The article “Creating Shared
Value” (CSV) does great at exploring the strengths of the concept of creating
shared societal values by a business that benefit a larger audience than just
the corporation itself. However, there are a few holes that can be poked
thorough the logic usually used to support the theory of creating shared value.
Most importantly, the idea of
CSV ignores the inherent tensions between societal and economic goals. Many
decisions, it can be argued, are not clear win-wins but often pose themselves
in terms of dilemmas. In many cases, the idea that the organization should
pursue financial good which would automatically lead to societal good is
severely improbable, if not impossible. Companies that produce products of
questionable social good (e.g. tobacco products) present a pertinent example as
considerable financial gains can be enjoyed by the company at the expense of giving
up social gain.
Secondly, the idea of CSV
relegates CSR as a concept that does not create value. That may not always be
the case as organization’s investment in CSR may create immense societal value,
most of which may be indirect and many of which may not directly impute to the
firm organizing the CSR program. Merck Pharmaceuticals has undertaken a
lifelong aim of distributing Mectizan – a drug that cures river blindness in
Africa – free of cost to all areas where it is needed where all expenses of
production and distribution are borne by the company. Whereas the value that the company benefits
from in terms of enhanced brand value might not be great, the societal value of
having generations upon generations of healthy, productive, disease-free
individuals would be immense and far exceed the private cost incurred by Merck.
A narrow focus on pursuing activities according to the CSV principle ignores
the immense incremental societal value created. Even Porter and Kramer had
claimed in an earlier article that: “CSR can be much more than a cost, a constraint,
or a charitable deed - it can be a source of opportunity, innovation, and
competitive advantage”.
Thirdly, CSV is seemingly
based on a narrow perception that places a great deal of emphasis on business
compliance and completely ignores the naiveté of such a suggestion. It accounts
for a shallow perception of an organization’s role in society and perpetuates
the profit-maximizing belief that has doggedly maligned capitalism for much of
history. The notion that CSR was valuable because it involved organizations
viewing their societal role as more than profit maximization and as an active
contributor towards improving societal values and creating social good
irrelevant of the maxim of profit maximization. CSR enabled firms to push the
envelope beyond compliance and towards societal elements irrelevant to their
core business.
The
inherent criticism here indicates that whilst there is great merit in the idea
of creating shared value; often, industrial capitalism destroys natural capital
created over thousands of years of evolution. To generate real value, CSV needs
to recognize the fact that capitalism is not always a benign process and can
play a role in consuming natural resources and destroying social value.
Sources
1.
http://www.dirkmatten.com/Papers/C/Crane%20et%20al%202014%20in%20CMR.pdf
2.
Porter and Kramer (2006), op. cit., p.
78-92.
3.
http://www.merck.com/about/featured-stories/mectizan1.html
4.
J.L. Badaracco, Defining Moments: When
Managers Must Choose Between Right and Right (Boston, MA: Harvard Business
School Press, 1997).
5.
http://www.theguardian.com/sustainable-business/sustainability-with-john-elkington/corporate-social-resposibility-creating-shared-value
6.
http://www.theguardian.com/sustainable-business/sustainability-with-john-elkington/shared-value-john-elkington-sustainability
7.
http://craneandmatten.blogspot.com/2014/03/four-big-problems-with-creating-shared.html
