“We would like to have a better CSR campaign, but …”.
– Study participant (ID119).
Abstract
Firms operating in developing economies are increasingly expected to implement CSR practices aligned with recognized global standards. Drawing on extensive field study data in four Latin American countries, we contribute to business ethics scholarship by making visible and explaining firm shortcomings across social, environmental, and governance goals and activities of CSR. Building on and extending sensemaking literature, we find that leaders and managers responsible for their firms’ CSR activities make sense of and justify CSR shortcomings. We specify that justification based on individual, organizational/industry, and macro-environmental influences serves as a mechanism that decouples firms’ actual CSR practices from recognized CSR standards. Further, we propose that detachment, involving disconnection from the local operating environment, underlies the CSR shortcomings of firms. We develop a theoretical multi-level model that specifies justification as a mechanism and detachment as an underlying driver of CSR shortcomings.
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Introduction
Within the literature of business ethics, corporate social responsibility (CSR) has emerged as a broad set of social, environmental, and governance practices that bridge a firm’s strategy and operations with its responsibilities to stakeholders (Freeman, 2010; Van der Linden et al., 2023). Despite the imperative of CSR as a competitive reality of firms (Shea & Hawn, 2019; Waddock et al., 2002) and growing awareness of CSR best practices within firms (Bertels & Peloza, 2008; Hafenbrädl & Waeger, 2017), the conceptualization, rationale, and implementation of CSR across global contexts remains highly variable (McWilliams et al., 2006; Perez-Batres et al., 2010). In developing economies, where the practice of CSR may be understood to reflect localized social and political contexts (e.g., Logsdon et al., 2006), growing awareness and recognition of globalized CSR standards (c.f., UN Global Compact; OECD Guidelines for Multinational Enterprises; Global Reporting Initiative) has created pressure for firms to perform accordingly. However, even with managerial knowledge about and experience with recognized CSR standards and common practices, firms may fall short of such expected behaviors in practice (Alamgir et al., 2022; Barnett et al., 2020). As a result, leaders and managers responsible for their firms’ CSR in developing economies are routinely confronted with tension and ambiguity as they endeavor to achieve CSR expectations, grapple with CSR challenges, and try to make sense of the CSR shortcomings of their firms.
From a business ethics perspective, CSR shortcomings are an interesting and important phenomenon. While blatant counter-normative CSR behaviors associated with corporate social irresponsibility (CSI) as characterized by undesirable effects, firm culpability, and noncomplicity of the affected party (Lange & Washburn, 2012) have been studied extensively, little attention has been paid to occurrences of and contexts in which firms make efforts to enact CSR standards and practices but fall short. We spotlight CSR shortcomings as a phenomenon in which firms pursuing CSR activities do not fully attain expected levels of achievement in line with recognized CSR standards or common practices.
Our focus on CSR shortcomings in this study is based on the insights from a unique data set gathered during a field study in four Latin American countries (Colombia, Mexico, Peru, and Argentina). We adopted a sensemaking lens (Basu & Palazzo, 2008; Maitlis & Christianson, 2014; Weick, 1995) to explore narrative accounts of CSR challenges by leaders and managers responsible for the CSR of their firms. Our analysis led us to identify firm shortcomings across social, environmental, or governance activities of CSR, and to explore CSR leaders’ and managers’ understanding of this phenomenon. The research question that guided this field study encompassing the CSR landscape in four Latin American countries is: How do leaders and managers responsible for CSR make sense of their firm’s shortcomings from recognized CSR standards and common practices?
We selected these developing market contexts based on common societal and economic challenges (e.g., educational inequality, wealth disparity, poverty, and environmental issues) (Aguinis et al., 2020; Rivera, 2010). Our broad focus on CSR in these Latin American economies informs a more nuanced and geographically inclusive understanding of the CSR landscape. This research also provides opportunities to extend comparative learning and insights across contexts (Pisani et al., 2017) to other developing (c.f., Nicholls-Nixon et al., 2011) as well as developed regions globally. In responding to the “urgent need to widen the geographic and cultural scope of international management research on corporate responsibility” (Egri & Ralston, 2008: 325), this study makes several additional distinct contributions to the existing CSR literature.
Importantly, this research draws attention to what we suspect is a common phenomenon in Latin American developing country CSR contexts and may extend to other geographic regions and economic contexts as well. Little attention has been paid to firm CSR shortcomings, which presents a promising area for field research (Edmondson & McManus, 2007). Building on and extending sensemaking scholarship (Sonenshein, 2007; Weick, 1988), we present a model that reflects how leaders and managers with CSR responsibilities make sense of their firm’s CSR shortcomings through the mechanism of justification. Furthermore, we theorize that detachment from the local environment drives and, along with justification, perpetuates CSR shortcomings. We contribute to sensemaking scholarship by proposing justification as a mechanism informed by influences from multiple levels that enables those responsible for CSR activities to make sense of their firms’ CSR shortcomings. We also advance CSR scholarship in developing economies (Shirodkar et al., 2018) and particularly in Latin America—an important but often understudied global region with regard to CSR (c.f., Lindgreen & Córdoba, 2010).
