Bis Business in Society

This essay is to present our opinion on Michael Porter’s and Marc Kramer’s “Creating Shared Value” (CSV) concept. They recommend a type of value-based management which promises the reinvention of capitalism. According to the authors the creation of “shared value” is meant to replace a narrow understanding of management with its rigid fixation on short-term profits. For Porter and Kramer, the objective is to reintegrate business into society.

CSV touches on some progressive ideas. Companies are encouraged to “utilize their skills, resources, and management capability to lead social progress”. Furthermore, Porter and Kramer suggest thinking in terms of societal needs and take them as a starting point for innovations. With this terminological transition from responsibility to creating value, Porter and Kramer want to reach skeptical which otherwise would have continued keeping its distance from business in society. Porter and Kramer contrast their CSV with an out-dated understanding of CSR by equating CSR with mere philanthropy that is disconnected from the company’s core businesses, while CSV is claimed to be integrated into the core business activities.

Some critiques and supporting ideas have been developed by Crane and Reyes.

In an issue on CSV, Crane criticises the authors. In fact, Porter’s and Kramer’s critique of CSR hints at how limited the understanding of corporate responsibility still is in mainstream economics. For example profit maximization is empirically given business needs to maximize profits in a competitive environment but it is also considered as morally good. CSV reinforces this normative predefinition by assuming that businesses meet “societal needs” while they are generating profits. However, the profit motive alone is questionable. Even in this CSV neither reveals anything new nor can it abandon its purely economic perspective.

Then a building idea