Sustainability of business
- Government regulation,
Government regulations play a key in promoting sustainable innovation by the organization. Simpson and Taylor (2004: 693) notes that governments have tended to come up with regulations and incentives while trying to protect the environment and promote competitiveness at the same time. Therefore with such laws, new opportunities are created for sectors within the economy. When the government gives incentives like grants and tax credits to counter expenses, it enables people to reduce barriers that could have limited investment and innovation. Carraro (1997: 25) points out that government policies can stimulate technological innovation through the right incentives to corporations that discourage them from causing environmental damage.
- Technological advance
Technology also promotes sustainable innovation. Baucus (1994: 39) points out that technology has long been a critical source of synergy between the environment and economic growth. Therefore, as technology advances, there is the creation of sustainable innovation. Moreover, the development of clean technology is essential to solving the current global problems. Advancement in technolog]y provides a wide range of opportunities for sustainable innovation.
- Social responsibility
Organizations are not only today meant to make a profit. They have a role to play in the community in which they operate. The company policies, activities, and businesses affect the environment, shareholders, and even the employees (Weiss, 2006). Therefore, because of the responsibility they have to constituents they influence, they need to be creative and enhance sustainable innovation. Hauser (2005) notes that the corporates‘ sustainable innovation as they promote social responsibility will have to address issues like working conditions, pollution, and depletion of natural resources.
Barriers to sustainable innovation
- Lack of financial resources
Generally, all innovations require capital investment. Organizations need money to invest in sustainable innovations. Therefore, in organizations with limited financial resources, there is little project development towards sustainable innovation. Besides, the existence of difficulties in obtaining credit leads to the decline of firms’ chances of developing sustainable innovations (Ciani, 2014: 250). Many financial lenders are reluctant to offer credit to environmental investors due to higher levels of risks involved.
- Inadequate understanding of the customers
Some sustainable innovations lack insight into the consumer. Failure to understand customers hinders innovation activities. Many times, sustainable innovators have carried developed business-driven innovations rather than compelling customer needs hence low purchases, which affect sustainable innovation (Anntonen and Halme, 2013:89). Therefore, sustainable innovations should mainly focus on the needs of the customers. Moreover, when innovations cater to customer needs, theRE will grow in sustainable innovation for increased purposes.
- Culture conservatism
Change of cultures promotes innovation. When people are willing to change and consume innovations in the market, sustainable innovation is encouraged. However, some communities are not ready to accept change. Even with new and improved innovation, some just want to retain the status quo hence affecting sustainable innovation. When innovations are introduced to people who do not wish to change from traditional ways, there is a likelihood of resistance leading to the loss of the capital invested in sustainable innovation (Bowers, 2003). Therefore, this leads to discouragement on the side of the innovators.
Question two: business and focus on profit
Based on the shareholder theory, the company’s primary responsibility is its shareholder (smith, 2013: 21). Besides, the theory sees shareholders as the main economic driver of the firm, and it is the only group upon which the organization should have social responsibility. Therefore, the role of the organization is to make more profit for the shareholders. Moreover, Friedman (1970) believes that it is the shareholders who have the mandate to make decisions on what social responsibility programs to establish instead of the executives who are appointees of the shareholders to only making business decisions. Basing the argument on shareholder theory, the M-Pesa enterprise has made a lot of money for the shareholders. The giant mobile money transfer offers services that, through various charges, have earned the shareholders billions of returns on the investment (Waweru, 2017). For example, the M-Pesa revenue in the year 2017 grew by 14.2% nearing 63 billion Kenyan shillings. Therefore, this means increased profit to the shareholder.
However, the business ethics theory of the corporate social responsibly holds a bit different view from shareholder theory. While organizations need to make profits for their shareholders, that should not be the only focus. The theory is based on the premise that business activities affect the constituents within which it operates, and therefore fore has a role to play. The business gets raw material, and labor from the community and environment surrounding it hence should be socially responsible (Bigg, 2004). Therefore, although making many profits for the shareholders is justified, the corporate social responsibility duty to the society is very crucial for the growth of the corporate and gives it a competitive advantage as well as a more prominent avenue of gaining more profit. Now basing them-Pesa money transfer service in the context of this theory, the Safaricom Company has not only been making money for the shareholders but has also been socially responsible to the society (Sodoulet, 2017: 247). The company has established an m-Pesa foundation academy that is an educational institution that provides education and residence to high school children who comes from a humble and disadvantaged background. Therefore, this is an excellent sign of the corporate social responsibility that involves giving back to society. Besides, the academy, the organization has constructed various schools and equipped the school and the laboratories.
