By Luca Collina, Mostafa Sayyadi and Michael Provitera
The article starts by looking at the roots of corporate social innovation, which come from ideas like corporate social responsibility and social innovation. It then shows how these ideas are connected but also different, clearly understanding what each one is and how corporate social innovation works. Finally, the best leadership practices for corporate social innovation capability in the AI age are presented.
It is widely agreed that corporate social responsibility has been the fundamental aspect of defining companies’ commitments towards society, considering the support of business activities. [1] [2] The literature has also tried to determine what actions could be taken and link them between business results’ expectations and positive effects on social problems. Research from 2011, started introducing the innovation aspect in the forms i.e., service and green innovation. So as Chu et al. (2022) say, achieving success through innovation and considering the opportunities and connections with social and environmental needs. [3] Through social innovation and corporate social innovation, it internally clarifies (values and culture) and externalizes (reputation and corporate brand) the company’s commitment and values. There are four different perspectives from the company:
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The Functionalist Perspective
This perspective produces programs, products, and services to align company interests with society’s needs. With the Shared Value Initiative, Michael Porter and Kramer (2006) tried to encourage companies to create offerings (products, prices) that could be affordable by society while creating a social benefit. [4]
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The Culturalist Perspective
Culturalists understand that both companies and societies have cultures and that companies adapt their actions to their surroundings. Companies use this perspective to reflect their cultural relationships with the community in which they operate.
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The Sociopolitical Perspective
The company and society are in a power relationship. Management, mediation, and action are the functions of corporate social responsibility. This power is also directed to maintain respect for the community and its components while showing commitment to helping social system characteristics be maintained.
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The Constructive Perspective
It is the approach that the company shows that it is socially responsible and is the first step to gaining credibility. Activating corporate social responsibility for companies indicates that they can deal with societal issues and shows that they take responsibility. This activated perspective fosters the company’s reputation.
As for the companies’ interests in pursuing social initiatives, the following points have been highlighted:
- Economic and Financial Performance: corporate social responsibility should aim to increase profits.
- Competitive Advantage: Generate an edge against rival firms by either benefitting the company itself or stopping others from gaining similar advantages.
- Reputation: Aligning stakeholders’ interests with those of the company, improving its standing within society by adopting social causes as its priorities, and building up its image through engagement in society.
- Cost and Risk Reduction: Companies reduce costs and mitigate risks through social actions designed to minimize operational expenses and address any potential threats associated with the production and distribution of goods or services.
- Value Creation: the process of producing economic, social, environmental, and institutional benefits regardless of any driving force or motivations for doing so.
The Boundaries of Social Innovation
The growing relevance of social innovation comes from the progressive shift from a centralized point to local entities, which, with a progressive utilization of entrepreneurship and a market-focused approach, try to offer specific and tailored innovative solutions to particular issues evidencing both tangible and intangible low-resource availability. [5] [6] The research about social innovation has seen the growing interest of scholars since the 70s, and during the 90s was explicitly mentioned and received growing attention, with a changing focus, particularly in the management and business world. [7] [8] [9]
Among the various definitions of social innovation, we need to consider why it emerged in the past decades: different public and private subjects have put it into their agendas; one concept is relevant: resolving diverse problems going through a deep societal transformation. [10] [11] We should also consider that authors have let emerge that many diverse concepts about social innovation require then a better understanding to connect social innovation with enterprise innovation. [12] Social innovation aims at providing innovative solutions that address societal problems and bring about social transformation through novel ideas such as solving society-related issues or encouraging inclusion, improving people’s well-being, or altering values, practices, or systems in society; however social innovation is considered different from those innovations with social elements.
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Diversity of Social Innovation in Addressing Issues
An in-depth review of various social innovation case studies underscored the wide-ranging nature of social and environmental issues that social innovation can effectively address. These case studies span sectors and geographical boundaries, offering compelling evidence of social innovation’s vast scope and versatile nature.
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Key Aspects of Social Innovation
Five critical aspects should underpin any comprehensive definition of social innovation. These include:
- addressing a social need,
- incorporating an innovative element,
- managing the implementation,
- inducing improvement
- fostering relationships and collaborations.
This multi-dimensional approach offers a more holistic and meaningful interpretation of social innovation.
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SDGs and Social Innovation
In an attempt to categorize the myriad forms of social innovation, we found the United Nations’ Sustainable Development Goals (SDGs) to be a practical classification framework. The versatility and global prominence of the SDGs lend them credibility as a classification system, supported by the fact that 89% of the scrutinized case studies could be associated with one or more SDGs.
