Critique of the Concept of Shared Value

The article by Crane et al. (2014) provides criticism to Porter and Kramer’s idea of creating shared value (CSV). Precisely, the authors pointed to the fact that CSV is a popular idea among academic audiences and practitioners. Its strengths lie in linking social goals to strategy. Nonetheless, they highlight some of the weaknesses observed in the application of CSV. For instance, they contend that CSV concept is unoriginal and it disregards the pressures intrinsic to ethical business practices (Crane et al. 2014, p.131). Additionally, they argued that CSV is impractical concept since it is naïve about the compliance in business and it is founded on a trivial notion of the role of corporations in society.

Similarly, the article by Dembek et al. (2016) uses thorough and systematic analysis to appraise the theoretical precepts of shared value. It concentrated on epistemological and ontological properties of the CSV. The scholars stressed that the conceptualization of CSV is quite ambiguous and it delivers discrepancies in the manner in which it is operationalized and defined. The article alludes to the impression that CSV is not a substantive concept but rather a buzzword (Dembek et al. 2016, p.231). Furthermore, its weakness is further compounded because it overlaps with a wide range of ideas and it fall short of empirical basis. For these reasons, the researchers recommended that measures should be taken to separate it from interrelated concepts. Moreover, appropriate research methods and theories should be identified that would promote spreading out information on shared value (Dembek et al. 2016, p.231).

The CSV concept by Porter and Kramer is a milestone towards realizing the aim of a business in terms of meeting stakeholders, societal and shareholder value. However, Crane et al. (2014) discovered that its precepts are marred by shallowness and limitation. Therefore, they suggested that the CSV might not be the solution to the achievement of business sustainability. In fact, CSV delivers a promising solution to the common reputation that corporations are considered to be prospering at the detriment of the wider community. Therefore, if they desired to recapture their validity and legitimacy in the community they had embrace initiatives in bringing society and business back together. Due to shallow structures of capitalism, most businesses are unable to realize their full potential and avoid focusing solely on profit making (Crane et al. 2014, p.133-9). Instead, they should be guided by the pursuits to solve the broader challenges facing the society. In this respect, Kramer and Porter pointed to the fact that the aim of business must be re-structured as establishing economic values in a manner that also generates society’s values by meeting its needs and challenges.

However, Crane et al. (2014) are opposed to the impression that the new approach by Porter and Kramer would link societies and business in a more holistic and integrated fashion. In fact, the scholars accuse it of disregarding the real strain between social and economic goals. Similarly, the article explicitly discusses how CSV is founded on a narrow conception of the responsibility of corporation in the society. In fact, they argued that instead of concentrating on the intrinsic problems and the unavoidable between the social and economic creation of value. They consider CSV as an effort to wipe-out the challenges of trade-offs. Additionally, it ignores the negative effects of companies’ activities (Crane et al. 2014, p.143). Their disapproval of the CSV is founded on the fact that it concentrates on win-win resolutions and personal projects. Therefore, they argue that CSV leads organizations to focus on the stress-free wins while avoiding the profound social issues unresolved.

Commercial whitewashing and cherry picking as advanced by CSV would more probably contribute to isles of win-win ventures in an ocean of unsettled social and environmental conflicts. The arguments by Crane et al noted that the aim would not be to establish more business opportunities for proceeds but to help in delivering solutions to the challenging societal matters, which should incorporate multi-stakeholder solutions and industry-wide initiatives (Crane et al. 2014, p.144). At the basic stage, Porter and Kramer are attempting to disentangle system-level challenges, which is the foundation of capitalism crisis with just changes at a corporate level. Subsequently, they are observed as offering another model where community and its necessities are observed as something the firm can satisfy to effectively in conventional economic terms.

In their discussions are convinced that corporate interests will not and cannot offer an adequate foundation for resolving the challenging social matters that the humanity is facing irrespective of the assurances from Kramer and Porter. In their opinion, it is essential to introduce reforms in the markets and their structural conditions (Crane et al. 2014, p.147). However, CSV must assist people to introduce some enhancement in this direction.

