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

2 Economic and SocialFrameworkBrazil faced an economic crisis in 1997-98. Oneresult of this crisis has been a heightened focus onthe human aspects of economic policies. While thisshift took place only academically at the beginning,a growing number of NGOs and socially committedcorporations began to recognize the positiveimplications of CSR (Sussdorff, 2003).As companies sought to restructure and becomemore competitive internationally, some managersrecognized the potential for using social andenvironmental initiatives as a way of reducing costs,increasing competitive advantage and managingrisks and reputation (Cappellin and Giuliani, 2004).The international repercussions of Brazil’sunfavorable business image pushed them toprioritize issues such as poverty, violence, childlabor, education and environmental protection. Inparticular, the largest firms assumed leadership,seeking to fill some of the gaps that resulted fromthe perception of a weak public sector.As the CSR agenda broadened in the 1990s and withcorporate restructuring intensifying, companiesdirected more attention inwards, and toward socialinvestments aimed at improving workers’ skills,particularly in the metallurgical, chemical, buildingand textile sectors. Social investments related toemployees had the primary goal of increasingproductivity. At the same time, such actions had thepotential to reduce problems on the shop floor suchas safety, illiteracy, poor health, absenteeism andweak identification with company goals.The level of unemployment in Brazil according to theWorld Economic Forum (2005) is 11.5 percent of thetotal labor force, and the level of informal economy isat 39.8 percent of the GNP (Schneider, 2002). SinceBrazil is a Federation of States, the states have thepotential to be powerful CSR policy makers.The following chart shows competitivenessindicators supplied by the WEF. All data is from2005 and the chart is sorted by indicator ranking.The indices below reveal a fair state for Brazil’scompetitiveness and market development.Organization Index Number of Countries in the Index Brazil’s RankingWEF Local supplier quantity 19 117 27Company spending onWEFresearch and development 117 29WEF Capacity for innovation 117 32WEF Local supplier quality 117 36WEFQuality of scientific researchinstitutions 117 39WEFUniversity/industry researchcollaboration 117 40WEF Ethical behavior of firms 117 51Strength of auditing andWEFaccounting standards 117 62WEF Global Competitiveness Index 117 65 (4 out of 21 in Latin America)19 Indicates that Brazilian suppliers are ready to be an important part of larger firm (multinational and transnational companiesincluded) supply chains.30 Recommended actions to foster the adoption of Corporate Social Responsibility (CSR) practices in Small and Medium Enterprises (SMEs)