An interview with Steinbeis Entrepreneur Professor Dr. Georg von Schnurbein
The term itself is enough to highlight the expectations faced by the new generation of SMEs in Germany – the New Mittelstand, where things new and global now intersect with things traditional and established that have stood the test of time. But can these expectations be met, or are such companies expected to become a Jack-of-all-trades, like a Swiss army knife that does practically everything? Professor Dr. Georg von Schnurbein, who runs Philanthropy, the Steinbeis Transfer Center in Basel, exchanged views with TRANSFER magazine and turned the spotlight on the social expectations faced by these companies.
Hello Professor von Schnurbein. The New Mittelstand is about stability, but also change; it’s about tradition, but also innovation. What prerequisites need to be fulfilled to reconcile these contradictions successfully?
I think Mittelstand companies have always placed emphasis on values, shaped by close relationships between business leaders and their employees, as well as regional affiliation and cultural ties in the surrounding area. To a certain extent that actually answers the question already. To survive in the long term in the face of large corporations and mass production, medium-sized companies have always needed to ensure they remain innovative. To do that, they have to keep one eye trained on international markets and think globally. But at the same time, they derive benefit from their roots in local communities, for example because their strong reputation makes it easier to find employees in the region.
You mention the particularly close relationships they enjoy and a sense of affinity. How important are people to the New Mittelstand – by which I mean staff, managers, but also customers?
Businesses are often accused of being opportunistic and self-centered, and just focused on making profit. Yet there are plenty of studies that show that’s not the case, especially studies on game theory, that demonstrate that in the long run, collaborative approaches are more successful. Action based on collaboration, exchanging views, and mutual support safeguards the long-term survival of a company. Medium-sized companies are particularly dependent on close business ties with different types of stakeholders. If, for example, a company has a high level of staff turnover, over time it can become difficult to find good workers in the local area. When you have to reach out further to attract people, that usually entails higher costs for advertising, salaries, or reimbursing travel expenses.
One of your areas of expertise is social impact measurement. What methods can be used to assess the social impact of a company?
Companies are first and foremost about output – i.e. calculable results. When we measure impact, we gauge the consequences of activities, which on the one hand affect individuals, and on the other affect society in general. When it comes to societal impact, you consider and evaluate the consequences of entrepreneurial activity. So not only does that mean looking at financial performance, but also social, environmental, or cultural consequences. These impacts can be positive or negative, intentional or unintentional. There are lots of ways to do this. The most straightforward approach is to use goals. To do this, a company sets itself overarching targets, so for example these can be derived from the Sustainable Development Goals laid down by the United Nations. Then, at the end of a given period, it assesses the extent to which those targets were met. Of course that means you also have to capture the initial point of reference, otherwise you can’t quantify changes.
You said that SMEs place particular emphasis on values. Does that suggest there are fundamental links between philanthropy and the Mittelstand?
We know from our own research that for most SMEs, philanthropy – for example, being prepared to make donations or establish a foundation – is strongly tied to the personal interests and inclinations of the owners. With large companies, there tends to be a much stronger strategic focus on corporate goals, which we refer to as a shared value approach. So as such, the question is not so much whether or in what way philanthropy works well with the Mittelstand. It’s much more important that the commitment to philanthropic causes is genuine and has a sustained impact within society. That said, the extent to which any company is able to make a valuable contribution to society depends on whether you allow staff to voluntarily engage in activities – be it a sports club, volunteering for the local fire department, or helping with social causes. Without support and recognition from the company, it’s very difficult to combine active engagement with a profession anymore. That has a much more negative impact on society than society stands to gain from financial donations.