Fashion or future: does creating shared value pay?

Porter and Kramer's () concept of 'creating shared value' (CSV) has attracted considerable attention from business and academics. According to Porter and Kramer, CSV is about creating economic value in a way that also generates value for society by addressing its basic needs and challenges. One of the key assumptions of the CSV concept is that companies will benefit economically through engaging in CSV activity. We test this empirically by developing a proxy measure of CSV based on 26 sustainability performance indicators drawn from a customised database. Based on a sample of ASX 300 companies taken over a 5-year period (2008-2012), we find a strong statistical association between the CSV proxies and a range of financial performance indicators. These companies also tend to be larger and have higher growth opportunities. However, statistical tests of causality indicate that superior financial performance leads to greater CSV activity, rather than CSV activity driving financial outcomes. This finding suggests that successful companies may well be adopting CSV-type practices more as an outcome of management fashion than because of their tangible contribution to the financial performance of the firm.