New business models for creating shared value

Abstract

Purpose -For a long time, managing the relationship between business and society has been one of the main topics of academic and business literature. Porter and Kramer have proposed a new interpretation of this relationship based on the mutual dependence that exists between corporations and society. Trying to put into practice the shared value principle, for-profit companies engaging in strategic CSR have chosen to implement new hybrid business models. These models include the social business model and the inclusive business model. The purpose of the paper is to understand which characteristics distinguish social and inclusive business models and what kind of benefits and risks (for companies and for communities) are connected to each model. Design/methodology/approach -In order to identify the features of the inclusive business and social business models and the benefits and risks associated with these models, ten case studies were analyzed. Analysis of the business models was based on a theoretical framework developed through the analysis of the literature.Findings -The findings of the research suggest two main conclusions. First, social and inclusive business models are similar in partner networks, use of knowledge and value chain, in the development of innovative distribution models (except for the cases in which the market considered is not in an emerging country) and in terms of social benefit. Second, the social and inclusive business models are different in terms of value proposition, governance systems, profits management model, social risks and economic profit equation.Research limitations/implications -The first limitation is that the case study analysis is based on documentary materials; for further investigation it might be useful to develop in-depth interviews with key figures involved in the implementation of business models. Even though this descriptive study has allowed a first important step in taking a comparative analysis between the two business models, further research should strive to extend the analysis to all the hybrid business models that are being developed with the aim of creating shared value.Practical implications -The final propositions allow entrepreneurs and managers to better understand the characteristics of business models. Moreover, the theoretical framework is a conceptual instrument that is useful in analyzing and evaluating alternative ways to develop new business models -based on the ''creating shared value'' principle -in developing markets.Originality/value -The paper focuses on comparing the characteristics of the social versus inclusive business models. Studies that compare business models in the social venturing space are limited. Moreover, the study addresses the similarity and differences between the two business models rather than focusing on the two models separately as the previous researches have done.

What to make of unprofitable corporate social responsibility

“…The classical cost-cutting school epitomised by Friedman (1970), in which CSR is conceptualised as an incremental cost to doing business, has now gone largely out of fashion. Shared (Maltz and Schein, 2012;Michelini and Fiorentino, 2012;Moon et al, 2011;Kramer, 2006, 2011) and blended value approaches (Emerson, 2003;Nicholls, 2009) now dominate the literature, with the business community largely taking CSR for granted and instead focusing their discussion on how to best implement it to create benefits for firms and their stakeholders. At other times, it is simply an acquiescence to outside pressure from NGOs, leaving businesses little room to select a particular strategy or to evaluate the impact on profit [Doh and Guay, 2006;Reinhardt et al, (2008), p.229].…”

Social Entrepreneurship in an Inclusive Business Model: A New Business Model for Sustainable Agroforestry

“…The fastest growing markets of today are those in emerging economies [9,10]. These markets have inspired Prahalad and Hart [7] to develop a conceptual model called base of the pyramid (BOP) that focuses on adapting business models to the local conditions.…”

“…Michelini and Fiorentino [9] present corporate social entrepreneurship (CSE) and inclusive business models as potential strategies for creating shared value and inding new business opportunities. The concept of a new business model, in this particular context, implies that "the triple botom line" and "shared values" are operationalized and implemented, not only in longterm strategies, but also in the actual daily operations and management of day to day business.…”

CSR initiatives by companies for employees through social protection measures

“…According to the Shared Value concept, the CSR agenda should be about policies and operating practices that enhance the competitiveness of companies, whilst simultaneously advance the social conditions in the communities which they are operating [2,19]. Shared value focuses on integrating social and business advantage that results in new business models which are social and inclusive [20]. With this underlying theory, it is proposed that social protection can be promoted through CSR activities because both social protection and CSR activities focus on providing opportunities for both companies and employees that enhances social status and rights of the marginalised groups in the society.…”