INTRODUCTION
At present, it is common to see how society faces the consequences of the axiological crisis that we are experiencing. This gives way to less and less values such as responsibility and solidarity, to name a few, not only in individuals, but also in all kinds of organizations, since organizations are made up of those individuals.
The lack of values in society, originates reprehensible and dishonest practices that permeate organizations, having economic and social repercussions, impacting the positioning of the brand in the market, as well as its public image and of course its profits.
Today we can see how consumers around the world are saying loud and clear that the social purpose of a brand is one of the factors that significantly influence purchasing decisions, each time, new trends point to greener products, with cause and history, that have a positive impact on society and the environment.
This behavior is on the rise and offers great opportunities for organizations capable of evolving from a red ocean to a blue ocean. This article is intended to alert all organizations that consider Philanthropy and Social Responsibility only as an annual and unimportant exercise. And is that currently, organizations in general need to evolve not only in their way of thinking and acting, but also in the way of resolving conflicts that affect their consumers.
We will explore the concept of "Shared Value" and thus its areas of application and success stories.
BACKGROUND
(Porter & Kramer, 2011) argue that value creation is a long-recognized idea in business, where profits are income received from customers minus costs incurred. However, companies have rarely approached the problems of society from the perspective of value and have limited themselves to treating them as peripheral issues. This has blurred the connections between economic and social concerns.
Strategic theory says that, to be successful, a company must create a distinctive value proposition that meets the needs of a chosen set of customers. The company obtains a competitive advantage with the way in which it configures the value chain or the set of activities involved in the creation, production, sale, delivery and support of its products or services. Businesses can create economic value by creating social value.
(Morell, 2015) suggests that the success of the harmonious society depends on the ability of human beings to put aside their differences and collaborate to create a society that grows in quality of life, in quality of the environment, in spirituality, in holistic impact economics and applied ethics. The balance between these dimensions can harmonize the motivations of all individuals and groups in a society to make it happier.
We know according to (Pes, 2015) that the formation of a global economy without a parallel development of global public institutions to regulate it and the social awareness of the environmental impact of economic activity have changed society's expectations about the conduct of companies. In the absence of common standards for all countries or a global authority capable of developing and enforcing them, society has mobilized through Non-Governmental Organizations (NGOs), consumer movements and campaigns through social networks denouncing bad practices. With all this, companies are required to behave with integrity and transparency based on respect for basic values such as human rights and on a strategy that contributes to solving the social and environmental challenges of our time.
To respond to the current expectations of society, a proposal with growing roots suggests orienting the business strategy towards the creation of shared value, which supposes, in short, linking the purpose of the company with the great challenges of our time.
And all of this is necessary because, in recent years, organizations have been increasingly seen as a major cause of social, environmental and economic problems. There is a perception that large organizations prosper at the expense of the rest of the community (Porter & Kramer, 2011).
The purpose of creating shared value is to renew the business strategy with the aim of expanding business possibilities while helping to improve the standard of living of the companies' interest groups. Therefore, it is not a question of redistributing an already created value, but of an innovative strategy that changes the way of developing the business activity, its business model, to achieve a result based on the win / win binomial.
Since, the value chain of a company inevitably affects and is affected by various social issues, such as the use of natural resources and water, health and safety, working conditions and equal treatment in the workplace.
But to achieve this, organizations must move out of the area where they are stuck, with an outdated approach to value creation that has emerged in the past decades, optimizing short-term financial performance, overlooking the most important needs of clients, ignoring the influences that determine their long-term success. (Porter & Kramer, 2011)
We can see this kind of situations reflected in the following graph, which, although we will not delve into the subject of perfect market competition, it is necessary to review it to understand what is happening with organizations.
Perfect Market Competition Source: (Moreno, 2010)
SHARED VALUE
In the conference of (TED, 2013) the guru Michael Porter comments that even as a business professor he is fully convinced that companies can solve social problems, and that this, incidentally, can have an impact on more growth opportunities for companies.
