Corporate Responsibility versus Porter's Shared Value

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Corporate Responsibility versus Porter's Shared Value
Ismael Bena - MBA, Management Consultant, Netherlands

Crane et al. (2014) recently argue that ‘Created Shared Value’ (CSV)' is a subject (part) of the Corporate Responsibility (CSR) concept.
This is opposed to Porter and Kramer’s (1999; 2002; 2006; 2011) view, who conceptualize CSV as an enhancement of CSR.

In short, CSV aims to transform societal problems potentially affecting the corporation into business opportunities, which in turn have the ability to solve the social problems and simultaneously enhance the corporation's profitability. Hailed as a ‘new concept’ by Porter & Kramer (2006; 2011), and Porter being one of the world’s-best known business strategists, the new concept quickly got embraced by multinationals (e.g. Nestlé, Coca-Cola) and even became a key strategy in the official EU strategy on CSR (European Commission, 2011).

Crane and colleagues (2014) challenge the novelty of CSV and find strong correlation with (pre) existing CSR concepts, i.e. Stakeholder Management, Social Innovation, Instrumental Stakeholders theory, etc. Supported by CSR literature they go on arguing that “CSR is strategic when it yields substantial business-related benefits to the firm” (2014, p.7).

CSV is contested to ignore dilemmas between social and economic goals, where outcomes might not be aligned, or worse, might even be unacceptable for some stakeholders (e.g. NGOs).
The key question raised by Crane, et al. (2014) within this CSV concept is; can social good be achieved through CSV when the fundamental nature of the product innovations comes from revenues created by for example arms manufacturers, the tobacco industry or the petroleum industry?

They argue CSV promotes an advanced form of ‘green washing’ in cases where the regular, key activities of the corporation remain ‘business-as-usual’. “While CSV might be a good way of integrating various activities into one social strategy, it fails to deliver orientation for responsible corporate wide strategy” (2014, p.16).

My question is: what is your opinion on the CSV concept, which clearly has merit in the creation of value, where CSR in general is about responsibility? Has anyone struggled with trade-offs when merging CSR with corporate strategy?

- Crane, A. Palazzo, G. Spence, L.J. and Matten, D. (2014) ‘Contesting The Value of the Shared Value Concept’, California Management Review. 56 (2).
- European Commission. (2011, 25/10/2011). A renewed EU strategy 2011-14 for Corporate Social Responsibility: Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions.
- Porter, M.E. and. Kramer, M.R (1999) ‘Philanthropy's New Agenda: Creating Value’, Harvard Business Review. 77, pp. 121-131.
- Porter, M.E. and. Kramer, M.R (2002), ‘The Competitive Advantage of Corporate Philanthropy’, Harvard Business Review. 80, pp. 56-68.
- Porter, M.E. and. Kramer, M.R (2006), ‘Strategy and Society: The Link between Competitive Advantage and Corporate Social Responsibility’, Harvard Business Review (December), pp. 78-92
- Porter, M.E. and. Kramer, M.R (2008) ‘The Five Competitive Forces That Shape Strategy’, Harvard Business Review. (January) pp. 79-93.

What is New About CSV?
Piotr Wojcik, Student (Other), Poland
In my opinion, CSV is similar, but not the same as other concepts such as blended value or instrumental stakeholder theory. Of course it draws on prior ideas.
But what distinguishes it, is that it offers an approach towards business and society issues by using strategy tools to deal with CSR principles. CSV is the first concept that quite well implement social/environmental issues into corporate strategy. Its main advantage is to perceive social issues through the lens of value - a deeply rooted notion in management and economics.
I would say that CSV is rather an (extended) economic approach to normative issues that will pay off for businesses in the long run. It is still relatively close to mainstream management thinking and, thus, can probably connect to the mindset common among scholars and practitioners in the field of management.
CSV is still in nascent age and has some deficiencies. But as time goes on and new work is done (e.g. measurement) it will show its novelty.

Corporate Responsibility versus Porter's Shared Value, is There a Difference?
Sonny Vicente, Coach, Philippines
In my opinion, the seemingly conflicting interpretation between the two corporate endeavors arises from the perceived meaning of "value". If we are referring to the corporate "values" that an organization stands by on to promote "best practices, etc." to sustain a "win-win" environment for everyone for business to prosper, then I find no distinct difference between the two.
It may sound naive, but when the meaning of "shared value" will only extend to the common, often self-serving favorable mileage that will result from the activity for the business organizations involved, then, there may be some distinct differences.

Creating Shared Value with CSR
Ranjeet Menon, Project Manager, India
I haven't been in a role where I have had to merge CSR with corporate strategy. Here's what I think from my limited knowledge. I have seen and heard corporates taking up many social activities in the name of CSR in India, but I have never seen them factor in CSV when they plan the activities.
Cleaning up streets and beaches in the name of CSR has no shared value associated with it other than get some publicity for the company. In my opinion, not every CSR activity will have CSV associated with it. Education can play a central role here.
If shared value has to be created with CSR activities, it will require equal participation and contribution of the company and the people involved. Shared value can be created only if CSR activities produce long term and sustainable results. Analysis of the results will give insights to what benefits the company can derive from the CSR activities and how they can continue creating shared value.

