The initiatives of corporate social responsibility as sources of innovations/Socialines imoniu atsakomybes iniciatyvos kaip inovaciju saltiniai.

Navickas, Valentinas ; Kontautiene, Rima

Introduction

The changing global business environment is characterized by growing competition and has forced companies to find new ways of competing in the integrated global economy. In order to remain competitive, companies are facing increased pressure to be more inventive so that they can react quickly to consumer demands. Companies' competitiveness refers to their ability to produce high quality goods and services in an efficient and innovative way and by that to outpace their competitors. Companies can gain competitiveness through offering their products and services at lower prices than competitors, or through offering products and services at comparable cost but in unique quality creating a greater buyer value. Product, service or business model innovation is a key source of competitiveness at company level.

The implementation of initiatives of corporate social responsibility promotes companies in their desire to enter into additional commitments to improve their business practices and to introduce innovative human resource management technologies in their operations, to use natural resources conserving technologies, human health-friendly materials and manufacturing processes, to harmonize working relations and actively participate in social dialogue, considering the positions expressed by the stakeholders and the public expectations. The implementation of corporate social responsibility (CSR) contributes to business innovativeness and competitiveness.

The problem and novelty of the study. The premise of the study is that socially responsible initiatives are the sources of different types of innovation. Innovation in all aspects of business is the creation of new value for consumers and for company and contribute to competitiveness of company in global economy.

While the CSR initiatives as the sources of innovations in different business aspects and socially responsible innovations of Lithuanian companies have received a little attention in the literature, this study is significant and topical in term of novelty.

The object of the study is socially responsible initiatives.

The aim of the study is to explore socially responsible initiatives as sources of inovations.

The tasks of the study are:

1. To investigate the importance of innovation in gaining competitiveness of company.

2. To analyze the influence of initiatives of corporate social responsibility in creating innovations.

3. To analyze the development of socially responsible innovations in Lithuanian companies.

The methods of the study are systematic, logical and comparative analysis of scientific literature, synthesis.

1. The importance of innovation in gaining competitiveness of company

The development and implementation of innovation is very important for companies in all industries to survive in global and competitive markets. Fuglsang and Sorensen (2011) described innovation as development of a new product or service so as to gain acceptance in the company, in the market or in society. As stated in the Summaries of EU Legislation on Innovation and the Lisbon strategy (2003), innovation--"the successful production, assimilation and exploitation of novelty in the economic and social spheres". In these days innovation is no longer equated only with high--technology and new products, but is coming to be understood as a broad, continuous, systematic activity that takes place throughout the company. Sawhney et al. (2006) presented 12 types of innovation (see Fig. 1).

[FIGURE 1 OMITTED]

Moore (2005) has argued that the case for different types of innovation focus along the life of the business cycle. According to Fey and Birkinshaw (2005), innovations occur primarily through new combinations of resources, ideas and technology, a fertile innovation environment relies on a constant inflow of knowledge from other places. The ability to accumulate new ideas of stakeholders and produce innovative product using the advanced technologies becomes the dominant source of competitiveness in knowledge society.

Once, Friedman stated that "there is one and only one social responsibility of business--to use its resources and engage in activities designed to increase its profits" (Horrigan 2010). Profits are important, but the main goal of a business should be to produce innovative new products and services. The developing of new products and services will generate growth of business and employment. As Christensen and Raynor (2003) mentioned, many of the new products people use today did not displace existing products; rather, they created new markets by solving numerous problems of consumers that previously went unsolved. Innovation is a major reason for such increased productivity and economic growth as well as the enabling of a host of completely new industries (Helpman 2010). Innovations increase effectiveness and competitiveness of companies. Innovations influence competitiveness directly by price wars and offensive strategies and indirectly through motivation of employees and all factors of company's activity and sometimes through governmental policy. The innovation resulted in a wealth of new products and enviable success in the marketplace (Navickas, Kontautiene 2012). According to Liao and Chuang (2006), those companies that faster become innovative develop their position in the market faster. If company assures innovations faster than their competitors, that postulates for creating a new segment of the market because that innovation is not available for the competitors of the company at that time. Thereby innovations also increase the size of the segment of company's market as effectiveness of operations' performance. The innovation is not a genial thought, but it is intensive work, which has to be organized so that it would become the component of every company's unit and every level of management system (Sedziuviene, Vveinhardt 2010).

