Combining capabilities for the SDGs: value chain collaborations between SMEs and MNEs
As Inka Pieter noted in our SDG progress report on the 30th of November, 2018: “SMEs are able to move quickly through which they deliver innovative solutions: a capability we need on a global scale”. Yet, financing the scaling of these innovations is not always easy for small players. Consequently, the report stated that partnering of SMEs and MNEs forms an opportunity for business to advance the SDGs, by combining their capabilities.
As a follow-up, Global Compact Network Netherlands conducted research among three inspiring value chain collaborations between MNEs and SMEs with a sustainable mission, to learn from their best practices and find out how these different types of companies can collaborate with each other.
The findings showed that for a successful collaboration, it is important that the companies align in their ambition for sustainable development, in their vision on the strategy they want to use to pursue this ambition, and – more or less – in the extent to which they prioritize the SDGs and their topics. Actively communicating about this prioritization is important in order to develop understanding and to avoid that this difference becomes a bottleneck. Moreover, keeping the SME relative independent of the MNE facilitates the collaboration, so that the internal complexity of the MNE does not inhibit the SME’s ability to move quickly. In practical terms, companies are recommended to develop multiple individual relationships within the MNE and in top management, so that the goal of the collaboration is prioritized sufficiently and so that the collaboration is not dependent on the transition of individuals.
Through collaborating, SMEs and MNEs can extend their sphere of influence in the value chain, for example through increased buying power. As a consequence, they are better able to involve suppliers – but also other players - in sustainable practices. Hence, companies are recommended to identify who they need to further extend their sphere of influence. Not only other (leading) companies but also NGOs and governments play an important role in facilitating sustainable development in the chain. Moreover, the findings showed that by collaborating with each other, SMEs and MNEs can both develop and scale sustainable innovations, thereby actively contributing to the SDGs.
Besides the fact that both types of companies benefit from an extended sphere of influence and knowledge sharing and creation, the findings showed the collaboration can additionally provide SMEs with credibility and help them reach a larger audience, while the collaboration can provide MNEs with legitimacy and help them achieve their individual sustainability goals.
As can be concluded from this research: there is indeed a lot of potential for these types of collaborations when it comes to achieving the 2030 Agenda. Hence, we hope that these findings inspire companies to initiate similar collaborations or to improve existing ones, so that together, in support of SDG 17: Partnership for the Goals, businesses can and will make this world a better place.