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In the Harvard business review article " Strategy & Society", written by Michael E. Porter and Mark R. Kramer, the writers give an account of the new age practices and current expectations of corporate social responsibility (CSR), which has become a cultural norm for global businesses. Essentially, the article provides an elaborate account of CSR in terms of its role, with respect to public placation, profit, and allocation of philanthropic funds. Porter, and Kramer depict the current paradigm to be one that is dangerously fragmented to the point of impotence. In response to the issue, they establish a framework, a strategy, to circumvent future instances and common practices of misdirected investment, and allocation of funds.
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This new strategy, they call, "LICENSE TO OPERATE", which takes a radical approach to the dynamic relationship between business and social elements; social responsibility is at the forefront of this new model is the idea of social responsibility. Porter and Kramer consider strategic framework. This model provides innovation in that it distinctly outlines both future impact, as well as long-term goals. Both authors assert that this model should serve as an example of how to create an agenda between a business and society with the core principle of shared values.
In particular, the license-to-operate system suggests that there are 3 significant social categories which include: 1. value chain social impacts; like damage control, or "mitigating the harm" introduced by a corporations value chain. 2. social dimensions of competitive context 3. generic social issues. By these means, the model "Offers a concrete way for a business to identify social issues that matter to its stakeholders and make decisions about them. This approach also fosters constructive dialogue with regulators, the local citizenry, and activists."
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The license to operate model encourages the Prioritizing of goals that intersect to create and maintain instances of shared value. side from the direct benefit embedded in the shared value design, corporations also stand to benefit from, what Porter and Kramer define as "Competitive Differentiation". They believes that social initiatives can account for setting the leading corporations apart from one and other,” the most strategic CSR involves a social dimension." Namely, it should be one that patrons identify with.
They provide ideal instances of this type of stellar performances and involvement in social investments by companies like GE money, with an investment in school program with measured long-term impact, Nestle, which uses a distinctive strategy that is inseparable from its social impact, and Whole Foods; local farms, low impact, and organic.
Despite a flawed system, and unreliable ratings, more recently, corporations have been reaching out to non- profit organizations that specialize in CSR so that the findings are legitimized.
The best model should have an " embedded social dimension" to it, in" the core value proposition". In short, the authors propose a paradigm shift from today's fragmented model, to the more strategic, integrated, affirmative approach which suggests moving towards "social dimensions of competitive context.to foster social and economic growth"