Corporate Social Responsibility and Irresponsibility
The capacity for business to generate benefits or impose harm for stakeholders is the broad concern of CSR and CSI, respectively, and has attracted attention from the business ethics discipline (c.f., Clark et al., 2022). CSR, often used interchangeably with terms including corporate responsibility (Waddock, 2008), corporate citizenship (Carroll, 1998), corporate sustainability (Van Marrewijk, 2003), corporate social performance (Wood, 1991), and corporate accountability (Valor, 2005) among others, focuses on the social, environmental, and governance behaviors of firms that are beneficial (Aguilera et al., 2021). CSR has been conceptualized as foundational to firm performance (e.g., Carroll, 1998) and examined from diverse perspectives, including ethical (e.g., Donaldson & Dunfee, 1994), institutional (e.g., Campbell, 2007), economic (Margolis & Walsh, 2003), strategic (e.g., McWilliams et al., 2006), reputational (e.g., Bertels & Peloza, 2008), stakeholder (e.g., Clarkson, 1995), and communication (e.g., Yang & Basile, 2022) considerations. CSR is understood to be a complex and multi-level phenomenon (Aguinis & Glavas, 2019) with important micro-foundation influences (Hafenbrädl & Waeger, 2017), including the beliefs, perceptions, and actions of those responsible for advancing the social and environmental responsibility of firms (Hahn et al., 2014).
Despite growing awareness of CSR standards and best practices (Bertels & Peloza, 2008; Hafenbrädl & Waeger, 2017), the concept of CSR remains highly variable (Carroll, 2008) and with contested meanings (Okoye, 2009). The literature has theorized CSR in numerous ways (Lee, 2008), including normative, i.e., CSR as the moral or right thing to do (Luo et al., 2017), and institutional, i.e., CSR as a set of norms and standardized practices (Shabana et al., 2017). While different cultural understandings of CSR (e.g., Katz et al., 2001) affect implementation across global contexts (McWilliams et al., 2006; Perez-Batres et al., 2010), the increasing global traction of CSR performance standards (c.f., UN Global Compact; OECD Guidelines for Multinational Enterprises; Global Reporting Initiative) generates pressure for firms to behave accordingly. We reference CSR standards and norms in this paper in terms of the set of increasingly recognized global practices or measures that leaders and managers use to formally or informally compare and assess the CSR performance of their firms. Although leaders and managers responsible for CSR are increasingly knowledgeable about and experienced with salient CSR global practices and norms, firm shortcomings relative to such standards often occur in practice (Bromley & Powell, 2012).
In contrast to CSR, CSI focuses on social, environmental, and governance firm behaviors that are harmful. In general, CSI can be understood as a blatant departure from CSR as characterized by undesirable social effects, firm culpability, and noncomplicity of the affected party (Lange & Washburn, 2012). CSI addresses stakeholder attributions of firm irresponsibility and the accrual of negative consequences to the firm based on such contextualized understandings (Godinez & Liu, 2018). Deviant behaviors, including unethical decision-making and corporate misdeeds such as grand corruption and scandal, have garnered scholarly attention (c.f., Doh et al., 2003). CSI research has tended to focus on relatively extreme ethical violations associated with major corruption incidents (Hauser & Hogenacker, 2014) or well-publicized scandals such as those in the automotive (Rhee & Haunschild, 2006), tobacco (Palazzo & Richter, 2005), and oil (Haga et al., 2022) industries. This scholarship has emphasized the serious consequences of CSI to those directly impacted (Antonetti & Maklan, 2016) as well as to culpable firms (Frei & Muethel, 2017).
The focus of CSR on advancing the social, environmental, and governance responsibility of firms, and the emphasis of CSI on blatant corporate misdeeds and extreme violations of such responsible firm behavior, has precluded attention to and consideration of a significant domain of related but distinctive firm behavior. The phenomenon of firms pursuing CSR activities but falling short of recognized CSR standards and common practices is an inconspicuous and underresearched area in both CSR and CSI scholarship. This field study spotlights and explores CSR shortcomings based on the narrative accounts of CSR challenges by leaders and managers responsible for the CSR activities of their firms in four countries of Latin America.
Sensemaking and CSR Challenges in Developing Economies
An influential stream of literature unpacks how sensemaking impacts key organizational processes (c.f., Maitlis & Christianson, 2014), including efforts and initiatives linked to CSR (c.f., Nijhof & Jeurissen, 2006). Sensemaking is operative when organizational members seek to clarify what is going on in their environment by engaging with cues that help them “make sense of” and facilitate further interaction with the contexts they are trying to comprehend and navigate (Maitlis & Christianson, 2014; Sutcliffe, 2016; Weick, 1988; Weick et al., 2005). Sensemaking is retrospective, based on inputs attended to by actors that have previously occurred (Weick, 1995; Weick et al., 2005). In parallel, sensemaking informs and generates the present and future, as reality is created and sustained through the process of making sense of what is going on (Weick, 1988, 1993). Sensemaking involves the consideration and construction of plausible rationales (Weick et al., 2005), which are informed by the likelihood of agreement or endorsement of important stakeholders with whom an actor identifies (Schildt et al., 2020). Because sensemaking is often self-affirming, it contributes to the perpetuation of prevailing circumstances (Sutcliffe, 2016; Weick, 1995; Weick et al., 2005).
