Last week I spoke on a panel on shared value at HBS. I described Michael Porter's shared value in a previous post, "Social Entrepreneurship, Corporate Social Responsibility and Shared Value":
"Corporate strategies must be adapted to service social needs. By combining the creation of economic value and serving social needs "shared value" is created. "For profit" companies are well suited to solve social problems while at the same time serving their shareholder's interest to maximize investor returns."
I now believe that shared value is basically a trivial idea. To forego social responsibility in favor of maximizing shareholder return is really just an excuse to be socially insensitive. Maximizing shareholder return is not some sort of mathematical certainty but rather the more practical but vague notion that company earnings have to match stock analyst earnings estimates (as a surrogate for shareholder "expectations"). Spending could support social objectives or income generating activities as long as the shareholder expectations are met. For example, no one criticizes Wal-Mart for annual charitable contributions in excess of $600 million.
This post was inspired by this story on opensource.com, "Reimagining capitalism—as principled, patient, and truly social". I do not agree that "capitalism degenerates into narrow self-interest without a strong ethical foundation". Companies make many social contributions such as job creation and tax payments regardless of ethical foundations. The more constructive objective would be to make businesses more aware of the good "business" opportunities that exist in solving social problems or serving the underserved.
