Mapping the Global Environment
Corporate Social Responsibility in Mexico
Corporate Social Responsibility is defined by World Business Council for Sustainable Developments (WBCSD) such as �the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large.”
For the purpose of this essay the actual level of CSR in Mexico will be described followed by the corporate social programmes created by Mexican companies, after an analysis of strategies used by companies in CSR area and finally an evaluation of CSR in Mexico
The development of CSR in Mexico has started only a few years ago, a lack of transparency, access to companies’ information (Idowu & Filho 2009) and consumer organization exists. According with a survey applied to the south west of Mexico most of the managers of the companies found CSR term as the relationship with customers, improve employees relationship or related with marketing area, only a low percentage of them refer to environment or health care, education etc. (Borroso 2007). Therefore CSR is not yet well known by the Mexican population, all these factors limit the pressure that can be applied to those companies with low social responsibility (Weyszig 2004).
Mexican companies have created different organizations in the following areas: environment, education, and health (Idowu & Filho 2009). For the purpose of this essay three corporate social programmes will be listed: �Telethon” supported by companies such as HP, Soriana, DHL, MetLife, Banamex, Telcel, Telmex etc. This organization provides help to people with disabilities (TELETON, 2009).”Grupo Salinas” company established �Movimiento Azteca” organization, its objective is to develop health and environmental care as well as education (Movimiento Azteca, 2009). Finally �Round up”, this is an initiative developed by �ANTAD”, �Fundacion Televisa”, �Monte de Piedad” and �UNETE” in order to provide education to children with low economic resources (Rounding, 2009).
A strong relationship between social organizations and population exists by the fact that Mexican society is very traditional and religion has a strong influence (Weyszig 2004), also it can be considered as a paternalist society (May et al 2007). Therefore the community participates actively, this means that the population contributes by itself with economic donation and volunteer work as well. The way that these social organizations work is by duplicating the amount donated by the community and this is invested in the different objectives of each social organization. All this contribution made by the community is taken by company as tax deduction, this means the money donated by society most of the time goes directly to the company without any invoice or receipt of donation, then the company gives that money to its own social organization and get an invoice that will be used later to deduce taxes (CEMEFI, no date)
During the present research, the corporate social responsibility information found is not fair enough as mentioned at the beginning of this essay a lack of information and transparency exists in Mexico (Idowu & Filho 2009), it does not provide the amount of investment, how the resources are used, successful cases etc., the information provided by the organization is poor and it lacks credibility. Therefore the community cannot realize how these organizations work, the achievements obtained already and in the same way how the contributions made by the community have been invested.
Another highlighted aspect in CSR is the environmental care due the fact that environmental certification and efficiency processes start to be requested to Mexican companies due to the requirement of North American Free Trade Agreement (NAFTA) and Mexico’s membership in the Organization for Economic Cooperation and Development (OECD), for this reason companies are moving to areas where this environmental regulations are not requested (Peinado-Vara, 2004) or in other cases companies stay at the same place even if the pollution produced is excessive and it is also damaging to the people in near areas.
This is the case of the CEMEX company located in an area of Guadalajara Jalisco (Miravalle) where the population develops respiratory problems and eye diseases due to the pollution produced by the cement company, this area has the highest level of pollution in Jalisco (Contreras, 2006). Motorola company is another case to analyse. It has had a branch in Zapopan Jalisco for 40 years but in recent dates the organization left the place. The company produced electronic components and batteries, this generated radioactive waste and heavy metals such as cadmium and thallium, these highly toxic substances were dropped directly to the land where the company was located and now it has been found that all the area is extremely polluted and it is a risk to use the land for human purposes (Llamas, 2008). These two previous cases show the fact that companies are not 100% CSR when they incur in a real investment to solve the damage that they are causing to the society and environment
It is important to not lose the purpose of businesses, the objective of a companies is profits. An article from Economist magazine about globalization argues that �if business that treating their customer and staff well, or adopting a policy of corporate social responsibility or using ecologically friendly stationary will add to their profits, they will do it, otherwise they will not” (Economist 2001h: 4)
Companies are using CSR as a strategy to create a trust environment with customers and suppliers as well as establish a strong relationship between employees and employer in order that the workforce feels part of the company, in this way company is saving costs, employees develop a better work, this turns in more productivity, more sales and customer satisfaction (Alvarez, 2009).
