Porter and kramer creating shared value

What is Creating Shared Value (CSV) according to Porter and Kramer (2011)?

Policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates.

How do Porter and Kramer define value in the context of CSV?

Value is defined as benefits relative to costs, not just benefits alone.

What is the core argument of Porter and Kramer (2011)?

The purpose of the corporation must be redefined as creating shared value, not just profit.

What problem do Porter and Kramer identify with how companies currently operate?

Companies remain trapped in an outdated approach to value creation, optimizing short-term financial performance while missing important customer needs.

Is CSV the same as CSR, philanthropy or sustainability?

No, CSV is not social responsibility, philanthropy or sustainability but a new way to achieve economic success.

What is the key difference between CSV and CSR?

CSR focuses on doing good and is separate from profit maximization, while CSV focuses on economic and societal benefits relative to cost.

Why do Porter and Kramer argue CSV should supersede CSR?

CSR programs focus mostly on reputation and have limited connection to the business, while CSV is integral to profitability and competitive position.

What is the difference between fair trade and shared value as an example of CSV versus CSR?

Fair trade aims to increase revenue for farmers through higher prices, while shared value focuses on improving efficiency and yields.

What is the impact limitation of CSR compared to CSV?

CSR impact is limited by the corporate footprint and budget, while CSV realigns the entire company budget.

What are the three ways companies can create shared value according to Porter and Kramer?

First by reconceiving products and markets, second by redefining productivity in the value chain, third by enabling local cluster development.

What does reconceiving products and markets mean in the context of CSV?

Identifying societal needs as market opportunities rather than problems for governments to solve.

What does redefining productivity in the value chain mean?

Recognizing that societal problems create internal costs for firms and addressing these issues can increase productivity.

What does enabling local cluster development mean?

Building geographic concentrations of firms and institutions to improve productivity and innovation.

What opportunity do disadvantaged communities and developing countries represent for CSV?

They represent large underserved markets with pressing societal needs.

What examples do Porter and Kramer give of companies reconceiving products for societal needs?

Vodafone's M-PESA mobile banking service and Thomson Reuters' service for Indian farmers.

Why are markets in developing countries particularly valuable for CSV?

New opportunities for economic development and social progress increase exponentially as capitalism works in poorer communities.

What is the key insight about externalities in the value chain?

Many externalities inflict internal costs on the firm, such as excess packaging and greenhouse gas emissions.

What did Walmart achieve by redefining productivity in its value chain?

Walmart saved 200 million dollars by reducing packaging and rerouting trucks to cut 100 million miles from delivery routes in 2009, while shipping more products.

What did Coca-Cola achieve through value chain productivity improvements?

Coca-Cola reduced its worldwide water consumption by 9% from a 2004 baseline, nearing its goal of a 20% reduction by 2012, demonstrating cost savings through environmental performance.

What is the Nestlé Nespresso example and what does it illustrate about procurement?

Nestlé redesigned procurement for Nespresso by working with coffee growers, increasing incomes, reducing environmental impact, and ensuring a reliable supply of high-quality coffee, illustrating shared value.

What did Johnson and Johnson achieve through employee wellness programs?

Johnson and Johnson saved 250 million dollars on health care costs from 2002 to 2008 by implementing wellness programs, illustrating shared value through improved employee health and productivity.

What did Olam International achieve by relocating processing activities to Africa?

Olam cut processing and shipping costs by up to 25%, reduced carbon emissions, built relationships with local farmers, and provided direct employment to 17,000 people, 95% of whom were women.

What is a cluster according to Porter and Kramer?

Clusters are geographic concentrations of firms, related businesses, suppliers, service providers, and logistical infrastructure in a particular field, including academic programs and public assets.

Why do deficiencies in clusters create internal costs for firms?

Deficiencies like poor education and transportation infrastructure increase costs and limit employee pools, leading to reduced productivity and higher operational costs.

What is the Yara example and what does it illustrate about cluster development?

Yara invested 60 million dollars in improving infrastructure in Mozambique and Tanzania, benefiting over 200,000 small farmers and creating 350,000 jobs, illustrating shared value through cluster investment.

What is the Hindustan Unilever Project Shakti example?

Unilever created a distribution system run by female entrepreneurs in Indian villages, providing skills that double household income and accounting for 5% of Unilever's revenues in India.

What does good regulation that enables shared value look like according to Porter and Kramer?

Good regulation sets clear social goals, performance standards, and universal measurement systems, stimulating innovation rather than mandating specific practices.

What does bad regulation that discourages shared value look like?

Bad regulation forces compliance with specific practices, blocking innovation and inflicting costs on companies, undermining progress and triggering business resistance.

Why is antitrust policy important in the context of CSV?

Strict antitrust policy ensures that the benefits of company success flow to customers, suppliers, and workers, preventing exploitative monopolistic practices.

What is the broader implication of CSV for capitalism according to Porter and Kramer?

CSV represents a new evolution of capitalism focused on creating shared value rather than short-term profit, enabling sustainable company growth and societal advancement.

What limitations do Porter and Kramer acknowledge about CSV?

Not all societal problems can be solved through CSV; some require government or NGO intervention, and CSV requires new skills that most managers currently lack.

What criticism could be made of the CSV concept from an academic perspective?

Critics argue CSV is hard to distinguish from CSR or marketing, with social benefits pursued only when commercially convenient, risking SDG washing.