Sustainable value creation. From a country to a corporate perspective

introduction This book is the third part of a trilogy including another two previous researches aimed at investigating the rapid development of the concept of “value”, as a corporate value, driven by the tumultuous and incessant change that is characterising the economic environment, both at corporate and a systemic levels. These previous researches were published in two books, that have inspired two well-attended and challenging Conferences in the Aula Magna of Bocconi University in 2010 and 2011. In the first book the processes and the relations that characterise “global production networks” were qualitatively analysed. In particular, the analysis was conducted by examining more closely three relevant economic sectors: coffee, cosmetics and manufacturing. With the second book, we have tried to go beyond qualitative observations concerning “sustainable value” following the stakeholder theory, as opposed to the generation of profits and cash flows in the short-run only, according to a short-sighted corporate perspective. In this regard, the analysis has paid attention to the wide sphere of stakeholders relating to them - employees, customers, suppliers, financial partners, State, local authorities and public administration, natural environment and local communities, in addition to shareholders only – as refereed by the CSR-SC project, begun in 2002 by the Italian Welfare Ministry (Perrini and Tencati, 2008). The results showed that “socially responsible” companies are about as efficient as those that are not “socially responsible” in the short-term, but generate more “value” in the future, that will assure these companies to be more competitive and operate more effectively than the latter. 13 Sustainable Value Creation The present book aims to improve the discussion on “sustainable value” in management in a double perspective. First, we have conducted a thorough empirical analysis, based on a time span of 7 years from 2005 to 2011, to identify if a possible relationship between a “sustainable value” approach and economic and financial perspectives of firms can be identified. Second, the book is presented in two parts. While the second is specifically dedicated to the just mentioned empirical analysis and to a review of the literature related to analytical work conducted at a corporate level, the first part of the manuscript ventures into an ambitious comparison. Have the concepts of “value”, “wealth” and “richness” been changing, not only in firms, but also at a systemic level, that is, from a country standpoint? Over the last years, continuous rigorous studies have been conducted to come to alternative indicators of gross domestic product (GDP), that is not able anymore to identify appropriately “how much value” a country is able to generate. Among these studies, the proposal advanced by the French government in 2009 has been under the spotlight, essentially for the standing and notoriety of the three scholars who have been charged to head the Commission: Joseph Stiglitz, Amartya Sen and Jean-Paul Fitoussi. The first part of our book does not aim to “give answers”, but just to cast light on the more and more evident interactions that are established between the corporate and systemic levels, and the need for a convergence on the reassessment of concepts like “value” and “wealth”, and their role in the long-term survival of these different organisational entities. According to these preliminary remarks, the book is structured in two main parts. Part I reassesses the concept of ”value” from a country/systemic perspective, while Part II aims to reach the same goal, but from a corporate standpoint. Part I includes two chapters; Chapter 1 reviews the main indicators used by national States to account for “the richness” they create. After the definition and limits of the Gross Domestic Product (GDP) are presented, the chapter proposes a move from an economic to a sustainable approach, by examining the most common alternative indexes used to balance the more and more obvious drawbacks included in the GDP formula. Chapter 2 reviews the trend of GDP and alternative indicators such as ISEW over time, both in developed and developing countries, by pointing out some interesting considerations about the trade-off between short-lived competitiveness and long-lasting wealth. Part II comprises also two chapters; Chapter 3 carries out an extremely detailed analysis of the academic contributions available on the new concept of “value” at a corporate level, thus examining the role of Corporate Social 14 Introduction 3 Responsibility and Stakeholder Theory and their supposed relationship with economic and financial performances of firms. The chapter also includes an examination of the criteria used to come to a sustainable/ethical rating of a company, as the resulting scores are an important input that we have used in the analysis presented in the following chapter. Chapter 4 includes the results of a thorough empirical analysis conducted on 111 European companies that have undergone a nonstop sustainable/ethical rating procedure, over the period from 2005 and 2011. The objective of this work is to evaluate whether a connection between socially responsible behaviour of firms and whether their economic and financial performance can be identified or not. The findings are particularly interesting as they are derived from an analysis conducted over the years affected by the heaviest and stricter financial crisis of the last decades, in which the financial function has probably not acted only as the victim, but to a large extent, also as the reason. Many people have contributed to make this book possible. First, many sincere thanks to Laura Taveggia, for her irreplaceable work, without which we could not have carry out this project. We thank the students and interns who have helped in the data collection phases and in the editing of the book, and particularly: Giordano Perico, Mariano Mamertino, Stefano Miola. A special acknowledgment to Francesca Ada Pra who has shown her enthusiastic involvement in the project, and has also co-authored a chapter. Grateful thanks to Sara Alberti, whose experience and carefulness have been precious, Federico Siano for his valuable contribution throughout the work, and Davide Gremmo for his contributions in the sample construction in Chapter 4. We also thank E. Capital Partners (ECPI) for providing us all sustainabilityrelated data used in the empirical analysis.