CSV versus CSR: Interesting Question
Love Lonnroth, Management Consultant, Sweden
Thanks Ismael for a thought provoking post. I have not read Crane's article, but from your resume I am inclined to agree with the authors that CSV is rather a subset of the CSR concept than an entirely new concept.
For me, CSR is a very broad concept about the relation between the corporation and society at large that encompasses compliance and risk management, as well as shared value for business and its various stakeholders.
CSV, as described in the HBR article, is the win-win part of CSR, excluding the compliance part. The merit of the CSV concept is that it highlights the business benefits of CSR, whereas CSR especially in the US is often described as a drag on shareholder value.

Semantics, ... Or, in Other Words...
Ron Strauss, Business Consultant, United States
Consultants have a genius for calling the same thing by a different name in an attempt to distinguish their service offering from other service offerings.
CSR programs operate on three levels:
Level 1: Donations where you write a one-off check
Level 2: Compliance to meet legal requirements
Level 3: As a value creation mechanism to create shared value among various stakeholders as part of an ongoing set of initiatives tied in to corporate values as expressed by the corporate mission statement.
CSV operates at Level 3.
Triple bottom line measurement and reporting can be applied to both.
Editor: Indeed, see also Caroll's Pyramid of Corporate Social Responsibility, distinguishing 4 layers of CSR.

CSV and CSR to a Business Enterprise
Leodegardo M. Pruna, Professor, Philippines
Created Social Value (CSV) and Corporate Social Responsibility (CSR) are not opposing ideals or virtues. Rather they are complementary. While it is true that a business runs for profit, a balance has to be maintained between profit and stakeholders' satisfaction for business sustainability. There is a common ground or intersection between CSV and CSR which should be enlarged in order to extract from business the greatest good which CSV and CSR combined could bring.

CSV and CSR are Beyond Companies Boundaries
Guillermo Hasing, Business Consultant, Ecuador
CSR is going beyond companies' boundaries because generally suppliers are not seen inside organizations as responsible business partners, and actions taken in order to protect poorest workers' conditions, environmental care, fuel comsumption, bad social practices, etc., specifically in underdeveloped countries are not considered. The main interests are centered on how the company itself can protect its environment, workers, community and the customers around them, therefore there is a lack of CSV in the business responsibility chain.

Cannot Use Short Term Output to Measure CSR or CSV
Jay Lo, Partner, Taiwan
CSR needs to be carried out with true heart. If the owner/manager truly embraces CSR, chances are that this person will also deal with suppliers and customers fairly. Depending on circumstances, the same owner/manager may enter into transitions that have CSV elements. The key issue is never about CSV or CSR; it is about what the owner/manager truly believes in and what are his core values.

Societal Problems are often Created by Companies
Hamad Al Sadd Al Ali, Student (MBA), United Arab Emirates
Good day, this article is critical, and so is my point of view that social problems are not only a bunch of conflicts that need solutions. They are also somehow created by the firms themselves. When strategies create new trends and problems for people, then you can't say: "it's a social problem" or so.

CSR Goes Beyond Created Shared Value
Ismael Bena - MBA, Management Consultant, Netherlands
Great contributions and comments so far.
As it appears, CSV is not really a novelty as claimed at its inception, although it strongly relies on previous research and is pitched differently. By emphasizing on the “business value” aspect to create a ‘win-win’ situation, corporations widely embraced it, which is an acceptable driver and a good thing for CSR in general. But CSV cannot be the only driver of CSR!
The issue in my opinion is the isolated character of CSV, which support the creation of island-like solutions through cherry picking for ‘win-win’, amid the broad corporate social responsibility context. When CSV would be regarded as the path to organizational-wide CSR implementation (to meet the 3BL), than a ‘win-win-win’ situation can be created with sustainable value creation. Various researchers have indicated the positive financial implications for shareholders through CSR enhancement, validating the pursuit of companies for the incorporation of CSR for their own and civic good.

CSV Represents a Different, Instrumental Approach to Sustainability/CR Issues
Piotr Wojcik, Student (Other), Poland
As @Ron Strauss said - it is all about semantics. No matter which notion do we choose, the phenomenon remains the same - to make a positive contribution to society and natural environment when doing everyday business.
However, when the discussion is focused on HOW social engagement affects business performance, it is no longer a matter of normative phrases such as: "firms should engage because it is expected to do". Businesses usually seek solutions to implement a CR strategy in such way that it allows to generate benefits both for itself and community. From this perspective, CSV tries conceptually to solve this problem and represents an instrumental approach to sustainability/CR - it deals with economic issues.
While "Value" is understood by the CSV concept in economic terms, it shouldn't be confused (for the sake of clarity of arguments) with epistemological meaning (e.g. manager's values).

