This paper aims to present Kramer & Porter’s opinion as to why companies should take on a fresh new approach on Shared Value Creation. We’ll examine the authors’ arguments then discuss their validity as well introducing personal supporting facts related to this subject.
The main idea of this article by Kramer & Porter is to call for companies & government agencies alike to reconnect with society by taking on a different approach to value creation; for they have the ability, the resources and the incentives to do so. The kind of shared value that will generate enduring economic benefits for the company when at the same time adding momentous value to society by addressing its basic needs and challenges. The authors rationalized this idea by pointing out the fact that business & society have grown further apart, tangled up in misconceptions such as business as the cause of many societal problems, especially environmental & economic. In the same way, business believes providing societal benefits will hurt their bottom line. In fact the real problem resides in the fact that business has long been locked in with an outdated and narrow concept of value creation; the ones that mainly focus on profits and short term performance over the long term outlook. Their major mistake is to overlook all other contributing factors such as their customers’ needs, the depletion of the resources they use or the reliability of the supply chain they use, etc, that could help ensure their financial success and strengthen their corporate image. The authors note that companies are still trapped with the notion of “social responsibility” but they don’t address societal issues as the core element. Kramer & Porter stress that share value is totally different than philanthropy or social responsibility; rather it is new way to achieve economic success and that capitalism is the greatest mean for companies to accomplish the above purpose by meeting human needs,...
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