Creating Shared Value by Fostering Regional Development: The ‘Partners in Responsibility‘ Method for SME
| DOI | http://doi.org/10.1111/1758-5899.12238 |
| Author | Arved Lüth,Marcel Stierl |
| Date | 01 November 2015 |
| Published date | 01 November 2015 |
Creating Shared Value by Fostering Regional
Development: The ‘Partners in Responsibility‘
Method for SME
Arved L€
uth and Marcel Stierl
:response, Frankfurt
The Idea of Shared Value
There is ever increasing debate on the appropriate role
of business in today’s globalized world. Managers are
faced with growing, yet often diverging stakeholder
demands to fulfill their economic, social and environmental
responsibility. In this vein, Mervyn King introduced the
notion of ‘integrated thinking’to extend a company’s
strategy and management beyond the purely financial to
encompass the social and environmental factors that
deeply affect a company’s future viability in the 21st
century (King and Roberts, 2013).
Likewise, Michael Porter developed an approach to
answer these stakeholder demands using the idea of
‘shared value’(Porter and Kramer, 2012). Shared value
involves creating economic value for the company in a
way that also creates value for society by addressing its
needs and challenges. The competitiveness of a company
and the health of the communities around it are closely
intertwined: a business needs a successful community,
e.g. to provide critical public assets and a supportive
environment. Conversely, a community needs successful
businesses to provide jobs and wealth creation opportu-
nities for its citizens.
Enabling regional development
Following ISO 26000, a global guidance on social respon-
sibility developed by an international working group of
about 500 experts including representatives from govern-
ment, NGOs, industry, customer groups and labour orga-
nizations, an organization itself is ‘a stakeholder within
the community’. The Global Reporting Initiative (GRI), an
international not-for-profit organization and leader in the
sustainability field, stresses the growing importance of
local communities as a key stakeholder group for compa-
nies in its sustainability reporting framework. So far, how-
ever, companies have often overlooked opportunities to
meet fundamental societal needs. Instead, within their
Corporate Social Responsibility (CSR) engagement, they
have rather focused on compliance, risk and reputation
issues. By doing so, companies often misunderstand how
societal deficiencies affect their own long-term economic
success. Social weaknesses frequently create internal
costs for firms, such as the need for remedial training to
compensate for inadequacies in public education. Yet,
strong local capabilities can boost productivity (Porter
and Kramer, 2012).
Thus, a key strategy to create shared value is by building
strong local communities and by enabling sustainable
regional development. Businesses can get involved in the
community and –in a literal sense as ‘corporate citizens’–
take responsibility for it (L€
uth et al., 2005; Matten and
Crane, 2005). Such efforts to enhance infrastructure and
institutions in a region often require collective action by
multiple actors. According to Porter, the most successful
regional development programs are ones that involve col-
laboration within the private sector, as well as companies’
stakeholders such as trade associations, government agen-
cies and NGOs. Companies should try to enlist stakehold-
ers as partners to share the cost, win support and
assemble the right skills (Porter and Kramer, 2011).
Creating shared value by enabling regional develop-
ment also works because it increases the ‘social capital’
of a region. Social capital is an endogenous, thus intrare-
gional resource, derived from the preferential coopera-
tion and social networks between actors from business,
civil society and the public sector in the region (Bour-
dieu, 1983; Coleman, 1988; Putnam, 1993). It can facilitate
regional development because durable social networks
enable an efficient and effective flow of information and
mutual trust decreases transaction costs. Thus, companies
that operate in communities with a high degree of regio-
nal integration and social capital have a competitive
advantage, based on location factors such as durable
stakeholder networks, trustful interactions, cultural bonds
and a privileged access to political institutions (Porter,
1999).
Global Policy (2015) 6:4 doi: 10.1111/1758-5899.12238 ©2015 University of Durham and John Wiley & Sons, Ltd.
Global Policy Volume 6 . Issue 4 . November 2015 507
Practitioners’ Special Section
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