The research objective of this research is to theoretically identify the capabilities organizations need to have to create and sustain social value. We focus on multinational enterprises as this type of organization has much influence worldwide and in local communities. We use the High-Performance Organisation (HPO) Framework in our research as it provides the characteristics organizations need to have in order to achieve sustainable excellent results: results that should include the creation of social value. We find that theoretically the majority of the 35 HPO characteristics in the HPO Framework influence one or more of the social value components positively. In the next, empirical, stage of our research, we will investigate whether the positive relationship between HPO and the creation of social value in practice holds true. This will be evaluated in a follow-on pilot study at two multinational enterprises.
Keywords: Social Value, HPO, Organisational Capabilities, ESG, EDI, CSR
Society increasingly looks at the business sector to create social value, as organizations in general possess the financial, technological, and managerial resources that can be used to deal with social issues (Hasan, 2018; Rygh, 2020). In addition, because of the various (financial and corporate) scandals in the business world during this decade, society increasingly expects businesses to no longer only focus on creating economic value for their shareholders (Samans & Nelson, 2022; Weissbrod & Bocken, 2017) but also on achieving social value for its many stakeholders (Adrian & Anggiani, 2020; Rygh, 2020).
One of the developments in this respect is the UK Government that now demands of its suppliers that these need to show in their product and service proposals how they are going to create social value in one or more of the themes of COVID-19 recovery (help local communities to manage and recover from the impact of COVID-19), tackling economic inequality (create new businesses, new jobs, and new skills; increase supply chain resilience and capacity), fighting climate change (effective stewardship of the environment), equal opportunity (reduce the gender and disability employment gap, tackle workforce inequality), and wellbeing (improve health and wellbeing, improve community integration) (Government Commercial Function, 2020). More governments worldwide are expected on short notice to follow the UK’s example (Gidigah et al., 2022).
Social value creation by multinational enterprises (MNEs) is of special interest because this type of organization has much influence worldwide and in local communities. The interest is reflected in calls for research such as of Rygh (2020) who states that it is important to study shareholder and stakeholder governance affects MNEs’ social value creation strategies and outcomes. In order for MNEs to effectively create social value, they have to increase and strengthen their capabilities for social value creation (Riikkinen et al., 2017; Sinkovics & Archie-Acheampong, 2020; Varga & Csiszárik-Kocsir, 2019; Wettstein, 2012). In fact, previous research has shown that when MNEs do not develop these capabilities to a sufficient level, their initiatives to create social value actually often fail, produce unintended (negative) consequences or even result in loss of social value (Bocken & Short, 2016; Sinkovics et al., 2014; Sinkovics et al., 2015; Sinkovics et al., 2016). Thus, according to Van Tulder et al. (2021), is no longer the question of ‘why’ MNEs should develop social value, but rather a question of ‘how’.
Unfortunately, in the current literature limited research can be found into the capability’s organisations need to create social value but MNEs were not the topic of investigation. For instance, Weissbrod & Bocken (2017) conducted a case study into the connection between lean startup thinking, triple bottom line value creation, and organizational capabilities but in at a clothing company; Urban & and Gaffurini (2017) determined how different organizational capabilities are related to social innovation specifically in social enterprises; Da Silva et al. (2021) examined the role played by dynamic capabilities and business model innovation but in international social purpose organizations; Wójcik et al. (2022) investigated the micro-foundations of an organization’s dynamic capability for social responsibility but specifically for a business-nonprofit collaboration; and Salim et al. (2019) made a systematic review of the internal capabilities for enhancing eco-innovation performance but strictly of manufacturing firms. Thus, Samans & Nelson (2022) conclude that commitment to the principles of social value creation is growing but that the practice of actually achieving social value is still developing. They state that the current gap between aspiration/commitment and implementation/ results has to narrow because otherwise organizations, including MNEs, will keep coming up short in their efforts.
Our research objective, therefore, is to identify the organizational capabilities MNEs need for creating and sustaining social value. For the identification process, we will use the high-performance organization (HPO) framework (de Waal, 2012a+b, 2020), which is a scientifically validated framework (Do & Mai, 2020) with which an organization can evaluate the capabilities it needs to achieve excellent results.
An HPO is defined as an organization that achieves financial and non-financial results that are exceedingly better than those of its peer group over a period of five years or more by focusing in a disciplined way on that what really matters to the organization (de Waal, 2021). As creating social value can be seen as a category of organizational results, our proposition is that becoming an HPO will aid in creating social value. In addition, the HPO Framework has been used in earlier research to study the relation between capabilities, high-performance organizations, and organizational performance (Al-Shummary et al., 2016; de Waal, 2012b; Honyenuga et al., 2019; Mukif et al., 2020; Pattanasing et al., 2021, 2022). It has also been applied in the context of MNEs (de Waal, 2012b; de Waal & Hanna, 2016; de Waal & Schreurs, 2017). In this article, we will theoretically link the HPO Framework to the various components of social value, to show that there are many links between the two. In a follow-on study, we will empirically test these connections at several pilot MNEs. The contribution of our research is therefore initially theoretically as it will expand the literatures on social value, high-performance organizations, and MNEs.
The remainder of this article is structured as follows. In the next two sections, the concepts of social value and social value creation are described and the HPO Framework is introduced. This is followed by a section describing the results of the matching between the HPO Framework and the components of social value. The article ends with a conclusion, limitations of the study, and future research opportunities.
2. Literature Review: Social Value and Social Value Creation
‘Social value creation’ can be defined as the process that results in the creation of something of value for society (Dietz & Porter, 2012) or providing solutions to social problems (Dacin et al., 2011) while altering existing social structures (Mair & Marti, 2006). The definition of ‘social value’ itself is a bit more controversial as there currently is not a universally accepted one (Gidigah et al., 2022; Rygh, 2020). This is because the social value is a complex concept with a subjective nature (Choi et al., 2014): its definition basically lies in the eyes of the beholder (Russel, 2013). For example, Farag and McDermott (2015) consider the social value to be a soft non-financial benefit of work and investments (which includes individual and community well-being); Oanh (2019) adds that it is the value created through human activities aimed at benefiting disadvantaged and marginalized people and the community at large. In the same vein, Westell (2012) sees social value as a positive social change that prevents negative social changes in the life of people. Opoku and Guthrie (2018) stress the sustainability aspect of social value, in the sense of creating positive social, environmental, and economic impacts on a community and the people who live in that community. Russel (2013) explained social value as the benefit of activities performed by an organization for its stakeholders, while Halloran (2017) and Daniel & Pasquire (2019) look broader at the concept by stating that a community and its inhabitants obtain social, economic and environmental benefits from organizations operating in that community. Another explanation, by Awuzie et al. (2018), is that social value is the outcome of publicly funded investments and programs aimed at local communities such as employing local suppliers and workers. Going in a different direction, Sinkovics et al. (2015) reconceptualize social value creation as the alleviation of social constraints that prevent individuals from achieving the three development values of sustenance, self-esteem, and freedom from servitude. Finally, a nice summary is provided by Jain et al. (2019) who state that social value is expressed in changes in…