Shared Value Creation

Topics: Sociology, Social responsibility, Corporate social responsibility Pages: 3 (1033 words) Published: November 17, 2011
The importance of corporate social responsibility to companies has been widely debated. Companies eager for maximizing the profit with limited cost. Facing the complexity economic environment and growing competition, as well as the short-term performance pressures from shareholders, companies have no idea but force to restructure the business, reduce the labor force and relocate the business to lower-cost regions. However, are they really helpful to maintain the competitive advantages and gain the sustainable profit? Michael Porter and Mark Kramer, in their January/ February 2011 Harvard Business Review article - Creating Shared Value (CSV) explains what a growing companies have come to recognize - companies can derive a great deal of economic value by addressing social needs. This new approach is used to replace the traditional description of corporate social responsibility (CSR). Traditional Concept of Social Responsibility

Most companies remain stuck in a “social responsibility” mind-set in which societal issues are at the periphery, not the core. They think the only responsibility of business is to make money for shareholders, and that any corporate investment in social programs is a misuse of shareholder money. Therefore, many executives have come to believe that it is the government’s responsibility alone to tackle social issues. To be socially responsible, they need a profit motivation. In current year, many companies recognize that being socially responsible can burnish the company’s brand and reputation, attract new customers, aid in recruiting employees and improve employee commitment to the organization. However, this is only the way that helps the companies enter new markets, improve economies in existing markets and create new business opportunities. In the article, Porter and Kramer indicate that companies must recast the narrowly defined and traditional mind-set of CSR for creating shared value. This approach is designed to deliver...
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