Corporate Social Responsibility in Latin America: Trends and Challengers

Abstract

This chapter analyzes corporate social responsibility (CSR) programs in Argentina, Brazil, Colombia, and Chile from a stakeholder perspective from 2015 to 2023. The analysis focuses on the trends in their implementation and the challenges faced by these companies in all five dimensions of CSR. The study uses a qualitative approach to collect and interpret information. We examined 150 reports and 130 CSR programs from different organizations, such as supranational agencies, governments, business associations, and companies. One of the main findings is that CSR initiatives are adapting to the specific characteristics of the environment and philanthropic tradition. Moreover, the three main challenges to the implementation of CSR programs are identified: Lack of infrastructure, weak institutional capacity of the government, and a hostile environment for businesses.

1. Introduction

Seventy years have passed since the first publication on the responsibility of companies toward society, which marked the beginning of the concept of corporate social responsibility (CSR). Since then, a large debate on the definition and nature of this subject has developed in the scientific literature in management and business; academics and practitioners seem to have renewed their interests in the topic propitiating several perspectives, methodologies, and models [1, 2].

As a result, CSR is a concept with multiple interpretations and its significance varies depending on the perceptions of different stakeholders, as a result, CSR has evolved into a concept with multiple interpretations and its significance varies depending on the perceptions of different stakeholders, causing confusion among the various actors who have studied phenomena like CSR but not CSR [1, 2].

In the last thirty years, various studies have demonstrated the epistemological evolution. While the results did not align with the normative orientation of CRS, they could not definitively establish the prevalence of either the progressive or variegation perspectives. However, with further research, we can provide evidence on this issue [1, 2, 3, 4, 5, 6, 7, 8, 9, 10].

One aspect of CSR is the voluntary commitment made by companies to address social demands and environmental challenges. A socially responsible company must cater to the needs of all its stakeholders by generating wealth, respecting laws and regulations, implementing fair work policies for its employees, contributing to the regeneration of natural resources, respecting human rights, and providing solutions for social well-being [1, 2, 3].

Refs. [11, 12, 13, 14, 15, 16] assert that CSR provides numerous benefits to businesses, their environment, and stakeholders in developing countries. It enables companies to attract new customers and cultivate a positive image by contributing to society in a sustainable and ethical manner. CSR is a strategic approach that generates value for businesses and stakeholders by promoting equitable and responsible practices.

Scholar progress and the implementation of CSR actions in emerging countries, on the other hand, are contradictory: In some Asian countries, it is a growing movement, while in Latin America it is still at an early stage. However, it is important to strengthen the institutional capacity of governments, encourage the participation of civil society, change the business climate, and propose an agenda for each country [4]. Latin America’s scholarly debate focuses on the relevance of adopting CSR models formulated in developed economies, whose contexts are different and whose social needs have their specificities.

The study is motivated by the need to expand the theoretical framework of CSR for its correct application in Latin American companies. Analyzing the CSR programs implemented in Latin America is crucial to establishing an academic agenda that strengthens existing theoretical frameworks and generates models in the Latin American context.

This chapter analyzes CSR programs in Argentina, Brazil, Colombia, and Chile from the perspective of stakeholders from 2015 to 2023. The trends of their implementation and the challenges these companies face in all five dimensions of CSR are emphasized in the analysis.

Finally, this chapter includes four main sections. First, the literature review focuses on the basic concepts of CRS and the differences in its evolution in developed and emerging countries in terms of theory and practice. Second, it describes the methods, instruments, and techniques used to conduct research, as well as the process for collecting and analyzing information. Later, the results are discussed in the context of the formulated analytical framework, showing the originality and novelty of our approach. Finally, the theoretical and managerial implications of the paper along with its limitations and future research perspectives are presented.

2. Literature review

According to various scholars and practitioners who have addressed the subject, CSR is the commitment and responsibility of an organization to assume the impacts of externalities generated by its decisions and activities on society. This is achieved through ethical, transparent, and respectful behavior that reconciles the expectations of stakeholders and contributes to creating a better environment that respects human rights, promotes sustainability, and generates social welfare [2, 3, 5, 14, 17].

To be more specific, CSR refers to three key elements: The subject (society), the object (the relationship among the different economic actors), and the behavior (business practices and social demands), which are the basis of multiple frameworks. Hence, the interaction of these elements determines the level of social integration, influences business practices, guides the expectations of stakeholders, and determines the conditions for the functioning of the social system [18, 19, 20, 21, 22].

