Received wisdom has it that Creating Shared Value (CSV) is key to corporate social responsibility and to rebuilding public trust in business. But Schulich professor Andrew Crane and others have recently questioned the overly optimistic CSV agenda, suggesting it is an illusion that fails to address the real trade-offs required to achieve socially benefical sustainable development.
Writing in 2011 Michael Porter and Mark Kramer contended that “most companies remain stuck in a ‘social responsibility’ mind-set in which societal issues are at the periphery, not the core,” and that to correct this we need to focus on Creating Shared Value, thus “reconceiving the intersection between society and corporate performance” (Harvard Business Review, January 2011).
Subsequently over the past couple of years, the CSV concept has gained considerable traction with business thinkers and in boardrooms as a way to embed corporate responsibility and to re-build public trust in business.
Proponents of CSV believe executives can address social issues and simultaneously create economic value for their company, and do this by focusing much less on distributing value among stakeholders and more on creating new value for everyone. Hence the label ‘shared value’.
In a recent article in the California Management Review, co-authored with Dirk Matten, Guido Palazzo and Laura Spence, Professor Crane argues that “CSV offers the seductive promise that company success can be aligned with social progress – and that business can be re-legitimised in the process…Unfortunately however, despite all its attractions, CSV risks misleading today’s business students about the reality of the societal challenges facing business.”
The co-authors find four problems with the CSV argument:
1. There is little new about CSV
CSV is really just a rebranding by Porter and Kramer of existing practices previously known as ‘strategic CSR’, ‘social innovation’, or ‘stakeholder management’.
2. CSV ignores the tensions between social and economic goals
CSV is presented as "moving beyond trade-offs" between social and economic goals. But such trade-offs cannot be ignored. There are times when business and pro-social goals can be aligned; but there are also times when social progress and economic goals inevitably diverge.
3. CSV is naive about business compliance
By taking as read that businesses will comply with the law and adopt ethical standards, CSV fails to acknowledge our all too recent history of corporate bad behaviour. A better route to corporate responsibility and to re-legitimizing business would be to ensure companies paid their fair share of taxes or respected international labour standards across the globe.
4. CSV is based on a shallow conception of the corporation's role in society
Rather than offering a radical reshaping of the free-market capitalist model, as promised, CSV by remaining focused on individual corporate self-interest is merely a superficial rebranding. Rather than really acknowledging the problems society faces, and engaging in collaborative responses with other stakeholders to solve these problems, CSV merely encourages companies to cherry-pick CSR initiatives that can bring quick profits.
The article explains why, for understandable reasons, CSV has achieved such high profile recognition; but questions its value, saying that by side-stepping the really problematic issues CSV gives a very unrealistic picture of the challenges ahead both for society and for the truly socially responsible business.
“CSV has been successful because it promises to tick all the right boxes for executives – make more money, check; restore trust, check; solve social problems, check,” wrote Crane in a follow-up article in the Financial Times last month. “It is little wonder that it has also had such a warm reception in business education. To the extent that it has made it easier for everyone to talk openly about the need to engage business in social betterment, that is a good thing. But it peddles such a narrow view that…we may just end up evolving backwards rather than forwards.”