However, other researchers support the CSV approach arguing that it would assist organizations to concentrate on the appropriate type of profits, which would establish social benefits instead of shrinking them. It would then commence a constructive sequence of community and community wealth, which would relink society with business (Kramer and Pfitzer 2016, p.333). Additionally, it would also facilitate the progress towards the new revolution of productivity and innovation growth in the international economy. In this regard, markets would be demarcated progressively not just by traditional financial necessities but rather by the needs of the society (Porter and Kramer 2011, p.342). Furthermore, CSV was formulated not as a redeployment strategy but as a tactic for intensifying the entire pool of social and economic value.

The CSV is also deficient owing to the fact that it is naïve towards compliance in business. In this respect, it exhibits the capacity to encourage ethical standards and abiding by the law including mitigation of any destruction that the business causes. However, Porter and Kramer dedicated only a single sentence to the legal compliance, ethical norms, and social harms in the entire article. In this regard, they appear to disregard all instances when companies inflict harm to the environment or the people (Crane et al. 2014, p.149). Moreover, they also seem to pay no attention to occasions when businesses fail to maintain some of the ethical customs and laws of the areas in which they function. For these reasons, CSV is not a beneficial approach to corporate responsibility. Similarly, they claimed it would not be used as an avenue to re-legitimize commercial activities as Porter and Kramer had claimed. Researchers have proposed that re-legitimizing corporate can be accomplished by adhering to the global labour norms, and remittances of fair proportions of taxes (Crane et al. 2014, p.150).

Dembek et al. (2016) tend to criticize CSV suggesting that it can be categorized as a management buzzword instead of a theoretical concept. The article uses ontology and epistemology methods to analyse shared value to understand the meaning through which it is established, its results and the recipients. The review also acknowledged the backgrounds of shared values in order to understand how it differed from other ideas. The researcher noted that shared value is not used as a theoretical concept (Dembek et al. 2016, p.235). Instead, CSV is the operating practices and policies that strengthen the competitiveness of a business. Therefore, limitations of CSV are evident because its definition ignores circumstances when organizational and social advantages are in conflict. CSV also lacks an explicitly stated definition, which could assist in explaining its costs, especially those related to choice, operating practices, and policies. More importantly, CSV is limited in operating practices, policies, and scope, which imply that actions pertaining to a single nation or not directly associated with a commercial place cannot be described as the shared value. Moreover, it is vague if shared value is associated with a certain activity, project of a whole firm, or harmonized operations of many firms. It is not clear on the basis on which choices concerning share value are arrived at. The CSV omits personal values but other scholars submit that values are key elements of a firm’s capacity to formulate shared values (Dembek et al. 2016, p.236-9).

Share value in an organization is concerned with productivity, savings, higher sales, strengthened competitiveness, and availability of resources. However, the CSV is poorly constructed because it concentrates on a restricted number of carefully chosen needs and stakeholders instead of embracing systemic perspectives. Furthermore, it tends to focus on the fundamental human needs but most of the activities could not be grouped as shared values (Dembek et al. 2016, p.246). Therefore, it is quite challenging to identify how these processes meet the needs and promote organizational and social well-being.

Similarly, CSV has a myriad of questions, which have not been resolved. Therefore, it does not explicitly explain what constitutes a shared value between the society and the organization. For instance, the research questions whether toothpaste’s sales could be categorized as a shared value simply because the social necessities of health and corporate’s profits are met. In this respect, it does not comprehensively explain what types of needs should be met and under what situation to establish shared value. For this reason, without explaining these issues nearly all business operations could be depicted as an initiative of shared value. Likewise, Porter and Kramer do not evidently determine whether shared value concentrates on providing the capacity and dreams of progressing society or addressing the unmet human needs (Dembek et al. 2016, p.250-9). Finally, the CSV fail to describe how business could participate in solving the social problems or generating better answers to existing challenges.