CSR is the relationship between a company and society that shapes the economic and political reality. It determines the level of social integration and promotes ethical practices. Adaptation to the environment, achieving objectives, social integration, and preserving cultural values are the most important elements of a social system [2, 3, 5, 14].

According to Refs. [5, 13, 14], the CRS views the firm as an economic agent whose decisions, actions, and omissions have a social impact by modifying the conditions of its context. Likewise, the implementation of business practices aimed at responding to the problems of customers, employees, and suppliers constitutes a source for the development of competitive advantages. On this premise, the CRS privileges the growth of the company over the impacts on stakeholders and society.

On the other hand, Refs. [17, 18, 19, 20, 21, 22] affirm that companies must exercise their power responsibly, which is why they are obliged to guarantee their employees’ well-being through initiatives promoting physical and mental health. As social institutions, enterprises have a significant influence on the actions of citizens through their labor policies, management practices, bargaining power, and provision of goods and services [5, 13, 14].

In the same way, they must prioritize social well-being and sustainability over the construction of a favorable social image. In this context, the CRS is fundamental to design and implement best commercial practices to meet the requirements of society and mitigate adverse externalities resulting from business activities.

The models proposed by Refs. [3, 5, 6] for emerging markets show that it is necessary to balance the interests of the firm’s stakeholders and the contribution to meet societal demands under an institutional orientation. These models base their theory on five essential dimensions: Economic, social, environmental, legal, and ethical (Table 1).

Dimension	Description
Economic	The company’s goal is to ensure their owners’ profits are maximized.
Politics	Companies and institutions exist in a political arena where social norms regulate power.
Social	Businesses, as social entities, have a responsibility to follow social norms.
Legal	Companies must comply with regulations, laws, and legal provisions.
Ethics	Companies should adhere to the moral and ethical standards accepted by their society.

Table 1.

CSR dimensions.

These dimensions highlight six crucial aspects: (a) economic and social goals; (b) power dynamics; (c) acknowledgment of social demands; (d) ethical and socially acceptable conduct; (e) cultural and social values; and (f) organizational complexity [14, 17]. The company’s economic performance must be the base of a pyramid that represents the relationship between its dimensions and components; compliance with laws and social norms are the highest levels of it [2, 5].

In this vein, companies have two sets of stakeholders [18, 19, 20]. The first set comprises individuals who have formal or official contractual relationships with the company, such as customers, suppliers, employees, shareholders, and others. The second set is made up of people or institutions that do not have a contractual relationship with the organization, such as society. The company’s internal and external relationships increase complexity and define its responsibilities with the environment [18, 19, 20].

Stakeholder theory aims to guide companies in their decision-making by considering the interests of shareholders, owners, and stakeholders. The business’s strategy should prioritize the development of ethical attitudes and practices to respond to society’s demands, which expects reciprocity [20].

Businesses could adopt three types of behavior: Immoral, amoral, and moral. When a company prioritizes its economic interests over social norms and laws and implements strategies to exploit opportunities for its private benefit, it exhibits immoral behavior [19, 20]. On the other hand, when a company functions with the belief that ethics have no relevance to its operations and decision-making, it exhibits amoral behavior [21, 22, 23, 24, 25].

In the case of emerging countries, the consequences of recurrent financial crises mean that economic and social demands have overtaken environmental ones, making companies’ approach to CRS more reactive than proactive [2, 5, 17]. Regulatory frameworks and institutions have been weakened by mistrust, corruption, fraud, and power asymmetries [23, 24, 25].

Consequently, the nature of CSR in emerging economies differs significantly from that in more developed countries. Therefore, CSR programs implemented are less formalized of a philanthropic nature, rooted in cultural, moral, and religious values, aimed at rural communities [3, 5, 6].

In this sense, companies assume two opposing approaches to CSR. Multinational corporations implement CSR programs and practices with a global perspective and little local impact [3, 5, 6]. On the other hand, local enterprises adopt programs designed to respond to local needs through the region’s social norms and cultural values [2, 5, 17].

