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Capitalism in Porter & Kramer’s Creating Shared Value

Introduction

My review of the article intends to critically approach the ideas expressed in the article and present my reaction and evaluation of the information. In the review, a brief summary of the article, the main points of the article, the article’s place in context will be presented. In the next sections, I will discuss the central lesson of the article, its strengths and weaknesses, and how my personal experiences can relate to it. Recommendations for further research are also to be included.

The authors of the article “Creating shared value” are Michael E. Porter and Mark R. Kramer. In the article, the issue of capitalism and business, and the society’s hostility against them is addressed. The authors point out that the problem lies within the companies, but it can be solved with the help of shared value. The authors aim to prove that a narrow perception of capitalism is what causes the problems; another approach to it would allow creating a new conception of capitalism and end the bad blood between business and society.

The ideas expressed in the article are not new, but exciting nevertheless; I believe that the future of capitalism and business should be guided by what the authors presented as a shared value. Indeed, such an approach is capable of profiting both society and business.

Background Information

As the world changes, so do capitalism. The authors stress the importance of change, especially today when more and more companies and enterprises realize the necessity of shared value. Eliminating inequality, creating new jobs for unemployed and poor, improving the community’s well-being and the company’s image, and, eventually, gaining profit from these actions, supports the companies’ opinion about the shared value as a new, advantageous form of capitalism. Global companies create clusters and provide opportunities for third-world countries; the concept of shared value continues to be implemented throughout the world.

To evaluate the article successfully, its informational content, novelty, apprehensibility, strengths, and weaknesses need to be addressed. The article needs to be persuasive, clearly state the problem/the topic, and address it from various points of view. Moreover, it should not be too complicated so that the reader who is not familiar with the problem and its insights is still able to understand the content of the article.

Summary

The article is divided into several sections. In the beginning, the authors present the history of shared value, and how it has been developing throughout the years. The authors proceed and explain how shared value is created: “by reconceiving products and markets, redefining productivity in the value chain, and building supportive industry clusters at the company’s locations”. The next sections of the article present the ideas given in the quote, but their explanation is detailed and profound.

Every section also provides at least one example of how shared value is created by mega-corporations and enterprises, and how it has benefited their business. In a separate block, the authors discuss the creation of shared value by the government, pointing out that “governments and NGOs [should] focus on the results achieved rather than the funds and effort expended”. Kramer and Porter argue that government regulations are also necessary and will influence the companies’ work positively, but only if they are implemented in the correct way. At the end of the article, the authors provide a comparison between the shared value and corporate social responsibility; they also discuss the key advantages of the concept and explain why it is a future form of capitalism.

Evaluation

The article provides an interesting, profound, and well-formulated view on shared value. Providing various examples, the authors successfully present the concept and its advantages, convincing the reader that today is the right time to switch to shared value as a new form of capitalism. The authors explain in detail why other approaches do not work and how they make the relationship between society and business hostile. Although some of the opinions may repeat in the article, they do not overload the text but rather remind the reader of the main ideas and concepts essential for the understanding of shared value.

The central lesson of the article is the demand for innovation in modern capitalism; the authors discuss how shared value can become this innovation. It marks the idea of profit and non-profit as partially obsolete and explains how shared value blurs the line between these concepts. The article also proves that a social purpose will not harm business (that often seeks only short-term profit), but will help it develop and become more productive. The authors provide a reasonable explanation of shared value as a self-interested behavior, not a form of philanthropy. Business school curricula need to change according to the concept presented in the article, state the authors.

Although the article is persuasive and presents ideas that are comprehensible for a reader with or without the necessary background, it does not approach the disadvantages or potential risks of the concept. However, to present an idea clearly and objectively, it is crucial to address its weak points as well. It seems that shared value is a concept that is flawless, which is not possible, as such an idea would be considered utopian. While idealistic ideas are not dangerous per se, implementation of such an idea can lead to various consequences that may not be desirable for the company. Thus, if the authors try to present the concept as an answer to modern issues, they should address other issues that will emerge together with the concept when it is implemented.

As for my personal experiences, I would be glad to work in a company that creates shared value and follows the principles presented in the article. It would be helpful to understand how capitalism can be reinvented and innovated, what new approaches exist and how they influence the market. The previous forms of business have shown that this approach is obsolete and demands to be rebuilt. Investigations about mega corporations as Zara, H&M, Apple, and others that exploit child labor or underpay their employees at factories leave the consumers with a question whether or not they should buy products from the companies that do not violate ethics. I also wonder if I should prefer other companies’ products that have a different approach to business.

Conclusion

The article discusses the innovative concept of shared value, and its impact on capitalism; the authors provide various opinions and examples why business needs to become more society-oriented, how and why it will gain profit from it. Suggested recommendations for further research include investigation of failed implementation of shared value and the causes of it. The ideas expressed in this study are important because they encourage business and market explore new forms of capitalism to create a better future both for business and for society.