Redefining economics: why shared value is not enough

Abstract

PurposeThis paper aims to offer scholars and practitioners critical arguments on the strengths and weaknesses of the shared value concept and of the mental model of economics that lies at its heart. On the basis of these arguments, it proposes the paradigm of ethicological value-added creation as a new economic framework extending the shared value concept into a concept of lastingly viable business strategy.Design/methodology/approachConceptual and philosophical analysis of the mental model of economics and of basic concepts and premises regarding scarcity, competition, growth and raising value. Application of this analysis to the re-design of the shared value approach and to the development of practical guidelines for sustainably viable business models.FindingsThis paper highlights how the shared value approach can be transformed into an even stronger strategic tool for the design of viable business models.Practical implicationsScholars, entrepreneurs and managers receive a new conceptual framework to design lastingly viable business models on the basis of re-defined tools and concepts.Originality/valueLeading texts on strategy and business development as well as CSR-driven texts on designing sustainable business models do not bridge the paradox of destructive wealth creation, i.e. the fact that individually rational and, in itself, highly successful economic behaviors lead, on the group level and the level of the whole system, to an outcome that by and large is highly destructive, as it places the social, ecological and economic sources of this wealth creation process in existential jeopardy. The paper proposes a new framework of economic reasoning for solving the paradoxes that shape current economic models and the shared value approach. It offers a first set of indicators, the parameters by which the shared value approach can be transformed into a living model for generating resource growth and added value creation cycles that stop the present downward spiral of acceleration, disruption, concentration and resource depletion. The paper thus presents forms of shared value creation that are more holistic and sustainable.