Creating Synergistic Value for Business and Society

Synergistic value integrates insights from the stakeholder theory [1] the resource based view theory [2] and the shared value notion [3] [4].

The stakeholder theory [1] provides opportunities to align business practices with societal expectations and sustainable environmental needs. Businesses ought to reconcile disparate stakeholders’ wants and needs (e.g. employees, customers, investors, government, suppliers etc.). By forging alliances with internal and external stakeholders business can create synergistic value opportunities. This may lead to an improvement in mutual trust and understanding. As a result, there are also benefits for corporate reputation, brand image, customer loyalty and investor confidence. This societal engagement also responds to third party pressures, it lowers criticisms from the public and minimises regulatory problems by anticipating legal compliance.

The resource-based view theory [2] suggests that the organisations’ slack resources are a facilitator for quality and innovation. Therefore, discretionary expenditures in scarce resources for internal and external socially-responsible practices as well as investments for environmental sustainability will result in strategic CSR [3] outcomes including; effective human resources management, employee motivation, operational efficiencies and cost savings, greater productivity outcomes (which often translate in healthier financial results) [3]

The synergistic value notion suggests that there is scope for governments in their capacity as regulators to take a more proactive stance in promoting responsible behaviours. They can possibly raise awareness of social and sustainable practices through the dissemination of information; the provision of training programmes and continuous professional development for entrepreneurs [4]. They may assist businesses by fostering the right type of environment for responsible behaviours; through various incentives (e.g. grants, tax relief, sustainable reporting guidelines, frequent audits et cetera) [3].

This proposition implies that socially responsible and environmentally-sound behaviours will ultimately bring financial results – as organisational capabilities are positively linked to organisational performance. Synergistic value is based on the availability of slack resources, stakeholder engagement and regulatory intervention which transcend strategic CSR benefits for both business and society.

References

[1] Freeman, E.E. (1994). The Politics of Stakeholder Theory: Some Future Directions Business Ethics Quarterly, 4(4), 409

[2] Orlitzky, M., Siegel, D. S. and Waldman, D. A. (2011). Strategic Corporate Social Responsibility and Environmental Sustainability. Business & Society, 50(1), 6-27.

[3] Camilleri, M. A. (2012). Creating shared value through strategic CSR in tourism.. University of Edinburgh. https://www.era.lib.ed.ac.uk/handle/1842/6564 accessed 10th July 2014.

[4] Porter, M.E., Kramer, M.R. (2011). Creating Shared Value, Harvard Business Review, 17 pages. gen 01, 2011.