Value

The concept of value is a multidisciplinary one, which is defined and referred to in many different ways. A value allows people to understand why individuals, communities, and organizations prefer and esteem some things over others. Generally speaking, a value is a difference that distinguishes the acceptable from the unacceptable. Values are defined by the difference they make, and since this difference is not perceived as the same and equally important to everybody, values cannot be considered to be objective. As a product of subjective emotions, attitudes, and belief systems, values lack a strict inner argumentative logic.

Values in a broad sense refer to the core set of beliefs and principles that are deemed to be desirable by individuals or groups. Anchored in the cultural community in which we belong, values are considered to provide continuity in our lives and the way we think, believe, and act with one another from one generation to another. Basic features of values are described by Shalom Schwartz and Wolfgang Bilsky as concepts or beliefs about desirable end states or behaviors that transcend specific situations, guide selection or evaluation of behavior or events, and are ordered by relative importance. This entry first discusses key perspectives of human values and their importance in social life, organizational values, and values-based management. It then discusses communication about value, the stakeholder value perspective, and the concept of creating shared value.

Perspectives on Value

From an ethical perspective, value is about what is considered to be right and wrong. For example, in most cultures, the idea of treating people with respect and dignity is a value. Values thus guide and influence our behaviors and attitudes. Moreover, values encompass an obligation restricting our behavior. Treating people with respect and dignity implies that there are things we feel like doing but do not do for moral or ethical reasons. According to Emmanuel Kant’s moral philosophy, there are two kinds of values based on two different types of valuation. There are things that have a price and that can be replaced by something equivalent, while other things are considered to be above price, because they do not have a replaceable equivalent and are therefore not exchangeable. These things have a dignity. This brings another embedded distinction into the arena: the distinction between intrinsic and relative value. Relative value is attributed to things that are valued as a means to achieving something (pride, prestige, profit, etc.). Intrinsic value on the other hand is attributed to something representing an end in itself (dignity, honesty, care, etc.). People value means by using them, adding an element of utility to the thing valued, but they value dignified persons by respecting them as an act of honoring them for what they are in themselves.

From a sociological perspective values are conceptions of the desirable. Values are used as one criterion for judging which desires we consider legitimate and worthwhile and which we do not. Values articulate what we maximally want from life for the minimum of sacrifice and effort. In this understanding, value implies a social relation of property. The value of buying a car, for instance, is less the right to use this car for the buyer as his right to prevent others from using it and a recognition of this right. From an economic perspective, value is not addressed in terms of its social implication, or even of its price per se. Hence, value is reduced to an object whose (market) value is estimated in terms of what buyers are willing to pay for it.

From a psychological perspective, value is best described with reference to Schwartz’s comprehensive structure and identification of human values as motivational priorities that are considered to be common to people across cultural communities. Schwartz’s value structure model (see Figure 1) categorizes basic types of subvalues in two higher-order dimensions of values: self-transcendence (universalism and benevolence) versus self-enhancement (hedonism, power, and achievement), on the one hand, and openness to change (stimulation and self-direction) versus conservation (tradition, conformity, and security), on the other. Hedonism taps into self-enhancement as well as openness to change, which explains the dotted lines on either side of this particular subvalue. While self-transcendence values focus on the acceptance of others as equals and concern for their welfare, self-enhancement values are in opposition to these, stimulating self-success and concern for oneself. Openness-to-change values prioritize change and independence of thought, feeling, and action while conservation values are driven by the opposite, calling for self-restriction, stability, and tradition. The model represents fuzzy transitions of where conceptually convenient decisions end and others begin. The contribution of Schwartz’s value model has first and foremost been acknowledged as a way to explain how different value structures are likely to motivate individual behavior in particular contexts, such as consumers’ purchasing pattern and behaviors toward particular brands and products.

Figure 1 Schwartz’s Theoretical Model of Relations Among Motivational Types of Values

Source: Schwartz (1994, p. 24).

Organizational Values

A general underlying premise of values is that they constitute a guide to matters of decision making and action and that this guidance is used to satisfy desires and needs. This is also reflected in values addressed at the organizational level. Organizational values can be framed as socially shared cognitive representations of institutional goals and demands. Providing the decision rules for how to interpret an organization’s numerous and complex signals, organizational values allow us to know what is important for the organization to accomplish its goals (mission and vision). The values of an organization thus articulate and define its identity, culture, structure, and strategy. The values are set by the top management and are typically stated explicitly in corporate documents such as corporate websites, annual reports, corporate advertisements, and so on, whereas organizational identity and culture emerge from shared experiences and social practices. The values may be seen as guiding themes for a company’s brand personality and the positioning of brands, which are part of the corporate strategy and culture. The corporate brand of an organization communicates organizational values that are inherent in and associated with the corporation, differentiating it from competing brands and enhancing the esteem and loyalty for the organization in the eyes of its stakeholders.

