Creating Shared Valued

Creating Shared Valued         

Shinikwa James

Abstract

Shared value is a management strategy in which companies find business opportunities in social problems. While philanthropy and CSR focus efforts focus on “giving back” or minimizing the harm business has on society, shared value focuses company leaders on maximizing the competitive value of solving social problems in new customers and markets, cost savings, and talent retention. Companies are now building and reconstructing business models around social good, which sets them apart from the competition and enhances their success.  

A big part of the problem lies with companies themselves, which remain trapped in an outdated approach to value creation that has emerged over the past few decades. They continue to view value creation narrowly, optimizing short-term financial performance while missing the most important customer needs and ignoring the broader influences that determine their longer-term success. (Porter) Companies are overlooking the things that are most important to their business, like customers, the depletion of natural resources, viability of key suppliers and the economic distress of the communities in which they operate.  

With the help of NGOs, governments, and other stakeholders, business have the power of scale to create real change on immense social problems.  There are 3 ways to create shared valued: by reconceiving products and markets, by redefining the productivity in the value chain, and by empowering local cluster development.  Many companies are embracing the shared valued initiative, it brings direct economic benefit to the company while solving large scale social issues.

Hypothesis 1: Shared value will create economic value in a way that also creates value for society by addressing societal needs and challenges

Hypothesis 2:

 Creating shared value will be more effective and more sustainable than most of today’s corporate efforts in the social field

Introduction

The concept of shared value can be defined as policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and economic progress.

Shared valued overlaps with overlaps with other well-known business concepts like CSR, sustainability and corporate citizenships. What makes shared value unique is the emphasis on an economic return to the company while it is trying to achieve a positive social impact.