Creating Shared Value: Competitive Advantage through Social Impact
Course Number 1415
with Professor Michael E. Porter
Fall; Q1; 1.5 credits
NOTE: As an option, students can elect to complete an additional 1.5-credit independent project during Q2 applying concepts from the course to an industry, company or societal problem of their choosing. Students who elect this option take the Q1 course and, instead of submitting a paper, develop a project in consultation with the instructor that is due at the end of Q2.
Classical economics taught that the social and environmental impacts of business were externalities to be handled by government regulation, philanthropy or corporate social responsibility. Classical finance went further, arguing that any corporate focus on “social” factors was a misuse of shareholders’ resources. We now know, however, that societal problems actually create internal costs for companies. Addressing these problems creates new avenues for improving efficiency. Meeting societal needs also offers fresh opportunities for differentiation and growth. Companies that integrate social impact into their competitive positions will find opportunities for innovation and profitability that competitors miss, as is becoming apparent in numerous industries.
CSV rejects the deeply ingrained notion that there is an inevitable trade-off between delivering social benefits and maximizing shareholder returns. It offers a more sophisticated way to think about capitalism — one imbued with a social purpose that arises not out of charity or obligation but out of a deeper understanding of competition and economic value creation. We believe that CSV is part of the next major evolution of business thinking that will drive productivity growth and competitive advantage in the global economy. Current and future business leaders will need to understand and be able to apply this thinking.
Social enterprises and governments are also beginning to recognize that the private sector and private-sector models are essential partners in solving the world’s problems. The result is new forms of cross-sector partnerships built on shared value creation that offer corporations the opportunity to utilize their skills, resources and management capability to lead social change in powerful ways that also deliver bottom line results.
Course Content and Organization
The Creating Shared Value course is fundamentally a strategy course, based on the ideas first introduced in the 2011 HBR article Creating Shared Value. Rather than analyze the social impact of business in abstract moral or philosophical terms, CSV provides a clear framework and practical guidance in driving business results through measurable social impact. The course will provide a comprehensive set of tools and concepts for putting CSV into practice.
The course includes 14 cases that cover all three levels of CSV: creating new products and markets, redefining productivity in the value chain, and enhancing the local business environments in which the company operates. These cases will also address the challenges involved in shifting organizational culture and processes, measuring social impact, engaging financial markets, and managing public-private partnerships.
Cases will cover companies in both developed and emerging economies, including large/mid-size public companies (e.g., Walmart, Nestle, Discovery) as well as venture capital backed start-ups (e.g., DBL Partners, Farmers Business Network). Supplemental course materials will include readings and research reports on CSV opportunities in different industries (e.g., healthcare, extractives and banking) and in addressing particular social issues (e.g., education, health, employment, racial equity). All cases focus on social impact as integral to company performance in a rapidly evolving market and societal environment.
CSV is intended as a mainstream strategy course for future corporate leaders and entrepreneurs who want to understand how social issues intersect with corporate strategy to create new opportunities for competitive advantage, and who are committed to purpose-based corporate leadership. It is also recommended for students who aspire to work in governments or social enterprises that partner with businesses to deliver social impact. A limited number of cross-registrants from other schools in related disciplines will be accepted to enrich the class discussions.
Course Evaluation and Grading
50% of the grade will be based on class participation and 50 % on a final paper.
Note: Professor Porter will co-lead 3 to 5 classes and has co-authored 8 of the 14 cases. Guest faculty will include Professor Shawn Cole, as well as corporate executives from several case study companies.
This course is part of a portfolio of courses relevant to Social Enterprise. For a full listing, see the Social Enterprise Initiative website.