Porter and Kramer have published new article

on the topic of corporate responsibility, again attempting to re-name responsible business as something more fundamental, the “Shared Value” concept. 

But responsible business, corporate responsibility and sustainable business thinking has acknowledged this for decades. Perhaps not in Harvard Business review, but in many other respected academic journals.

Whilst CSR has indeed been used in most cases as they describe, increasingly its later iterations, corporate responsibility, responsible business and sustainable business, go far beyond how Porter and Kramer claim all CSR/CR is used by business.

This is not new. Companies, particularly in Europe and also in emerging markets, have been doing this for quite a while.

I cannot see any difference between “shared value” and “responsible business” or “sustainable business”.

Only that a consultancy has decided to re-name a generic term into something that fits well with their marketing and growth strategy.

It’s a clever idea, but I can’t see it really taking off when there is nothing wrong with our existing terminology.

“Sustainable business”, “corporate responsibility” and “responsible business”, for example, were pioneered by many others.

Sociologically, company is responsible for the social problems caused by the activities or operations of the company. Thus, company has to enact the policies and principles as responds of the social requirements. Carroll (1979) proposed a ‘Pyramid of Corporate Social Responsibility” that consists of four categories: economic, legal, ethical, and philanthropy. 

Stakeholder Theory

Mele (2008) also mentioned thart stakeholders can be defines as individuals or groups that obtain benefits from or are harmed by corporate actions. This theory clearly suggests that companies have responsibilities to all the parties influenced by positive or negative business activity; that is called as a responsibility to the stakeholders of the firms (Mele, 2008).  The main advantage is the consideration to respect human rights and environmental responsibility. The idea is to adopt social responsible concept as a management strategy to achieve various goals, not only profits orientation. However, some arguments oppose the theory by stress the idea of this theory is a suggestion of socialism perspective applied in the business. Another critique is the need for balancing all the stakeholders’ interest make corporate objective becomes unspecific. The reason is once stakeholder theory is applied, stakeholder management would contradict with the shareholder oriented, in the sense of value creation is a pro-shareholders goal, not for stakeholders. As a result, Mele (2008) suggests that the need of scholars to improve the normative stakeholder theory. However, the stakeholder theory contributes to explain the business-society relationship. Mele (2008) argued that corporate citizenship is to understand how business should act to respect the stakeholders. A Company is not considered having a social responsible unless its behavior falls in a certain way according to the law. In the other words, a good corporate citizen would behave to its stakeholder for some reasons.  Second advantage is the ability of the theory to answer that the social responsible action would lessen profits. Based on this theory, the managers able to  pursue for profits without disrespecting human rights and undervaluing social purpose. Third is that the citizenship theory similar with the social philanthropy. On the other hand, criticism of the theory is because of measurement of the effectiveness is difficult to measured because of it contains various interpretations and topics.

his, in essence, is another progressive way of thinking about one's business and operating model to create a win-win for all the stakeholders. It is my belief that though both these approaches - CSR (Corporate Social Responsibility) and CSV (Creating Shared Value) are different, yet they complement each other. Organizations embarking on either are undertaking their first step towards becoming more responsible, and the path that they choose is a function of the resources - time and talent, available to them. Small and medium sized organizations might find it a challenge to embark on CSV as they might not have right talent or sufficient resources at their disposal that would enable them to relook at their business model or determine the manner in which they could add more value to their stakeholders and community; this is a manageable task for larger organizations. These small and medium sized organizations find it relatively more manageable to undertake the required compliance certifications integral to CSR, and hence choose this path towards being more responsible.Examples of organizations that think of Corporate Social Responsibility in terms of reengineering their business to create more value and win-win all around, abound. The end goal should be becoming more responsible, the route that organizations take to achieve this - CSR or CSV, is up to them. Both routes are relevant in the end game.

The replacement of strategy by so-called management tools has been responsible why many firms have increased operational effectiveness but have been unable to translate those improvements into values for customer where profit can be earned and profitability be increased.

A Sustainable strategic position requires trade-off’s

Porter argues that only the optimal (right) mix of activities is responsible to maintain sustainable advantages and this optimum comes with trade-off’s that will not allow every company to participate fully. This implies that a company should know its limits and that it should know that certain sacrifices can not be made without putting other activities behind. Those trade-off’s occur when activities are incompatible[Porter 1996:68] and might come from missing skills, heritage, inoperable change management etc.

Number of recalled vehicles exceeds 30 million units in January-October 2014

Ignition switch recalls turn into big issues

 In February, GM announced that it will recall 1.62 million older vehicles with model years of 2003 to 2007, which are no longer produced, due to the faulty ignition switches. It is said that due to the poor torque performance of the ignition switch, the switch deviates from the "run" position and turns off, and the engine shuts down; this causes the steering wheel to become heavy and the air bags to become inoperable. This recall has become the serious  issue due to the following findings. The responsible GM engineers had known about the defects and did not issue a recall. Due to the defects, the number of front collision accidents became 31 and the number of occupant deaths became 13. The responsible engineers had also committed perjury at the trial on the ignition switch accident and there were suspicions that there was a systematic cover-up.

“Shared value” approach is indeed an improvement on this caricature of CSR. And the idea of looking for profit opportunities that offer good for society is in itself not a bad idea. But it is a big leap from there to suggest that “shared value” will “fix capitalism”.

