Supporting the creation of shared value

• DOI: http://doi.org/10.1002/jsc.2257
• Published date: 01 March 2019
• Author: John Mendy
• Date: 01 March 2019

RESEARCH ARTICLE

Supporting the creation of shared value

John Mendy

Lincoln International Business School,

University of Lincoln, Lincoln, United Kingdom

Correspondence John Mendy, Lincoln

International Business School, University of

Lincoln, Lincoln LN6 7TS, United Kingdom.

Email: jmendy@lincoln.ac.uk

Abstract

The negative externalities that are due to companies limiting themselves to objectives such as

“maximisation of profits”and “commoditization”can be mitigated with supporting the creation

of shared value. A method is formulated which helps to implement Porter and Kramer's Shared

Value model. The results suggest that individuals developed ways to increase their ability to act

expertly—that is resiliently in the face of the challenges. It is argued that the proposed method

is similar to but also substantially different from the scientific method (used to acquire knowl-

edge rather than gain expertise as the new method is designed to do). The formulation of the

method helps to identify how it is insufficient to realize the aims of creating shared value and

suggests a way to do so.

1|INTRODUCTION

Porter and Kramer (2011) proposed a redefinition of capitalism after

criticizing it for having led companies to focus on realizing their own

objectives independent of their social and national environment—

thereby creating general socioeconomic problems. These include pov-

erty, ethical financial misconduct, and lack of health and safety. Such

problems have been left for governments to deal with, partly at the

expense of business. When this led to large financial claims as well as

stricter regulations companies came up with their own strategies to

deal with the problems, such as corporate social responsibility. The

implementation of such strategies remains separate from the compa-

nies' main activities, just as happens when governments are dealing

with the problems. This suggested a new strategy that Porter and

Kramer refer to as “Shared Value”(SV). They argue that this strategy

provides many advantages compared to previous ones and even helps

to create a new form of capitalism. The strategy requires companies

to provide organizations and individuals outside of the company with

the tools to become partners. Activities that originally are separated

from the main activities of a company would thus morph into activi-

ties that those involved would benefit from as well as the company

itself. This would reduce the burden on governments as well as intro-

duce other benefits such as helping to avoid negative externalities.

The core element of the proposal appears to be that existing com-

panies are to export their way of working and have anyone benefit

who otherwise might become the victim of that way of working and

in need of government care. That way of working is severely criticized

however as the source of seriously negative externalities: companies'

“narrow”strategies generate socioeconomic problems, resist societal

regulation, and lack a social purpose. What is to be exported is quite

different therefore. The aim is that companies and individuals acquire

a social purpose, are expected to change their use of resources, and

to be innovative and apparently open to the future. The authors of

the proposal appear to claim that what is intended for export will also

change the original companies as they will begin to understand the

advantages of a more open type strategy—but at the same time fear

that they will “resist even well-constructed regulation”when chal-

lenged to implement that change (Porter and Kramer, 2011, p. 14).

The proposal is less practical than one would expect therefore. It

is restricted to suggesting an objective—albeit an attractive one—that

should replace the popular objectives of “commoditization,”price

competition, little true innovation, slow organic growth and not clear

competitive advantage”(Porter and Kramer, 2011, p. 6), or more gen-

erally “profit maximisation”(Porter and Kramer, 2011, p. 16). The pro-

posal thus raises a question, which is taken as the research question

of this paper: “what method might help to realise the proposed objec-

tive?”The question obviously is not new and has received a number

of answers in the management literature, which Porter and Kramer do

not discuss or compare (Kotter, 2008; Lewin, 1947).

One reason for this omission may be that the proposed objective is

special in some sense and hence that the question requires a new

answer. The results of a study of employees' efforts when their compa-

nies have to respond to life-threatening challenges suggest such an

answer (Mendy, 2012). This study questioned the way some employees

are able to resist managerial directives that continue to adopt the “nar-

row”strategy that Porter and Kramer criticize. A methodology of

DOI: 10.1002/jsc.2257

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