Tag Archive: Supply Chain

Why Corporate Shared Value (CSV) exceeds Corporate Social Responsibilities (CSR)

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest.”

Adam Smith, 1776 (An Inquiry into the Nature and Causes of the Wealth of Nations)

Studies show that many business executives view the concept of Corporate Social Responsibility (CSR) as a challenge. The biggest challenge for some of these executives is finding a suitable strategy and approach, which they could apply to make their business organizations profitable and at the same time be responsible towards the society.

According to sources, the fundamental problem begins with a misunderstanding about what Corporate Social Responsibility really is. Many researchers and experts in this field have repeatedly pointed out the problem of a lack of  a single and universally accepted definition of what CSR is. It is no surprise that there is plenty of confusion about what constitutes CSR activities.

In fact, one of the leading experts in this field, the late professor William Frederick, openly highlighted in his book ‘Corporation, be Good!: The Story of Corporate Social Responsibility’ the problem of not finding an actual accepted definition  of CSR. In his book, he stated that “the actual meaning of CSR has dogged the debate from the beginning.”

More recent studies focusing in CSR, not only highlight the obvous problem of a lack of universally accepted definition, but also the lack of a proper understanding of the essential nature and purpose of a business organisation. A major dilemma lies in the –‘why’ and ‘if’ Profit seeking companies should also engage in social responsibilities especially in cirumstances where there is clearly limited or no financial benefits.

As a result,  Professor Michael Porter and Mark Kramer coined the Term ‘Corporate shared Value’ CSV  as a means to resolve this dilemma. The concept of Corporate Shared Value goes beyond Corporate Social responsibility. As described on article on The Institute for Strategy and Competitiveness, Michael Porter describes  Creating shared value  as-

“ a framework for creating economic value while simultaneously addressing societal needs and challenges. When businesses act as businesses—not as charitable donors—they can improve profitability while also improving environmental performance, public health and nutrition, affordable housing and financial security, and other key measures of societal wellbeing. Only business can create economic prosperity by meeting needs and making a profit, creating infinitely scalable and self-sustaining solutions”-Michael Porter, Havard Business School

On the following link, Professor Michael Porter explains the CSV in depth and how applying the capitalism model can help address problems of the society.