Michael Porter on the social role of businesses
Everyone who deals with Strategic Management sooner or later stumbles across him: Michael Porter. He is known as the father of Strategic Management. I myself have studied many of his books and cited him at various occasions. Thus, I am happy to see him talking about a topic that is very important to me: The social role of businesses.
For a long time the conventional wisdom saw a trade-off between social and economic performance. The pursuit of profit maximization didn’t give space for interests such as protection of the environment, health and development of society. It seemed so.
Porter is presenting the concept of shared value. Shared value is creating social and economic value simultaneously. Porter sees shared value as the original idea of capitalism which meets important needs at a profit and thus, can treat social issues with self-sustaining solutions and the necessary resources and funds.
A business is no longer an institution that reinforces or causes social problems, but which can address social problems profitably on an infinite scale.
This new way of thinking releases synergies for businesses that are both socially and economically engaged. Businesses profit from solving social problems and also become more efficient, productive and sustainable in their structure.
Porter claims the business model of shared value being the most promising business opportunity of our time. What is needed to make this business model thriving?
It is a question of perspectives!
There must be a change in the way businesses see themselves, and also the way society perceives businesses. A business is no longer an institution that reinforces or causes social problems, but which can address social problems profitably on an infinite scale.
You can already observe a new generation of social organizations that is currently emerging. The common characteristics are big talent, a high level of energy and innovation power.
Michael Porter: Why businesses can be good at solving social problems
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