Corporate social responsibility is a deliberate action taken by investors to ensure they participate in activities that promote positive development in the community around them. It involves the establishment of programmes that ensure a business pays back to the society through participation in community activities. This may include constructing schools, establishing sponsorship programmes, easing the implementation of environmental conservation policies and empowering local communities to safeguard their future.
Creating a shared value involves the implementation of policies that ensure businesses get quality raw materials and offer awareness and education programmes to their suppliers to help them get better rewards for their participation in promoting businesses. CSR and CSV help organisations to create a good public image and avoid conflicts with local communities and authorities.
Differences between Creating Shared Values and Corporate Social Responsibility
CSV differs with CSR in the following ways. First, CSV focuses on improving the value of products and services offered by a business. However, CSR focuses on ensuring that a business uses responsible approaches in its production processes. In addition, it includes the establishment of policies that compel an organisation to reward the local community because of its continued support. Secondly, CSV involves the establishment of long term projects that enables businesses to work with local communities in ensuring the products of an organisation benefits it and the society. On the other hand, CSR focuses on establishing programmes or participating in activities that help local communities to improve their lives and become responsible in the society. Thirdly, CSV concentrates on the activities of a business and its public’s while CSR involves participation in issues that may not be related to a company like sports, environmental conservation and social activism. For instance, Nestle’s CSV aims at creating value for its products and farmers by investing in research, water supply and nutrition. Its CSR includes the construction of schools near cocoa farmers to motivate their children to stop migrating to urban centres to look for jobs and instead attend schools to benefit them in the future.
| CSR | CSV | |
| Focus | Improving the welfare of the community and promoting the participation of businesses in communal activities | Improving the relationship between suppliers and businesses by boosting supply or raw material and improving product quality |
| Nature of policies and programmes | Short term or if long term they have deadlines | Long term plans to improve quality of products and living standards of suppliers |
| Formation | Formed by businesses in consultation with communities and appropriate authorities | Formed by relevant departments or personnel within an organisation |
| Target | Targets to improve the standards of living of the local community | Targets to improve the performance of a company and the lives of suppliers and not the community |
| Beneficiary | The greatest beneficiary is the public/local community | Suppliers and businesses benefit from improved quality and quantity of production |
Limitations of Corporate Social Responsibilities and Creating Shared Values
The greatest disadvantage of CSR is that it diverts the attention of businesses from generating profits to providing social infrastructure to local communities. This makes organisations to focus on activities that may affect their production and sales. In addition, not all organisations participate in corporate social responsibilities and this means that others may take advantage of weak companies and edge them from markets. Thirdly, CSV and CSR are matters of public relations and most of them do not have positive impacts on local communities or even the management of an organisation.