Porter affirms that there is an unexplored potential of market forces that, if they are well oriented to generate social and ecological value, can lead companies to change their role and reputation in the system. In his shared value initiative, the Harvard professor affirms that the purpose of the corporation must be redefined as the creation of shared value, not just profit itself. This will fuel the next wave of innovation and productivity growth in the global economy.
(Porter & Kramer, 2011) mention that shared value involves creating economic value in a way that also creates value for society by addressing its needs and challenges. And with this they suggest that companies must reconnect their business success with social progress. Likewise, they explain that shared value is not social responsibility or philanthropy and not even sustainability, but a new form of economic success.
The concept of shared value, according to Porter and Kramer, can be defined as the policies and operational practices that increase the competitiveness of a company by simultaneously developing economic and social conditions in the communities where companies have their business base. Creating shared value focuses on identifying and expanding the connections between economic and social progress.
(Morell, 2015) explains that shared value is the element that makes it possible to deactivate aggressive competition between interest groups and generate synergies between them.
By including the social agenda in the purpose of the companies, shared value promotes a corporate strategy that facilitates the connection of the company with its stakeholders and with society as a whole. However, the social agenda raises three types of problems for which, from the exclusively business sphere, there is no answer. First, there is no single solution to social issues, nor is the position of each stakeholder homogeneous. Not all clients of a company share the same opinion on how to tackle the problem of poverty, for example, and the rules for making decisions on this issue, although it has implications for regulating the economy, correspond rather to politics.
Second, the company runs the risk of being involved in the political and social debate on the different alternatives, a discussion that is not part of its purpose, limited to the creation of shared economic value.
The politicization of the company will end up weakening its position in the market, which will no longer depend only on the quality / price of its offer and its ability to manage the resources it uses efficiently, but also on the sympathy or antipathy produced by its ascription to a political option.
Third, there are not always win / win solutions. Business management often involves the resolution of dilemmas in which it is not possible to find a satisfactory solution for all interested parties.
The three problems are solved, to a great extent, when political and social institutions establish a regulatory framework assumed by the vast majority of society.
AREAS OF OPPORTUNITY
(Pes, 2015) Porter has pointed out three areas in which shared value can be reflected:
The concept of shared value, which focuses on the connections between society and economic progress, has the potential to generate the next wave of global growth.
Companies can create opportunities to generate shared value in three main ways:
- Rethinking products and markets: The starting point to create value is for companies to identify the needs of society, benefits and harmful effects that their products may have. These needs are not static; they change permanently with the evolution of technology. Knowing these unmet needs by the markets requires redefining the products and services of a company. Microfinance is an example of how it is meeting the needs of people in developing countries that were previously not served by the financial sector.Redefining the productivity of the value chain: Porter and Kramer reiterate the congruence between social progress and productivity in the value chain, which implies not only exercising environmentally friendly practices,but rather to procure purchases from small businesses or local firms, as well as to use new distribution models, such as the case of Google Scholar that offers school textbooks on the network; as well as implementing occupational health programs. All these innovative practices not only reduce costs, but also generate immense shared value that most companies have traditionally ignored in their operations Supports the development of local clusters: The success of a company depends on the companies and the infrastructure that are around it. These clusters are not only made up of other companies, but also other types of institutions, academic programs, trade organizations, universities, drinking water, fair competition laws, and transparency in markets.as well as using new distribution models, such as the case of Google Scholar that offers school textbooks on the network; as well as implementing occupational health programs. All these innovative practices not only reduce costs, but also generate immense shared value that most companies have traditionally ignored in their operations Supports the development of local clusters: The success of a company depends on the companies and the infrastructure that are around it. These clusters are not only made up