Economic and Social Value

Reply to two prompts in 100 words each. No sites needed, these are just thoughts on the prompts.

(Original prompt for you consideration,

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Discuss the difference between economic value and social value or the shared value creation framework.

Why do you think organizations tend to focus on the creation of one type of value but not both? )

Prompt 1: Economic value is the difference between the amount in which someone will pay for a product and the cost to produce the product. This number can change based on the cost of production versus the the demand for the product. While economic value focuses on the financial side, social value deals with societal needs. I think that in a perfect world, a company would focus on economic value and social value equally. But since businesses need capital to survive and grow, they tend to focus on the economic value. However, as companies grow, they tend to have an effect on the workings around them. This is where the social value begins to grow. Larger companies need to worry about their social standing (or value). They will have an effect on the society they reside.

Prompt 2: The definition for economic value is stated to be, “the value that person places on an economic good based on the benefit that they derive from the good”. Social value is stated to be, “the quantification of the┬árelative importance that people place on the changes they experience in their lives”. From these definitions, I would argue that the difference between economic value and social value is economic value is viewed from the perspective of a person on how a product would benefit the economy or grow the economy. While social value is viewed from the perspective value of an individual’s life, meaning how a product or service could benefit them personally.

For a company to focus on both economic value and social value, a possible conflict could occur. Not everything that is beneficial to the economy is beneficial to an individual person. I would ask, how could focusing on both values benefit a company? Maybe in the long term focusing on the economic value could benefit the social value, but it could not happen right away.

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