Identifying opportunities through responsible business practice will keep SMEs ahead of the game, says Dr Simon Zadek

Hong Kong's open economy needs to be complemented by responsible business practices if it is remain globally competitive, says Dr Simon Zadek, Chief Executive of AccountAbility, an international think tank promoting competitiveness strategies through innovative approaches to dealing with social and environmental issues.

Speaking at a recent luncheon in Hong Kong, he offered practical guidance on how to pursue such a development path, backed up by concrete examples from around the world.

Reflecting on Hong Kong's current situation, Dr Zadek offered the following observation: "If you don't grasp the competitive opportunities offered by advancing responsible business practice, you will eventually be driven towards sustainability, but in a follower compliance mode - a catch-up model - chasing business models that other parts of the world have innovated in advance of you." He added that "you only have a choice as to whether you want to be a first mover or a follower".

Know your market

Over 90 per cent of Hong Kong's businesses are small and medium-sized enterprises (SMEs), so how should the "SME capital of the world" incorporate corporate social responsibility (CSR) into its business practices to maintain its competitive edge?   As one of the luncheon guests remarked in discussion: "We see many SMEs that know their market conditions are changing and their concern is that they really don't know how to change. They have been doing what they are doing for a long time and they simply don't understand the changing rules of the game".

Dr Zadek's ‘tough love' answer was that Hong Kong's SMEs would have to adjust to changing realities, or else eventually go out of business. He said the key to helping SMEs was to support them in seeing what was going to happen to their markets. Dr Zadek said the solution is not to get SMEs to adopt complex CSR codes as their biggest challenge was to focus on the immediate dynamics of business and face a changing environment.

"This is not a matter of reporting and codes - it is a matter of opening their eyes to the transformations that markets will demand of them before they hit the wall. What you can do is to provide them with comparisons on what the other SMEs are doing around the world and the infrastructure they need to make the changes." 

Value-added services

He said it is vital to raise awareness to help SMEs know what is going on with regards to CSR in business practices and not just on the compliance and supply chain management level. "It really depends on where you sit on the global competitive edge. Hong Kong's future does not lie on low labour costs. It can only compete on value-added services and on an educated, healthy and engaged workforce."

Dr Zadek said SMEs must work in clusters and work with non-government organisations (NGOs) in negotiating for changes with the big players. "NGOs are historically the problem but they can be part of the problem solving as they can help to negotiate between suppliers and multinational corporations. Governments' likely roles will be to act as facilitators," added Dr Zadek.

AccountAbility was established in 1995 to promote accountability innovations that advance responsible business practices, and the broader accountability of civil society and public organisations. Its more than 300 members include large and small organisations and service providers, NGOs and research bodies from around the world.

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