From Organizational Values to Values-Based Management

Most organizations have established values, but not all organizations make explicit use of their values as an instrument or framework of management. Values-based management uses organizational values as a proactive means of monitoring and strategizing day-to-day practices and operations. The characteristics of values-based management and brand building are the integrated common approach to management as omnipresent in the entire organization across sections and members as a way of achieving organizational goals. This common approach is shared by all members and based on core values, influencing the entire organization and the corporate brand. Consequently, the core values need to be monitored and maintained. Some rules of thumb thus determine the success or failure of values-based management:

• Commitment to the agreed values from senior and middle management through the organization
• Implementation of interactive communication ensuring employees’ engagement in sensemaking and co-creation processes, encouraging them to enact the values in their daily work
• Availability of resources in support of effective application of values in daily decision-making processes
• Organizational ownership, ensuring the full involvement and support of all members of the organization
• Enforcement of value consistency, providing stability of systems, behaviors, and structures

Values-based management is generally practiced as a corporate brand–building strategy primarily aimed at enhancing employee engagement and commitment within the organization. In case employees do not consider the values to be important, true, and acceptable, the organization risks internal division and conflict, which may lead to loss of corporate legitimacy and reputation among internal as well as external stakeholders. Consequently, values-based management is closely related to stakeholder management and stakeholder engagement.

Value Communication and Stakeholder Value

With the growing interest in corporate social responsibility (CSR) and the increased pressure on businesses to contribute to society, organizational values and the communication hereof have gained renewed interest. Accordingly, organizations are increasingly integrating social issues and ethics into their organizational values and corporate communication activities. Most organizations have integrated morality concepts such as trustworthiness, respect, responsibility, care, and citizenship into their value statements as a way of demonstrating their interest in stakeholder concerns and the environment in which they operate. It is not uncommon to meet identical value concepts in different organizations. Studies even show that entire value statements may be replicated from one organization to another across sectors and industries.

There are different reasons for the similarity in values among organizations. First, organizational value statements generally consist of concepts with positive connotations. It is thus unlikely for organizations to present themselves as incompetent, unskilled, or careless. Although there might be situations where organizations find it difficult and struggle to live up to their value statements, they are forced to pretend that they can in order not to lose their legitimacy. This brings in a well-known communication dilemma in CSR: the corporate self-promotion paradox. Because of the structures and complexities in the business environment, it is impossible for organizations to predict what is happening along their value chain, such as fluctuations resulting from legal, political, or social problems in the environment of remote suppliers, for instance, or critical voices from consumer activists. Accordingly, there may not be a total fit between the walk and the talk in organizations at all times, leaving corporate statements to be conceived as empty labels of illusion. A typical example of this is when organizations describe their CSR activities in philanthropic and altruistic terms, trying to hide the fact that extrinsic motives such as profit and/or reputation enhancement drive them to engage in CSR. This may cause skepticism among stakeholders and, at worst, public allegations of green-, blue-, or pinkwashing. These “washing” concepts are generally used by stakeholders to criticize companies and organizations that make unsubstantial CSR claims as a means to (a) promote environmental initiatives in order to boost their eco-credentials (greenwashing), (b) improve their reputation by concluding partnerships with the United Nations Global Compact initiatives (bluewashing), or (c) promote consumer goods and services using the pink ribbon symbol in support of breast cancer charities (pinkwashing).

Second, an explicit vague, generic, and abstract framing of the organizational values may be used to protect the organization against stakeholder criticism and disbelief. Value statements are based on emotional rather than objective persuasive strategies. As communicated forms of expectations for the right actions, without necessarily determining these actions, organizational values are unable to provide a clear and precise locus of action. For this reason, stakeholders’ claim for action and for rational support is reduced. The advantage of abstract values is that they allow organizations to express their identity without dismissing contradictory expectations of stakeholders. This communication exercise enables organizations to handle the embedded complexity of stakeholder management: coping and complying with conflicting stakeholder interests. Values are thus a way for organizations to deal with the fuzziness and complexity of both the organizational and the societal environment. The following portion of Unilever’s (n.d.) purpose and principles statement serves to illustrate how this fuzziness plays out: “Always working with integrity. Conducting our operations with integrity and with respect for the many people, organizations and environments our business touches has always been at the heart of our corporate responsibility.”

