Corporate Social Responsibility (CSR) is about how companies manage the business processes to produce an overall positive impact on society. CSR helps the organizations to function in such a way that benefits society and enhances the public perception. Companies can practice CSR by doing philanthropic activities like donating money to local charities and causes, and through ethical treatment of its employees.
Michael Porter and Mark Kramer introduced the concept of Creating Shared Value (CSV) in a 2006 Harvard Business Review article and explained it further in the follow-up article published in 2011. CSV is a way to grow economies, marketplaces, companies, and communities in the long-term interest of businesses and everyone else and enables a company to attain competitive advantage. It enables a company to visualize social problems as market opportunities and in turn discover innovative products and services.
The following table lists the difference between CSR and CSV (Borgonovi et all, 2011)
|Motivation||Corporate reputation and license to operate||Competitive advantage|
|Driver||External Stakeholders||Corporate Strategy|
|Measurement||Spending||Social and economic value created|
|Management||CSR Departments||Across the whole company|
|Social Benefit||Successful projects||Large-scale sustainable change|
|Business Benefit||Risk reduction and Goodwill||New Business Opportunities|
I would like to explain my experience as a recipient of such shared value. The Chicagoland Entrepreneurial Center (CEC) is a non-profit organization that supports entrepreneurs on their path to building high-growth, sustainable businesses. Its flagship project, 1871, fulfills CEC’s vision of a central address for entrepreneurs in Chicago. 1871 is a co-working center for digital startups. Located in the Merchandise Mart, the 50,000-square-foot facility provides Chicago startups with affordable workspace and access to mentors, programming, educational resources, potential investors and a community of like-minded entrepreneurs. CEC is funded through private entities and corporations. It is also supported by numerous emerging and successful entrepreneurs, established businesses and academia that recognize the significance of entrepreneurs and the impact the CEC has on the local economy.
All these companies form a cluster and understand the importance of the need for more entrepreneurs in the society to grow the economy further. This cluster worked together to provide an amazing experience for about 120 people earlier this month at the Chicago Startup Weekend (CSW). About 60 start-up ideas were presented on a Friday evening, and 16 were selected to form teams. Each team worked together on Saturday and Sunday to create a business plan and a presentation. We four people who met just on that day and with varying backgrounds formed a team and our idea came out in the top 6. It provided a unique experience for me. The top three are about to proceed with their project and enter the market in the near future. Among the many sponsors, Google and Amazon provide products with prices specifically targeted for such startups. These companies receive the goodwill and eventually secure further business from these startups as they scale up. This is a prime example of the creation of shared value from the initiatives of each of the participating companies.
Borgonovi, B., et al. (2011). Creating Shared Value in India. Retrieved February 28, 2014, from FSG: http://www.fsg.org/Portals/0/Uploads/Documents/PDF/India_CSV.pdf
Porter, M., & Kramer, M. (2011). The Big Idea: Creating Shared Value. Harvard Business Review.