of other companies, but also other types of institutions, academic programs, trade organizations, universities, drinking water, fair competition laws, and transparency in the markets.as well as using new distribution models, such as the case of Google Scholar that offers school textbooks on the network; as well as implementing occupational health programs. All these innovative practices not only reduce costs, but also generate immense shared value that most companies have traditionally ignored in their operations Supports the development of local clusters: The success of a company depends on the companies and the infrastructure that are around it. These clusters are not only made up of other companies, but also other types of institutions, academic programs, trade organizations, universities, drinking water, fair competition laws, and transparency in the markets.as well as implementing occupational health programs. All these innovative practices not only reduce costs, but also generate immense shared value that most companies have traditionally ignored in their operations Supports the development of local clusters: The success of a company depends on the companies and the infrastructure that are around it. These clusters are not only made up of other companies, but also other types of institutions, academic programs, trade organizations, universities, drinking water, fair competition laws, and transparency in the markets.as well as implementing occupational health programs. All these innovative practices not only reduce costs, but also generate immense shared value that most companies have traditionally ignored in their operations Supports the development of local clusters: The success of a company depends on the companies and the infrastructure that are around it. These clusters are not only made up of other companies, but also other types of institutions, academic programs, trade organizations, universities, drinking water, fair competition laws, and transparency in the markets.but additionally, they generate immense shared value that most companies have traditionally ignored in their operations. Supports the development of local clusters: The success of a company depends on the companies and the infrastructure that is around it. These clusters are not only made up of other companies, but also other types of institutions, academic programs, trade organizations, universities, drinking water, fair competition laws, and transparency in markets.but additionally, they generate immense shared value that most companies have traditionally ignored in their operations. Supports the development of local clusters: The success of a company depends on the companies and the infrastructure that is around it. These clusters are not only made up of other companies, but also other types of institutions, academic programs, trade organizations, universities, drinking water, fair competition laws, and transparency in markets.fair competition laws, transparency in the markets.fair competition laws, transparency in the markets.
Innovation is necessary in the three areas that Michael Porter identifies as ideal for generating shared value. This connection links the capacities that a company has to innovate with the development of a socially responsible business strategy.
SUCCESS STORIES
(Escudero & Lama, 2014; Porter & Kramer, 2011) mention that companies such as Google, GE, IBM, Intel, Johnson & Johnson, Nestlé, Unilever, Wal-Mart, Coca-Cola Brasil, Natura Brasil, have already embarked on major efforts to create shared value by reconsidering the intersection between society and corporate performance.
(Porter & Kramer, 2011) explain that the first studies on cocoa farmers in Côte d'Ivoire suggest that while fair trade can raise farmers' incomes between 10% and 20%, shared value investments can raise their profits. revenue by more than 300%. It may take more upfront investment and time to implement the new sourcing practices and develop the supporting cluster, but the return will be greater economic value and broader strategic benefits for all participants.
As early as 2011, (Porter & Kramer, 2011) mentioned that the concept of shared value blurs the line between for-profit and non-profit organizations. And they gave the example of WaterHealth International, a fast-growing for-profit firm, using innovative techniques to purify water and distribute clean water at minimal cost to more than a million people in rural India, Ghana and the Philippines Its investors include not only the socially oriented Acumen Fund and the World Bank's International Finance Corporation, but also the Dow Chemical venture fund.
REFERENCES CONSULTED
- Escudero, M., & Lama, JG (2014). Corporate social responsibility and the creation of value in Latin America. University of Deusto.Morell, JMC (2015). Zen Business: The benefits of applying harmony in the company. Profit Editorial Moreno, MA (2010, February 19). What are Monopolies and "Imperfect Competition"? Retrieved on May 22, 2017, from https://www.elblogsalmon.com/conceptos-de-economia/que-son-losmonopolios-y-la-competencia-imperfectaPes, Á. (2015). Four leaf clovers. LID Editorial. Porter, M., & Kramer, M. (2011). The creation of shared value. Harvard Business Review, 89 (1), 32–49.TED. (2013). Michael Porter: Why business can be good at solving social problems. Scotland. Recovered from