What we can deduct from working “with integrity and with respect” is that Unilever is a company that can be expected to operate in a correct and honorable way and with concern for the people to whom it relates. However, the specific operations and activities and for whom they are done are not described. They thereby become uncontroversial at the communication level. Although one of the most important challenges in stakeholder management is how to balance the needs, expectations, and interests of different stakeholder groups, it is wise to leave this out in corporate value presentations.

With the current attention on stakeholder management, creating value for stakeholders has been a hot issue, along with the growing CSR agenda. Businesses that are not willing to create value above shareholder profit are no longer highly esteemed in their business environment and risk losing their license to operate. Accordingly, studies in stakeholder management tend to focus on how to replace a narrow and centric stakeholder view with a more dynamic and relational perspective of stakeholder management and engagement. Recent approaches have thus paved the way for showing how organizations can co-create value with their stakeholders. On the one hand, importance is attributed to the capacity of organizations to pay attention to not only which particular values and benefits they may gain from taking particular social initiatives or engaging in particular joint social projects and partnerships but also what benefit is gained by the stakeholders. For instance, if a bank decides to develop and sponsor a public school program on household budgeting, providing teaching material and lectures, specific functional benefits and values might be attributed to important stakeholders. The children might be enabled to acquire particular skills that would otherwise have been excluded from their curriculum, employees might feel committed to their work and engagement with their workplace, and investors might feel good about making socially responsible investments. Integrating a stakeholder value perspective into the social management and practices of the organization improves its opportunity to engage in mutually beneficial partnerships and potential social innovation projects.

From Stakeholder Value to Shared Value

Creating shared value (CSV) is a concept launched by Michael Porter and Mark Kramer. Criticizing businesses for considering value creation from a narrow and short-term financial performance perspective, Porter and Kramer encourage businesses to pay more attention to the major premises of their long-term success, such as the well-being and needs of their customers, the viability of their key suppliers, environmental resources, and the economic situation of the market where they operate. Their preoccupation is how to create economic value in a way that also creates value for society by addressing its needs and challenges. The basic idea behind CSV is that corporate policies and practices may be established in a way that stimulates businesses’ competitive advantage and profitability while advancing the social and economic opportunities in impoverished communities. Their key argument is that businesses’ role in society is to act as businesses and not as charity donors, pointing out that businesses are a powerful force to solve Third World economic and social problems through creating the right foundation for growth. Creating both economic and societal value is addressed as an achievable goal rather than as a contradiction in terms. A reconceptualization of products, markets, productivity, and local development is suggested as a new framework for reinventing capitalism for the benefit of both businesses and the communities in which they operate.

The CSV approach is acknowledged by management scholars and practitioners in large multinational corporations who have already initiated innovative social joint projects with partners in their supply chains. However, critical scholars have pointed out that it is not without challenges to conceive the CSV approach from a society-business win-win perspective and as a solution to help reduce the growing imbalance between rich and poor populations. They doubt that social and economic goals can go hand in hand and expect that corporations may tend to invest more in showing off their willingness to transform complex societal problems than actually taking care of these problems. Besides, the critics hold that there is nothing new in urging businesses to create shared value and that advocates of CSV seem to ignore the fact that even before CSR became mainstream, the legitimate purpose of businesses was not restricted to generating economic value for shareholders. Hence, the reductionist view of the purpose of businesses is reproduced in the CSV approach.

Conclusion

Values are core sets of beliefs and principles that guide the desires and behaviors of individuals or groups. Values help in producing continuity in our lives. They allow us to understand why individuals, groups, communities, and organizations value some things over others. In an organizational setting, values refer to socially shared cognitive representations of institutional goals and demands. The values of an organization thereby articulate and define its identity, culture, structure, and strategy. Most organizational values are communicated by means of abstract and imprecise concepts, which due to their vagueness are uncontroversial and thus unlikely to create disbelief and skepticism among stakeholders. Values consequently enable organizations to deal with the fuzziness and complexity of their environment. With the growing focus on CSR and businesses’ role in society, creating stakeholder value has become a crucial corporate issue.