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Interview with Andreas Suchanek

Ethics and economics are often seen as conflicting concepts. How important do you believe ethics are for a social market economy?
Suchanek: Ethics, as a shared basic understanding of “just” values such as dignity, freedom, justice, and so on, form the very foundations of a social market economy. Indeed, competition and legal principles, both of which are essential for a market economy, simply stop working when people lose trust. Maintaining this trust is always (also) a matter of responsibility – or, in more general terms, values being translated into action – on the part of the actors in a market economy.

There can and always will be tension between ethics and economics, but the key is to find suitable investments that allow ethics and economics, responsibility and profit to flourish together.

Confidence in the benefits that a market economy holds for society has reached a new low with the present financial and economic crisis. How can the relationship between the economy and society be improved?
Suchanek: On the one hand, there is a lack of familiarity and closeness. Many people don’t understand enough about the market economy and what companies and managers do to be able to form appropriate expectations. In other words, sometimes they make demands that simply cannot be met. This is where clarification and communication are needed to establish what can be reasonably expected and what costs are associated with a market economy (even despite current events, the market economy still remains the best economic system in the world today).

On the other hand, there is the question of how committed economic decision-makers and companies are to acknowledging their responsibility and communicating this in a credible manner. In this context, “credibility” means not making promises that cannot then be kept, whether they are specific pledges with customers, suppliers or associates, or more general commitments in the form of communicated values.

Over recent years, many companies have rediscovered corporate values. Bosch too has set out its values, which can be traced back to its founder Robert Bosch, in writing. How can such a value system help companies to fill out the far from adequate global regulatory framework in a responsible manner?  
Suchanek: The fact that values, when understood correctly, are the basis of value creation in a company applies here, too. Nobody wants to work for an irresponsible, unreliable company with no integrity, or buy products from such a firm. The same applies in global competition. Hence it is not by pure chance that companies are rediscovering values at present.

Nonetheless, it is crucial that these values are translated into action and that requires investment in executive development, training, and governance structures. The values need to be brought into harmony with the often challenging conditions of day-to-day business.

Implementing these values also requires management and control mechanisms. These include incentive systems, CSR management, and compliance. Is there a particular key to aligning innovation processes and corporate development with overarching, non-financial targets?
Suchanek: I believe so. The task I mentioned earlier of implementing these values in everyday business is closely linked with the compliance and incentive systems you refer to. It is crucial to see both in context. It is particularly important to ensure associates understand why and how compliance activities, for example, help to translate values such as integrity into action.

CSR activities in the narrow sense of corporate citizenship – i.e. charitable donations, pro-bono activities, releasing associates for social or ecological projects, etc. – can also be a key component when implemented in a professional manner. However, activities such as these should not be given equal status to corporate responsibility – they are only part of this overall concept. Corporate responsibility affects first and foremost core business – the ways and means of making profits.

The German government is currently working on a CSR strategy that aims to encourage companies in Germany to live up to their social responsibility. This will also involve issues of regulatory policy. How do you believe the CSR strategy could contribute to the ongoing development of the social market economy?
Suchanek: The process of compiling the CSR strategy is still at a very early stage. The commission, of which – as a representative of the Wittenberg Center – I am a member, has so far only met once and we will have to wait and see how September’s elections turn out.

My hope would be that politicians will develop supportive regulations and incentives to boost the motivation for companies – including small and medium-sized enterprises in particular – to devote the attention (and additional resources) to these issues that they merit.

(Interview with Prof. Andreas Suchanek, in March 2009)
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Interview
Prof. Dr. Andreas Suchanek
Prof. Dr. Andreas Suchanek,
Chair of Sustainability and Global Ethics at HHL Leipzig Graduate School of Management and Member of the Management Board of the Wittenberg Center for Global Ethics