Most companies believe that a corporation exists to generate profit for its shareholders. Porters article reminds us of the fact that a corporation is a social construct existing to serve social needs. Profits are mere resources or a motivation for action and not the reason for its existence. We can see the drastic difference in poverty and what is determined as poverty between the first and third world countries. While I do agree that there should be a trend shift in trying to reach a finding the middle ground between capitalism and socialism. There are still a multitude of companies in the market that have not nowhere close to following Porter’s trend.
I do not completely agree with Porter in one sense when he states “Businesses have lost sight of what is important” How many businesses do we see focusing on customers well-being. Coke or for that matter any cola are great examples, the products provide a customer with short term benefits and the organizations with a profit but we all know how harmful and poisonous these drinks are in the long term. These companies have survived and will continue to thrive solely on their profits.
On the flip side I would like to name companies that are following this trend. Since I believe creating a shared value will serve varied purposes that would benefit the environment. This in turn would create a cycle with the customer, organization and society.
Most organizations are under this myth that companies cannot profit while creating shared value. In India, the Tata group of companies since its inception have strived towards not only creating profit but it adds value to the society and the environment one is in. All city governments do not possess the skillset to tackle the social issues using business acumen. Like we saw in the city of charlotte case sometimes privatization of certain social constructs helps the society, its people and the organizations running it. We’ve seen countless various multi nationals contribute towards society from all fields. We’ve seen Adiddas start a campaign that would provide shoes in Bangladesh to the poor. H.J. Heinz launched the micro-nutrient program whose objective was to combat iron deficiency. This initiative served 5 million children. Microsoft’s charitable endeavors are infamous and we all are aware of the company’s success and its profits.
Having said that I believe large organizations should focus on creating and building a shared value to improve society. The onus of this initiative must be taken by larger organizations since they possess the resources to accomplish this goal. As Frank Abrahams said “Business managers can more effectively contribute to the solution of the many complex social problems of our time. There is no higher responsibility, there is no higher duty of professional management.”