Moreover, the firm has contributed much toward the health sector. The foundation has been giving support to initiatives that have increased access to affordable healthcare by the people from the communities. Moreover, they have been involved in partnerships that have focused on the construction of healthcare facilities and equipping them. Besides, the Safaricom Foundation has been very critical in supporting sports activities in the country. The company has supported sports initiatives that offer opportunities for integrating life skills, health, and education into sports. Such support has been based on the recognition that games have a significant role in enhancing a healthy society, cohesion, and the overall growth and development of community.
Part B question 2: Safaricom and sustainable development goals
Safaricom, which is the owner of the M-Pesa services, has a belief that their existence goes beyond making profits. Moreover, the company views the mobile telecommunication industry with its related products as a unique chance of improving the quality of life of Kenyan citizens and other consumers of their services (Wamalwa, 2019:166). Therefore, this informed the integration of sustainable development goals to their business strategy.
In 2015, the company adopted sustainable development goals aimed at promoting prosperity for all, protecting the planet and fighting against poverty. These goals include clean and affordable energy, quality education, industry innovation, infrastructure, economic growth, and decent work, partnership for the purposes, responsive consumption, and production. Furthermore, the company integrated these development goals into their core business strategy. Within its effort to provide clean and affordable energy, the company has produced solar energy that customers can take on loans and pay slowly like the M-kopa solar. Besides, the company is also involved in the implementation of green procurement policy within its businesses with the aim of environmental protection and fulfillment of its commitment to combat the issue of climate change.
On the side of the health sector, the company has been involved in the construction and equipment of health facilities in partnership with the other stakeholder. Furthermore, the Safaricom Foundation has been active in promoting quality education in the country. The m-Pesa academy offers education to children from a humble background who could not have access to high school education without such an opportunity (Wamalwa, 2019: 172). Besides, the academy, the organization has been partnering with other organizations and government to construct school facilities and equipping them. On the side of agriculture, the organization has also been supporting farmers through. It has been fixing water for the farmers with the support of the government agencies for the farmers with small scale to carr]y out irrigation
Part B question 4: system thinking
This referrers to an approach used to analyze how various parts of the system work together and how they influence each other within the bigger system. Besides knowing how different part of the system works and influences each other, the system thinkers understand how their action towards any component affects the whole system (Caldwell, 2012: 147). In the organizational context, the method involves the structures, people, and processes working in unison to achieve the organization’s set goal. Moreover, business leaders are the system thinkers and usually holds a complete view of the system. Therefore, they put all their attention there to promote the highest levels of the organization’s performance. From there, supply and demand idea comes in. Here, the system thinkers know of the time and place where the output is needed. Besides, they have an understanding of external determinants of demand.
Moreover, they know the ability of the organization to accomplish market demand. Besides, feedback is another component that is crucial to the system thinkers (Rigby, 2011). Mostly, feedbacks enables the system thinkers to identify the problems and come up with the appropriate solution effectively and efficiently. The system thinkers who are business leaders need to avoid issuing instructions as well as controlling the system. Instead, the best way is the implementation of an appropriate style of management. Moreover, they should realize that every person’s performance greatly influences the performance of the whole system.
References
Adler, B.E., Capkun, V., and Weiss, L.A., 2006. Destruction of value in the new era of Chapter 11.
Anttonen, M., Halme, M., Houtbeckers, E., and Nurkka, J., 2013. The other side of sustainable innovation: is there a demand for innovative services?. Journal of cleaner production, 45, pp.89-103.
Baucus, M., 1994. The case for an environmental technology act. EPA, J., 20, p.37.
Beerens, Joris, Thomas Goldbrunner, Richard Hauser, and George List. “Mastering the Innovation Challenge (Results of the Booz Allen Hamilton European Innovation Survey).” Amsterdam et al. (2005).
Bowers, C.A., 2003. Mindful conservatism: Rethinking the ideological and educational basis of an ecologically sustainable future. Rowman & Littlefield.
Carraro, C., and Soubeyran, A., 1997. R&D cooperation, innovation spillovers, and firm location in a model of environmental policy. Fondazione Eni Enrico Mattei Working Paper, (23.98).
Simpson, R., and Hill, F., 2004. Squaring the circle: Managing and measuring organizational performance while stimulating change and innovation. Total Quality Management & Business Excellence, 15(5-6), pp.689-697.
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