However, in support of CSV, the concept is instrumental in addressing various challenges in the society and establishing economic value rather than focusing on offsetting various types of values. In addition, the assumption by critiques that it does not pay particular attention to corporate behaviours in terms of compliance with the law and respect of social accountability is wrong because the CSV is a pragmatic approach in the real world (Szmigin and Rutherford 2013, p.176). One of the key precepts of CSV is that it supports social progress with business self-identity in a realistic and concrete manner. For this reason, it identifies the principal commercial practice and reality of business rivalry in its reasoning. Similarly, the idea that companies should ignore their main goals of achieving competitiveness and profitable ventures is ill-advised because it would be damaging to both the society and the corporate. For this reason, they must concentrate on the shared goals (Moore 2014, p.13). Since the corporate sector can solve all the ethical issues of modern capitalism, it is essential for critiques of this concept to realize that the ideas advanced by Porter and Kramer could assist in realizing a better world which is inspired by the motive of solving societal challenges (de los Reyes Jr, et al. 2017, p.147).

Unfortunately, the academics failed to realize that the idea is a landmark towards encouraging innovation corporate social responsibility (Pavlovich and Corner 2014, p.346). Proper application of this concept would encourage more managers and business leaders to acquire new perspectives of identifying and utilization of top talents in both the society and the organization (Topal and Toledano 2013, p.273). The success of the company in its goals is dependent on innovations and talents of its human resource. Therefore, a company that uses CSV ideas ensures that it attracts persons with capacities to deal with societal needs. In this way, a firm, which concentrates on shared values with the community, has a higher chance of accomplishing competitiveness and improved level of sales (Rangan, Chase and Karim 2015, p.45).

Conclusion

Creating Shared Values (CSV) concept has received criticisms from a number of scholars. There are four major limitations in the CSV. They argue that it is unoriginal, disregards the pressures between economic and social goals, naivety towards corporate compliance, and it is founded on the narrow idea of the role of companies in society (Crane et al. 2014, p.135).  Similarly, others explain that CSV is a mere management buzz without theoretical foundations. Therefore, it is not suitable to be used in business (Dembek et al. 2016, p.239). However, the arguments presented by these scholars do not realize that CSV advocates for pragmatic strategies that can achieve the necessities of both business and societies in a mutual fashion.

References

Crane, A., Palazzo, G., Spence, L.J. and Matten, D., 2014. Contesting the value of “creating shared value”. California management review, 56(2), pp.130-153.

de los Reyes Jr, G., Scholz, M. and Smith, N.C., 2017. Beyond the ”Win-Win” Creating Shared Value Requires Ethical Frameworks. California Management Review, 59(2), pp.142-167.

Dembek, K., Singh, P. and Bhakoo, V., 2016. Literature review of shared value: a theoretical concept or a management buzzword?. Journal of Business Ethics, 137(2), pp.231-267.

Kramer, M.R. and Pfitzer, M.W., 2016. The ecosystem of shared value. Harvard business review, 94(10), pp.80-89.

Moore, C., 2014. Corporate social responsibility and creating shared value. Heifer International Report.

Pavlovich, K. and Corner, P.D., 2014. Conscious enterprise emergence: Shared value creation through expanded conscious awareness. Journal of business ethics, 121(3), pp.341-351.

Porter, M.E. and Kramer, M.R., 2011. Creating shared value. In Managing Sustainable Business . Harvard business review, 94(10), (pp. 327-350).

Rangan, K., Chase, L. and Karim, S., 2015. The truth about CSR Most of these program aren’t strategic-and that’s OK. Harvard Business Review, 93(1-2), pp.41-49.

Szmigin, I. and Rutherford, R., 2013. Shared value and the impartial spectator test. Journal of business ethics, 114(1), pp.171-182.

Topal, J. and Toledano, P., 2013. Why the extractive industry should support mandatory transparency: A shared value approach. Business and Society Review, 118(3), pp.271-298.