This article aims to analyze the concept of shared value and the ways in which it has revolutionized the business world.
For some years there has been the idea that companies are succeeding regardless of the damage they may cause to the environment that surrounds them, it is for this reason that a large part of them are aiming to incorporate corporate responsibility in their practices. However, trust in companies has reached levels that have never been had in history and this has greatly affected them.
The companies that exist today must take the necessary measures to unite business and society, they must leave the old stereotypes that viewed social responsibility as a way to address the surrounding social problems only and not focus on the most important ones.
To achieve this, a new concept derived from social responsibility emerged that focuses on creating economic value but in a way that creates value for society and in this way helping them in their needs, this new concept was called shared value.
However, shared value does not mean social responsibility or philanthropy or sustainability, it is rather a way to achieve economic success and aims to be one of the new ways to revolutionize the business world.
Shared value
Currently, companies face the stereotype with which most are identified, this because they have been classified as one of the main causes of most problems of a social, economic and environmental nature.
There is the idea that companies are succeeding regardless of the damage they may cause to the environment that surrounds them, it is for this reason that many of them are aiming to incorporate corporate responsibility in their practices. However, trust in companies has reached levels that have never been had in history and this has greatly affected them.
Much of this originates within the organizations themselves as they handle an old vision of value creation since their approach is not directed towards the most elementary piece of their system: customers, for a company to create value properly it must be oriented mainly to the satisfaction of its customers, to the conservation of the environment, to the communities where its plants are established, etc.
The companies that exist today must take the necessary measures to unite business and society, they must leave the old stereotypes that visualized social responsibility as a way of addressing social problems superficially and not focusing on them.
To achieve this, a new concept derived from social responsibility emerged that focuses on creating economic value but in a way that creates value for society and in this way helping them in their needs, this new concept was called shared value.
However, shared value does not mean social responsibility or philanthropy or sustainability, it is rather a way to achieve economic success and aims to be one of the new ways to revolutionize the business world. This is why many of the large companies like GE, Google, IBM, Intel, Johnson & Johnson, Nestlé, Unilever and WalMart - have taken on the task of creating shared value by creating a new way of linking society and the company, however there is still a long way to go. of shared value, since it is necessary to develop the skills that allow identifying the true needs and problems that must be addressed and create awareness to develop the best solutions to them.
The concept of shared value
“The concept of shared value can be defined as the policies and operational practices that improve the competitiveness of a company while helping to improve the economic and social conditions in the communities where it operates. The
creation of shared value focuses on identifying and expanding the connections between economic and social progress. ” (Porter & Kramer, 2011)
Porter's investigation
In the results of Porter's research, he determined that shared value strategies are even more effective than improvements that can be made to a product or even cost reduction, although it is known that wealth creation is mostly done Through the private sector, it is of the utmost importance that this same sector becomes aware of the importance that it has as the main factor in the prosperity that a country can achieve.
In this way, the first step of the shared value raised by the interest that companies establish social welfare as a priority in order to achieve economic success and be able to remain competitive over time is being fulfilled.
Porter establishes that economic value must be created at the same time that value is created for society and the environment and for this he indicates three ways:
- Through the company's product or service.
Products and services must be developed to satisfy a social need, since there is a large population whose needs have been ignored, such is the case of people who live in marginalized areas.
- value chain.
In this area there are a large number of improvements that could be implemented, such is the case of saving energy and resources or using materials that are more environmentally friendly or that do not consume as many resources.
- Local clusters.
Help build better clusters since they can act for or against neighboring companies
In summary, it can be said that today's companies must stop visualizing themselves from the context of philanthropy through which small contributions of the value that a company generates are allocated and must take the initiative to create business opportunities disguised within the problems that they exist in the environment. This is intended for companies to improve their strategic economic performance but at the same time contribute positively to society. (Mutis, 2013)
Difference between shared value and social responsibility.
Little by little, companies should change their CSR procedures by a CVC approach to achieve a social benefit and with this be better companies.
- CSR programs are mainly focused on reputation and maintain a limited connection with the business, thus making it difficult to maintain in the long term.In contrast, CVC is an integral part of the profitability and competitive position of the company.
Take advantage of the unique resources that a company can possess to create economic value through the creation of social value.
In addition, with the creation of shared value, new approaches will be created that will contribute to greater innovation and with this to the development of companies, in addition to generating benefits for society.
From CSR to CVC
There are different stages that a company goes through from CSR until it reaches CVC.
(Zadek, 2005) Establishes five stages of organizational learning, to develop a sense of corporate social responsibility.
- Defensive Stage: During this stage you have the mentality that "It is not our job to fix this." Therefore the subject is dealt with in communication matters of the company only. Compliance Stage: during this stage a policy-based approach to compliance is adopted, it is seen as a duty for the success of business. Management Stage: in This stage introduces the social issue in their management processes. It is viewed as a part of the business and seeks to go beyond the legal and public relations. Strategic Stage: during this stage the social issue is taken to the core business strategies. The company at this time sees CSR as a strategy because it is aware that socially responsible behavior gives it a competitive advantage. Civil Stage:the fifth stage involves broad industry participation in social responsibility. At this time, the company becomes a social leader, and at the same time promotes collective actions together with other
In addition (Albano et al, 2012.) proposes adding a sixth stage, which he calls Shared Value Chain.
- Shared Value Chain Stage: this stage gives rise to the creation of shared value and this will lead to greater innovation and growth for companies, while achieving more benefits for society.
For this, it is necessary to redefine productivity in the value chain. So it is necessary to include the social, environmental and economic impacts, and change the organizational culture through training.
Some of the companies that have opted for shared value
Below is an analysis of the companies that have adopted CVC in the world and whose results have contributed to its success.
