The ‘Creating Shared Value’ Proposition

The following is an excerpt from one of my latest contributions, entitled; “Corporate Social Responsibility: Theoretical Underpinnings and Conceptual Developments”

The concept of creating business value is not new to academia. Wheeler et al. (2003) came up with a simple framework for the creation of value. They reconciled the concepts of corporate social responsibility and sustainable development (or sustainability) with a stakeholder approach. They held that the reputational and brand value were good examples of intangible value. Although, they failed to relate reputation and branding to economic value over the long term, they came up with a business model in their value creation approach. Their sustainability model embraced the concepts of CSR, corporate citizenship and the stakeholder theory (Wheeler et al. 2003). In a similar vein, Porter and Kramer (2006) claimed that the solution for CSR lies in the principle of ‘shared value’. According to Porter and Kramer (2011), the businesses are in the best position to understand the true bases of their company productivity. It is in their interest to collaborate across profit and non-profit boundaries. Porter and Kramer (2011) gave relevant examples of how efficient processes are aimed at adding value to the firm and to society at large.

(Porter and Kramer , 2011)

The authors explained that the creation of shared value focuses on identifying and expanding the connections between societal and economic progress. A shared value proposition requires particular areas of focus within the businesses’ context (workplace) as well as looking after society’s interests (comprising the environment, marketplace and the community) for the firm’s self-interest. The enterprise’s performance must be continuously monitored and evaluated in terms of its economic results. Creating Shared Value (CSV) is about embedding sustainability and corporate social responsibility into a brand’s portfolio. All business processes in the value chain (Porter, 1986) operate in an environmental setting within their wider community context. Porter and Kramer (2011) held that this new approach has set out new business opportunities as it created new markets, it improved profitability and has strengthened the competitive positioning. Crane and Matten (2011) admitted that Porter and Kramer (2011) have once again managed to draw the corporate responsibility issues into the corporate boardrooms. Crane and Matten (2011) had words of praise for the ‘shared value’ approach as they described the term as compelling and endearingly positive.

Elkington (2012) argued that sustainability should not be consigned to history by Shared Value. The author recognised that Porter and Kramer’s shared value proposition is undeniably a key step forward in corporate strategy. Yet he maintained that shared value can play a key role in destroying key resources, reducing the planet’s biodiversity and destabilising the climate. Then Elkington (2012) went on to say that Porter reduced corporate sustainability to resource efficiency. Eventually, Crane, Palazzo, Spence and Matten (2014) have also critiqued Porter and Kramer’s (2011) shared value proposition. They argued that this concept ignored the tensions that were inherent to responsible business activity. They went on to suggest that shared value is based on a shallow conception of the corporation’s role in society. Eventually, Porter and Kramer (2014) admitted that “shared value” cannot cure all of society’s ills as not all businesses are good for society nor would the pursuit of shared value eliminate all injustice. However, Porter and Kramer defended their (2011) proposition as they argued that they had used the profit motive and the tools of corporate strategy to address societal problems.

Citation: Camilleri, M.A. (2015) Corporate Social Responsibility: Theoretical Underpinnings and Conceptual Developments. In Vertigans, S. & Idowu, S.O., Stages of Corporate Social Responsibility: From Ideas to Impacts, Springer (Forthcoming)

 

References

Crane and Matten blog (2011). Url: http://craneandmatten.blogspot.com/ accessed on the 15th April 2012.

Crane, A., Palazzo, G., Spence, L. J., & Matten, D. (2014). Contesting the value of the shared value concept. California Management Review, 56, 2.

Elkington, J. (2012). Sustainability should not be consigned to history by Shared Value accessed on the 19th June 2012. http://www.guardian.co.uk/sustainable-business/sustainability-with-john-elkington/shared-value-john-elkington-sustainability

Porter, M.E. (1986). Competition in Global Industries. Harvard Business School Press, Boston.

Porter, M.E. and Kramer, M.R. (2006). Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility. Harvard Business Review, (December 2006), pp. 78-92.

Porter, M.E. and Kramer, M.R. (2011). Creating shared value: How to reinvent capitalism – and unleash a wave of innovation and growth. Harvard Business Review, (January/February), pp. 62-77.

Wheeler, D., Colbert, B. and Freeman, R.E., (2003). Focusing on value: Reconciling corporate social responsibility, sustainability and a stakeholder approach in a network world. Journal of General Management 28(3), pp. 1-28.