3BL Concept and Win Win Win Situation
Guillermo Hasing, Business Consultant, Ecuador
Thanks, Ismael for your comment. 3BL concept, economic prosperity, environmental quality, last paragraph, social justice (concept was coined in 1997 as I remember) should be replaced or updated by CSR so win win win situation could be more meaningful in order to create long term shareholder's value and to manage the risks of doing business.

CSR / CSV ⇒ Value / Values
Olaf de Hemmer, Business Consultant, France
Very interesting still converging discussion: obviously CSV is a new concept when compared to Porter’s previous vision of the corporation, where it did not have to share the ‘value’ created (meaning money)!
CSR is a still more broad concept, in which CSV is one of the means a corporation may implement its goal to serve society issues, which is linked to the company ‘values’. As already mentioned, CSV is a good example of approach combining ‘value’ and ‘values’!
This leads to consider the company as a mean for stakeholders to exchange what they have so that it creates ‘value’ (not only money, but also time, wellbeing, social status, products/services, information …) for themselves and the other ones (each exchange is a win-win, as –strangely enough-each actor perceives more in what it gets that what it gives, or the exchange will not happen!).
So a company has to create the different ‘valueS’ expected by its different stakeholders! I started a new topic because it's worth a separate discussion.

Win-Win Solution in CSV and CSR
Leodegardo M. Pruna, Professor, Philippines
@Guillermo Hasing: Your commentary on the subject of CSV and CSR is well taken and appreciated. I took notice of the phrase " Win-Win Solution" which I think has been overly misused. I believe that when two parties run in a competition, one would win and the other lose. There has to be a winner and a loser. However, when the loser takes the loss positively and learns from it, then he/she can consider it personally as a "Win". I think that the phrase should be more of "SATISFACTION" as we can aptly say that both came out happy and SATISFIED with the result of the competition.

Win - Win Solutions CSV and CSR
Guillermo Hasing, Business Consultant, Ecuador
@Leodegardo M. Pruna, thanks for your wise clarification, you are right, that point of view has a lot of interest. The person who supposedly loses never loses if he takes it as a win and learning experience for future behavior. Actually in a business environment nobody loses, only earn less because risks are well managed.
I think Satisfaction will occur at the time the past experience is used, so instead of a winner and a loser, it is more appropriate to say: a winner and a loser-winner.
We are all going to benefit from the win - win prize donated by Ismael and the people who contribute their comments. Anyway it is an interesting and valuable subject.

Win-Win Solutions CSV and CSR
Leodegardo M. Pruna, Professor, Philippines
@Guillermo Hasing: Thank you for your comment. I agree with your earlier commentary that CSR is going beyond company boundaries because it will not be able to sustain itself without outside influence. I subscribe to the notion that CSV has to be a subset of CSR for a sustainable company to work in a globally competitive environment.

The Pragmatic Implications Need to Be Considered
Tom Essen, Consultant, Finland
My thoughts are similar to @Ron Strauss. Business concepts very seldom have one single correct definition. It is in the nature of development, for consultants to come up with new slightly enchanced or modified concepts.
When looking at it from a pragmatic point of view, it is important to take into account the fact that resources always are limited. It means that cost efficiency of course is to be considered. As I understand CSV, one of the main principles is to help choose those projects that give maximal value for the buck. And here it is not just the value for the company but the total shared value.
I also perceive an aspect in the CSV concept, that I have always admired. That is to be driven by a vision, that is so strong that when running into barriers that are related to challenges in society, top managers do not give up, but start thinking in terms of "let´s help society to overcome the challenges".

Contradictions with CSV Implementations
Ismael Bena - MBA, Management Consultant, Netherlands
@Tom Essen: Hi Tom, your and Ron's remarks are on point, business concepts often have multiple dimensions for qualification, this is not different with CSV. Although an issue with CSV is that companies often use it for "cherry picking" and deviate when they run into barriers which they cannot align with their strategic course.
Another complaint is the "island style" solution corporations use, when embarking on ONE specific issue while the core operations of the company are counter productive and severely harming society and the environment (i.e., a sigaret company donating money for community improvement).

Contradictions with CSV Implementations
Olaf de Hemmer, Business Consultant, France
@Leodegardo M. Pruna and @Ismael Bena:
Yes, if two people compete for the same thing, I agree one will win and the other loses.
But most of the time people in business do not target the same goal; common sense shows that most deals that are settled are win-win, where the supplier is happy to provide a service and get money and the customer is happy to get the service and give the money.
These different positions lead them to not perceive the same 'value' in what they exchange: the customer will find more value in the service than the money paid, and the contrary for the supplier.
So the supplier and customer do not have the same goal, therefore the exchange leads to a win+win!
The same with every stakeholder for any company: targeting value creation for each stakeholder, as CSV and CSR propose, creates multiple win-win exchanges.


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Ismael Bena - MBA
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