Porter's Creating Shared Value: Changing The Way We See 'Big Business'

Porter's Creating Shared Value: Changing The Way We See 'Big Business'

By Chris Sausman

From third world sweatshops [1] to a baby powder scandal that still challenges the Nestlé brand today [2], big business has a constant fight with a hostile media and a general public that is wary of the ‘profit motive’ when applied to the Third World.

Yet with all bad stories in the press over recent years, some multi-nationals are quietly battling against negative perceptions of big business without giving up on what makes the private sector, private.

 Michael Porter, Professor at Harvard Business School, argues that these businesses are showing us that “not all profit is equal” [3]. Creating Shared Value (CSV) is now the new buzz word for solving social problems with market-solutions, while at the same time creating a competitive advantage for the multi-national itself.

A number of case studies are now emerging that show CSV in action.

Yara, the world’s largest mineral fertilizer company, found that a lack of infrastructure meant that farmers in Mozambique and were unable to access their fertilizer products. To solve this problem, Yara has invested tens of millions of dollars into ‘Agricultural Growth Corridors’ which modernizes ports and roads, creating public benefits for the region while enabling farmers to buy its products [4].

 Nestlé have integrated CSV into their key performance indicators, using innovative technology to meet environmental standards [5]. Unilever CEO Paul Polman while laying out the company’s new sustainable supply chain strategy explicitly referred to CSV. Mr Polman made the case that sustainability and the profit motive were no longer the enemies they used to be [7]. In his mind, without sustainability and good practise, profitability would be under threat.

CSV is not just being implemented by buyers from the Global North. Indian corporations are right now using CVS practises within India itself [6].

It may just be that Multi-Nationals who themselves created the image that big business was bad might also be the ones remake it. The threat is that, like Corporate Social Responsibility, CSV becomes just a marketing fad. But this hasn’t stopped many from touting CSV as a revolutionary coupling of the private sector and international development.

References

[1] Meyers, C. 2004. ‘Wrongful Beneficence: Exploitation and Third World Sweatshops’. Journal of Social Philosophy, 35 (3), pp. 319-333. Available at: http://www.econ.upf.edu/~lemenestrel/IMG/pdf/meyers_jsp_2004.pdf

[2] Baby Milk Action. Campaigns. Available at: http://info.babymilkaction.org/campaigns/campaigns

[3] Porter, M. E. and Kramer, M. R. 2011. Creating Shared Value. Harvard Business Review. 89 (1/2), pp. 62-77

[4] Paul, H. and Steinbrecher, R. 2012. African Agricultural Growth Corridors: Who benefits, who loses? EcoNexus. Available at: http://www.econexus.info/african-agricultural-growth-corridors-who-benefits-who-loses

[5] Nestlé, 2012. Nestlé in Society. Available at: http://www.nestle.com/asset-library/Documents/Library/Documents/Corporate_Social_Responsibility/Nestle-CSV-Summary-Report-2012-EN.pdf 

[6] Borgonovi, V. And Meier, S. 2011. Creating Shared Value in India. FSG. Available at: http://www.fsg.org/tabid/191/ArticleId/493/Default.aspx?srpush=true

[7] Polman, P. 2011. Food Security in a Changing Climate. City Food Lecture [Transcript]. Available at: https://docs.google.com/file/d/0Bwx4b11cxeb2SndhYnVXZUFHWWs/edit?pli=1