Many studies have shown that innovations initiate the economic growth. The development of innovation is increasing markedly in the global knowledge based economy and it gives a promise for creating high productivity and better standards of living. The innovations have created millions of jobs, generated hundreds of billions in revenue, and improved people's lives by creating useful products and services. The social good is well served through innovations in business. Innovations are extremely important for economies as they anticipate the frontiers of knowledge and the possibility of integrating and adapting external technologies tendencies. Although less--advanced countries can still improve their productivity by adopting existing technologies or making incremental improvements in other areas, for those that have reached the innovation stage of development --companies from advanced economies must design and develop superior products and processes to maintain a competitiveness. This progression requires an environment that is conducive to innovative activity, supported by both the public and the private sectors. Innovations require financial and highly skilled human resources as an input and lead to more efficient technologies, having the potential to link environmental protection and competitiveness.

2. The influence of initiatives of corporate social responsibility in creating innovations

In the globalized economy corporate social responsibility is often claimed as a unique proposition of business to gain and sustain competitiveness. According to "European Competitiveness report 2008", strategic approach to CSR is increasingly important to the competitiveness of companies (European Commission 2009). It can bring benefits in terms of risk management, cost savings, access to capital, customer relationships, human resource management, and innovation capacity. "CSR gradually becomes a concurrent part of modern companies' activity, which stimulates a number of factors: an alternation of consumers' wishes and demand, changes of suppliers' attitudes and requirements, pressure on legislators and principles, new expectations of employees, changing scale of social values" (Juscius, Snieska 2008). CSR is a long-term effect of improving company profits. There is a positive relationship between social and financial performance, especially when attention is drawn to the growing importance of intangible assets such as reputation and business innovation. This becomes a factor that ensures the market value and competitiveness.

The increasing business focus on CSR is based primarily on the ability of corporate social responsibility to influence on the efficiency of companies, on sales increase, on the image improvement, on the staff moral education (Fiori, Donato, Izzo 2007). Corporate social responsibility does not mean that the company should abandon its primary economic objective--to make a profit. It does not mean that socially responsible companies can be more profitable than those that are less responsible. Social responsibility demands that companies have coordinate the benefits and the achieving of them. As Carroll (1999) says, the economic responsibility of companies is to achieve a profit and it is the basis of all other responsibilities (Pruskus 2003).

According to the new European Commission's definition (2011) corporate social responsibility is "the responsibility of enterprises for their impacts on society". To fully meet their corporate social responsibility, companies should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of maximizing the creation of shared value for their owners/ shareholders and for their other stakeholders and society at large ... To maximize the creation of shared value, companies are encouraged to adopt a long-term, strategic approach to CSR, and to explore the opportunities for developing innovative products, services and business models that contribute to societal wellbeing and lead to higher quality and more productive jobs (European Commission 2011).

"Spreading CSR conception impels to ensure the implementation of needs and goals of all groups concerned" (Dagiliene 2010). This in turn helps to create an environment in which companies can innovate and grow. As Little (2006) stated, CSR initiatives can lead to innovation through the use of social, environmental or sustainability drivers to create new ways of working, new products, services, processes and new market space. That has led many companies to redefining their business models. More importantly it is believed that innovation can be communicated and transferred to other companies through the supply chain creating a virtuous circle.

[FIGURE 2 OMITTED]

Some corporate leaders now see CSR as part of their strategic management program, while others see it as a source of innovation (Husted, Allen 2006). According to Ubius and Alas (2012), corporate social responsibility predicts innovation climate. A study on CSR actions in Europe based on 545 business solutions and 140 networking activities has shown that future priority areas to be addressed by European companies are "mainstreaming CSR" and "innovation and entrepreneurship" (CSR Europe 2006).

CSR initiatives can be sources of different types of innovation (see Fig. 2). CSR has the potential to deliver competitiveness by creating a platform and sources for innovation and thus further lead to attracting consumer interest and employees, enhancing the competitiveness of companies.

3. The development of socially responsible innovations in Lithuanian companies

Innovation is broadly seen as important element of competitiveness, infixed in the organizational structures, processes, products and services within the company. The ability to accumulate new ideas and produce innovative product using the advanced technologies becomes the dominant source of competitiveness of Lithuanian companies. According to Arbaciauskas et al. (2010), company performance--be it in the production or service sector--can substantially be turned more sustainable in terms of environmental, economical and social performance through technical and organizational innovations.