The CSR context and associated initiatives of firms, involving tradeoffs between addressing societal issues and responding to economic pressures (c.f., Chrisman & Carroll, 1984), have been characterized as “classic sensemaking” situations (Margolis & Walsh, 2003: 285) and “fertile ground for sensemaking” (Aguinis & Glavas, 2019: 1064). A sensemaking lens views CSR as a dynamic and social context in which organizational actors generate meaning about, interact with, and influence their environment in what can be understood as more or less responsible ways (Aguinis & Glavas, 2019; Basu & Palazzo, 2008). This lens accounts for the complexity, multi-stakeholder, and ethical dynamics of CSR (Carroll, 2008, 2015), which can spark ambiguity and uncertainty for leaders and managers tasked with making sense of and executing a firm’s social or environmental responsibilities. This is particularly true for CSR contexts in developing economies, where layers of complexity and uncertainty tend to be amplified (Aguinis & Glavas, 2019). Such “hazy” institutional landscapes of fragmentation and volatility (Dorado, 2005) further prompt the need for sensemaking by those attempting to negotiate, shape, and implement the CSR activities of their firms.
Leaders and managers responsible for CSR activities in developing regions occupy a specialized and demanding role in their firms (Tonoyan et al., 2010) as educators, champions, and often pathbreakers—as well as sensemakers (Basu & Palazzo, 2008)—of CSR. Despite knowledge of and even direct experience with recognized CSR standards or common practices through prior jobs, training, or professional networks, those charged with leading CSR in developing economies are frequently faced with complex dynamics that hamper the implementation of CSR (Husted et al., 2010). Even with the recognition that optimal or ideal CSR may never be fully realized in developing economy contexts (e.g., Kourula et al., 2017), gaps can exist between a firm’s CSR activities and recognized CSR standards and common practices. Sensemaking tends to occur “when the current state of the world is perceived to be different from the expected state of the world” (Weick et al., 2005: 409). Justification is a mechanism that helps individuals make sense of the contexts and situations they are engaged with when they are ethical in nature (Sonenshein, 2007). As the domain of CSR is associated with a range of ethical considerations (c.f., Carroll, 2008; Donaldson & Dunfee, 1994), sensemaking through justification is likely to be salient for individuals with CSR leadership responsibilities who perceive that their firms’ performance falls short of recognized CSR standards or common practices and are faced with making sense of this discrepancy.
In this study, we adopt a sensemaking lens to shed light on CSR shortcomings among a sample of firms operating in Argentina, Colombia, Mexico, and Peru. We build on scholarship that considers the complexity of CSR (Aguilera et al., 2007) and the sensemaking of those who lead and engage in the initiatives of their firms (Basu & Palazzo, 2008). We privilege the interpretations, understandings, and accounts (Isabella, 1990) of CSR leaders and managers to explore how these individuals make sense of CSR challenges and justify their firms’ shortcomings across the dynamic and ambiguous landscape of CSR in Latin America.
Methodology
Research Design
This research originated as a field study of the CSR practices of firms in Latin America to better understand areas of strength, challenges, and opportunities for improvement. Through an in-depth qualitative approach and initial thematic analysis of interviews, we became aware of the common acknowledgment described by leaders and managers of CSR that their firms are falling short, i.e., that firms could be doing better but are not, in terms of performing CSR standards and common practices. This led us to center attention on participants’ accounts and sensemaking of CSR challenges, as well as shortcomings from recognized CSR standards or common practices, by their firms.
We utilized an interpretative method to privilege participants’ experiences and interpretations and to represent their voices and sensemaking in our data reporting and analysis (Gioia et al., 2012; Isabella, 1990). This allowed us to identify not only CSR challenges but also firm shortcomings from recognized CSR standards and common practices, and then to gain a more comprehensive view and nuanced understanding of how leaders and managers responsible for CSR make sense of their firms’ CSR shortcomings in the developing economy contexts of Latin America.
The exploratory design and inductive nature of this study facilitated the process of empirical discovery and theoretical elaboration in several ways. Qualitative methods are appropriate for collecting rich data, identifying common themes, and generating nuanced insights that serve as key building blocks for developing conceptual frameworks of complex and sensitive organizational matters (Kumar et al., 1993). In this study, occurrences of deviation from participants’ understandings of commonly recognized CSR activities are representative of dynamic social contexts where subtleties are prevalent, and motivations of actors can be opaque (Elsbach & Kramer, 2003). We employed an exploratory and interpretive approach to surface participants’ experiences and perspectives and followed an inductive analytical process to clarify meaning and to identify and untangle influences and causes (Gioia et al., 2012). Consistent with a grounded theory approach (Strauss & Corbin, 1990), we iterated between interview data, emergent themes, and extant literatures to contrast analytical findings with preexisting understandings and to generate novel insights and explanations.
Research Setting and Data
This research privileges the experiences and perspectives of firm actors accountable for managing and implementing CSR. We define the empirical field geographically (Ruef & Scott, 1998) to focus on the Latin American operating contexts of Argentina, Colombia, Mexico, and Peru. We chose these countries as representative of Latin America as a developing region with large inequalities that have created obstacles for addressing common societal and environmental needs (Calderon, 2011). While culturally and economically distinct, in the early 2000s, these four nations experienced “a massive wave of trade liberalization and other drastic policy changes” that forced firms to adapt and initiate CSR activities without being fully prepared to do so (Perez-Batres et al. 2010: 195). Due to the complexity and ambiguity of the CSR context in Latin America (Aguinis et al., 2020; Rivera, 2010), this environment is well suited to exploring how leaders and managers make sense of challenges in the CSR landscape and CSR shortcomings by their firms. Further, Latin America shares several commonalities with other developing regions (Bruton et al., 2009), including a weak formal institutional environment, high levels of income and wealth disparity, environmental degradation, and high levels of corruption (Godinez & Liu, 2015), which makes it possible to explore and expand insights from this study in regions with similar contexts.
