BEYOND CORPORATE SOCIAL RESPONSIBILITY: CREATED SHARED VALUE AND SUSTAINABLE DEVELOPMENT

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BEYOND CORPORATE SOCIAL RESPONSIBILITY: CREATED SHARED VALUE AND SUSTAINABLE DEVELOPMENT

CHAPTER ONE

INTRODUCTION

The concept of Created Shared Value (CSV) has been pioneered by Professors Porter and Kramer of the Harvard University since 2011. Although the idea of shared value was first expressed in their publication in the Harvard Business Review on “Strategy and society: The link between competitive advantage and corporate social responsibility” in 2006 where they advocated a mutual dependence between corporations and society or a win-win business-society relationship to create competitive advantage. There would be a symbiotic relationship and reciprocity between business and society as firms redefine and readjust their concept of value in a broader, more “shared” perspective (Davenport,2011).This is because (shared)values of organizations and top management influence their strategies and strategic decisions (March & Simon,1958; Andrew,1980; Enz,1989)

The CSV is a new (r)evolutionary way of strategic business thinking in the business-society relationship which integrates social goals within business practice without distracting a firm from its primary purpose of achieving profit (Porter & Kramer,2011; Rocchi & Fererro,2014).This could trigger once again the greatest economic wealth, growth and innovation for humanity and business (Porter & Kramer, 2011). According to Porter and Kramer (2011),‘shared value can be defined as policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the community in which it operates’ and companies can create shared values through re-conceiving products and markets, redefining productivity in the value chain and building supportive industry clusters at the company’s locations. It is creating economic value in a way that also creates value for society by addressing its needs and challenges. The idea is combining “traditional objectives with additional benefits for society” (Altman & Berman, 2011).

Porter and Kramer’s propositions for the CSV have been laudable and applauded by many supporters (Bockstette & Stamp,2011; Hills et al.,2012; Pfitzer, Bockstette & Stamp, 2013;Visser,2013) in re-connecting the disconnected corporations’ successes to society’s development, particularly in the advancement of social causes to strategic level, specifying the roles of government in enhancing shared value and introducing a broader conception of capitalism-the “caring or conscious capitalism”. Without doubts, the world has experienced unparallel prosperity following the industrial revolution and the free-market economy. Ringmar (2005) argues that although capitalism has produced comparable levels of economic prosperity, it has also brought to human beings and societies the consequences of income inequality, erosion of non-market values, commodification and alienation of people and hence it should be controlled.

The arguments on CSR have revolved around the continuum of Professor Friedman’s neo-classical economic theory and Professor Freeman’s stakeholder theory. Although Porter and Kramer (2011) argue that CSV is not social responsibility, philanthropy or even sustainability, but instead, it is a modern manner to achieve long-term success with regards to economy terms. Bosch-Badia et al (2013) argue that shared value directs businesses to a more sustainable and stronger value chain. It does appear that CSV is beyond CSR-a new CSR agenda of business integrating social and economic goalsǃ Moczadlo (2015) argues that CSV is going beyond the pure business case approach of CSR because it requires integrating CSV into the core business and the long term strategic alignment of companies.The CSV is a win-win situation where an organization creates value for the society by tackling its needs and challenges in a way which also creates economic value to them. Epstein (2012) remarks that CSV could grow future markets and strengthens economies and communities. Spitzeck‐ and Chapman (2012) find that shared value strategies do enhance financial as well as socio environmental performance and build stronger clients’ relationships in Brazil.

In fact, as awareness on global issues such as poverty, climate change and global warming, inequities keep increasing, CSR has become inescapable priority for firms and their managers the world over (Porter & Kramer, 2006; Jean & Yazdanifard,2015;Fjell & Rødland,2015) to be part of the solutions of the problems of society which they also created. The multinationals (MNCs) are being blamed for society’s failures (Porter & Kramer, 2011). Moreover, most of companies’ efforts have not pay off greatly in their productivity due to their disconnect from or ditch against society and not linking the CSR to their strategy (Porter & Kramer,2006).Porter and Kramer (2011) argue that there is a growing perception of companies’ successes at the expense of society’s social, environmental and economic problems. The companies’ CSR has not been strategic to be a source of business opportunity, innovation, revenue growth and competitive advantage and benefits to society (Moore,2014).

The CSV challenges the academic literature on CSR as well as business practice in the few years of its existence. No wonder, there have been increased study of CSV from different point of views, contexts such as industrial sectors and multinationals (Maltz & Schein,2012) social entrepreneurship (Pirson,2012) and countries e.g. Brazil (Spitzek & Chapman,2012), India (Vaidyanathan & Scott, 2012),and Australia (Leth & Hems, 2014).Some have tried to reconstruct/redesign or extend the original CSV framework by Porter and Kramer (Michelini & Fiorentino, 2012; Moon, Pare, Yim & Park, 2011) and/or widely applied the CSV to regional development, poverty reduction other discipline like finance and banking (Bockstette, Pfitzer, Smith, Bhavaraju, Priestley & Bhatt 2014), education (Mena & Zelaya,2013;Kramer & Tallant,2014.), global health (Peterson, Rehrig, Stamp & Kim,2012), oil, gas and mining companies (Hidalgo, Peterson, Sith & Foley, 2014), agriculture, business corporate strategy, low-income markets (Michelini,2012) and emerging markets (Hills, Russell, Borgonovi, Doty & Iyer,2012).

There are lots of literature and empirical evidences that the CSR approach in the developing countries of Africa including Nigeria has been mainly philanthropic and normative CSR (Visser,2006,2008;Visser,Matten, Pohl & Tolhurst,2007;Amaeshi,Adi, Ogbechie & Amao,2006) and there are increasing expectations by various stakeholders that corporate organizations, especially the multinational companies (MNCs) and transnational companies (TNCs) should go beyond profit maximization and regulatory compliance to taking up responsibilities that make significant impact on society by helping to remedy the social problems including the ones caused by them (Odia,2016). The CSV may just be the desired solution that the stakeholders have been waiting for to make corporations break away from restricted CSR involvement to embrace the broader view of “caring, conscious capitalism” and responds to social issues and problems. However, managers and entrepreneurs will need to develop and possess new skills and knowledge to create shared value (Bockstette & Stamp, 2011). Porter (2014) traces the evolving role of business in society from philanthropy (donation to worthy social cause, volunteering to CSR (compliance with community standards, good corporate citizenship and sustainability initiatives) to creating shared value (addressing societal needs and challenges with a business model at a profit)

While there are benefits and prospects associated of CSV to the society and businesses at least from evidences of companies that have keyed into the CSV, a research gap exists on how CVS can be linked to the sustainable, inclusive development of developing countries as well addressing the limitations and challenges of CSV such as the criticisms regarding the CSV, measurement issues, changing corporate mindsets to view environmental and social problems not as constraints but as business opportunities, and gaining support of top management of MNCs, TNCs and other companies to key in and their voluntary CSV compliance and getting support of governments and agencies at the local, national and international levels to encourage more businesses to adopt shared value strategies. Therefore the objective of the chapter is to examine the relationship between CSV and corporate sustainability. The rest of the chapter is divided into five sections: The immediate section clarifies CSR and exposes the problems with the present CSR. Section three considers CSV, the different ways companies can create shared value as well as the differences between CSR and CSV.Section four addresses the role of government and government policies on CSV and Section five examines CSV and sustainable development. The last section is the concluding remarks.

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