMEs to create the changes society demands.
[1]http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/EXTCENFINREPREF/0,,contentMDK:22685794~menuPK:7518274~pagePK:64168445~piPK:64168309~theSitePK:4152118,00.html
[2]http://www.forbes.com/sites/siimonreynolds/2014/03/30/how-your-self-image-determines-your-wealth/
Comments Off on Large Corporations & SMEs Walking Hand in Hand /
20 Apr 2014
por
anabeatriceacuna
IMSD /
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