As Giedraitis and Rasteniene (2009) stated, "Lithuania has certain real advantages compared to larger economies in terms of innovation. First, Lithuania's industries are still in a relatively nascent stage. Twenty years after the collapse of the Soviet Union, its industries are specializing and adapting to a global marketplace faster than the industries of such "old Europe" countries as Germany. This is a case of the so-called "second place advantage," where a newly opened economy can learn from the mistakes and consequently "out innovate" them, since they have no new infrastructure to need to replace". Lithuanian companies use all possible contacts to gain information about the new technologies and innovations. Top level leaders are perfectly aware of the importance of scientific research and are the initiators of innovation within their companies, but bringing about innovation and change in some companies is still retard by the existing management style and the organization culture, which discourages creativity and initiativeness.

It is sometimes maintained that is a high cost to operate responsibly and it may adversely affect company's profitability, but the implementation of social responsibility principles does not necessarily cost for company more expensive, by contraries, a professional practice of socially responsible business can improve corporate profitability.

Socially responsible companies in Lithuania view CSR initiatives as opportunities for more efficient management of their human resources and supply chain to achieve competitiveness. More and more companies are adopting CSR approaches to ensure efficiency and stimulate innovation. Lithuanian socially responsible companies not only do business in a socially responsible way, but also they innovate in a socially responsible way (see Table).

Lithuanian companies motivated by competitiveness actively innovate in socially responsible way in different aspects of business to enhance their market positions. Some companies indicate that if consumers were more demanding, then they would more likely show social and environmental responsiveness. It does not only concern sustainability, safety and health, but also values such as accountability, transparency, privacy and more general ethical and social concerns.

Socially responsible companies have already done much to improve the social and environmental consequences of their activities, but for more streamlined development of socially responsible innovations it is advisably to increase the awareness and the competence of business representatives, government which encourages companies to integrate CSR initiatives into business practice.

Conclusions

1. The innovations occur through new combinations of resources, ideas, technology and create high productivity and better standards of living. The innovation is a broad, continuous and systematic activity and can take place on any dimension of a business system. The development of new products, services, technology and segments in the market generate the competitiveness of the company and the growth of the business in common.

2. The initiatives of corporate social responsibility are the sources for developing innovative products, services and business models. CSR initiatives can lead to innovations through the integrating social, environmental, ethical, human rights and consumer concerns to companies' activities. It is very important that those innovations can be communicated and transferred to other companies by creating a virtuous circle. Socially responsible initiatives development is stimulated by wishes and demands of all stakeholder groups.

3. More and more Lithuanian companies implement socially responsible initiatives in companies' performance. Lithuania's industries are in a relatively growing stage. Socially responsible companies in Lithuania view CSR initiatives as opportunities for innovations and implement different types of socially responsible innovations. In some companies the process of integration of CSR initiatives is still going slowly by the existing management style and the organization culture. For more well-run development of socially responsible innovations need the awareness and the competence of business representatives and all groups of stakeholders.

doi: 10.3846/btp.2013.03

References

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Valentinas Navickas (1), Rima Kontautiene (2)

Kaunas University of Technology, Laisves al. 55, LT-44309 Kaunas, Lithuania

E-mails: (1) valentinas.navickas@ktu.lt (corresponding author); (2) rima.kontautiene@stud.ktu.lt

Received 19 October 2012; accepted 11 January 2013

Kauno technologijos universitetas, Laisves al. 55, LT-44309 Kaunas, Lietuva

El. pastas: (1) valentinas.navickas@ktu.lt; (2) rima.kontautiene@stud.ktu.lt

Iteikta 2012-10-19; priimta 2013-01-11

Valentinas NAVICKAS. Doctor of Social Sciences (economics), Professor at Kaunas University of Technology, the Faculty of Economics and Management, the Department of Economics and International Trade. Author of more than 230 scientific publications and scientific popularity articles published in Lithuania and abroad, author of four experimental development projects, prepared 4 doctors of social (economics) science; now he is research adviser of 2 persons maintaining a doctor's thesis of social (economics) science. Research interest: microeconomics, macroeconomics, international economics, tourism economics, logistic, economic development.

Rima KONTAUTIENE. PhD student of Kaunas University of Technology, the Faculty of Economics and Management, the Department of Economics and International Trade. Research interests: microeconomics, macroeconomics, international economics, corporate social responsibility, corporate philanthropy.

