One of Latin America’s largest economies, Mexico is an intriguing mix of Catholic values, society-orientated politics, market-friendly economics and some serious social problems
When Francisco Madero rose up in 1910 against Mexico’s then leader Porfirio Díaz, events unfolded that would shape the remainder of the century. The social focus of the Mexican revolution would see moves to introduce universal health insurance, public education and social housing.
The private sector was not exempt from the process. Companies were given the option to contribute to the national project directly – through a special federal tax – or indirectly through their own direct social programmes.
“Many Mexican companies ended up building neighbourhoods, schools and health clinics,” explains Bryan Husted, professor of management at Egade business school in Monterrey.
Cerveceria Cuauhtémoc Moctezuma, one of the country’s oldest and largest breweries, providesan illustrative example. In the middle of the 20th century, the Monterrey-based firm was providing everything from X-rays and dental care to sports clubs and theatre performances for its workers and their families. This was in the days before compulsory social security was introduced.
Mexico’s prevalent Catholicism chimed with this tradition of private philanthropy. The influence of entrepreneurs’ personal mores was further enhanced by the fact that most large companies were family-owned. Many still are.
Arguably, the tradition of corporate (in the sense of “collective”) responsibility goes even further back. The indigenous Raramori peoples of northern Mexico use the term “korima”, meaning “to share”. The phrase does not refer to the sharing of surplus wealth in the philanthropic sense, but of sharing resources in times of stress, says Leonardo Cardenas, general director for Mexico, Central America and the Caribbeanat the consultancy firm Tüv Süd.
Generous response
This commitment to society is exemplified in recent times through the generous response of Mexico’s private sector to natural disasters. Today, more than 38,000 companies in the Chihuahua region pay annually into a voluntary fund (Federation of the Chihuahuan Industry) for social projects. The fund was established after businesses lobbied for a one-off tax in the wake of a flood in Chihuahua nearly two decades ago.
“The tradition of philanthropy is stronger in Mexico than elsewhere in Latin America,” says Antonio Vives, former manager of sustainable development at the Inter-American Development Bank and now director of regional advisory firm Competere.
He points to the magnitude of Mexico’s social problems, notably drug-related crime and poverty, as a continuing preoccupation for companies and government alike. Mexico has the eighth largest population of poor citizens in the world. In the country’s poorest states, such as Chiapas and Oaxaca, malnutrition, low literacy and high unemployment dog development efforts.
Strategic shift
Analysts note a gradual evolution of corporate responsibility management. A decade ago, companies would support institutions “without any strategic focus”, says Gerardo Lozano Fernández, director ofthe Centre for the Integration of Economic and Social Value at Egade.
That is now changing. Fernández says: “CSR started to be talked about as an opportunity for competitive advantage among certain stakeholders.”
Government agencies, company employees, large suppliers and business customers top the list for where such advantage was – and continues to be – felt. There is little evidence, however, to support the notion that end consumers in Mexico differentiate on ethical grounds on any scale.
The companies that fall into this more advanced bracket tend to be large firms, often with a national or regional presence. While long-term reputational advantage is recognised as a driver, short-term measures that increase efficiency and reduce operational costs are the strongest motivating factor for most companies. Many have taken basic environmental management steps for this reason.
As a comparison with the rest of Latin America, Husted sees no “unusual or different patterns that are uniquely Mexican” with respect to companies’ approach to corporate responsibility. Most firms are heavily influenced by management models adopted in the US.
In terms of progress along that agenda, Mexican companies find themselves in the second-tier of regional performers, behind Brazil and perhaps Chile. Closer comparables to Mexico might be Argentina, Peru and Costa Rica.
Naturally, there are exceptions. In the likes of bakery firm Bimbo and cement manufacturer Cemex, Mexico boasts some national-owned multinationals that have exemplary management systems in place.
While Competere’s Vives acknowledges that such firms are “genuinely world class”, he stresses that such examples remain a tiny minority among Mexican corporations.
“CSR is not a collective effort. It’s characterised by a few leading companies out on their own,” he says.
That’s without considering the small and medium-sized business sector. Firms with 15 or fewer employees account for about 85% of Mexican businesses and generate more than half of the gross national product. Bar a few exceptions, most remain firmly in the non-strategic, philanthropic camp.
Mexico presents a mixed bag in terms of corporate responsibility, therefore: a long history of philanthropy plus plenty of pressing social and environmental problems, while at the same time becoming increasingly aware of international management practices. Unlike 1910, expect a gradual evolution in corporate practice, not a sudden revolution.
