Just When You Thought It Couldn’t Get Worse, You Hear: “The Business of Business Is Business”-Some Reflections on a Self-Fulfilling Prophecy and Alternative Perspectives on the Purpose of Companies

Abstract

Business seems to have lost its sense of purpose and the relationship between business and society appears to be broken. Relevant parts of society question whether business is creating value for the many or just for a few. At the same time there is an expectation that business contributes to solutions to huge challenges such as poverty or climate change. In such an environment, the concept of Shared Value is catching a lot of attention from academics and business practitioners because it appears to offer an appealing narrative about how business can develop innovative solutions to societal challenges that are creating business and societal value simultaneously. According to the authors, this requires a re-definition of the role and the purpose of business in society, a definition that would be fundamentally different compared with the most prominent economic and business theories that in turn claim that business has to maximize profits or respectively has to create value for the shareholders first and foremost. This situation analysis raises some important questions that this article tries to explore: How could it happen in the first place that business is under such scrutiny, given that companies are creating considerable value for societies? And for what reason have economists been at least ambivalent if not even agnostic concerning moral values, ethics and social responsibilities of companies in modern societies for so many years? And what alternative concepts – in regards to the role and responsibilities of business as possible tools to address societal challenges – were offered in former times and can be seen as foundations for the Shared Value concept? The article makes a rather explorative attempt to offer some perspectives to these questions and specifically to how companies could respond to these expectations. We propose that companies should operate with a strategic portfolio approach, i.e. using a portfolio of interventions – of which Shared Value is one – with the aim to optimize the positive impact on society and minimize the negative footprint. Lastly, the article discusses some of the concerns that were raised against the Shared Value concept, either because these are an inherent element of it or because of how it is positioned within the academic debate on the corporate responsibilities of companies.