Refs. [3, 5, 17] identify five key elements to promote the adoption of CSR programs in emerging countries: Public policies, institutions, consumers/social needs, business strategies, and economic performance. To consolidate CSR in emerging economies, it is essential to generate synergy among specialized institutions, associations, non-governmental organizations (NGOs), government, companies, and society, with a local vision and a global perspective [3, 5, 6].

In their study of CSR in Ecuador [5] founds that the actions taken by companies were characterized by ethics and respect for community norms, which allowed them to have a great local impact and improve the living conditions of society. The authors also observed that companies’ profitability grows over time when they develop programs that seek to guarantee human rights through legal obligations, ethical behavior, and environmental responsibility.

Similarly, Ref. [6] analyzed programs implemented to implement a CSR system for companies in Latin America and the Caribbean. Their findings show the weak participation of social sectors, the capacity of NGOs to implement and supervise initiatives with social impact, and the importance of financing from external agents (Inter-American Development Bank, Organization for Economic Cooperation and Development, among others).

Ref. [7] compared CSR programs implemented in developed countries with those created in emerging economies and discovered that in emerging countries, information regarding the results of these programs is mainly controlled by influential stakeholders from foreign markets, and that there is little public pressure for CSR disclosure due to a lack of knowledge about awareness programs in the three dimensions.

Ref. [8] explored the various interests that converge around CSR and that could undermine the credibility and legitimacy of companies. They observed that emerging economies face multiple challenges and obstacles in addressing societal demands such as job creation, poverty reduction, access to education, and so on. Stakeholders’ expectations of the impact of CSR are diminished by mistrust of institutions, excessive bureaucracy, lack of standards, and corruption.

Refs. [9, 10] found that companies in emerging markets tend to have more economic, environmental, social, and governance initiatives regarding the exploitation of natural resources, the use of labor, the exercise of human rights, and the implementation of CSR strategies, while companies in developed economies prioritize social welfare, public health, business ethics, inclusion, gender equity, equality, and community impact, reflecting a concern for preserving public health and maintaining business ethics.

Finally, in the Latin American context, there is a need for more evidence on the scope and characteristics of CSR. Some studies show that the social and private sectors have great potential to develop CSR programs [3, 4, 5]. However, lack of institutional capacity in many governments, corporate governance, a less favorable business climate, and a low level of business activity, which are obstacles in other regions, are also cited by some sources [3, 7].

3. Materials and methods

This study uses a qualitative approach in its collection and analysis of information. This approach permits the interpretation, systematization, and synthesis of documents obtained from primary sources, and consequently facilitates the examination of the categorical variables established in the five dimensions of the CSR model [3, 5, 6], used as an analytical framework (Table 2).

Dimension	Description	Measure
Economic	Generating and distributing added value between collaborators and shareholders.	Relationships with clients, suppliers, and creditors.
Social	Investors, managers, collaborators, and suppliers share responsibility for promoting employees’ quality of life.	Adopting practices to manage human talent and foster positive relationships with society.
Environmental	Responsibility to consider and prevent any harmful effects their processes, products, and by-products may have on the environment.	Relationship with the environment and commitment to the regeneration of natural ecosystems.
Legal	Ensuring adherence to the legal requirements set by regulatory authorities.	Compliance in the payment of taxes and respect for human rights.
Ethical	Implementation of ethical commercial practices and effective human talent management.	Ensuring high levels of employee satisfaction and maintaining a positive reputation with customers.

Table 2.

Dimensions and variables.

A total of 150 reports were examined from various organizations such as supranational agencies, government, business associations, and companies. These reports evaluated the outcomes and experiences of the implementation of CSR programs from 2015 to 2023. The reports contain information from CSR programs.

The unit of analysis was CRS programs characterized by their impact on the community. The inclusion criterion was companies established in Colombia, Mexico, Argentina, Brazil, and Chile that have more than 200 employees, as they are the ones who typically implement CSR programs.

To measure the impact of CSR programs, the following factors were considered: The number of beneficiaries, the number of communities supported, the number of actions taken, participant satisfaction, the investment made in the programs, and the opportunities created for the participants [3, 5, 16, 17]. The reputation and credibility of the companies were measured indirectly through society’s opinions of their performance and the positive or negative externalities resulting from their actions [18, 19, 20, 21, 22].

The research used documentary analysis as a technique and employed the consultation and review of reports collected from 2015 to 2023 using the proposed analytical framework [3, 5, 6]. This demonstrates the framework’s applicability based on the obtained data [3].

