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Fashion or future: does creating shared value pay?

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  • Stewart Jones
  • Christopher Wright

Abstract

Porter and Kramer's () concept of ‘creating shared value’ (CSV) has attracted considerable attention from business and academics. According to Porter and Kramer, CSV is about creating economic value in a way that also generates value for society by addressing its basic needs and challenges. One of the key assumptions of the CSV concept is that companies will benefit economically through engaging in CSV activity. We test this empirically by developing a proxy measure of CSV based on 26 sustainability performance indicators drawn from a customised database. Based on a sample of ASX 300 companies taken over a 5‐year period (2008–2012), we find a strong statistical association between the CSV proxies and a range of financial performance indicators. These companies also tend to be larger and have higher growth opportunities. However, statistical tests of causality indicate that superior financial performance leads to greater CSV activity, rather than CSV activity driving financial outcomes. This finding suggests that successful companies may well be adopting CSV‐type practices more as an outcome of management fashion than because of their tangible contribution to the financial performance of the firm.

Suggested Citation

  • Stewart Jones & Christopher Wright, 2018. "Fashion or future: does creating shared value pay?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(4), pages 1111-1139, December.
    • Handle: RePEc:bla:acctfi:v:58:y:2018:i:4:p:1111-1139
    DOI: 10.1111/acfi.12243
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    Citations

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    Cited by:

    1. Elisa Giuliani & Annamaria Tuan & José Calvimontes Cano, 2021. "Creating Shared Value Meets Human Rights: A Sense-Making Perspective in Small-Scale Firms," Journal of Business Ethics, Springer, vol. 173(3), pages 489-505, October.
    2. Geoffrey Frost & Stewart Jones & Muchen Yu, 2023. "Voluntary Carbon Reporting Prediction: A Machine Learning Approach," Abacus, Accounting Foundation, University of Sydney, vol. 59(4), pages 1116-1166, December.
    3. Danny Z. X. Huang, 2021. "Environmental, social and governance (ESG) activity and firm performance: a review and consolidation," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(1), pages 335-360, March.
    4. Yi Jiang & Stewart Jones, 2018. "Corporate distress prediction in China: a machine learning approach," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(4), pages 1063-1109, December.
    5. Danny Zhao‐Xiang Huang, 2022. "An integrated theory of the firm approach to environmental, social and governance performance," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(S1), pages 1567-1598, April.
    6. Carlos González-Rossano & Antonia Terán-Bustamante & Marisol Velázquez-Salazar & Antonieta Martínez-Velasco, 2023. "What Drives Profit Income in Mexico’s Main Banks? Evidence Using Machine Learning," Sustainability, MDPI, vol. 15(7), pages 1-19, March.
    7. Jane Andrew & Max Baker, 2020. "Corporate Social Responsibility Reporting: The Last 40 Years and a Path to Sharing Future Insights," Abacus, Accounting Foundation, University of Sydney, vol. 56(1), pages 35-65, March.
    8. Shinya Takata & Young Won Park & Takahiro Ohno, 2022. "Research on the Effects and Factors of CSV Activities by Sector in Japanese Firms: Analysis Considering the Relationships with Management and Communication Strategies," Sustainability, MDPI, vol. 14(17), pages 1-18, August.
    9. Wei‐jian Li & Wei Zhu & Bin Wang, 2023. "The impact of creating shared value strategy on corporate sustainable development: From resources perspective," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(5), pages 2362-2384, September.
    10. Jakub Horak & Petr Suler & Jaroslav Kollmann & Jan Marecek, 2020. "Credit Absorption Capacity of Businesses in the Construction Sector of the Czech Republic—Analysis Based on the Difference in Values of EVA Entity and EVA Equity," Sustainability, MDPI, vol. 12(21), pages 1-16, October.

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