Creating Shared Value:
Lessening the Tension between Society and the Economy by Utilizing Corporate Social Responsibility to its full Potential PA 311 Introduction to Civic Engagement
Commerce is an essential part of humanity. Without commerce man would most likely still be in an animalistic state relying on the hunter-gatherer life style. With business and trade, come economic prosperity and a higher standard of living. However, business can also create situations that are unjust and not equitable for all humans. On the same token, society can create environments in which a business cannot successfully operate.
A tension between economy and society has existed since the beginning of modern human culture. Throughout history cultures have tried to lessen the tension with mixed results. Communism attempted to eradicate the problem by eradicating the profit motive but in the end, it was unsuccessful. Socialist theorists failed to understand that business is part of human nature and if wielded correctly can benefit not only the business, but the society as well.
In modern times the attempt to lessen the tension between the two has taken the form of Corporate Social Responsibility (CSR). While it has many benefits it also leaves the profit motive out of the equation by only focusing on the needs of society and not of business. In its current state, CSR is not a sustainable form of philanthropy and will ultimately fail. A newer version of CSR, Creating Shared Value takes into account, not only society’s needs but the businesses’ as well. By operating within this model we can create a self-sustainable equilibrium in which both business and society as a whole, prosper. Only by uniting the two, and focusing on the commonalties, not the differences, can we create a situation in which the tension between economics and society are tempered.
This paper will show how the modern era attempted to lessen the tension between the two by the creation of CSR. It will show the history of the program and ultimately its failings. Later, it will focus on the new concept of Creating Shared Value and how it can benefit society and lessen the tension between economics and society. Origins of Corporate Social Responsibility
Benjamin W. Heineman, a senior vice president for law and public affairs at General Electric, defines CSR as. 1. Strong, sustained economic performance. 2. Rigorous compliance with financial and legal rules. 3. Ethical and other citizenship action, beyond formal requirements, which advance a corporation’s reputation and long-term health (Olowski, p. 6). These concepts were not the norm in business forty years ago. Most people believed that corporation’s sole responsibility was to conduct business and be profitable. However, the role of business in society began to be seriously questioned during the cultural revolution of the 1960s. With the possible exception of the depression of the 30s corporations were held in high esteem in America. From the early beginnings of US business to the 1960s people assumed that business existed solely to serve the economic needs of the country. Businesses produce goods and services and employ citizens thus providing them economic security. Employed Americans can then buy more goods and services producing more commerce and business which leads to more employment (Wilson, 2000, p. 3). This role is very important in a society because if it is done correctly, it will eventually raise the standard of living for most of its citizens. This idea that corporations were merely agents of economics was not seriously challenged until the 1960’s (Wilson, 2000, p. 6). During the turbulent 60s there were many societal changes that led to the birth of Corporate Social Responsibility and a heighted sense of conflict between society and business. Affluence doubled in the decade of the sixties allowing more young adults to attend...
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