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June 10, 2014 3:42 pm

Why CSV makes sense for business schools

Corporations need to find innovative business solutions to social problems

The recent discussion about the concept of Creating Shared Value demonstrates a one-way direction in criticising the fundamental ideas, as well as the proponents of CSV, authors Michael Porter and Mark Kramer. With the exception of Kramer’s article defending the idea of CSV and Thomas Dyllick’s neutral article, each contribution displays a critical view of CSV.

Dyllick points out in his article “The opposing perspectives on creating shared value” that both the proponents’ and the opponents’ perspectives on CSV have legitimate arguments and we will have to live with this dualism of perspectives.

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One of the major criticisms of Porter’s and Kramer’s CSV concept is its exclusive focus on scenarios in which social engagement enhances the competitive position of the corporation. Despite CSV’s potential shortcomings and fallibility in A few dimensions, CSV is driving the discussion about a more advanced social responsibility of businesses. On one hand, in many instances we observe a more positive discussion and AN increasing level of engagement BY corporations, for example through growing participation in the annual shared value leadership summit. On the other, we now notice the controversial and critical discussion among scholars. Dyllick highlights both these points and refers to a long tradition of teaching the business case for sustainability to business students, but also the limitations of the business case framework.

What is not mentioned in the discussion and can be added to Dyllick’s perspective is the positive view of CSV as an enhancement of existing measures and concepts in the field of corporate social responsibility. CSV has a positive view of business engagement in society. It changes the perspective from one where corporations harm society and must therefore give back to society, to one where corporations are becoming part of the solution to social and societal challenges. The fact that there are cases in which a win-win solution might not be achievable does not change the fundamental benefits of the CSV concept. Instead, it is important to engage in a thorough search for such win-win opportunities. As Porter, Kramer and their Foundation Strategy Group showcase, there are numerous successful examples of creating shared value even in industries which at first glance seem to have a negative impact on society – such as the tobacco or the mining sector. Corporations should engage in this sequential process of first looking systematically for win-win opportunities. Only if CSV opportunities – after a thorough process of searching – cannot be achieved in certain cases does the corporation have to deal with trade-offs of business and other interests.

An important element in dealing with trade-offs is collaboration with other entities such as governments, NGOs and competitors. The process of CSV can be observed with the British American Tobacco (BAT) company for example: it engages in CSV activities along its value chain when it trains farmers in sustainable agriculture. However, its core business remains tobacco products and since BAT has been unable to change its end-product entirely, it is investing in research into less harmful tobacco products and e-cigarettes. In doing so, it collaborates closely with scientists and regulators. BAT has investigated where to implement CSV, and only then has it addressed the business-society trade-offs in those fields where an immediate CSV solution is not achievable.

Not all social challenges can immediately be cured by CSV. But it is in the interest of the global community that powerful corporations engage in finding innovative business solutions to social problems. It is of crucial importance that future business leaders are equipped with an adequate mindset to apply this process. We need to teach business school students to look first for CSV opportunities – meaning: win-win solutions – before turning to solve the remaining trade-offs.

It is a question of search strategy: If you are not taught to look systematically for win-win opportunities, you will only see trade-offs. Trade-offs seem to be “out there”, whereas win-win opportunities must be discovered – and created.

Business schools should adapt their CSR programmes to include CSV. This growing trend in schools across the world may help to unite the business world and other parts of society in solving social problems.

Christoph Luetge is the Peter Loescher professor of business ethics at Technical University of Munich. Benedikt von Liel is a doctoral candidate in business ethics at Technical University of Munich.

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