Corporate Responsibility versus Porter's Shared Value
Crane et al. (2014) recently argue that ‘Created Shared Value’ (CSV)
' is a subject (part) of the Corporate Responsibility (CSR)
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.