Creating shared value: an opportunity and challenge for entrepreneurship

Exclusively written for the Sting by Edoardo Gauzolino, Vice President of Junior Enterprise Bergamo (JEBG)

Nowadays Corporate Social Responsibility (CSR) is accepted by firms as something that has to be done, although most entrepreneurs consider it as a philanthropic action or as an ethical behaviour. Separated from profit maximization, CSR programs focus mainly on reputation and they have only a limited connection with business, making them unfeasible in the long-run.

In 2011 a new concept was defined in order to fill in the existing gap between social and business issues: Creating Shared Value (CSV). Shared Value can be defined as the set of policies and processes that enhance the competitiveness and the productivity of an enterprise together with the improvement of the economic and social conditions in the community in which the company operates; therefore CSV programs focus on the identification and the expansion of the connections between social and economic growth, where value is accounted as benefits related to costs.

There are three ways identified in the business literature in order to create shared value: reconceiving products and markets, redefining productivity in the value chain and enabling local clusters development. An improvement in one of these areas leads to new opportunities in the others, opening new ways to expand markets, serve new needs and gain efficiency.

To understand the concept of shared value, one of the best examples can be the promising service provided by Thomson Reuters to 2 million Indian farmers who earn on average $2,000 a year. For a fee of $5 a quarter, Reuters provides to them weather and crop-pricing information with also agricultural advice; first researches implemented in 2011 indicated that this service helped to increase the farmers’ incomes on average by 60%, while making profits – a case of reconceiving products and markets.

The ability to create shared value is not limited to emerging markets: although many companies traditionally focus on holding down employee’ wages, reducing benefits (e.g. corporate health-care) and offshoring, Johnson & Johnson has saved $250 million on health care costs by implementing wellness programs from 2002 to 2008, obtaining a return of $2.71 for each dollar spent in these programs and benefiting from a more present and productive workforce.

I founded Junior Enterprise Bergamo with the vision of creating Shared Value by enabling a local cluster in Bergamo, connecting firms, students, university, public institutions to enhance economic and social development while fill in the existing gap for young people between universities and companies; the concept of Shared Value is therefore a possible opportunity and challenge for youth and social entrepreneurs for satisfying new needs from a different perspective.

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