A bandage on a cancer

To be sure, it is good to see GE being more ecologically responsible. However $18 billion in sales is only 11.5% of GE’s total sales. Thus 88.5% of GE’s sales are still “business as usual” i.e. not ecologically friendly. In public relations term, we do not have a different view of GE as a whole, simply because a small fraction of its overall business is now ecologically friendly. The question in thinking people’s minds is: when will GE get around to doing something about the rest of its business?

To abide by & respect the Environment, Health & Safety i sues by taking a long-term view of continuous improvement and a responsible, short-term focus on our day-to-day activ ties

Organizations face new challenges, not only as they seek the best economic performance but also in their drive to be more environmentally and socially responsible. In other words, companies are changing from a pure economic business perspective to one including more sustainable development, adding more economic, social and environmental concerns to their business operations. The perspective of sustainability has evolved from an internal focus on the company to a global perspective of the supply chain [2]. Supply chain management is crucial not only in increasing organizational effectiveness, competitiveness, customer service, and profitability, but also in influencing sustainable business development. Companies must not only implement practices that promote the company and the efficiency of the global supply chain, but also those that focus on social, economic and environmental issues [1]. 

The concept of sustainable development has been quite important for the responsible by making decisions in industry [1]. Delai and Takahashi [18] argue that the measurement of sustainability is a driver for the inclusion of sustainability as an important issue in decision-making and organization system process activity. The sustainability rating can be accomplished via an index or a set of indicators. The unit of measurement used for sustainability is not relevant, since its function is the same: helping to take responsible decisions to assess corporate performance in terms of sustainability, as well as providing information that will enable future planning.

IMPROVING COMPANIES THROUGH ACTIVE OWNERSHIP AND ENGAGEMENT

 Sustainable investors have made a difference by using active share ownership and engagement to encourage more responsible and forward-thinking corporate practices. Investors—often in concert with civil society organizations and multi-stakeholder groups—have helped persuade numerous publicly held companies to: • improve climate risk disclosure, set greenhouse gas emission reduction goals, adopt goals to reduce energy use or to use renewable energy, • implement sustainable forestry practices, • address poor labor and human rights conditions in their global supply chains, • pledge not to discriminate against employees on the basis of their sexual orientation, • disclose health, safety and environmental risks associated with hydraulic fracturing, • promote gender diversity on their boards of directors, • issue detailed reports on sustainability, • report on political and lobbying expenditures and establish policies to oversee or limit such spending, and • provide investors who meet specified ownership criteria with access to their proxy materials in order to nominate alternative directors to the board. Engagement strategies have also been used successfully to help shape sustainable policies and practices at privately held companies on sustainability issues, such as the labor conditions in their global supply chains and their environmental and community relations practices.

The passenger car and light vehicle manufacturer, who often are the same manufacturer, have mainly two levels of middlemen before the product reaches the end customer. These middlemen are responsible for the Sales/Marketing stage in the value chain. The first level constitutes of general agents who specify on particular automobile makes.

Lower cost production facilities were established in the region, both for ethical drugs and for generic drugs. There was less need for the global coordination of the production process itself, provided local quality controls were effective, since production costs were a lower proportion of total costs, and governments were keen to secure local production centers. The overall strategy of the corporation and the related technological requirements of the production system were the primary influences upon multinational capacity for incorporation into national business systems. The critical factor was the inter-relatedness between the subsidiary's production system and the production systems of other firms in the multinational, both vertically and horizontally. Several subsidiaries were responsible for supplying components and sub-assemblies for end user products completed elsewhere, as first tier suppliers to a final assembler in motor vehicles, as the Audi plant in Gyor (Hungary) supplied engines for Audi cars assembled in Germany. Toyota style industrial engineering involved tightly coupled and controlled production systems, enabled by investment in IT, to ensure quality standards as well as to maintain continuity of production. When the subsidiary achieved global mandate status, the level of subsidiary autonomy was limited by global responsibilities. The degree of coupling depended upon the variability and specificity of product markets: enterprises supplying diverse products to specific national markets acquired greater autonomy than enterprises supplying standardized products to global markets. The development of global production systems, with limited subsidiary autonomy, was at its peak during the Fordist era of the 1970s, when economies of scale reduced production costs and provided competitive advantage, and was strongest in the motor industry, but the logic continued after the Fordist peak. 2.2. Multinational organizational structures The major feature of organizational structure influencing subsidiary relations with national business systems was the degree of autonomy granted to the subsidiary by corporate headquarters. The higher the level of subsidiary autonomy, the greater was the potential for involvement with national business systems. The degree of autonomy differed according to a range of organizational features, operating within parameters set by corporate strategies, production systems and sector and product markets. Three organizational features influenced the degree of subsidiary discretion. The first was the multinational's country of origin, with national differences in the extent to which corporate head offices

Most of these studies show a positive relationship between the company and the firm SP FP. They raise the question of whether it is a profitable investment in the company SR. Several studies have provided evidence that a more socially responsible funds are not provided significant differences in return by conventional means (see Bauer, Koedijk and Otten 2005[30]; Bello, 2005; Gezcy, Stambaugh and Levin, 2003[31]). . However, these studies have had problems in terms of inconsistencies in regard to firm and firm SP FP defined. The question is whether the good SP firms have a positive effect on the firm FP, or vice versa is one of the main objectives of this study.