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Top1. Introduction
Since the advent of industrialization, maximization of shareholder value has been a major driving force for survival and success of business organizations. However, with the growing ecological concerns of today’s natural environment, environmental sustainability has come to become a source of competitive advantage (Kiron et al. 2012) and research in Sustainable Value (SV) creation brings out the relationship between natural resource-based view and the sustained competitive advantage (Hart, 1997). Environment is a public good, so there is a crucial need to bring in the perspective of other stakeholders in creating value (Hart, 1995). Following the literature on SV, it may be noted that it constitutes creating value that is economically, socially and environmentally responsible. This translates into the need of including all the stakeholders who get directly affected by an organization’s activities when speaking about SV creation
The stakeholder theory postulates that the purpose of a business is ‘to create value for all stakeholders’ (Freeman et al. 2010).The sustainability management concept urges companies to provide ‘an important contribution toward sustainable development of the economy and society’ (Schaltegger & Burritt, 2005). Both the concepts thus, as brought out by Hörisch et al. (2014), extend the view beyond short-term shareholder value maximization or accounting-based profits to ‘share a broader understanding of the embeddedness, dependencies, obligations, abilities, and possibilities of companies’.
Trevisan et al. (2012) define co-creation as ‘a process of value creation sequence involving different stakeholders, such as supplier networks, customers and others’. Co-creation has always existed, however its potential is much greater today since now the ‘world is flat’ (Friedman, 2006), thus enabling greater engagement with an organization’s stakeholders across the globe. The purpose of this paper is to bring out that the need of the hour is to co-create SV with all its stakeholders. To this end, an organization must increase the stakeholder participation in organizational decision-making. To thus integrate the view of all stakeholders, organizations have to develop effective mechanisms for Stakeholder Engagement (SE) through which they would be able to co-create SV with them.
Such a scenario prompts two questions:
- 1.
How are stakeholders enabled in playing a contributory role in co-creating Sustainable Value?
- 2.
Which particular Stakeholder Engagement dialogues will help organizations co-create maximal Sustainable Value?
The paper is structured as follows: Section 2 presents the literature background, followed by Section 3 which details the methodology employed in this paper. Section 4 presents the propositions, findings and discussions regarding co-creation. The propositions build on Hart and Milstein’s (2003) Sustainable Value framework to propose a 4x4 grid for Co-creation with Stakeholders and the paper demonstrates the validity of each cell by analyzing relevant real-world organizational examples and discusses each proposition with respect to one organization before presenting conclusions, recommendations and future research directions in section 5.