Table. Examples of socially responsible innovations of Lithuanian
companies

Company         Socially responsible
                innovations

UAB             Creating social complexes: cooperation
"PakMarkas"     between business and non-governmental
                organizations

UAB             Green technology development:
"Ecoconon"      construction of houses of straw panels,
                solar houses

UAB             Eco product development: organic
"DuMedu"        bread, pies, cookies, biscuits made from
                natural raw stuff without synthetic
                additives and preservatives

UAB             Environment friendly food packaging:
"Marijampoles   eco design of tin can
pieno
konservai"

AB LESTO        Paper-less operation: the
                implementation an electronic document
                management system (DocLogix)

UAB             Returnable wastes: the use of
"Bionovus"      construction waste

UAB "Baldai     Waste material collection:
Jums"           a modern system of wood waste use

II "Bremena"    Engineering work with attention for
                surroundings: installation of modern
                economical indoor heating, ventilation,
                air-conditioning, water supply and
                sewage systems

UAB             Waste recycling: the set up of Eco stops
"Svyturys-      --a special garbage sorting centers
Utenos alus"

AB YIT          Periodical check for safety: the founded
"Kausta"        occupational safety and health service

UAB "RIMI       Anti corruption activities: a transparent
Lietuva"        pay policy, transparent tenders (public
                procurement)

UAB "Veikme"    Eco-compatible buildings: energy-wise
                houses

AB "Nordic      Training programs: retraining courses,
Sugar           offer additional training
Kedainiai"

AB "Kraft       Focusing on the social dimension
Foods           segments of market: responsible
Lietuva"        marketing: the change of food and
                beverage advertising to children under
                the age of twelve

Company         Benefits of socially responsible innovations

UAB             Clear communication and effective way
"PakMarkas"     of solving conflicts between business and
                non-governmental organizations, better
                management of business risks

UAB             Efficient use of the energy, increased
"Ecoconon"      competitiveness of the manufactured
                production in many export markets

UAB             Consumer confidence and the maintenance of
"DuMedu"        competitiveness in the market

UAB             The decrease of manufacturing, recycling
"Marijampoles   and transportation stages, increased
pieno           competitiveness of the manufactured
konservai"      production in many export markets

AB LESTO        Reduction of natural resources use,
                reduced pollution

UAB             Reduced pollution, collection of wooden
"Bionovus"      packaging and recycling

UAB "Baldai     Noticeably reduced pollution, saving of raw
Jums"           materials

II "Bremena"    Saving of raw materials and energy resources

UAB             Noticeably reduced pollution: almost 2 500
"Svyturys-      cubic meters of garbage during the four months
Utenos alus"    in 2011 was shipped out of six Eco stops
                garbage sorting centers

AB YIT          Skilled workforce and high quality of work and
"Kausta"        impeccable reputation

UAB "RIMI       The favorable public opinion,
Lietuva"        qualified and motivated employees, loyal
                consumers, and increased trust from investors
                and financial institutions

UAB "Veikme"    The saving of energy sources, reduction of
                expenditure, good reputation of company, new
                methods of construction attractive to clients,
                increased trust of investors and financial
                institutions

AB "Nordic      Reduction in costs (e. g. smaller employee
Sugar           turnover, and increased employee performance).
Kedainiai"

AB "Kraft       The growing trust of company's consumers
Foods           (parents) and loyalty to the company, better
Lietuva"        management of business risks

Company         Sources

UAB             http://www.pakmarkas.com/pakmarkas_acknowledged
"PakMarkas"     _as_environmental_enterprise_of_the_year_2011/

UAB             http://www.ecococon.lt/en/panel_houses
"Ecoconon"

UAB             http://www.dumedu.lt
"DuMedu"

UAB             http://www.spin-project.eu/index.php?node_id
"Marijampoles   =Environment-friendly-food-packaging--ecode;
pieno           58.250&lang_id=1
konservai"

AB LESTO        http://www.lesto.lt/lt/Sitemap

UAB             http://www.bionovus.lt
"Bionovus"

UAB "Baldai     http://www.undp.lt/uploads/Publications%20LT/
Jums"           ISA%20medienos%20apdirbimo%20ir%20baldu%20
                gamybos%20sektoriuje.pdf

II "Bremena"    http://www.bremena.lt/tinklapis.php?mid=8

UAB             http://www.utenosalus.lt/
"Svyturys-
Utenos alus"

AB YIT          http://yitbustas.lt/bendrinama_visiems/2011m
"Kausta"        _SA_ataskaita.pdf
UAB "RIMI       http://www.baltojibanga.lt/our-mission.html
Lietuva"

UAB "Veikme"    http://www.veikme.lt/apie_mus/8

AB "Nordic      http://www.undp.lt/uploads/Publications%20LT/
Sugar           ISA%20diegimas%20Lietuvos%20maisto%20pramoneje
Kedainiai"      .pdf

AB "Kraft       http://www.undp.lt/uploads/Publications%20LT/
Foods           ISA%20diegimas%20Lietuvos%20maisto%20pramoneje
Lietuva"        .pd