Comparing Shared Value Creation and Corporate Social Responsibility by Small Firms: How do they Contribute to Local Economic Development?

As seen in the case study, small firms engage in development processes in the Bogota-Region applying either shared value models or corporate social responsibility strategies, contributing to local economic development through partnership building. While developing either one, private sector seeks for partnerships because they offer a collaborative advantage. Specifically, when implementing shared value, partnerships are sought because partner organizations are depending on resources, alliances are used as steering mechanisms to solve policy problems and actors are motivated around core issues or metaproblems. Particularly, while executing corporate social responsibility, partnerships are built because organizations depend on resources for responsibility purposes. Nevertheless, the essence of this research is how the contribution is done, embracing that the alliances promoted (1) can be understood as “local impact” of local economic development (2) incentivize processes of learning and entail a source of innovation (3) enhance the local governance scenario and (4) promote a local economic development driven by endogenous forces. Reflecting on theory and practice of how small enterprises apply shared value and corporate social responsibility, four elements are analyzed: first, it has been identified that the shared value model requires considering organizational support, innovation and absorptive capacity, defining the core competence and price and population focus, as important elements to fit small firms needs. Second, the main theoretical difference between shared value and corporate social responsibility is the extent to which the social issues are embedded in the core of the business. Third, there is an overlap in practice between shared value and responsibility activities, however. Fourth, the theoretical relation among local economic development, partnerships and shared value on one side and local economic development, partnerships and CSR on the other side has sensible variations.