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Actors in Social Innovation
Through the case studies, the study dispels the common misconception that the realm of social innovation belongs exclusively to social entrepreneurs. It highlights that the development and implementation of social innovation can often be the result of efforts by a diverse spectrum of actors. This inclusive nature of social innovation helps expand its reach and potential impact by drawing from the insights and contributions of various stakeholders.
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Social Innovation and Unmet Needs of Society
A company’s innovations meet social needs effectively and create new social relationships and collaborations are considered social innovation. It still appears that social innovation could be misunderstood and confused either with the evolution of corporate social responsibility or understood that a big idea could solve problems. [13] Another aspect of social innovation could be related to innovative companies that explicitly consider social innovation and sustainability, including economic, social, and environmental elements, even if a suggestion for better implementation and management is required. [14] Another characteristic of the links between firms and social innovation was found by Przychodzen (2018) when they investigated the factors that characterize the link: sector, where social innovation acts as a stimulus to innovate, and high net margins and ROE promote social innovation. [15]
The Boundaries of Corporate Social Innovation
Corporate social innovation has its own identity, distinguished from other forms of innovative social support.
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Social Entrepreneurship and Corporate Social Innovation
Social entrepreneurship is a specific way to create social value by building an organization and business model to satisfy its mission, while corporate social innovation aims to generate both economic and social value.
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Organizational Innovation and Corporate Social Innovation
Organizational innovation doesn’t include involving stakeholders and doesn’t aim to generate effective change in society
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Corporate Social Responsibility and Corporate Social Innovation
These two definitions have a link that can be compared with vision and mission. The former represents a values declaration based on ethics overarching companies’ actions toward creating benefits for social aspects. Corporate social innovation works on specific projects to deliver social value. Our attention will be on corporate social innovation with the assumption that a vision that aims to satisfy unmet social needs (social innovation scope) and corporate social responsibility is accepted as the critical point of the social vision.
The Best Leadership Practices for Corporate Social Innovation Capability
The best leadership practices for developing corporate social innovation capability within organizations are what companies should consider using a model to embed business and social innovation. It emphasizes the need to prioritize social empathy and shared value creation in their social innovation efforts. The importance of integrating dynamic capabilities for innovation, stakeholder engagement, and top management support is fundamental. Organizations should focus on aligning their leadership and change organizations for innovation to support social value creation. The development of a vision for corporate social innovation, along with strategies, processes, and structures that facilitate successful social innovation projects, is crucial.
The next step for our future endeavors will be completed by the unlearning processes and connecting them with the learning ones.
Unlearning and Learning
The unlearning and training activities are a great way to learn through experience, and we experienced that “action learning” is the best way. Removing or, better, identifying what is not working anymore, with an effective reality check, allows new learning with experimentation.
Action Learning “learning by doing” involves actively engaging with real-world challenges and reflecting upon them to gain new knowledge and insights. When combined, people can effectively draw from experience to address complex problems and reflect if they are applicable. They benefit from supportive peers who offer new perspectives to explore emerging issues through novel inquiries and probes.
We also present a view of the approaches with and without AI and Chatbots:
AI-powered Decision Support System (DSS) It effectively supports unlearning outside real-life decision-making scenarios. We can design specifically to learn how to provide a safe space for employees to unlearn old habits and learn new ones.
Unlearning Process (With AI and Chatbots). The same approach is used with DSS, only different in the use of technology.
Scenario Planning and Future-back Thinking. It involves envisioning possible futures and working backwards to let trainees use their skills to identify the skills, knowledge, and behaviors needed in those scenarios.
Negative Learning. It is a powerful tool to challenge pre-existing beliefs and assumptions, facilitating unlearning and opening the door to new learning. This is particularly effective in extreme cases where existing behaviors or mindsets may harm existing or future leaders, particularly in negative situations.
About the Authors
Luca Collina is a transformational and AI Business consultant at TRANSFORAGE TCA LTD. York St John University awarded him the Business – Postgraduate Programme Prize and CMCE (Centre for Management Consulting Excellence-UK) for his paper in Technology and Consulting Research Prize. Author/External Collaborator of CMCE.
Mostafa Sayyadi works with senior business leaders to effectively develop innovation in companies, and helps companies—from start-ups to the Fortune 100—succeed by improving the effectiveness of their leaders.
Michael J. Provitera is an Associate Professor at Barry University. He is an author of Level Up Leadership published by Business Expert Press.
References
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Luca Collina
Why Europe Shouldn’t Treat Protectionism as a Panacea
By Zhenglin (Alex) Li
In a bid to protect domestic car manufacturers, the EU is considering imposing extra tariffs on imported Chinese cars. Is this the right response? How about allowing some competition to encourage innovation?