The data were collected from statistical and descriptive reports, as well as reports published by NGOs and international agencies. Furthermore, a protocol was designed and applied to extract the necessary and relevant technical information for this study. Regarding the data analysis, the following were used synthesized by simplifying the data, according to the following criteria [3, 7].

4. Results

Analyzing the reports and data, it was found that 68% of the CSR programs implemented by companies could be categorized into the five dimensions defined in the framework. This categorization proposes a way to classify the development and implementation of CSR actions within the programs (Table 3).

Country	CRS programs	Level of implementation	Features
Colombia	30	High (Includes the five dimensions).	The programs focus on four areas crucial for society – environmental rights, human rights, labor rights, and the fight against corruption. They are designed to integrate shared value within the business strategy and target vulnerable populations while addressing ecosystem imbalances. Each year, an organization awards the programs with the most significant impact.
México	30	High (Includes the five dimensions).	The objective is to address social and environmental issues, improve internal processes, focus on philanthropy, and reinforce policies for employee well-being.
Brazil	30	High (Includes the five dimensions).	Aligned with the United Nations’ development goals, these principles govern human rights, labor, the environment, and anti-corruption. The target population is low-income communities.
Argentina	10	High (Includes the five dimensions).	They are concentrating on reducing environmental risks, enhancing customer satisfaction, increasing brand value, and supporting low-income communities. The primary source of funding is through donations.
Chile	30	High (Includes the five dimensions).	They follow the CRS guide suggested by the Ministry of Economy, which has the most experience implementing these programs in Latin America. The program’s primary goals include promoting business ethics, improving the quality of work life, conserving the environment, producing responsibly, consuming responsibly, and committing to the community.

Table 3.

High-impact programs feature.

Meanwhile, 60 RCS initiatives were identified. These initiatives come from Colombia, Chile, Mexico, Brazil, and Argentina, with ten from each country except for Argentina, which has 30.

These proposals aim to enhance the companies’ reputation with their customers through cause-based marketing campaigns and philanthropy. These companies use marketing strategies to increase their revenue, attract new customers, retain existing ones, and build a positive public image [18, 19, 20, 21, 22].

According to the structure of the programs, the tradition of corporate philanthropy persists in Latin America, where the public and private sectors have preserved a paternalistic vision of their role in society. For example, institutions such as the Mexican Center for Philanthropy, the Ethos Institute, Acción RSE, and the Corporación Fenalco Solidario Colombia promote social responsibility through sharing experiences between various actors in society, constructive dialogue, building institutional capacities, and articulating philanthropic participation that strengthens the socially responsible management of companies.

In this vein, three types of actions were identified out of the reviewed programs. These include donations from companies to NGOs, known as philanthropy. The second type is the transfer of resources from companies to communities through the construction of social work, which is referred to as social investment. The third type is the implementation of strategies involving the company in a process that benefits not only the company’s reputation or the society in which it operates but also the workers, the environment, the community itself, and the investors.

Furthermore, there has been a constant growth in CSR as companies have become more conscious of their role in society and the environment. The rise in economic inequality in recent years and the social demand for the creation of decent jobs where the value of human beings in the company is recognized have compelled companies to implement actions that support it. As a result, programs have a significant local impact and are specifically targeted toward communities.

In some programs, previously excluded customers are considered stakeholders, improving their quality of life, providing access to products and services, and contributing to the sustainable development of communities. However, it is unfortunate that most businesses focus on market segments with high spending power, while neglecting lower-income sectors.

Furthermore, Latin America’s CSR initiatives are evolving in response to the specific characteristics of the environment and the philanthropic tradition, as well as to a growing awareness of the problems that are leading to a trend toward social welfare and the reduction of inequalities. However, there has been slow growth in programs aimed at sustainability and technological access to various sectors of the population (Table 4).

Company	Program	Description
Telefónica Movistar México.	Digital volunteering.	Utilize digital tools and the expertise of volunteers to enable them to assist, collaborate, provide opportunities to others, and support vulnerable individuals, regardless of the method or tool employed.
Grupo Restaurantero Gigante	Sustainable and responsible coffee project using blockchain technology.	Identify the coffee supply chain that improves the living conditions of small coffee producers and their families within the Tacaná Volcano Biosphere Reserve. The model should be free of intermediaries, with fair payment and technology that guarantees product traceability. Trust between the different actors and the inviolability of the system through blockchain.
URREA	Technology to live the water	Implementation of internal and external actions that contribute positively to environmental protection and sustainability.

