Creating Shared Value (CSV) and its Significance in Corporate Social Responsibility (CSR)

Background
In business organizations, and theories of management practices, an aspect of Creating
shared Value (CSV) has gained high significance, specifically in context to the aspect of
corporate social responsibility (CSR) (Wieland, 2017).
According to Porter and Kramer, it has been stated that, “Shared value emphasizes the aspect
of relationship between the societal and economic progress, which has the ability to vent to
the next stage of growth at global level (Porter and Kramer 2011: 65)”.
The approach of “Shared Value Creation” (SVC) does not only describe the economic and
business dimensions, rather this relationship determines the elements of socio-political
aspects (Wieland, 2017).
The EU communication, perceives the concept of “Shared value” not as “company specific
and internally created”, reasonably as value creation. The aspect of value creation is guided
by the integrated efforts of stakeholder interests and resources, resulting into involving core
elements of CSR into organization (Wieland and Heck 2013: 14ff).
Likewise, the concept of “Shared Value” has been understood as the outcome of the long-
term and strategic concept of CSR. As CSR puts the social and ecological alongside the
economic aspects in the main activities of the business, and therefore it considers the key
stakeholder’s interests (European Commission 2011: 7f).
The focus and integration of CSR activities or strategies has been supported by sharing of the
profits of the company through following the redistribution of a part of the total income of
company. CSV determines a radical shift which states that companies must lead a positive
social change through aspects of innovation, and incorporating the social and economic
values02 (Hwang, 2018). In contrast to CSR, the concept of CSV expands sales and profits
through engaging into the activities leading to contribution to society. It determines the main
point of difference between both terms, i.e. CSR and CSV Hwang, 2018). However, it can
be stated that CSV is considered more sustainable concept of facilitate corporations, for
ensuring their social responsibilities, through focusing on social values.
CSV leads organizations to take initiatives to create social and economic values for both, the
company as well as the society, through the expansion of CSR practices (Hwang, 2018).

Despite the fact, that CSR is based on profits redistribution in firms, however CSV focuses
on addressing current and future needs of the society, which can be done through
restructuring the value chain of the firm (Porter & Kramer, 2011).
The ways of creating shared value
The way of
CSV
Description Example
Reconciling
products and
markets
To define the market in terms
of the needs or social aspects
unfulfilled and establishing
the profitable products and
services which acts as
solutions to these conditions
Thomson Reuters has established a service
for farmers in India, which ensures providing
information, related to weather and crop
pricing. Also, advice in agricultural aspects
and for fee of 5 USD per quarter. The service
attains the estimated value of 2 mln farmers,
and earlier it led to an increase in the income
for most of them , above 60% .
Reconstructing
value chain
productivity
Addressing the social and
environmental constraints in
value chain leads to an
increase in the overall
productivity of company or
their suppliers.
Walmart saved 200 mln USD in terms of the
costs of distribution while increasing the
quantities that are shipped through decreasing
the packaging and enhancing the delivery
logistics.
Local cluster
development
To strengthen key regions in
respect to the competitive
aspects, wherein the
company operates for
increasing the growth of the
company and leading to high
productivity
Nestle established agricultural, to technical,
financial, and logistical firms and potential in
every coffee region, for increasing efficiency,
and ensuring the high quality local production.