Creating Shared Value: Redefining the Role of Business in Society?

Creating Shared Value: Redefining the Role of Business in Society?

Wed Apr 06 11:42:15 CEST 2016

Prof. Dr. Filip Caeldries’ guest lecture focused on Michael Porter’s concept of Creating Shared Value (CSV): What can businesses do for society and what are their benefits?

 

The problems
Filip Caeldries’ talk started with a short introduction of the CSV concept, where he explained the two main problems companies are facing nowadays: First, business is seen as a major cause of social, environmental and economic problems, which results in a lack of trust in society. Second, companies are trapped in a very traditional approach to value creation, which is based on optimizing short-term financial performance. According to Caeldries, this rather narrow conception of value creation has prevented business from harnessing its full potential to meet society’s broader challenges.

 

The challenge
So what can business do for society? Traditionally, the government is seen as the responsible actor for the society’s needs. Business shouldn’t be burdened with those demands as this causes additional costs.

Business projects in favor of the society do normally only involve peripheral activities like sponsorships or donations. However, Caeldries points out that it is necessary to move beyond the idea of business as a “charitable giver” and integrate society’s needs and problems into the core of the business.


The solution
According to the father of the concept, Michael Porter, the solution lies in Creating Shared Value. CSV creates economic value in a way that also creates value for society by addressing its needs and challenges. Additionally, it provides policies and practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. CSV invites corporations to perceive society’s problems as real opportunities and serious targets for building a legitimate respectively profitable business.

 

Caeldries presented different excellent examples for how to create CSV within a company. One of those is a project of the Baloise Group, which also attracted great interest among the Belgium Institute for Road Safety: Baloise detected the high accident rate in Belgium as a problem for both society and the company. Therefore, Baloise developed a device which helps drivers to record their driving performance and improve it accordingly. The project's aim is to decrease the accident rates, which is to the benefit of drivers and society. At the same time, Baloise saves costs due to fewer accidents.

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