Our findings stem from a unique dataset collected from 47 semi-structured interviews conducted with 42 leaders and managers with CSR responsibilities from 30 significant companies operating in four countries in Latin America. The primary questions we analyzed from interviews were, respectively: What do you perceive to be your firm’s major CSR-related challenges? What do you think needs to change for your firm to address the aforementioned challenges? Additional prompts were used to invite participants to provide further elaboration.
Study participants include 14 women and 28 men who are leaders and managers of 13 Multinational Corporations (MNCs), 8 Multilatinas (MLEs), and 9 significant local small and medium-sized enterprises (SMEs) with “CSR” or CSR-related (e.g., “Sustainability,” “Compliance,” etc.) management titles and responsibilities. Study participants also include senior leaders accountable for the CSR activities of their firms, even without CSR or related designations in their titles (e.g., CEO, owner-manager, general manager, etc.). We used purposive sampling (Charmaz, 2006) to identify and invite individuals in the geographical region with relevant in-depth experience and knowledge of their firm’s CSR initiatives to participate in this research. Participants represented a diversity of firms by size, operational location, and a variety of industries; the analytical focus was on common themes despite such differences (Robles et al., 2015).
Interviews were conducted in-person and in-country between July 2017 and October 2018 over the course of extensive field study trips to Argentina, Colombia, Mexico, and Peru by the first author. All interviews were conducted in Spanish, the native language of participants. Five participants provided a follow-up interview as well. Interviews lasted between 40 and 90 min and were recorded, transcribed, and translated into English. The interviews totaled 1631 pages of transcripts,Footnote 1 and both Spanish and English transcriptions were used in the analytical process for meaning and clarity. Table 1 details characteristics of the interview sample.Footnote 2 Additionally, during the same field study trips, 12 external experts were interviewed to supplement the accounts of leaders and managers responsible for CSR and to provide additional insights about the CSR landscape of the region.Footnote 3 These interviews lasted between 45 and 80 min. Following Mair et al. (2012), this supporting data were utilized, though not coded in detail, to corroborate and provide nuance to the findings.
Data Analysis
Data analysis is based on participant interview responses, corroborated by expert external stakeholders, and informed by field study observations. Consistent with an inductive qualitative approach drawing on narrative accounts (Mair et al., 2012), we analyzed the interview data in an iterative manner that allowed us to go back and forth between the field study dataset, emergent themes, and theoretical concepts (Strauss & Corbin, 1990). Iterating between interview data and external stakeholder accounts supported emergent analytical themes.
We analyzed interview data in a three-step approach. First, beginning with narratives of CSR challenges we further identified accounts of CSR shortcomings. Next, we identified key themes and patterns that provided further insight into how leaders and managers in this developing economy context make sense of CSR challenges and their firms’ CSR shortcomings. We followed Meng et al. (2022) who adapted their methodology from Corley and Gioia (2004) and condensed descriptive codes to thematic codes. Specifically, we coded the data as follows: identifying first-order concepts (from open coding), generating second-order themes (from axial coding), and conceptualizing emergent aggregate dimensions. One author, a native Spanish-speaker, provided initial open coding suggestions based on Spanish language transcriptions. The author team reached coding agreement based on Spanish and English-translated transcriptions through discussion. NVivo 12.0 software was used to organize the coding process.
Analytical Approach
We created first-order concepts based on the full set of transcribed interview data to identify the patterns (Strauss & Corbin, 1990). We utilized participants’ accounts of CSR events and actions, as well as their perceptions of CSR standards and whether or to what extent their firms performed these, to sensitize us to the CSR practices of their firms. These accounts also provided key contours of the landscape of CSR contexts in these developing countries of Latin America. Using axial coding, we integrated first-order concepts into second-order themes. This analytical process led us to the key insight that participants viewed their firms as falling short relative to recognized CSR standards and common practices.
Once we identified the phenomenon of firm shortcomings in CSR contexts, we identified patterns and common themes through open and axial coding that guided us to focus on the various inputs leaders and managers use to make sense of their firm’s CSR shortcomings. We iterated between the data, emergent coding, and the literature in first and second phases of analysis. Finally, building on our analysis and findings, we provide theoretical elaboration for justification as a key mechanism and detachment from the local environment as an underlying driver of firm shortcomings from recognized CSR standards and common practices in these developing economic regions of Latin America. An overview of our analytical approach and coding is presented in Fig. 1.
Data structure and analytical coding process
Findings
In this section, we identify CSR shortcomings by firms operating in Latin America as a common and important phenomenon. Findings are based on accounts of leaders and managers responsible for the CSR of their firms in the sensemaking context of their firms’ shortcomings from recognized CSR standards and common practices. Importantly, all participants referenced shortcomings relative to recognized CSR standards and common practices. This discrepancy between what those responsible for a firm’s CSR programs perceive their firm could and should achieve and what their firm actually achieves can be understood as contributing to the experiences of tension, uncertainty, or ambiguity characteristic of sensemaking contexts.