CSR is a competitive advantage for companies due the fact that customers are more likely to buy products from a company with social responsibility (Hooley, et al., 2008) therefore companies are taking advantage of CSR as a marketing strategy in order to enhance their corporate image (Velazquez et al 2009). Also government grants benefits to those organizations that are investing on CSR (CIMEFI, no date)
It is not the responsibility of businesses to look after society, only in the cases where it is affected directly or indirectly by these organizations (Hooley et al., 2008 cited in Donaldson & Preston, 1995, p.523). The main reason that Mexican companies are becoming social responsibility is because this is turned into government benefits and customers show preference to buy products from organizations with CSR.
It has been found according to a study developed by Margarita Tsoutsoura from University of California across 500 firms and data covering a 5 years period (1996-2000) that a positive relationship does exist between company profits and CSR in financial performance (Tsoutsoura, 2004 cited in Waddock and Graves, 1997; McGuire, et al., 1988, 1990; Auperle, et al., 1985).
According to the research developed in the present essay CSR can be described as marketing strategic in order to increase company’s profits, because it is known that customers prefer to buy products from a company with CSR. However companies continue polluting the environment and damaging population around. It is important to mention that companies get benefits from CSR such as tax deduction. Therefore in simple words this is not an altruistic activity this is just business.
References
Alvarez, S., 2009. Social Responsability, companies incentives, The Economist Mexico [online]. http://eleconomista.com.mx/notas-online/negocios/2009/10/07/responsabilidad-social-incentivo-las-empresas [Accessed 10 October 2009].
Barroso, F., 2007. Corporate Social Responsibility from the point of view of company owner UNAM, Mexico DF
CEMEFI (no date) Fiscal Information http://www.cemefi.org/english/content/category/10/43/55/ [Accessed 10 October 2009].
Contreras R., 2006. Breading worse every time: Miravalle. Magazinemx [Online] Availeble at: http://www.magazinemx.com/bj/bjfiles_archivo/contingencia/contingencia.html [Accessed 10 October 2009].
Garcia, J.C. 2006 Neighbours against polluted cement company in Guadalajara. La Jornada [Online] Availeble at: http://www.jornada.unam.mx/2006/02/14/index.php?section=estados&article=039n3est [Accessed 10 October 2009].
Hooley et al. 2008 Marketing Strategy and Competitive Positioning 4th ed, Essex: Pearson Education Limited
Idowu, S. & Filho W., 2009. Global Practices of Corporate Social Responsibility London UK, Springer
Llamas A. 2008 Guadalajara, polluted place. La Gaceta [online] p.4-5 Available at: http://gaceta.udg.mx/Hemeroteca/paginas/518/G518-COT%204-5.pdf [Accessed 10 October 2009].
Mamoun, S., 2005. Examining the Impact of Corporate Commitment to Sustainability, Texas US. University of Texas at Austin
May S., Cheney, G., Roper J., 2007. The debate over corporate social responsibility. New York US. University Press
Movimiento Azteca, 2009. http://www.movimientoazteca.org/ [Accessed 10 October 2009].
Peinado-Vara E., 2004. Corporate Social Responsibility in Latin America and the Caribbean. Washington DC US. Inter-American Development Bank
Rounding, 2009. http://www.fundaciontelevisa.org/compuredondeo/ [Accessed 10 October 2009].
TELETON, 2009. http://www.teleton.org.mx/ [Accessed 10 October 2009].
Tsoutsoura, M., 2004 Corporate Social Responsibility and Financial Performance. . [Online] University of California. Available at: http://smba03.furchescompany.com/files/Corporate_Social_Responsibility_and_Financial_Performance.pdf [Accessed 11 October 2009].
Velazques et al., 2009. Mexico: An Overview of CSR Programmes London UK Springer Berlin Heidelberg