DO COMPANIES HAVE TO BE SELFISH TO BE COMPETITIVE IN THE MARKET? BUSINESS STRATEGY ON A VALUES-BASED APPROACH IN THE CIRCULAR ECONOMY: THE GERMAN MITTELSTAND

Abstract

The world has been struggling with an economic crisis since 2007 in general. Next to the economic crisis based on diminishing growth and employment, the world economy has also been facing unprecedented environmental and social problems. The current state of the world economy is directly connected to the orthodox Neoclassical Economic Theory which has been claiming that businesses are only profit making and all economic agents including company owners and managers must be acting only for their very own wealth maximisation. This is very well reflected in ‘the shareholders’ wealth maximisation’ approach of the Anglo-American stock-market-based economic system. Therefore, the Neoclassical Model provides its legitimacy to such actions caused environmental and social problems such as global warming and huge income discrepancies. However, recently new concepts such as ‘circular economy’ have also been introduced and widely accepted by sensible companies and governments. In addition, new discussions have also gained a momentum in the public scene regarding ‘sustainability of business’. In this paper a simple conceptual framework is introduced to integrate strategic management, ethics or moral values with business sustainability in the new circular economy with a special focus on the German SMEs sector (Mittelstand) to reflect the practical examples of sustainable and ethical approaches to business. This is important and interesting since the German economy has been doing the best among other European countries in the current economic crisis.