The recent decade seems to be the least enjoyable time for European car producers. While the economic community is experiencing serious supply-side and cost-of-living crises, car production of old European brands has moved to a comparatively inferior position, especially in terms of Chinese companies. Not only does the latter have a price advantage of being 28% lower than European-made vehicles, but also has contributed more to innovations like electric vehicle (EV) development. A lot of politicians and economists are arguing that it is necessary to protect domestic car producers, to keep their competitiveness and employment of manufacturing workers. Nonetheless, protectionist policies such as a tariff on imported Chinese cars should never be considered as a panacea. Instead, a more practical solution is to treat foreign competitors as “catfishes” which encourages the “sardines” of domestic producers to run faster.
A Costly Agenda
Although domestic producers will benefit from the higher price resulting from the tariff, consumers will need to pay more compared to current costs. Because of the importance of transport vehicles to consumers and their position as a necessity, everyone, despite their financial background or lifestyles, would be negatively affected by the additional cost of buying a car. Although it seems that economic nationalism is encouraging to people who tend to be patriotic, its drawback is shared by the whole economy. According to economic theory, at least in the short run, the economic loss of the EU would be greater than its economic gain.
Furthermore, although employment is increased by a greater scale of domestic output, it has a regressively re-distributive effect on the economy. The newly-employed workers are largely those with better educational backgrounds and skills, so their income is usually greater than other employees. This leaves the poorest members and consumers in the economy in a worsening situation as the price has been driven up, and they are no longer able to buy a car. To sum up, the tariff transfers the wealth of the poor to the middle class and businesspeople which would make equality in the economy worse off.
Despite people’s utility being worsened, it would also lead to a greater market failure. Since most Chinese imported cars are electric, if a tariff is introduced that raises the price for EVs, people will start to purchase petrol cars as a substitute to replace its highly-priced competitor. Consequently, the carbon emissions from petrol cars could immediately result in environmental damage and enhanced global warming. Besides, considering the tariff on carbon resources, the price of petrol cars is increasing rapidly. This would force the EU to either bear the costs of inflation and the rising cost of living due to the rising prices of both types of cars or reduce carbon regulations and take the risk of greater external costs and market failure.
Lastly, it should be noticed that the European car market is an oligopoly market controlled by a few manufacturers who are earning much higher than normal profits. With protection that limits international competition, oligarchies are less likely to invest in new technology. Instead, they can rely on the protections which give the power of control back to their hands and there is less risk that they will lose profits due to little development.
And a Useless Agenda
Some people have argued that because the electric car market is an infant industry with high growth potential in the future, the EU should take any attempts to provide a good innovative environment for the entrepreneurs. While it has been proven in South Korea through Park Chung-hee’s Heavy-Chemical Industry (HCI) programme which gave Koreans an obvious advantage in the industry, it should be noted that previous successful cases generally rely on two conditions: low cost of labour and enterprises’ investments in innovation.
However, this is not typically suitable for the European Common Market. Firstly, as we have mentioned, it could result in firms’ reliance on government protections. This is found in the European agricultural market, where protections like tariffs to other economies have reduced the productivity of farmers. Because they are the only choice of European consumers, there is little motivation to invest in new technology and management systems of farms. Unfortunately, it seems to be true for car producers as well. European car manufacturers have a relatively low investment rate in technological advancement. There is no reason to believe that they will return to “good developers” just because the government has cared for them as newly-born babies while they are old hands.
Moreover, the growth potential of European car producers should also be questioned. Due to the strong trade union power in Europe and the high cost of labour, it should be questioned whether the companies would still have the money for innovation after receiving the protections. If they are forced to pay much higher to their workers, which enhances its disadvantage compared to Chinese producers, the current situation will hardly be altered. On the other hand, if it chooses cheap labour and de-industrialise its domestic industries, it would be unrestrained gambling for the EU to do so as neither the consumers nor workers will benefit from it. Hence, even if it can be more efficient in the future, can Europeans be beneficiaries of this de facto non-European companies’ growth?
On the contrary, what free trade and international competition can contribute to growth is that it forces European producers to invest in innovations to cope with changes in the world market. If these companies have seen an obvious loss in profits due to the development of Chinese EVs, unless they are Stoics, they will immediately promote their technologies to keep their positions as world-leading companies. Furthermore, this can also encourage international cooperation between Chinese and European firms. If the former can benefit from the experiences of the latter, the Catfish Effect on European car producers would be successful because they are indeed encouraged.
Conclusion
Protectionism has a long history since the discovery of economics. However, its agendas are usually controlled by large firms that aim to benefit from the lack of international competition. Europe should be enthusiastic about competition: it still has great growth potential, and the key issue is to find an effective strategy for growth. In a world with exaggerated “Communist China has beaten capitalism in a market economy,” Europe should be open to new challenges and take advantage of this global ordeal. It has to grow, in the way of encouragement instead of protection.
About the Author