Cultivating Sustainable Small-Enterprise Networks: A Way to Enhance Value, Competitiveness and Resilience

The author’s experiences and successes in the 1980’s using “green chemistry” as a leading strategy in the transformation of a textile chemical company’s financial success, led to research on the potential of “sustainability” as a new strategic lens to improve value creation in small to medium sized enterprises (SMEs). Sustainability was offered as a useful strategic lens to aid in transforming SMEs to produce greater value in a world defined as “hot, flat and crowded”, meaning, a world where population pressures on resources, global warming, and the development of global trade are fundamentally changing the nature of enterprise and the consumer’s concept of the role of the corporate enterprises. The dissertation research proceeded along the following steps: · Pursue background research on sustainable development and the concepts for creation of sustainable enterprise · Develop research questions to discover what role “sustainability” might play in strategy planning and successful business strategies for SMEs · Examine the role of SMEs in the global economy · Explore the role and theory of SME network behavior and performance within the boundaries of sustainable development · Report the results of three action research cases where a sustainability lens and transformational framework were inserted as major influences on strategy development over a fiveplus year period · Summarize findings and develop suggestions for ongoing research The research questions developed were directed at discovering: what were the important attributes of sustainable enterprise that could lead SMEs to become more successful, how could these attributes be inserted into the activities of SMEs, and what were the impacts of defining a sustainability lens and inserting it into the strategy of three SMEs? Furthermore, there are many regions of the world where networks of SMEs have been found to create markets and unexpected synergies. Exploring these examples exposes the complexity of network formation and the architecture and behavior of such networks, but also produced some new understandings as examples of networking behavior from the Internet were contrasted with the performance of SME networks. It was found that networks of SMEs could form and dissolve rapidly; the term “ad hoc” network was coined to describe such behaviors. It was also observed that ad hoc networks could be extremely detrimental to the global physical and fiscal environments if their behaviors were not tempered by a realization of the need for sustainability and its associated behaviors. The globalization of markets seems to have forced SMEs to choose between hyperefficient behaviors, which create brittle, monofocused lowprice driven networks and have few environmental or social conscience boundaries, versus more resilient, socially, environmentally and financiallybounded networks that tend to be regional or local. The big questions addressed are whether SME networks can develop a hybrid structure that allows for adequate efficiency within a broadbased, “rightly understood” creation of value for large number of diverse stakeholders, and whether the winlose war of either “local” or “global” can be supplanted by multiscale sustainability? Samuel B. Moore, Erasmus University vi A transformative framework was developed based on the work of leading theorists on sustainable enterprise to encourage development of hybrid strategies and actions. This action research framework is outlined and consists of a series of educational and diagnostic exercises with the chosen firms, based on extensive dialogues with the owners/entrepreneurs of the firms. The anticipated results sought to balance the inputs and outputs of the corporation through inclusion of heretofore ignored stakeholders that creates new customers. The results were analyzed by value mapping of the new sustainable investments. This framework was used by the author on three SMEs as a lens to help the owners and managers of these firms to find a path forward out of their failing incumbent strategies. Three action research cases are presented: · Burlington Chemical Company, Inc. the author’s textile chemical manufacturing firm that was failing due to globalization of the textile industry. · Reedy Fork Dairy Farm – A family farm located in central North Carolina, USA that was failing due to wide fluctuation and decline of liquid milk prices. · TS Designs, Inc. A custom apparel printing company that was also failing due globalization of the textile market in the southeastern USA. The overall results of the action research projects were successful. Two of the three SMEs were adequately transformed as a result of sustainable lens insertion and new strategy implementation. They continue to survive and thrive after 5 plus years of strategic intervention. The textile chemical company did not survive due to inadequate understanding and actions related to “creative destruction” of the incumbent business model, however, even in failure, this case provides support for the idea that sustainable strategies can provide unique competitive advantages The finding of the research indicates that sustainability is a useful foundation for formal strategyplanning processes for SMEs. It forces consideration of internal and external factors and provides a new communication channel for communication and inclusion with new stakeholders. A sustainability lens provides for a broader definition of success that transcends but is inclusive of economic profitability and provides stability and control (resilience) within operations of SMES and networks of SMEs. The key concept of enterprise creating abundance for as many stakeholders as possible and thus expanding opportunities for many, rather than limiting value to strictly economic profits for shareholders, was a key metaphor for the success of these cases. Opportunities for further work remain in correlation of SME network behavior and other measureable networks such as the Internet. There also remains a great opportunity to study the resilience effects of the sustainability lens on creation of value for adopting SME firms and perhaps even the creation of new forms of SME network business structures.