Shared Value: Double the Value?

Share By Lars Moratis and Ronald Jeurissen

The debate over the creating shared value (CSV) concept has recently gained traction after several years of relative silence since Porter and Kramer published their well-received Harvard Business Review article. While academics Dirk Matten and his colleagues have criticized CSV for its unoriginality and conceptual superficiality in a stinging California Management Review article, practitioners welcomed the concept — as it anchors corporate social responsibility (CSR) within a tradition of strategic management and provides an appealing, fashionable label that captures the essence of business-case approaches to CSR.

It has also been argued that CSV should be an integral part of business school curricula. Interestingly, the aspects of instrumental versus ethical CSR and the lack of interaction between business and academia have hardly received any attention in this debate.

Stating that CSR may “unite the business world and other parts of society in solving social problems,” professors Luetge and Von Liel have recently argued in the Financial Times that CSV should be an integral part of management education. They rightfully note that (future) managers should be trained in identifying and exploring win-win relationships between business and society, instead of viewing this relationship as a trade-off. Indeed, companies worldwide are increasingly recognizing the win-win opportunities between business and society. Other institutional actors, such as governments and non-governmental organizations, are making CSV part of their strategic agendas, too. Cross-sector partnerships have emerged to address some of the most pressing social problems and sustainability challenges by combining the competencies and resources of the actors involved.

The coalescence of  business and social value is unquestionably a strong point of CSV, but there is an ethical downside to it as well. Essentially, as an example of ‘instrumental CSR approaches,’ CSV  argues that profit maximization is a function of addressing a company’s social responsibilities. As such, it is characterized by an ethical detachment and a neglect of the societal necessity of moral motivation. In addition, and somewhat similar to the claim that Porter and Kramer make that CSV represents “a higher form of capitalism,” morally-motivated CSR offers a deeper sense of purpose for companies and individuals working in them.

Consequentially, it may even offer an enriched sense of purpose for business schools having been under intensified scrutiny as the hallmarks of capitalism. Management education should hence integrate this critical perspective on CSV as much as business schools have the responsibility towards both business and society to train (future) managers in recognizing the win-win opportunities such instrumental approaches provide. Integrating CSV in MBA curricula without this perspective only represents half the value of viewing the modern role of business in society.

But there is one other important side to this story, still: The controversy  over CSV is an illustration of the lacking relevance of academia for the corporate world. While we agree to a large extent with the arguments of management scholars Matten c.s. that the CSV concept is hardly an original advancement of existing CSR theory, academics should realize that if it weren’t for Porter and Kramer, strategic perspectives on the mutual advancement of  business and society would probably be far less popular in business than it is now.

Capitalism is a deeply paradoxical institution, as Adam Smith acknowledged when he introduced the perennially puzzling metaphor of the invisible hand. The market works in ways that economic actors themselves do not always intend, nor always understand.  In this context, CSV offers double  value: It propagates the symbiotic value-creation processes between companies and the societies in which they operate and has contributed to lifting CSR thinking from the academic confines into business reality.

Image credit: Emilio Quintana, Flickr

Lars Moratis is an experienced CSR consultant and researcher and a doctoral candidate in CSR at the Open University the Netherlands. Ronald Jeurissen is professor of business ethics at Nyenrode Busines University in the Netherlands.

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One response

  1. It saddens me that academia has become so disconnected from everyday society and so amoral that this is really treated as anything new. Any business community I have encountered is full of small business owners who just naturally fulfill their CSR while creating all sorts of CSV and make a profit, too. We used to call them regular God – fearing Americans and gave them lots of well deserved respect. They still, today, support their communities, churches, and charities; lead volunteer efforts; and strive to create more jobs by delivering value to their clients and customers. This often means they take from their own pockets to help others. We used to call it the American Way of doing things. It’s all voluntary and functions well till someone demands government confiscate their resources under the guise of doing on a grand scale what they are already doing voluntarily. Maybe the academics should take a sabbatical and go into the real world to open a small business at their own risk (no “too big to fail” out here). Real life can be quite educational.

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