Creating Shared Value From the Analysis of the Effect of Corruption and Crime on MSMEs in Bogota

Creating Shared Value From the Analysis of the Effect of Corruption and Crime on MSMEs in Bogota

María Teresa Ramírez-Garzón, Carlos Mario Muñoz-Maya, Olga Lucía Díaz-Villamizar, Freddy Alexander Barrera-Valbuena
DOI: 10.4018/978-1-7998-4909-4.ch023
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Abstract

Organizations must strive to increase competitiveness and to improve the economic and social conditions of the environment in which they work, thus creating shared value. Corruption and crime limit social development, government effectiveness, and the conditions in which private companies operate. For this reason, based on the shared value theory, the purpose of this research is to make a co-relation analysis between what micro and small enterprises (MSEs) think of the increase in sales and the risk of closing their business, with respect to corruption and crime. The study was made to a sample by convenience of 484 MSEs in the southern area of Bogotá, which work in different industrial and service activities, using a validated questionnaire of 99 items that ask about corruption and crime.
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Theory Of The Shared Value

To talk about the shared value theory requires to go back to the social and economic environment in which it aroused. On September 15, 2008 the investment bank Lehman Brothers announced that it went into bankruptcy, which generated the so-called 2008 “Big recession”, affecting the economy at a global scale, not only American, but also that of the countries belonging to the OCED2 (Organization Cooperation and Economic Development) and causing a rejection by American citizens to the feasibility of neoliberal policies. This nonconformity given by the limitations of the neoliberal system to guarantee an adequate standard of living caused the economists of Harvard University to think about the subject and to put forward new theories. It was at that time that Porter and Kramer, who were professors at that university, established and developed the shared value theory (Martínez , & Martínez Zavala, 2015).

Porter and Kramer, according to Martínez and Martínez Zavala (2015), assure that companies are socially conceived as entities searching to generate value or, in the short run, to achieve an economic performance, leaving aside “fundamental aspects such as the real needs of customers, care of natural resources and the economic problems of the community” (p. 35). Social problems are not the center of the organization and these matters are handled with a philanthropic attitude. Therefore, companies must start to identify which activities of their value chain generate higher social impact so as to improve them, thus achieving the maximum social value by reinforcing their strategies, which in turn will generate competitive advantages (Muñoz-Martín, 2013).

Taking into account the foregoing, Porter and Kramer assure that companies must change their entrepreneurial approach by assuming a leadership that reflects the union between business and society, giving rise to the shared value theory, the center of which is that creation of the economic value must generate value for society meeting their needs and solving their problems, thus generating value for both the private sector and the community. Said authors define shared value as: “the operational policies and practices that improve the company’s competitiveness while improving the economic and social conditions of the communities in which they operate” (Martínez Zavala, L. & Martínez Zavala, A. 2015, p. 36).

According to Muñoz-Martín (2013), the concept of shared value which according to Porter and Kramer “redefine the limits of capitalism”, is centered in three aspects as shown in table 1.

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