Shared Value at the Forefront?

Reflection on “Creating Shared Value” by Michael E. Porter and Mark R. Kramer

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In “Creating Shared Value,” the authors argue that for too long, there has been an incorrect belief that the success of a company must necessarily come at the expense of the workers and nearby residents. The authors further posit that if companies, and the people and institutions that they are made up of, adopt new approaches to development, incorporating ideas of creating shared value, both society and people can benefit from the economic success and growth of companies.

The authors support these claims with numerous examples of companies who have created shared value, however, the question is left of whether the ultimate impact of these companies creates shared value. For example, Wal-Mart is used as an example of a company that, by reducing packaging, has not only saved money in transportation and waste disposal costs, but has also reduced its environmental impact by lowering carbon emissions and usage of natural resources. This example is uplifting and seemingly “reveals that the congruence between societal progress and productivity in the value chain is far greater than traditionally believed.” But what happens when we take a step back and reflect on the throwaway or convenience culture that Walmart encourages? What is the impact of a company that encourages one-time use of products that previously would have been repaired when broken or treated with care given higher prices paid by consumers? While Walmart has attempted to address this through sustainability initiatives (https://corporate.walmart.com/2016grr/enhancing-sustainability/moving-toward-a-zero-waste-future), these initiatives are mainly targeted towards company operations and supplier packaging practices. Once they reach the level of customer behavior, they seem nothing more than PR or marketing campaigns.

Other examples mentioned (Coca Cola, Nestle, Unilever, etc.) raise this same question: are these companies truly trying to create shared value or are they simply reducing costs with the help of new technologies that allow them to better monitor and adapt their supply chains? There is a big difference between lowering usage of water or electricity to save on costs and creating shared value by allocating significant investments towards initiatives that create hard-won additional revenues in the way that ITC does in the case. One reduces impact to increase profits while the other attempts to do so by creating a change in the larger society that improves people’s lives beyond the company’s walls.

At the end of the article, the authors briefly, but importantly, mention “Most business schools still teach the narrow view of capitalism, even though more and more of their graduates hunger for a greater sense of purpose and a growing number are drawn to social entrepreneurship.” I looked at one of the top social entrepreneurship programs in the U.S. at Duke University to see if they were furthering the idea of shared value. Interestingly, the program defines social innovation as “value created...primarily to society as a whole rather than private individuals.” (https://entrepreneurship.duke.edu/social-entrepreneurship/about/) It suggests that the idea that authors posit, that social good and economic profits can go hand in hand, may be further afield than hoped.