Table 4.

Example of CRS programs on sustainability and access to new technologies.

Efforts to raise awareness of the social and economic benefits of CSR policies in Latin America are beginning to produce results, but efforts are needed to promote the implementation of these practices. Business responsibility can contribute significantly to the social and economic development of the region.

Finally, the challenges to the implementation of CRS programs are identified: The deficit of the infrastructure, the weak institutional capacity of the government, a hostile environment for businesses, society’s mistrust of its authorities, the paternalistic mindset of the public sector, the confusion about the nature of CRS, fraudulent behavior of some companies (greenwashing), tax fraud, cultural diversity, economic crises, and a growing trend of social demands.

5. Conclusions

Economic and global environmental crises have influenced CSR. Consequently, sustainability, environmental regeneration, and well-being have become essential components of CSR in social and business life. It is vital for companies to adopt ethical, social, and cultural values, as these values can either reward them or damage their reputation. Citizens have the power to hold companies accountable for their actions.

The analysis of CSR programs has been based on a theoretical framework developed through a literature review [18, 19, 20, 21, 22]. The main characteristics that distinguish CSR programs for Latin American companies are addressing social and environmental issues, improving internal processes, and aligning with the United Nations’ development goals.

CSR programs are built on four pillars: Human rights, labor rights, environmental protection, and anti-corruption. These programs aim to reduce environmental risks, enhance customer satisfaction, increase brand value, support low-income communities, promote ethical business practices, improve the quality of work life, encourage responsible production and consumption, and foster community engagement.

CSR is an approach that offers various advantages to businesses, their environment, and stakeholders. It supports companies in attracting new customers and building a positive image by contributing to society in a sustainable and ethical way.

In other words, CSR is a strategy that creates value for businesses and stakeholders by promoting fair and responsible practices. Understanding the philosophy, scope, characteristics, evolution, trends, and challenges is crucial to successfully implementing CRS.

Although CSR has significant benefits and impacts in Latin America, more clarity is still needed regarding its application. This is because CSR has certain similarities with various practices and theories that have been developed over the years to explain different aspects of the relationship between companies and society. These issues include philanthropy [10], shared value [11], corporate strategy [12], corporate governance [13], business ethics [14], social business [15], and sustainability [16].

In conclusion, this study wants to add knowledge about the trends in CSR programs and the challenges they face in the complex context of Latin America. The main contributions of this study are the characterization of programs, their level of implementation, and the identification of opportunity areas. The empirical research validated the multidimensional character of CSR by finding its purposes in the studied programs: Social commitment, environmental responsibility, adherence to laws, and ethical behavior.

Furthermore, it seeks to strengthen the theoretical framework of CRS by introducing new theoretical and methodological elements to the existing. The study aims to generate practical experiences for applying CRS. The theoretical framework developed to analyze the programs and the challenges encountered in the region could also be useful for entrepreneurs, managers, and academics involved in this field of research.

This research emphasizes the importance of examining the different perspectives that explain how CSR can benefit development. Understanding the specifics of how it is applied can provide an analytical framework for academic discourse and challenge the myths that have been perpetuated about the economic benefits of CSR by official and academic sources.

The study has certain limitations that need to be considered in future research. Firstly, it was conducted on an intentional sample of a relatively small number of companies. As a result, the findings cannot be applied to all the companies in Latin America with CRS programs. For further investigation, it might be useful to apply a questionnaire to managers of companies with CRS programs in Latin America. A second limitation derives from the method used.

The research relied solely on documentary analysis of reports and data provided by companies to NGOs. While this technique has its advantages, it is recommended that statistical tools be used to validate the information. By applying statistical analysis, any potential biases on the part of the researchers could be eliminated.

Finally, to better understand the relationship between businesses and society in Latin America through CRS programs, future research should focus on institutional logic, regulatory frameworks, and cultural values.

Acknowledgments

This work was supported by the Mexican Network of Researchers in Organizational Studies and the Autonomous University of the State of Quintana Roo.

Conflict of interest

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The authors received no financial support for the research, authorship, and/or publication of this article.