Creating shared value

Abstract

Creating Shared Value (CSV) is a concept that brings business and society together so that entrepreneurial activity is profitable and increases the well-being of citizens in the local community.CSV is an extension of Stakeholder Theory (Freeman 1984). CSV applies an integrative approach to business ethics by doing business and finding solutions to societal challenges together (von Liel 2016). Also, Social Entrepreneurship (SE) integrates conscious moral behaviors into business activities (Bowen 1953). SE is a concept aiming at social benefits without targeting financial profitability. Benefits for society may be direct or indirect. Direct benefits can be services, gifts and care or buildings, scholarships and aid. Indirect benefits include employment. The entrepreneurial process may involve hiring a select group of people. (Tan et al. 2005.) There are similarities between SE and CSV. CSV is grounded in the circumstances where “companies have overlooked opportunities to meet fundamental societal needs” (Porter and Kramer 2011). However, in contrast to SE, CSV is aimed at fulfilling basic human needs in society alongside financial profitability (Beschorner 2013). CSV is about enhancing the competitiveness of a company while simultaneously enhancing the social circumstances of the communities in which it operates (Porter and Kramer 2011). Enabling strong local ecosystems for business is a concrete way to create shared value. Strong ecosystems have a positive impact on productivity and innovation. They foster efficiency and ease of collaboration. Value can be created, for example, by relocating production back to its home markets. This is a special feature of CSV that cannot be found explicitly in related responsibility concepts (von Liel 2016).Implementation of CSV is based on five principles. First, ethics are integrated into the business strategy. Then shared values are identified by combining societal problems and the purpose of the business activities. After that the business activities are ready to be started. Progress is tracked during the process and insights will be utilized to upgrade business activities. Learn about this notion (read further).