Creating Shared Value (Essay Sample)

Creating Shared Value
Name:
Institution:
Introduction
Capitalism refers to an economic system dominated by private investors. Many governments have allowed capitalism to thrive due to its simplicity of operation and the ability of capitalist private companies to maximize on efficiency in resource utilization in a way the government cannot compare.
Creating shared value
Porter and Kramer (2011) point out that capitalism has outlived its usefulness and is the source of societal, environmental as well as fiscal hitches in the economy. They further state that corporate social responsibility assisted to uplift the societal status but wrong doings of organizations are far more and they come in the form of inadequate products, depleting natural resources, creating little value in products as well as employing staff on unfavorable terms.
Creating shared value (CSV) calls for establishing and managing companies competitively and efficiently leading to full acceptability of such companies and their products in the community. Companies have a number of ways they can create shared value. They can re-invent their products with the customer in mind, by creating quality products that fully satisfy consumer needs and are cheaper. They can also look for better channels of distribution, which shall reduce cost of distribution and access new market segments. The companies can also join efforts to develop infrastructure, hence attracting other companies and related social amenities to that cluster. This shall be beneficial since it will attract social amenities, increase security within the area and consequently reduce cost of living of the inhabitants. Such a cluster shall have schools, hospitals, hotels, playing grounds, chain stores, all which complement the company growth.
The key idea in the article is that as much as the community depends on the company for provision of jobs and infrastructure, the company shall gain and thrive more in a conducive and healthy business community. These people shall offer ready market for its products and assist in research and innovation when manufacturing new products. Therefore, the company and the community shall have policies and operational practices, which do not hinder promoting society and economic advancement. Porter and Kramer (2011) further state that CSV emanates from internal management operations, without pressure from any outside body including the community.
There is a potential limitation in that Porter and Kramer (2011) insist on economic rationality of companies as the only way for their survival. They fail to point out that CSR alone is not working out and CSV expands organization...