As presented in Fig. 2, we advance an empirically informed model in which justification of individual, organizational/industry, and macro-environmental-level influences is an important sensemaking mechanism (Weick, 1993) for individuals with CSR responsibilities in coming to terms with their firm’s CSR shortcomings. We theorize that justification further constrains the CSR activities of the firm, and that CSR shortcomings stem from detachment at the individual, organizational/industry, and macro-environmental-level influences of the firm’s operating environment.
Sensemaking model of CSR shortcomings, justification, and detachment
Shortcomings from Recognized CSR Standards and Common Practices
Based on our analysis of interviews with leaders and managers responsible for their firm’s CSR initiatives and corroboration by experts, shortcomings from recognized CSR standards and common practices by firms in Latin America emerged as a notable, common, and consequential firm-level phenomenon. Specifically, shortcomings were discussed in terms of CSR activities that do not fully attain expected levels of achievement in line with recognized CSR standards or common practices. All participants shared the view that despite making efforts to implement recognized CSR standards or common practices, their firms were falling short. In particular, participants articulated their firms’ shortcomings in terms of social, environmental, and governance responsibilities.
For instance, when discussing water usage, a manager from an MNC remarked: “Today there are many companies that are offering water treatment plants. You take the water from the subsoil, use it in a production process and recover it and use it again. That makes you consume less cubic meters of water to produce the same amount of [product]. We have not installed them yet” (ID119). Even with experience and knowledge, this firm had not yet installed a product that would help to achieve more robust CSR in terms of water care and conservation. Another participant commented on formal “provisions for human rights” as “… something that we will start implementing. It is a new topic for us” (ID115). This manager shared the perspective that despite awareness of business norms to protect human rights, their firm had not yet begun to implement activities or policies in line with such provisions.
In addition to environmental and social arenas, participants also addressed their sense of their firm’s shortcomings related to governance issues. Managers discussed how their firm avoided blatant high-level grand corruption, yet still participated locally in widely accepted smaller-scale bribery. For instance, one participant shared that “… to keep bureaucratic procedures moving we sometimes have to provide small facilitating payments” (ID101). This and similar accounts suggest that leaders and managers know better than for their firms to pay “grease money” based on common standards of CSR but recognize that their firms still do engage in these behaviors—representing another CSR shortcoming. Table 2 provides additional illustrative quotes revealing firm’s shortcomings from recognized CSR standards and common practices.
CSR Shortcomings and Justification
The perceived discrepancy by those responsible for a firm’s CSR programs between recognized CSR standards or common practices and their firm’s activities and outcomes generates the kind of tension and ambiguity consistent with sensemaking contexts (Weick et al. 2005). Our analysis led us to focus on the sensemaking mechanism of justification (Sonenshein, 2007; Weick, 1988) that leaders and managers used to make sense of their firm’s CSR shortcomings. Justification helps individuals generate meaning under conditions of ambiguity or confusion (Staw, 1980; Weick, 1988) and enables individuals to rationalize, explain, and respond to events, situations, or issues that are ethical in nature (Sonenshein, 2007) such as those associated with CSR contexts (c.f., Carroll, 2008; Donaldson & Dunfee, 1994). Justification can be beneficial in helping “people to get their bearings and then create fuller, more accurate views of what is happening and what their options are” (Weick, 1988: 310). Justification can also be harmful by shielding from scrutiny those assumptions or practices that may contribute to what is happening (Weick, 1988). In this study, when discrepancies exist between expectations and behaviors regarding a firm’s CSR activities, individuals use justification to make sense of such situations. More specifically, participants access and articulate a wide range of individual, organizational/industry, and macro-environmental-level justifications in making sense of their firm’s CSR shortcomings as detailed in Table 3.
Individual
Findings from this study suggest that leaders and managers responsible for the CSR of their firms see themselves and other firm leaders as playing a fundamental role in the extent to which their firms fall short in CSR. These leaders and managers consider various individual-level inputs to bridge the distance between their firm’s CSR activities and recognized CSR standards and common practices. Consistent with extant literature, participants justify CSR shortcomings by emphasizing their own robust personal ethics in contrast to the firm’s ethics (Petrenko et al., 2016). For instance, a participant said that “…at home I have strong principles and I enforce them, but in my business, it is sometimes the law of the jungle” (ID016). Participants also justify CSR shortcomings by claiming powerlessness to change the status quo and blaming others (Paté‐Cornell & Cox Jr, 2014), and by arguing that ‘others are also falling short’ and therefore it is acceptable that their firms do so as well (Green, 1991).
Additionally, we found that those responsible for CSR—notably leaders and managers from SMEs—can view generational resistance as a justification for their firm’s CSR shortcomings. Several participants discussed generation gaps between top firm leadership and CSR leadership as a barrier to achieving more or better CSR. Participants talked about different understandings of CSR across generations as preventing firms from advancing CSR in terms of challenges to updating or formalizing practices to be more consistent with current norms. These participants shared their sense that CSR activities historically involved a ‘top down’ approach, and that firm leaders familiar with and accustomed to CSR practices of the past (i.e., philanthropy and industrial paternalism, (c.f., Matten & Moon, 2008)) can reject or delay the adoption of CSR practices of the present. This sensemaking aligns with research findings that CSR activities tend to be strongly influenced by top leadership values (Matten & Moon, 2008). The following quote highlights one participant’s perception of generational impediments from “older” firm leadership to the achievement of more robust CSR: “Generational change has been my biggest challenge. Making older generations understand that the system has changed. … Imagine, my father is a baby boomer, and I am a millennial. I think that real change will come when I, a millennial, can make decisions in the firm” (ID027).
