Creating Shared Value in Economics - Essay Example

The solution to the problem lies in shared value which involves creating economic value both for companies and the society around them (Porter & Kramer, 63).
Unlike sustainability, social responsibility, or philanthropy, shared value achieves economic success without requiring one party to sacrifice their gains be it in terms of profits or property and time. There is no economic trade-off that comes about when shared values are presented between business and the needs of society. What comes out of shared value is the benefit and progress that both parties shall accrue over time. Economists have long vouched for the idea that to realize economic progress, businesses must trade off gains in one way or the other.

The authors’ purpose about shared values is that they aim to ignite growth and progress by eliminating the trade-offs businesses have to make to progress (Porter & Kramer, 70). Given that they have identified the reason behind the imminent failure of capitalism, the two authors go ahead giving reasons as to why capitalism plays a vital part in the lives of every individual in society. Another purpose the two authors aim to put forth is to end the stirring war between business and society. They think that progress needs to occur without one party having to sacrifice their gains.

In creating shared value in a firm like Google, several benefits are realized. Google Scholar, which provides texts of academic literature online, greatly reduces the wastage of such resources as paper and plastics. Google Scholar is a very popular service and, by meeting the requirements of society and not merely it's conventional economic needs, has defined a market of its own and reduced social harms that could increase Google’s operational costs. In this way, therefore, the aspect of shared values not only benefits both parties in terms of gains, but it also reduces the impact of pollution resulting from some aspects such as the use of paper and plastics (Porter & Kramer, 73).

In conclusion, creating shared value (CSV) yields more than corporate social responsibility (CSR) over the long term. While the latter benefits society more than the companies that carry it out, the former has benefits for both parties. According to value addition as an economic theory, the addition of value to a given item has benefits on many fronts. Adding value to business operations and sharing the values with society reduces the interruptions to the speed of innovation. The implementation of the shared values model of operation comes about as the salvation to the continuous friction between business and society observed since the Industrial Revolution. In this sense, it is the solution to trade-offs companies had to bear. Read More