All the fuss over CSV started with Michael Porter and Mark Kramer’s article ‘The Big Idea: Creating Shared Value’ in the Jan-Feb issue of the HBR in 2011. It was also hyped up on the cover with this sub-head: ‘How to reinvent capitalism—and unleash a wave of innovation and growth’.
The problem is that it just confused capitalists and unleashed a wave of bewilderment and contestation which was expounded on in the California Management Review by Crane et al in 2014. It’s a long essay of 16 pages, followed by a rebuttal by Porter and Kramer followed by a rebuttal of the rebuttal by Crane et al. Thankfully the debate then stopped.
Luckily Menghwar and Daood reviewed the whole megillah with a sober systematic review. They proposed as follows (wording is adapted – i.e. mine):
- CSV is a meaningful addition to the literature – not a revolutionary concept.
- A firm’s CSV strategy depends on opportunity costs and transaction costs (like any other business decision).
- There is no single way to create shared value.
Porter and Kramer focused on the supply chain – with Nestlé as a prominent example. The reason for the focus may have been by default, because Nestlé was their client, and that was what their client was doing. You could say that they fell into a constraint trap. Well, so did Menghwar and Daood, as they come up with the following definition after analysing 242 articles on the subject:
CSV is the strategic process through which corporations can solve a problem which is relevant to its value chain while making economic profits.
What is the difference between a strategic process and a process? The padding of ‘word count’ aside – we can also take out the value chain (just because Nestlé did it, doesn’t mean we all have to). So in essence, it becomes:
CSV is the process whereby corporations add value by solving social issues.
But where are the profits you say? It’s in the word ‘value’. The firm is also a component of society, so it applies to it as well. If we did it at a cost to the company, that’s not value for the organisation, the equation then doesn’t make sense – I can only give you the shirt on my back if I can buy another one – otherwise I am not a capitalistic business.
Clarification is often added when we can compare something to that which we know – if we relate CSV to CSR, the conundrum becomes a little clearer. The difference between the two is that Corporate Social Responsibility (CSR) is about responsibility and CSV is about value. These are broad guidelines that can (and are) debated.
For example, in reference to CSR, the debate could vary immensely about carbon emissions – on the one hand, we contribute to it, and it’s not good for the planet; on the other hand it’s not our responsibility if God made the ozone layer too thin (I appreciate that no one would make the latter statement in the boardroom, so it is just for dramatic purposes).
In the same way that responsibility can be debated, we can also do so with value. Nestlé is lauded on the one hand for being pioneers in shared value, but condemned for supplying fat, sugar and salt disguised as food – in some cases (they do have nutritious infant products, amongst others, for the literal sustainability of humankind, for which they need to be applauded). But value can become a tricky concept for the likes of arms manufacturers, cigarette companies and addictive TV show producers. But each to their own, and we’ll avoid that debate for now.
The clarity of delineation between CSR and CSV is also supported by Mark Kramer (of the Porter and Kramer duo), who blogged the following in 2011: “… shared value creation is about new business opportunities that create new markets, improve profitability and strengthen competitive positioning. CSR is about responsibility; CSV is about creating value.”
So where does that leave us? Right at the start, I’m afraid – you have to work out what value looks like for you, which now has to include your stakeholders and society at large as well – the basic tenet of CSV.
Maybe a good place to start would be to ask your stakeholders. Or give them the challenge: to find something that helps them as much as it would help the business. People have a natural tendency to do that – everyone knows better than the coach of the national team how to pick the players. And they may even know better than you how to create value for all.
Crane, A., Palazzo, G., Spence, L. J., & Matten, D. (2014). Contesting the value of “creating shared value.” California Management Review, 56(2), 130–153. https://doi.org/10.1525/cmr.2014.56.2.130
Kramer, M. (2011, Feb 18). CSR vs. CSV – What’s the difference? FSG. https://www.fsg.org/blog/csr-vs-csv-whats-difference/
Menghwar, P. S., & Daood, A. (2021). Creating shared value: A systematic review, synthesis and integrative perspective. International Journal of Management Reviews, 23(4), 466–485. https://doi.org/10.1111/ijmr.12252
Porter, M. E., & Kramer, M. R. (2011). The Big Idea: Creating Shared Value. Harvard Business Review, 89(January-February). http://www.relativimpact.com/downloads/HBR-Shared-value.pdf
Porter, M., & Kramer, M. (2014). A Response to Andrew Crane et al.’s Article by Michael E. Porter and Mark R. Kramer. California Management Review, 56(2), 169–151.