Organizational/Industry
Several participants referenced organizational/industry-level justifications in making sense of why their firm is not implementing widely recognized CSR standards. While leaders and managers create and implement CSR activities, the firm itself is widely assumed to be the main engine for generating and delivering CSR (Wickert et al., 2017). Findings from this study suggest that leaders and managers tasked with developing CSR strategies and activities in parallel with stewardship of the shift from compliance to engagement (Shea & Hawn, 2019) justify lesser performance in these areas as subject to hierarchical and other structural constraints within the firm. Some participants made sense of CSR shortcomings using the justification that CSR does not have return on investment (Malik, 2015). For instance, a participant argued that “of course, we would like to start other activities with social conscience without looking for a return on investment, but our industry does not allow us to do that” (ID119). Another common justification expressed by leaders and managers for why their firms were doing less CSR than they understood they could be doing was that their firms had limited financial resources. As a result, firms could not enact a more appropriate or updated CSR strategy. In general, larger firms tend to have more financial resources than smaller ones to develop and implement CSR programs (Wickert et al., 2017). This perception was shared by many participants in this study and particularly by those from MLEs and SMEs. Referencing lack of financial resources as a justification for not implementing widely recognized CSR standards was not exclusive to smaller or regional enterprises, however. This sentiment was also shared for MNCs, as illustrated by one participant: “So it is very difficult … to ask the Finance Director to provide me with the funds [for a CSR activity]” (ID021).
Others shared their perception that their firm’s CSR performance was diminished by partner firms along the value chain. These participants justified achieving less CSR than their firm was capable of by referencing other organizations as contributing to the firm’s shortcomings. For instance, a participant shifted blame to suppliers for not fully engaging in recycling efforts by saying “we audit these firms [suppliers] to ensure that they really comply. Now, if they don’t recycle, we leave them plans of action, but really, we understand that there is not enough maturity to demand them to comply, otherwise we will not find anyone to work with” (ID012). Such organizational/industry-level justifications help individuals explain why their company is falling short of recognized CSR standards or common practices.
Macro-Environmental
Several study participants made sense of their firm’s CSR shortcomings by referring to the underdeveloped institutional characteristics of the locations in which their firm operates. This is consistent with literature that emphasizes how the environment in developing countries is characterized by poor infrastructure, weak market mechanisms, and underdeveloped legal and educational frameworks (Mair et al., 2012). These conditions can make it difficult for firms to design and implement CSR activities. This difficulty is likely to be even more salient for CSR activities aligned with recognized standards and practices given the greater complexity and integration expectations associated with these (Rathert, 2016). Not unexpectedly, participants referenced poor infrastructure and technology (Brusoni & Vaccaro, 2017) as well as weak laws and law enforcement characteristic of emerging markets (Doh & Guay, 2006) as reasons to justify their firms’ deviations from recognized CSR standards and common practices.
Another justification for CSR shortcomings is lack of external stakeholder pressure as perceived by those responsible for the firm’s CSR. This suggests that in developing economies such as Latin America, leaders and managers in charge of CSR might not feel pressured by external stakeholders to enact activities that conform to recognized CSR standards, as might be the case in more developed regions. This understanding of a lack of stakeholder pressure provides another sensed impediment and justification for why CSR practices or activities lag recognized standards in developing economies. An MLE participant highlights the importance of stakeholder pressure (and lack thereof in the Latin America operating context) as follows: “I imagine that in Europe people [from the local community] would drive local authorities crazy if they found out that most of the waste went to the river” (ID023).
Detachment from the Local Environment
As we gained insight about justification as a mechanism of CSR shortcomings, we shifted our attention to why such shortcomings exist and may be so prevalent in the first place. Growing from the unique access and nuanced findings from this field study, our analysis led us theorize that detachment, involving individual separations, organizational disconnections, and extra-organizational gaps from the local operating environment, underlies and drives firm CSR shortcomings relative to recognized CSR standards and common practices. We conceptualize detachment from the local environment as a fundamental state of disassociation and unrelatedness that prevents firms from being fully engaged with the social and physical environment in which they operate. Our analysis of participants’ accounts suggests that such detachment influences firm actors to not fully identify with or understand the needs of local stakeholders. Table 4 highlights quotations that illustrate the levels and types of detachment identified and discussed in this section.
Individual-Level Separation
Detachment at the individual level can be understood as a powerful underlying driver for why firms do not implement recognized CSR standards and common practices. The accounts of leaders and managers responsible for CSR suggest that they have difficulty fully understanding the needs of the local environment based on their social and physical experience of separation from the local community. Social class and physical barriers function as impediments to CSR because such detachment prevents leaders and managers from fully grasping or appreciating the needs of the societies in which their firms operate. As a result, managers may not advance the CSR activities of their firms in line with global standards.
