Creating Shared Value
Executive Summary
This article, by esteemed authors Michael Porter and Mark Kramer, examines the relationship between business and society, the deeper purpose of capitalism and its benefits towards identifying and meeting real societal needs.
The authors believe that we have narrowed the scope of thinking how businesses can create economic value and they are thus increasingly being seen as the problem rather than the solution to building a better society. This phenomenon has lead governments to develop an over-regulatory, controlling mind set over corporations and political leaders are unable to set business friendly public policies even though there is a clear understanding that businesses and society need each other.
“Capitalism is under siege. In recent years business increasingly has been viewed as a major cause of social, environmental, and economic problems. Companies are widely perceived to be prospering at the expense of the broader community… companies must take the lead in bringing business and society back together”
Businesses themselves argue that their purpose is to maximize profits and in turn create value by offering employment, higher wages and higher quality products that meet the needs and wants of society.
Porter counter argues this notion that has developed over the past 20-30 years by citing examples such as companies destroying value in terms of human health, pollution, job cuts, depleting resources and the sub-prime crisis. He explains how a myopic vision of creating economic value has restricted firms from thinking of a long term sustainable solution to creating economic value and driving innovation. With this short term view, the firms’ profits indeed to come at society’s expense which leads to a backlash.
“The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges”
“Shared value is not social responsibility,
This article, by esteemed authors Michael Porter and Mark Kramer, examines the relationship between business and society, the deeper purpose of capitalism and its benefits towards identifying and meeting real societal needs.
The authors believe that we have narrowed the scope of thinking how businesses can create economic value and they are thus increasingly being seen as the problem rather than the solution to building a better society. This phenomenon has lead governments to develop an over-regulatory, controlling mind set over corporations and political leaders are unable to set business friendly public policies even though there is a clear understanding that businesses and society need each other.
“Capitalism is under siege. In recent years business increasingly has been viewed as a major cause of social, environmental, and economic problems. Companies are widely perceived to be prospering at the expense of the broader community… companies must take the lead in bringing business and society back together”
Businesses themselves argue that their purpose is to maximize profits and in turn create value by offering employment, higher wages and higher quality products that meet the needs and wants of society.
Porter counter argues this notion that has developed over the past 20-30 years by citing examples such as companies destroying value in terms of human health, pollution, job cuts, depleting resources and the sub-prime crisis. He explains how a myopic vision of creating economic value has restricted firms from thinking of a long term sustainable solution to creating economic value and driving innovation. With this short term view, the firms’ profits indeed to come at society’s expense which leads to a backlash.
“The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges”
“Shared value is not social responsibility,