Shared Value

Shared value is a hot topic when it comes to business discussions. A concept that be quite confusing but if mastered, is very beneficial to all parties involved. The article, “Creating Shared Value: How to reinvent capitalism-and unleash a wave of innovation and growth,” by, Michael E. Porter and Mark. R. Kramer, addresses this topic straight on. The article first discusses some definitional issues involved with the topic. It discusses exactly what is shared value and what isn’t shared value. As defined in the article share value I, “corporate policies and practices that enhance the competitiveness of a company while simultaneously advancing social and economic conditions in the communities in which it operates.” Shared value is not any of the following, sharing created value, philanthropy, giving back, ethics, personal values, harm reduction, just sustainability, triple bottom line, or balancing stakeholder interest. The goal for all companies according to the article is to create economic value by creating societal value. When a company realize that what is good for the community is good for business, then both parties will see economic benefits.

According to the article, there are three different levels of shared value. First, reconceiving customer needs, products and markets. Second, redefining productivity in the value chain, and last, enabling local cluster development. Reconceiving customer needs, products and markets is created by companies asking themselves if their products and services are good for their customers? For example, food companies are now focusing on healthier products for their consumers. This is better for consumers who live healthier lifestyles which leads to longer life spans, and the profit of nutrition conscience companies have sky-rocketed. Just as food companies have profited off the benefit of creating healthier humans, serving low income families is just as important. The article points out that providing low-income cell phones...