Understanding Shared Value

Abstract

Social or environmental misconduct shows that companies are strongly losing their legitimacy. This leads to them losing customers and investors as well as having to face institutional pressures. According to Porter and Kramer (2011) the time for a new economic paradigm has thus, arrived. They argue that the current approach to value creation is out-dated and that ‘companies must bring business and society back together’ (Porter & Kramer, 2011: 64). They developed a framework that contributes to focusing on social value creation in the strategic context more strongly. Before we detail out the new management concept by Porter and Kramer (2011) called ‘Shared Value’ we need to go back some centuries to get a better understanding of the antecedents of the concept. More precisely we look at the legitimacy of companies, the genesis of the current (neo-liberal) approach to value creation and why it does not fit the needs of our times anymore.