Social Class Separation
As we explored the “why” of CSR shortcomings, we noticed a theme of leaders and managers expressing views of belonging to a different and more prestigious social class than populations of the country where their firms operated. Scholarship analyzing social stratification in Latin America has pointed out that class lines “are strongly drawn and tended to become in part racially defined” (Beals, 1953: 327). Social separation was often expressed by participants through references to identities of origin outside of Latin America. Such foreign-origin identities reinforced a sense of difference and separation from local communities. One MNC manager articulated their perception that locals view their firms and firm managers as both apart and above as follows: “I think that people have a great deal of respect for the [European] brand and that I am [of European origin] makes them feel inferior” (ID125).
Social class separation at the individual level was also evidenced by participants’ identifications of themselves as members of the now-developed region or country from which their ancestors belonged, as opposed to the developing country in which they live and work. For instance, one MNC participant commented: “I worked for many years in [a developed country]. I have family in [European country] and I have [European country] mentality. My grandfather came from [European country], to live in [Latin American city]. He studied in [European country] and started his business here in [Latin America country]. My ways clash with the [Latin American country] reality. [The people in this Latin American country], in general, think differently” (ID116).
Physical Separation
We also noticed the theme of physical separation between managers and local stakeholders within Latin America. This dimension of individual-level detachment relates to social class status and arises from the pervasive and embodied distance facilitated by local-but-separate environments in which leaders and managers of significant firms in Latin America tend to reside, shop, socialize, and work relative to most members of society. Physical separation from the community prevents leaders and managers from accurately perceiving or experiencing the on-the-ground realities and needs of the societies in which their firms operate. To illustrate physical detachment, we utilize a quote from an MLE participant: “We all live in gated communities, don’t we? Now, if you talk to any of us, we understand that, as a society, it is not good. It is not good for rich people to live in gated communities and pay for their security and let the poor fend for themselves” (ID023).
Physical separation was also evident through remarks that emphasized perceptions of stark “we” and “them” distinctions based on understandings of geographical divides within the country or region. For instance, one participant remarked: “They are from [rural region] and … it is difficult to work with them because they have low intellectual levels. They don’t have any schooling. They don’t know how to read or write. They don’t even know how to talk” (ID129). In combination with examples of social class separation, this comment underscores deeply entrenched perceptions of extreme differences based on historical and structural separation among leaders and managers responsible for CSR and the communities in which CSR activities occur. Social class and physical separation experiences create major hurdles for managers responsible for CSR activities to understand, address, and feel invested in the needs of local operating communities.
Organizational-Level Disconnection
Participants’ accounts also suggest a disconnection between firms and the communities in which they operate. Similar to the finding that leaders and managers responsible for CSR activities frequently are separated from the communities where their companies operate, we found that firms are often described by participants as disconnected from the local operating environment. Participants shared impressions about firms not being fully invested in local stakeholder interests or meaningfully embedded within the operating community.
For example, a participant from an MLE provided insight about the disconnection between the firm and local communities within which it operates in terms of its outsourcing activities: “We cultivate about 300,000 hectares, but we don’t own a single tractor. Everything is outsourced. We don’t have hectares of land either. It is all rented. We don’t have our own capital; it is all from outside investors. Thus, you can be in the agriculture business without owning a single factor of production” (ID018). Thus, in this context outsourcing can be seen as a disconnection between firms and their operating environments. The practice of outsourcing CSR activities may further contribute to disconnection through perceptions of insincerity by the communities they serve (Kaul & Luo, 2018).
Extra-Organizational-Level Gaps
In addition to individual-level separation and organizational-level disconnection, participants describe a lack of collaboration or communication between their firms and other relevant stakeholders at more macro-levels. We conceptualize such coordination gaps as an additional level of detachment that fundamentally limits the possibility for firms to implement and sustain recognized common practices.
Lack of Collaboration or Trust Between Different Sectors
Some participants in this study expressed a lack confidence in consistent oversight by regulatory or legal sectors, including the imposition of consequences for sub-optimal CSR operations. This in turn limits collaboration among CSR-related actors and contributes to distrust among actors and across sectors in the developing country contexts of Latin America. This gap can be understood as detachment between key institutional actors that influences CSR shortcomings, as illustrated by these remarks by a participant from an MLE: “there is still a gap between what firms are beginning to understand as CSR and what the community, people know or want” (ID023).
Lack of Coordination and Communication with Other Societal Actors
In parallel with lack of collaboration, participants also mentioned lack of communication among firms and important societal actors in the broader institutional environment. Coordinated communication from influential actors including government agencies and advocacy groups such as non-governmental organizations (NGOs) supports and advances effective and sustained CSR performance. As a participant from an MLE elaborated: “Something I notice is that firms start CSR strategies without coordinating with others. For instance, with local governments, with other municipalities, or with other firms in their same community. So, sometimes we find out that there are people doing certain things and nobody knows, because there is little communication” (ID020). Gaps in coordination among firms and other societal actors, along with other individual- and organizational-level dimensions of detachment, influence how leaders and managers perceive the possibility and urgency for their firms to pursue CSR activities consistent with global standards.
