Summary Creating Shared Value

1268 words 6 pages
Creating Shared Value
Michael E. Porter, Mark R. Kramer; Harvard Business Review

Summary

The article “Creating Shared Value“, written by Michael E. Porter and Mark R. Kramer and published in the “Harvard Business Review“ in January 2011 deals with the idea of innovating the purpose of a corporation and their relationship to the government and social environment in order to identify unknown customer needs and expand the total pool of economic and social value.

In the introduction the authors explain that the problem of the contemporary, narrowed capitalistic conception is the reduced trust that people have in business, which is seen as the reason for all kinds of environmental, societal and economic problems. In this neoclassical view,
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An important point is that demand in this case is not static but very dynamic so that those opportunities arise frequently. Firms can reposition themselves quite often in order to absorb the grown potential. Especially in disadvantaged communities the demand is so high that firms can profit substantially by selling a large quantity to low prices; but sometimes new or redesigned products made for developing communities can also have applications to traditional markets.

As a second way to create shared value the authors mention redefining and reexaminating productivity in the value chain which is largely influenced by societal issues. Misuse in those issues and externalities are costly both to the environment and the business. Firms can use synergies between economic and societal issues to raise satisfaction and create shared value. Previously, a change in environmental performance was avoided because it arose too many short-time expenses, but nowadays it is clear that it can even increase product quality and aviod costs. This new thinking is also enabled by renewals in technology and may unlock new, unexplored economic value.

In a following step, Porter and Kramer mention parts of the value chain where changes can be made and were already observed, for example the reexamination of energy use or logistics, especially shipping routes. Besides, heightened

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