Om Shanti Om.
My good friend and advisor to my new food enterprise – Capitol Food Ventures – shared with me some of his good work in Mozambique related to Public Private Partnerships. In essence, PPP’s are “…collaborative arrangements among the private sector, government (donor and national) and civil society that address jointly defined business and development objectives.” On the surface, I want to believe this is a sustainable avenue for rural areas in Africa – but my heart and center are offering me reservations. I put it out there to you:
do you believe this idea of the corporation in our communities as shared partners (outside the idea of CSR)? or do you see them as overstepping their role (both in theory and/or in practice)?
I responded to a post on the same article which I am sharing with you below:
John (Tull – Univ. of Syndey), thanks for taking the conversation a step further. The lens from which I see Shared Value (SV) stems from its historical roots, which like you rightly point out, is commercial interest. I recall the idea of SV being promoted by the likes of Michael Porter, if not the originator with Mark Kramer – at least academically. SV stems from the belief that an NGO is an actor (and therefore not a true partner) within the commercial system, along with other stakeholders (Porter/Kramer’s initial example highlights Nestle’s dairy operation in India). This view is authoritarian in nature and originates from the firm, if not much of capitalist thought. To demonstrate my thoughts on this (much better depicted), there are two aspects – the real and the intellectualized.
First, with respect to the real life example used in the original article, here, Nestle in its expansion of capital asset investment into India, claims that this was what raised standards and consumption of milk that was otherwise sold on local markets or not produced at all. The example goes on to illustrate that with this capital investment, Indian’s were ‘better off’ as a result of this intervention. However a number of things are important to note here. India was already moving in a direction of mass organization creating a dairy marketing board and organizing cooperatives/dairy hubs as well government investment in the dairy industry was already shifting – not because of Nestle, but Nestle did happen to ride that wave of infrastructure development put in place by the local government. Also, the milk that Nestle is referring to typically gets processed and then goes to market (a minimum of 20%, but I’m certain I have read numbers nearer the 60% range). From this view, the producers and cooperatives are still ‘actors’ within the commercial system; merely inputs into the production process. The mere act of communicating that Nestle purchased milk from poor farmers does not make this a shared value initiative, if we take its true meaning in consideration and not one using the narrow view of the firm. Yes, those farmers did sell their milk, however, ultimately to a buyer who would process it and sell it back to the same community at a higher price – sometimes displacing a local fresh market for milk and disrupting public heath as a result (…consider the dry powder debate re-emerging today after 30 or so years).
In terms of representing this in the more academic view, I like to think of the typical/traditional value chain which flows downstream to the MNC or firm. The very essence of these models looks through the MNC or large corporate lens; therefore if they are the ones who are determining what’s happening in the value chain of any food product, they ultimately control and therefore take out the largest portion of whatever price is paid for the dairy or food product (moving towards the idea of vertical integration or power over the vendor/supplier). The value chain, as Porter depicts it, is geared to accommodate one stakeholder – the firm – the rest are simply noted as inputs.
Where I see the issue coming up for MNC’s or large corporations, is that they are threatened by the combination of technology and medium/small business entering the picture who can fill in (or ‘take’ in the corporate view) for local market share. So, in the case of dairy, imagine if the MNC was no longer in the picture and a small dairy business who used new technology to reach its customers was established, delivering its products at similar costs to its customers with similar health standards. How? The new technology acts as a ‘subsidy’ (if you’ll allow me) which not only brings customers closer to the small business but it also removes/limits a number of actors along the value chain (in the commercial view); however in the true shared value view, more stakeholders/partners exist because more labor is necessary to make the system function. Even with this additional labor, we now have a shortened supply chain were the ‘value’ captured is by the local firm and not the MNC.
Where does the investment come from if not from the MNC or corporation in a PPP? With new financing models emerging within communities around our ever more connected world – multi-partner investments including local/in-country private enterprise, donor agencies, NGO’s, local resources/businessmen, local commercial capital, impact investors, social bonds, local governments, and local communities – all participate in a truly more sustainable and shared value model.