RESEARCH PROPOSAL
By [Name]
Integration of Shared Value Approach in The Pharmaceutical Industry: A Case of Novo Nordisk Pharmaceutical Company
Introduction
Throughout history, pharmaceutical companies have established their companies to focus more on creating economic and societal value when they provide solutions to critical health problems. For many years, pharmaceutical companies have grown their business serving the affluent markets of North America, Japan, and Europe. The health companies were perceived to grow at the expense of the larger community. Pharmaceutical companies viewed value narrowly optimized short-term financial performance while not considering the needs of other patients. Capitalism was the unparalleled reason why the pharmaceutical companies were more concerned with building wealth, creating jobs, and increasing efficiency (Porter and Kramer 2019, p.4). This narrow concept prevented these companies from achieving their full potential and tapping on the many available opportunities. They later realized that they were missing out on the health needs of billions of patients. This also means many opportunities to innovate and grow in the industry. This changed the entire business trajectory and started to prioritize the undeserving patients. Pharmaceutical companies did not view this as corporate social responsibility since the patients’ income was lower but instead worked out ways to transform their products, manufacturing, pricing, and marketing to make profits and still meet the needs of these patients.
Professor Michael Porter and Mark Kramer first described the shared value concept. They defined the term as “policies and operating practices that enhance a company’s competitiveness while simultaneously advancing the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and economic progress” (Porter and Kramer 2019, p.6). Shared value allows companies to recognize societal needs and not just the economic conditions they are used to. Porter and Kramer (2019, p.5) also note that shared value helps companies identify social harms, for instance, wasted energy, need for training, and costly accidents.
Interestingly, dealing with or handling societal harms does not raise costs for the companies but instead helps them be more innovative and find solutions that later increase their productivity. One of the most common elements of the shared value approach is linking strategy to social goals (Spieth et al. 2019, p.427). Through the shared value concept, pharmaceutical companies will perceive that the remarkable growth of a company and better communities are mutually dependent. Moon and Parc (2018, p.116) argue that shared value as a business strategy will help organic growth and redefine capitalism. Capitalism makes companies narrow-minded and not think about the bigger picture and meet their full potential.
Despite the benefits of the shared value approach, other scholars still think it’s not. Crane et al. (2014) state that shred value overlaps corporate social responsibility (CSR). However, CSR practices are fundamentally taking resources from the business while shared value is aimed at changing how a company operates, its strategies, and its structure. Crane et al. (2014) further confirm that the shared value concept does not resolve the rigidities between social and economic goals. Crane et al. (2014) think that shared value advances how companies perceive their operations while not giving the exact models that need to be used. Dembek et al. (2016, p.231) refer to shared value as a buzzword instead of a theoretical concept. Strand and Freeman (2015) also do not support the idea and think the shared value is an element of stakeholder theory. However, shared value is an approach that can be designed as per any company’s needs.
In terms of the business environment, pharmaceutical companies are relatively dependent on the health and welfare of the community that surrounds them. Companies need to be within thriving communities to have a good demand for their products or services. On the other hand, the community requires a successful company to get jobs, among other opportunities. This shows the interdependent relationship between businesses and the community. Pharmaceutical companies need to consider the needs of the people on a societal level to grow and create more opportunities. Many policymakers have not yet realized the vital relationship between businesses and communities. Hills et al. (2019, p.11) states that companies concentrating on creating jobs, investing, and paying salaries failed to see the bigger picture. Mehera (2017, p.99) agrees with Hills et al. (2019) that companies need to shift their thinking. Mehera (2017) further argues that companies need to take new directions and incorporate society and stakeholders more to create a holistic and multi-level value. In the past, firms operated and distanced themselves from any social issues. Pharmaceutical companies, as discussed earlier, were more inclined to serve the elite individuals and the market. However, this strategy lacks innovation and no clear competitive advantage (Kim et al., 2020, p.381; Rachmawati, 2019, p.264). Companies find themselves in an economic crisis since the communities perceive profits as being taken for granted. Companies also deal with societal issues insignificant when the focus is more on revenue and profits than the overall environment, including the community.
This paper will evaluate the integration of the shared value approach in the pharmaceutical industry: a case of Novo Nordisk pharmaceutical company. Novo Nordisk Pharmaceuticals is a leading global healthcare company headquartered in Denmark. Novo Nordisk is best known for producing diabetes care medications and devices. Recently, Novo Nordisk saw the need to include a different approach to doing business. Novo Nordisk established a research and development center in China to incorporate knowledge by Chinese scientists and be able to make insulin products appropriate for the locals. This initiated the integration process of the shared value concept into how the pharmaceutical company did its business and made healthcare products. Kim et al. (2020, p.379) argue that many companies are transforming to developing value-generating business strategies.
Research Objective
To find out the integration of shared value approach in the pharmaceutical industry: A case of Novo Nordisk Pharmaceutical Company.
The Specific Objectives Include
1. To find out how shared value re-conceives products and markets
2. To evaluate how shared value has affected the reconfiguration of the value chain
3. To examine the effects of integration shared value approach in companies.
Research Questions
1. How has share value approach re-reconceived products and markets in the pharmaceutical industry?
2. How has shared value reconfigured the value chain in the pharmaceutical industry?
3. What are the significant effects of integrating shared value approach in the pharmaceutical industry?
Bibliography
Crane, A., Palazzo, G., Spence, L.J., and Matten, D., 2014. Contesting the value of “creating shared value”. California Management Review, 56(2), pp. 130–153
Dembek, K., Singh, P., and Bhakoo, V., 2016. Literature review of shared value: A theoretical concept or a management buzzword? Journal of Business Ethics, 137(2), pp. 231–267. http://www.jstor.org/stable/24755774
Hills, S., Walker, M. and Barry, A.E., 2019. Sport as a vehicle for health promotion: A shared value example of corporate social responsibility. Sport Management Review, 22(1), pp. 126-141.
Kim, R.C., Saito, A. and Avvari, V.M., 2020. Interpretation and integration of “creating shared value” in Asia: Implications for strategy research and practice. Asian Business & Management, 19(4), pp. 379-406.
Mehera, A.R., 2017. Shared value literature review: Implications for future research from stakeholder and social perspective. Journal of Management and Sustainability, 7(4), pp. 98-111.
Moon, H.C. and Parc, J., 2019. Shifting corporate social responsibility to corporate social opportunity through creating shared value. Strategic Change, 28(2), pp. 115-122.
Porter, M.E. and Kramer, M.R., 2019. Creating shared value. In Managing sustainable business (pp. 323-346). Springer, Dordrecht.
Rachmawati, T., 2019. Creating shared value (CSV): The sustainable business model. International Journal of Innovation, Creativity and Change, 8(9), pp. 262-269.
Spieth, P., Schneider, S., Clauß, T. and Eichenberg, D., 2019. Value drivers of social businesses: A business model perspective. Long Range Planning, 52(3), pp. 427-444.
Strand, R., and Freeman, R.E., 2015. Scandinavian cooperative advantage: The theory and practice of stakeholder engagement in Scandinavia. Journal of Business Ethics, 127(1), pp. 65–85