Summary Creating Shared Value
Creating Shared Value
Michael E. Porter, Mark R. Kramer; Harvard Business Review
Summary
The article “Creating Shared Value“, written by Michael E. Porter and Mark R. Kramer and published in the “Harvard Business Review“ in January 2011 deals with the idea of innovating the purpose of a corporation and their relationship to the government and social environment in order to identify unknown customer needs and expand the total pool of economic and social value.
In the introduction the authors explain that the problem of the contemporary, narrowed capitalistic conception is the reduced trust that people have in business, which is seen as the reason for all kinds of environmental, societal and economic problems. In this neoclassical view, social responsibility is seen by businesses as a constraint in economic success which arises costs; conducting business as usual was seen as spending enough social benefit. Many companies tried to increase their profits by means of restructuring and personnel reductions; at the same time, communities only perceived little benefit. But according to Kramer and Porter, the competitiveness of a company and the wealth of a community is closely interrelated. On the one hand, Firms need a strong social environment to have enough demand and to be able to benefit from public assets, on the other hand communities gain workplaces by having strong businesses. Firms set corporate responsibility programs only to improve their image and as cheap as possible, not because they regarded it as a productivity driver. Further more, they define themselves as “global“ and often do not have a home base which the authors declare as “something profoundly important“ in strategy theory in order to create value. Companies neglected the interrelation between a distinctive value creation and societal needs and focused more on the industry. For this reason the government had to arise laws restricting the success and competitiveness of the companies,
Michael E. Porter, Mark R. Kramer; Harvard Business Review
Summary
The article “Creating Shared Value“, written by Michael E. Porter and Mark R. Kramer and published in the “Harvard Business Review“ in January 2011 deals with the idea of innovating the purpose of a corporation and their relationship to the government and social environment in order to identify unknown customer needs and expand the total pool of economic and social value.
In the introduction the authors explain that the problem of the contemporary, narrowed capitalistic conception is the reduced trust that people have in business, which is seen as the reason for all kinds of environmental, societal and economic problems. In this neoclassical view, social responsibility is seen by businesses as a constraint in economic success which arises costs; conducting business as usual was seen as spending enough social benefit. Many companies tried to increase their profits by means of restructuring and personnel reductions; at the same time, communities only perceived little benefit. But according to Kramer and Porter, the competitiveness of a company and the wealth of a community is closely interrelated. On the one hand, Firms need a strong social environment to have enough demand and to be able to benefit from public assets, on the other hand communities gain workplaces by having strong businesses. Firms set corporate responsibility programs only to improve their image and as cheap as possible, not because they regarded it as a productivity driver. Further more, they define themselves as “global“ and often do not have a home base which the authors declare as “something profoundly important“ in strategy theory in order to create value. Companies neglected the interrelation between a distinctive value creation and societal needs and focused more on the industry. For this reason the government had to arise laws restricting the success and competitiveness of the companies,