Today and with a totally globalized world, national and transnational organizations in different countries are beginning to care not only about their workers, but also about the community, health, financial services and the environment. Organizations are trying to solve situations such as social, economic and environmental. For companies to be competitive, they have to focus not only on satisfying the social part but also on generating strategies that allow to supply the needs of society in an innovative way and that at the same time generate a profit for the organization. From these situations arises the concept of shared value, as a means for companies to achieve economic success and in the same way, adopt a responsibility towards the community and the environment.
DEVELOPING
What is understood by shared value
According to Porter and Kramer, organizations are viewed by society as problem-generating media. This is to create economic value through the generation of social benefits beyond those that the company itself has. For these authors, the concept of shared value is all those policies and operational practices that improve the competitiveness of the organization, while helping to improve the economic and social conditions of the communities in which it operates. Shared value goals are to identify and expand the connections between economic and social advances. The word identifies social needs since it is not only conventional economic needs that are going to define the market.
Porter and Kramer were the ones who introduced the concept of shared value in 2006; But this topic was extended until 2011, through an article in which the way of seeing the corporate world is mentioned and being clear about the way in which business leaders can generate strategies to generate solutions to social problems, and if these are correct generate economic increases. (Díaz & Castaño, 2013)
For authors, organizations can generate shared value through:
Redesigning products and markets
The demands of society in the aspect of health, housing, food, support for the elderly, improvement in the financial part, reduction of environmental impacts are today a need that is being unsatisfied by the global economy. The authors mentioned above mainly suggest that companies redesign their products or services, production methods and distribution through innovation. This through generating in managers an interest in discovering new opportunities to differentiate themselves. Through differentiation they can position themselves in the market; this through being able to satisfy the market needs that are not met through the innovation of products and services and opening new markets.
Perfecting products or the value chain; this through quality, cost, processes and logistics systems. The value chain is a theoretical model that has become a powerful medium for strategic planning and analysis. The main objective is to maximize the generation of value while minimizing costs. The methodology is to create value for the client company, translated into a margin between what is accepted to pay and the cost of acquiring the offer. But already in real cases it has been found that the cost is limited by the technological part, which is linked to the quality of the product or service. In order not to fall into this situation, the author Porter mentions that the principle of creating shared value be applied in the management of the value chain.They mention that the value chain of a company is affected by the social aspect, such as the management of natural resources, water, security, health, among others.
Local cluster generation
The cluster is presented through the four points of the Porter diamond, for the author this word is a geographical concentration of companies, suppliers, specialists, institutions such as universities and business associations. They are the companies that compete but at the same time collaborate with each other and generate a critical mass that can facilitate the competitiveness of each of the organizations that is part of this cluster. The success of a company is conditioned by the companies and the infrastructure in the environment. Productivity and the innovation part are largely influenced by the existence of a cluster. Deficits in the environment where the company is operating originate an internal cost to the company. The company will be generating shared value when it has managed to build a cluster,minimizing the social, educational and institutional deficiencies of the environment, but in turn the organization will obtain benefits since a local cluster is a source of productivity and reduction of internal costs. (Vidal, 2011)
There are various ways in which a company can generate economic benefits through solving social problems. The figure below shows some areas in which organizations can have a closer relationship with society.
Connection between competitive advantage and social problems
Source: (Porter & Kramer, 2011)
Roots of shared value
The competitiveness of a company and the health of the communities in which it is operating are totally intertwined; This is the company needs a successful community, not only to generate a demand, but to generate public assets and an environment that benefits the business. In turn, a community needs companies that are successful in order to have sources of employment and opportunities to generate wealth for the city. So there is an interdependence between public policies and companies. From an old perspective of capitalism, companies contribute to society by generating profits, which in turn is translated into sources of employment, salaries, purchases, investments, payment of taxes. The operation of a company is alien to society since it is self-sufficient and the problems of society are alien to it.This perspective has been changing management thinking for the past two decades. Now entrepreneurs are focused on attracting consumers to buy more of their products. But with constant changes in short-term performance, managers resorted to being able to restructure, downsize and relocate their facilities to minimize costs, but as a result there was price competition, little innovation, slow organic growth and no advantage. competitive. Faced with this situation, the communities in which this type of company is located receive very few benefits. On the contrary, the strategic theory mentions that to be successful, companies must create distinctive value propositions that help satisfy the needs of customers.The company obtains a competitive advantage through the way in which it is configuring the value chain or through its activities involved in the generation, production, sale, delivery and guarantee of its products.
Social responsibility of organizations
This concept focuses on companies assuming the responsibility of working to generate an improvement in the social part, taking into consideration the minimum impact on the environment. Due to the globalization of social responsibility policies, they can help the organization to differentiate itself from competitors through the improvement of competitive strategy and risk management. The author Porter mentions that in the competitive context of a company four factors are present that are interrelated: the productive factors, the structure and competitiveness of the companies, the conditions of demand and the strategy and related and complementary sectors.It is proposed that competitiveness can be improved by implementing social responsibility policies in order to modify these factors in the following way:
- The conditions of the factors. The organization can establish productive processes that help to minimize the impact that the development of its activity has on the environment, through training programs to have more qualified and specialized personnel, and thus offer employment opportunities.. Those companies that are within a sector can obtain benefit through the improvement of the quality and improvements in the costs of the supplies. The conditions of the demand. Organizations must focus on meeting the needs of their market as it becomes more and more demanding, this can be achieved through continuous innovation with the aim of being able to adapt to the continuous changes that arise in the environment. This through product donations,that allow to publicize or generate interest in the market. The structured strategy and competitiveness of the companies. The greater the competitiveness, the greater the effort of others to improve quality, efficiency and service through innovation.
Through the application of these social responsibility policies, the company can differentiate itself from the market and make its products of interest to its customers. It should not be forgotten that an additional cost is generated for the company to achieve this. (López & Escamilla, 2006)
Business ethics
The ethical part from the business point of view is measured in the way in which their decisions affect third parties. The development of its activities generates a series of expectations in the interest groups and establishes in a certain way a moral contract with the different people in which a relationship is generated. In business ethics, not only the legal contract is important, but also the moral contract and generating reciprocal recognition of legitimate expectations to generate credibility and social legitimacy. For example, an intelligent organization manages its character, its management through good practices and habits with which it acts every day, and which are involved in making decisions which must be fair and prudent in the face of the expectations that the generated. (Muñoz & Juan, 2013)
CONCLUSION
Today, companies, to ensure their permanence in the market, must seek innovations in both their products and their processes, as a mechanism for survival against globalization, in order to position themselves before their competition. For society an organization is normally seen as a figure that only looks after its interests and only looks for a way to be able to generate profits, at whatever price, speaking in terms of social ethics. Faced with this situation, Michael Porter argues that organizations must see beyond their limits, structurally speaking; This is to give back to the social environment in which they are found through benefits that support the economic, environmental, financial and political aspects of it.
REFERENCES
- Díaz, N., & Castaño, C. (August 2013). Shared value as a new business development strategy. International Journal of Godd Conscience, 8 (2), 82-100 López, S., & Escamilla, S. (2006). How business ethics affects risk management. Socially responsible investment. Muñoz, & Juan. (2013). Business ethics, corporate social responsibility (CSR) and creation of shared value (CVC). Globalization, competitiveness, and governance, 7 (5), 76-88. Porter, M., & Kramer, M. (2011). The creation of shared value. Harvard Business Review. Vidal, I. (2011). Porter and Kramer's Principle of Shared Value. CIES, 92.