Nestle
Nestlé is a company that has the idea that for one to achieve long-term success and generate value for shareholders, it must also create value for society. This is what the company calls creating shared value, this is the philosophy that acts as Nestlé's main competitive factor.
The company is based on three fundamental areas which are:
- Nutrition Protection of water resources Agricultural development in rural areas where it operates.
The company made an investment of 48 million euros in 2013, and has managed to maintain a turnover of 2,083 million euros.
“Nestlé's exports represent almost 44% of total production. In addition, for the third consecutive year, Nestlé was considered the best company to work for in the Spanish food and beverage industry, according to the Merco People 2013 study.
Likewise, and for the eighth consecutive year, it has been chosen the leading company in the food sector in the ranking of "the 50 most admired companies worldwide" carried out by Fortune magazine. " (Martínez, 2010).
| Nestlé's main contributions |
| Providers |
| • Nestlé's Responsible Sourcing Audit Initiative conducts ethical audits to verify that Nestlé suppliers adhere to standards of work and business integrity, as well as health, safety and the environment. |
| society |
| • Nestlé Health Science and Nestlé Institute of Health Sciences, are vehicles through which the company has advanced within the personalized clinical nutrition sector, with this it has given answers to specific profiles such as those of the malnourished elderly patient, the patient with cognitive dysfunctions, depression or diabetic peripheral neuropathy.
• Nestlé Spain also created its: 10 Nutritional Commitments, whose main objective is to combat obesity and help improve people's well-being and quality of life. |
| Environment |
| • Nestlé plans to work in collaboration with the World Wildlife Fund to promote the responsible development of bioplastics, which are obtained from materials of plant origin.
• Nestlé pays special attention to sensitizing and training society in general, its workers in particular, on the importance of the environment. • In 2013, the company held seminars and courses on environmental issues, in addition to holding events on the occasion of World Water and Environment Days. |
Real Field
The Shared Value Award was created by the CCB, and it is a recognition of companies that, using a profitable business as a basis, have managed to improve social, economic or environmental conditions. In this way, the aim is to promote a new business culture based on companies as protagonists of the welfare of society.
Lácteos Campo Real is a family business, located in Bogotá, Colombia. And its main function is the production and marketing of cheeses with a nutritional approach, and it makes products with specific nutritional characteristics.
Campo Real, is one of the organizations that has bet on shared value and through this strategy both it and the allied organizations and consumers, obtain benefits from Más Vida cheese, which was developed from a business proposal based on Creation of Shared Value.
It all started when in 2010 some organizations asked Campo Real for its support for cancer prevention activities. As a result, the company's team began a process of innovation, and designed the Queso Más Vida strategy, with the intention of contributing to the fight of women against this disease.
However, beyond making a donation, the company made an investment to develop a product that would achieve this comprehensive impact beyond the company's economic objectives. The following are those of the strategy:
| Main results |
| As of 2011, the year the product was launched, more than 113,000 units have been sold. |
| In approximately three years, around 13 tons of More Life Cheese have been produced. |
| El Queso Más Vida has registered more than 400 million pesos in sales. |
| For the middle of the year 2014, the brand registered a growth of 33%, compared to all of 2013. |
| The Ámese Association receives part of the proceeds from the sale of Más Vida cheese, and with this it can continue to help more than 95,000 women a year in early detection campaigns for cancer. |
The product contributes considerably to the supply of calcium to women suffering from cancer, as this element is one of the most lost with this disease.
(Chamber of Commerce of Bogotá, 2015)
Hindustan Unilever
Hindustan Unilever (dedicated to the production of personal hygiene items) is another company that has created a new direct-to-home distribution system, which is run by entrepreneurs from underprivileged classes, in Indian villages with fewer than 2,000 inhabitants.
| Main contributions |
| Unilever provides microcredit and training and currently has more than 45,000 female entrepreneurs spanning 100,000 villages in 15 states of India. |
| The project called Shakti benefits the communities by allowing women to obtain new skills, and thus can double the income of their home, and in this way also reduce contagious diseases thanks to greater access to hygiene products. |
| The Shakti project today contributes 5% of Unilever's total revenue in India and the brand has spread to rural areas, creating greater economic value for the company. |
This company is a clear example of how the unique ability of companies to sell to consumers in remote areas can create a benefit to society and in this way achieve that products capable of changing people's lives reach the hands of those who need them.. (Porter & Kramer, 2011)
Conclusion:
Today social responsibility has advanced to become shared value, which is a way of generating value for the company and also providing benefits to society, becoming the best way to establish win-win relationships.
The importance of the concept of shared value today has revolutionized the procedures of large companies that little by little aim to implement this strategy to be more competitive and achieve business success, the world is an environment of rapid change and from this form companies visualize the best way to adapt to the accelerated pace imposed by the more developed sectors.
Bibliographic references
- Albano et al. (2012.). From corporate social responsibility to the creation of shared value between organizations and the community. First part. Seventeenth Conference "Research in the Faculty" of Economic Sciences and Statistics., 17. Chamber of Commerce of Bogotá. (2015). Campo Real case. Shared Value Award. Martínez, N. (2010). CSR Custommedia commitment. Obtained from Compromiso RSC Custommedia: http://www.compromisorse.com/responsabilidad-social/alimentacionbebidas-hogar-e-higiene/nestle-espana-sa/Mutis, G. (2013). Shared value, a high impact business strategy. Sustainable Week, 5.Porter, ME, & Kramer, MR (2011). The creation of shared value. Harvard Business Review, 18.Zadek, S. (2005). "The road to corporate responsibility." Harvard Business Review.
Social responsability
Shared value
Bogota Chamber of Commerce
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