By Shweta Bapat
In 2011 Harvard Business Review article, Strategy & Society: The Link between Competitive Advantage and Corporate Social Responsibility (CSR) the concept of Creating Shared Value (CSV) was introduced by Michael Porter and Mark Kramer. They defined it as ‘corporate policies and practices that enhance the competitiveness of a company while simultaneously advancing social and economic conditions in the communities in which the company sells and operates.’ CSV is treated as a profit centre because it creates new opportunities for business by taking society ahead.
Creating Shared Value Approach
Creating Shared Value means advancing the society in which the company operates, while enhancing the competitive position of the business. It is important to understand that advancing a society and enhancing competitive position of business are done at the same time. It is basically balancing between two difficult tasks and creating win-win situation for business and society.
Strategic Decisions for Creating Shared Value
Company needs to take some strategic decisions to do this. E.g. many companies involved in dairy business are helping and training the farmers in the nearby community to improve the production and maintain the quality. These types of moves help the community plus companies get good quality raw material for their production process. Redefining productivity in the supply chain by creating shared value is, what companies need to do in today’s situation. Companies can take efforts for improving quality, quantity and cost of inputs and distribution, this can give double benefit of improving the standards of supply chain that is a part of the society and better economic results for the company.
Differentiating CSV from CSR
Literature review says that there exist the confusion between CSR and CSV but CSV is not CSR. It’s not only about social and environmental responsibility or philanthropy or sustainability, but it is about finding business opportunities while finding a solution to the social problems. CSR is viewed as cost centre, it is not expected to generate any profit or financial review in the process of CSR implementation.
But CSV is a profit centre and it focuses not only focuses on increasing profits but also on opening new business avenues. CSV expects rebuilding the business model around the social problem solving along with standing strongly in the market competition. Though it is not very easy to change business strategies for creating shared value because, it is a fact that every social problem cannot be solved by creating business opportunity. Companies must accept this as a challenge to make the difference for its future.
Collaborating with Society
The companies generally fight with the market competition alone, but CSV can give a strong partner called society. Going ahead with the society is beneficial to the organisation because society becomes a very strong support to the company. Society has a power; power that can destroy business if not supported by the society or power that can take business on top if supported by the society. Better to utilise the power that can bring business to the top. Company specific CSV agenda can create an opportunity of golden handshake for business.
About the Author
Mrs. Shweta Bapat, HoD Human Resource Management, Kaveri College of Arts, Science and Commerce, Pune
