Recommended actions to foster the adoption of Corporate Social ...

In regards to human rights, Venezuela hasperformed well in the area of child labor. However,the country received a very poor rating from theHuman Rights Watch for Intrinsic Country HumanRight Risk.OrganizationILO andUNICEFUNICEFMaplecroft 109ILO andWorld BankHumanResourceWatchIndexNumber ofCountriesin the IndexVenezuela’sRankingChild LaborIndex 191 43Child RightsRisk index 192 83Political Riskindex 209 183Health andSafety Index 187 123IntrinsicCountryHuman RightRisk 194 157In a survey conducted by the VenAmCham oneconomic perspectives for 2006, enterprisesinterviewed indicated political uncertainty, judicialinstability and judicial insecurity as the mainobstacles for their business activities 110 .Some intrinsic SME characteristics may inhibittheir development for example: the family-ownedSME structure limits the adoption of bettermanagerial strategies; SMEs have limitedinvestment funds, they experience slow growth insales volume, they lack partnerships and networksin their local environment and they face stronglocal competition. Venezuela’s SMEs are isolatedand do not participate in international value chains,which is a weakness when trying to integrate intothe global market.To solve SMEs' competitiveness problems, theMinistry of Production and Commerce (Ministeriode la Producción y el Comercio) initiated a programto support SMEs, titled “Endogenous DevelopmentPlan” (Plan de Desarrollo Endógeno), which definesthree areas of implementation: (i) IndustrialReactivation, to increase, in a short time, theutilization of the country’s industrial installedcapacity; (ii) Industrial Re-conversion, totechnologically modernize and actualize theVenezuelan industrial sector, and lastly (iii) theprocess of Reindustrialization, to increase theexisting Venezuelan industrial weave.Interesting insights about Venezuela come fromunderstanding cooperatives, which is a distinctiveform of doing business among Venezuelan SMEs.The first Venezuelan cooperatives were formedaround the turn of the 20th century, however mostdisappeared during the Marcos Perez Jimenezdictatorship of the 1950s and the military junta thatpreceded it. With the fall of Jimenez in 1958,cooperatives in Venezuela once more began to gainstrength and a new cooperative law was passed in1966, which allowed for the creation of theVenezuelan National Cooperative Superintendence(SUNACOOP). According to Fox (2006) a largeimpetus for the Venezuelan cooperative came in the1960s from the U.S. initiative Alliance for Progress,which attempted to promote the alternative road ofcooperatives in order to reduce the guerrilla andrevolutionary movements taking place across LatinAmerica. According to SUNACOOP, there arecurrently 153,000 registered cooperatives inVenezuela – the largest number in any country inthe world. Over 60 percent of Venezuela’s registeredco-ops are in the service sector, while around 20percent are in manufacturing. The members of thetraditional co-ops played a large role in the creationof the 1999 Venezuelan Constitution and theformation of the 2001 Cooperative Law, whicheased the process of cooperative formation andallowed for greater sovereignty to be given to thecooperatives themselves (Fox, 2006). 111109 Available on www.maplecroft.com110 www.amcham.org.ve111 Carlos Molina Graterol, President of SUNACOOP, at the conference held in September 2006 declared that “1,634 accusations have beenreceived against Venezuela’s cooperatives and that not all of co-ops are legitimate, that some supposed co-ops only use the laws to evadesocial responsibility and taxes, and that cooperative members do not always understand the principles of cooperativism” (Fox 2006).140 Recommended actions to foster the adoption of Corporate Social Responsibility (CSR) practices in Small and Medium Enterprises (SMEs)