Unit 2: Business in Society

Tutorial Two:Creating Shared Value

CREATING SHARED VALUE

LO 2.4 Explain the concept of ‘shared value’ (SV), clearly distinguishing SV from a traditional view of CSR

"Creating Shared Value" Harvard Business Review's Top Article of 2011 (5:28)

https://youtu.be/rfoHW4V_cgA

Discussion questions

1. Discuss the relative merits of the SHARED VALUE concept

2. What are the criticisms?

Creating Shared Value: Redefining the Role of Business in SocietyMark R. Kramer, at the 3rd Global Peter Drucker Forum on November 3rd, 2011

https://youtu.be/CPxdH-2dVFA

Emerging view on the purpose of businessPorter and Kramer (2011) proposes the concept of shared value: addressing a social issue with a business model and argue:

“Capitalism is under siege ... Diminished trust in business is causing political leaders to set policies that sap economic growth .... Business is caught in a vicious circle ... The purpose of the corporation must be redefined around SHARED VALUE”

“There's a fundamental opportunity for business today to impact and address these social problems, and this opportunity is the largest business opportunity we see in business” (Porter, 2013)

Three opportunities for companies to CSV (Porter and Kramer, 2013):1. By reconceiving products and markets2. By redefining productivity in the value chain3. By enabling local cluster development

(Porter, TEDGlobal, 2013)

• In a Scottish context, the third sector attracts £4.9 billion in funding from various sources, using SCVO statistics 34% (£1,686m) comes in from the public sector (includes local, devolved and national governments) when only 1.5% (73m) comes from the private sector (Weaver, Crossan, Tan & Paxton, forthcoming).

• Median donation by FTSE 100 companies have trebled from £1m in 2007 to £3 million in 2012 (CAF Bank, 2014)

CSR Vs. Shared Value (Porter and Kramer, 2011)

CSR Shared Value

Value: doing good Value: economic and societal benefits relative to cost

Citizenship, philanthropy, sustainability Joint company and community value creation

Discretionary or in response to external pressure

Integral to competing

Separate from profit maximisation Integral to profit maximisation

Agenda is determined by external reporting and personal preferences

Agenda is company specific and internally generated

Impact limited by corporate footprint and CSR budget

Realigns the entire company budget

Creating shared value CSV enhances social and economic conditions in the community, which then simultaneously enhances the company’s competitiveness

= Businesses should reconnect business goals with societal goals, and go beyond CSR efforts (Porter and Kramer, 2011; Scagnelli and Cisi, 2014)

(Porter and Kramer, 2013, pp. 8)

Critical thought: Many of your examples demonstrate the connection between building a competitive advantage and addressing a social issue?

Keep collating these ideas in everyday life

Discussion questions

1. Discuss the relative merits of the SHARED VALUE concept

2. What are the criticisms?

The Strengths and Weaknesses of the Shared Value Concept (Crane et al., 2014)

“ what about … people and their relationships”?(… Social capital)

Sustainable Capitalism (Asia Global Institute, October 2012 Hong Kong) (7:37)Final thought to take-away: how should businesses work with civil society (the third sector)and government in addressing environmental and social challenges?

https://youtu.be/77SPFSW9bHc