Creating Shared Value: How Companies Can Benefit Society And Gain Competitive Advantage

• The source and context of the article:  Where is it published?  What is its purpose?  Who is the intended audience?  Is the source reliable?  Is the source up-to-date, and is this important?   

The source is the

• What is the article about, and what issues does it raise or deal with?
• What is your response to the content of the article, and to the way it is presented? Does the purpose or intended audience of the article/resource have any impact on how information is presented?
• Is there any background information that you need to consider?
• Does the article provide evidence to support the points it is making?
• What are the strengths and weaknesses of how the article presents its subject matter? Is one perspective on the issue presented or are a number of perspectives presented?  
• If you wanted to investigate the subject more deeply what additional research might you do?

Purpose and Audience

The title of the article is “Creating Shared Value” and it has been written by Michael E. Porter along with Mark R. Kramer. The article was published in Harvard Business Review in the year 2011 (Porter and Kramer 2011). The article discusses that corporation can create shared value if they provide societal benefits. The article states that companies can be economically successful in the event of catering to the needs of the society. This article states that the social harms can cause the firm to incur internal cost that can cause the firm to suffer loses. I think that the article has rightly pointed out that there exist connection between societal and the economic progress of a country.

The purpose of the article is to talk about how a business can create opportunities for itself by reconceiving the products along with markets. The article has talked about the decisions of a form should be viewed through lens of the shared value. The intended audience of the article are the new business ventures and the entrepreneurs who want to survive within the competitive market. The source is reliable as it has been brought out in the reputed journal of “Harvard Business Review”. The source is important as this journal is universally acclaimed and the ideas of the journal are made use of by the reputed managers and the business in the world. The article talks about the fact that competitiveness of the company is closely intertwined with health of communities (Porter and Kramer 2019). This article states that business needs successful community for creating demand for the products. Successful business can help the people in the communities in getting jobs and it can pave the way for giving wealth creation opportunities to the citizens.

The article deals with the idea of value creation in relation to a business that can help a firm in getting competitive advantage. The article talks about that the configuration of value chain can help a firm in rising above the competitors. This article discusses how the concept of the shared value can reset boundaries in relation to capitalism. The connecting of the success of a company with that of societal improvement can help in opening ways that can increase the efficiency of a firm. The demand for the products that can help in meeting the needs of the society is increasing in the present age (Beschorner 2014). The article talks about how the food companies that traditionally concentrates on taste is focussing on better nutrition that can help in driving profit for the firm. According to me, the article has rightly pointed out the link that exists between societal concerns and that of productivity benefit in relation to a firm. I think that the article has aptly pointed out how the factors like employee skills, employee health, worker safety, energy use and water use can increase the profit that is made by a firm. The article provides enough evidence for supporting the points as it has provided examples of companies that have successfully made profits by indulging themselves in charitable acts. The article has given the example of Thomson Reuters within India that has been able to profit by providing agricultural advice. The agricultural service provided by it reaches a large number of farmers which has tripled the income of the farmers (Schwartz 2017). The article has discussed how the excess packaging in relation to the products proves to be costly both for environment and the business. It has also brought forth the example of Wal-Mart that has reduced the packaging and the rerouting of its trucks that has helped it in saving around $ 200 million (Hsiao and Chuang 2016).

The Source and Reliability

The companies should create programs that can support the purpose of a company and the objectives should be measured on the regular basis. The companies in the present age focusses on defeating poverty along with advancing of education that helps them making profit in the long run. A non-profit company can help in solving the global issues as it looks beyond profit and lends its hand that can help in serving the broader community (Turner and Mann 2017). National governments does not have resources for addressing global issues and international community does not have actionable agreements that can provide the adequate resources. The non-profit companies have worldwide influence that can help them in accomplishing their purpose. A self-regulated business can aid the performance of the firms and it can improve standing in relation to a company (Lys, Naughton and Wang 2015). The companies that have good track record pertaining to compliance can improve standing in relation to the regulators. These companies would be able to make profits owing to reduced scrutiny.

Shared value refers to the policies along with operating practices that can enhance competitiveness in relation to a company. Shared value can help a firm in advancing social conditions in relation to communities within which it carries out its operation. Shared value acts as the interface that can help a business in meeting the needs of the society. Shared value can be said to be exist when the social responsibility is placed at the centre of the strategy of a company (Gautier and Pache 2015). The benefits that a firm can get by creating shared value is that it can leverage power pertaining to market-based competition for addressing problems of the society. Corporate Social Responsibility can be said to be different from that of Corporate Shared Value. Corporate social responsibility acts as cost center while shared value creation refers to the opportunities of a business that can help it in creating new markets (Qian, Gao and Tsang 2015). Shared value can improve the profitability and strengthen the competitive positioning in relation to a firm. Corporate Social Responsibility deals with responsibility while on the other hand Corporate Shared Value is in relation to creation of value.

The strengths of the article lie in the fact that it has been able to present in a coherent manner the benefits that a firm can get in the event of contributing to the broader society. The idea is very popular among the practitioners and the academic audiences. The strength of article is owing to fact that connects strategy with that of the social goals and it has delved into the area  that has not been previously explored. The weakness of the article lie in the fact that it is unoriginal and it has dealt in a naïve manner with the concept of business compliance. Michael Porter not being a government policy writer has weaknesses in his writings. The subject can be investigated more deeply by looking into the journals that provides case-studies of different companies that can throw light on the aspect of “creating shared value”.

The article elaborates on value creation that aids a firm for securing of competitive advantage. Configuration in relation to value chain can help a firm in beating the rivals in the industry. The article has put forth evidences of companies that have been successful in garnering profit by working to remove the issues that plague the society. The companies want to remove poverty and spread education that can help them in the aspect of making profits. Non-profit company aims at solving global issues by working for the larger community.

References:

Beschorner, T., 2014. Creating shared value: The one-trick pony approach. Business Ethics Journal Review, 1(17), pp.106-112.

Gautier, A. and Pache, A.C., 2015. Research on corporate philanthropy: A review and assessment. Journal of Business Ethics, 126(3), pp.343-369.

Hsiao, T.Y. and Chuang, C.M., 2016. Creating shared value through implementing green practices for star hotels. Asia Pacific Journal of Tourism Research, 21(6), pp.678-696.

Lys, T., Naughton, J.P. and Wang, C., 2015. Signaling through corporate accountability reporting. Journal of Accounting and Economics, 60(1), pp.56-72.

Porter, M.E. and Kramer, M.R., 2011. The big idea: Creating shared value.

Porter, M.E. and Kramer, M.R., 2019. Creating shared value. In Managing Sustainable Business (pp. 327-350). Springer, Dordrecht.

Qian, C., Gao, X. and Tsang, A., 2015. Corporate philanthropy, ownership type, and financial transparency. Journal of Business Ethics, 130(4), pp.851-867.

Schwartz, M.S., 2017, July. What It Is and What It Isn’t: Assessing ‘Creating Shared Value’Against the Value, Balance, and Accountability (VBA) Model. In Proceedings of the International Association for Business and Society (Vol. 28, pp. 277-290).

Turner, J. and Mann, L., 2017. Creating shared value: An industry project framework. In 28th Annual Conference of the Australasian Association for Engineering Education (AAEE 2017) (p. 919). Australasian Association for Engineering Education.