Social Innovation for Business Success: Shared Value in the Apparel Industry by Julia Schmitt

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Social Innovation for Business Success: Shared Value in the Apparel Industry
By Julia Schmitt
Social Innovation for Business Success: Shared Value in the Apparel Industry

Table of Contents
Preface (Geleitwort) ........................................................................................................V
Table of Contents ......................................................................................................... VII
Index of Figures ............................................................................................................ IX
Index of Tables ............................................................................................................. IX
List of Abbreviations .................................................................................................... XI
1 Introduction ............................................................................................................. 1
1.1 Relevance of Topic .......................................................................................... 2
1.2 Objective and Course of Research .................................................................. 3
2 Understanding Social Innovation ............................................................................ 5
2.1 The Conceptualization of Social Innovation ................................................... 5
2.1.1 Social Innovation in the Literature ......................................................... 5
2.1.2 A Definition of Social Innovation .......................................................... 8
2.1.3 Differentiation of Social Innovation from
other Innovation Concepts ...................................................................... 9
2.2 Diffusion of Social Innovation ...................................................................... 11
2.2.1 Diffusion in Social Innovation Literature ............................................. 12
2.2.2 Diffusion in Systemic Innovation Literature ........................................ 13
2.3 Critical Review of Social Innovation ............................................................ 16
3 Understanding Shared Value ................................................................................. 19
3.1 Historic Antecedents of the Shared Value Concept ...................................... 19
3.2 Definition and Building Blocks of the Shared Value Concept ..................... 22
3.3 Critical Review of the Shared Value Concept ............................................... 25
3.4 Shared Value as Basic Social Invention ........................................................ 28
4 Development of Research Design and Methodology ............................................ 31
4.1 Development of the Research Design ........................................................... 31
4.2 Methodology .................................................................................................. 33
4.2.1 The Expert Interview as Research Methodology .................................. 33
4.2.2 Development of the Interview Guideline ............................................. 38
4.2.3 Procedure of Interview Analysis ........................................................... 40
5 Findings of the Empirical Study ............................................................................ 43
5.1 Findings on Social Innovation ....................................................................... 44
5.1.1 The Understanding of Social Innovation .............................................. 44
5.1.2 The Diffusion of the Basic Social Invention Shared Value .................. 45
5.2 Findings on Shared Value.............................................................................. 48
5.2.1 Reconceiving Products and Markets .................................................... 51
5.2.2 Redefining productivity in the value chain ........................................... 54
5.2.3 Enabling Local Cluster Development ................................................... 59
5.2.4 Success Factors and Obstacles .............................................................. 63
5.3 Discussion of Findings .................................................................................. 66
5.3.1 Discussion of the Findings on Social Innovation ................................. 67
5.3.2 Discussion of Findings on Shared Value .............................................. 69
6 Conclusion ............................................................................................................. 77
Bibliography ................................................................................................................. 79
Annex ............................................................................................................................ 91

Index of Figures
Figure 1: The multi-level perspective on transitions .................................................... 15
Figure 2: Shared value as an extension to stakeholder and shareholder value ............. 27
Figure 3: The quality criteria for qualitative content analysis ...................................... 41
Figure 4: Ways of influencing the value creation practices within the fashion market ..... 46
Figure 5: Overview on the three dimensions of value created by
the sample companies ................................................................................... 49
Figure 6: The value creation tree. ................................................................................. 75

Index of Tables
Table 1: Overview of the research sample. ................................................................... 36
Table 2: Overview of main findings ............................................................................ 43
Table 3: Interpretation key to the quantity of statements ............................................. 44
Table 4: Success factors for creating shared value ....................................................... 64
Table 5: Obstacles to creating shared value. ................................................................. 66

List of Abbreviations
CEO Chief Executive Officer
CFP Corporate Financial Performance
COO Chief Operations Officer
CSP Corporate Social Performance
CSR Corporate Social Responsibility
GIZ Gesellschaft für Internationale Zusammenarbeit
ILO International Labour Organisation
IVN International Association of Natural Textile Industry
NGO Non-governmental organization
PPP Public Private Partnership
SME Small and medium sized enterprises

1 Introduction
Globalization changes the basic framework conditions of corporate value creation activities. Technological developments not only allow for the internationalization of production, but also lead to better informed customers about the production standards of the goods they purchase. In this context, the apparel industry increasingly comes into public focus. This industry has been frequently criticized for its labour rights violations with regard to overtime hours, safety, and health issues (Tagesthemen, 05.09.2011: minute: 00:20:14). Similarly, it has been attacked for its external effects on the environment. Chemical effluents from textile factories pollute rivers and drinking water reservoirs (Greenpeace, 2011: 6). Also, the chemical sprays in cotton agriculture not only affect ground water quality, but also cause the death of several thousand cotton peasants a year (Environmental Justice Foundation, 2007: 10). On the other hand, the chemicals affect the customers that wear the garments. Customers are affected by some textile colours that may cause diseases as serious as cancer (Kneer, 2008: 3). However, inconsiderate value creation activities are not limited to the garment industry – they are rather the standard of all business activities today. This did not only give rise to the current debate on corporate sustainability, and changing customer preferences, but also to a shift in strategic management theory – namely, the creation of the shared value concept. Michael Porter and Paul Kramer (2011) argue that companies miss business opportunities by pressuring workers and the natural environment. This thesis seeks to provide a profound understanding of the socially integrative value creation approach, shared value, and underlines its effectiveness for corporate value creation. Meeting fundamental societal needs, the concept of shared value may thus be considered a basic innovation in management.


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