Discussion of Findings
This research provides a novel and nuanced view of CSR in terms of how leaders and managers responsible for CSR make sense of their firm’s CSR shortcomings relative to recognized CSR standards or common practices. We identify and explain CSR shortcomings as an important but overlooked phenomenon in CSR scholarship based on a field study of significant SMEs, MLEs, and MNCs in four developing countries of Latin America. Through a sensemaking lens, we advance a model of CSR shortcomings that specifies justification as a key mechanism and surfaces detachment from the local environment as its underlying driver. Detachment at individual, organizational, and extra-organizational levels drives CSR shortcomings. Detachment results in less impetus or ambition to achieve a firm’s potential for CSR based on disassociation with CSR needs or opportunities in operating locales. Lesser degrees of detachment lead to possibilities for firms to achieve more CSR because managers, firms, and extra-organizational actors are more connected with and aligned around CSR needs and opportunities. Attention to CSR shortcomings sparks justification at the individual, organizational, and extra-organizational levels by leaders and managers responsible for CSR. Both detachment and justification contribute to the perpetuation of CSR shortcomings.
Contribution to CSR Scholarship
The phenomenon of CSR shortcomings, and the ways in which leaders and managers make sense of these, is a novel arena for business ethics research. This research surfaces and explores the common and consequential phenomenon of CSR shortcomings by 30 significant firms in four developing countries of Latin America. While these firms pursue CSR activities informed by recognized CSR standards and common practices, they also deviate from such standards in practice. Findings from this study suggest that falling short of CSR standards and common practices is highly salient for the MNCs, MLEs, and SMEs in this study.
In an increasingly globally networked professional world, leaders and managers responsible for the CSR strategies and initiatives of their firms tend to be aware of and knowledgeable about widely recognized standards and norms for CSR within and across industries and geographies (Bertels & Peloza, 2008; Matten & Moon, 2008). While MNCs, major regional enterprises, and successful SMEs are often characterized as capable proponents of recognized CSR standards, this field research indicates that they frequently fall short of such standards in practice. In this study, we position CSR shortcomings in terms of recognized CSR standards or common practices relative to the CSR behaviors or outcomes of the firm. We spotlight such shortcomings as a phenomenon in which firms pursuing CSR activities do not fully attain expected levels of achievement in line with recognized CSR standards or common practices.
This empirical study identifies a particular kind of CSR context that we suspect may be common in these Latin American countries, and might extend to other developing regions and perhaps to more developed regions as well. Although CSR shortcomings do not fall within the purview of CSI, they are nonetheless counterproductive to the advancement of CSR. In this research, individuals make sense of their firm’s CSR shortcomings with justifications that rationalize, defend, substantiate, and ultimately further perpetuate their existence (Sonenshein, 2007). Importantly, findings from this study raise important ethical and operational questions about what capacities firms have for engaging in CSR that they may not be accessing to more fully align with recognized CSR standards or common practices.
Contribution to Sensemaking Scholarship
In addition to surfacing the phenomenon and sensemaking context of CSR shortcomings, this study specifies justification (Sonenshein, 2007; Weick, 1988) as its key enabling mechanism. Sensemaking is utilized to understand novel, confusing, or ambiguous events or issues that violate expectations in some way (Maitlis & Christianson, 2014). Sensemaking goes beyond retrospective interpretation (Weick, 1993) and involves generating an understanding of situations actors are both trying to comprehend and actively author (Sutcliffe, 2016; Weick, 1995; Weick et al., 2005). Sensemaking is instrumental in understanding current circumstances and thus also contributes to perpetuating prevailing circumstances and shaping of the future (Maitlis & Christianson, 2014; Weick, 1993).
We build on and extend sensemaking scholarship (Weick, 1988, 1993) by proposing justification as a mechanism informed by influences from multiple levels that enables leaders and managers responsible for CSR activities to make sense of their firms’ CSR shortcomings. The context of CSR shortcomings is a generative domain for better understanding how justification is utilized “when the current state of the world is perceived to be different from the expected state of the world” (Weick et al., 2005: 409) with regard to actual CSR behaviors or outcomes and recognized CSR standards or practices by firms. Participants in this study make sense of their firm’s CSR shortcomings at three different levels (individual, organizational/industry, and macro-environmental) of justification in understanding and defending such behaviors. The study contributes to sensemaking scholarship by specifying that justification based on individual, organizational/industry, and macro-environmental influences serve as a mechanism that decouples CSR practice from CSR standards, which helps leaders and managers justify why their firm’s actual CSR practices differ from recognized CSR standards.
In line with sensemaking scholarship (Sonenshein, 2007; Weick, 1995), we position justification as post-hoc reasoning that individuals construct in arriving at an understanding of their firm’s CSR shortcomings. That is, they provide justification for their firm’s CSR shortcomings after they perceive that such shortcomings have occurred. Justification helps those responsible for the CSR activities to make sense of and “live with” their firm CSR shortcomings, while also shielding assumptions and practices associated with CSR shortcomings from further critical scrutiny and ultimately limiting change for the better (Weick, 1988). Sensemaking of CSR shortcomings through justification serves as a “springboard to action” (Weick et al., 2005: 409) that further influences the firm’s CSR practices. In the case of CSR shortcomings, “action” informed by justification is anticipated to translate into not taking steps to bring CSR activities up to broadly recognized standards.
Justification enables actors to rationalize CSR shortcomings in ways that elicit tacit acceptance for such behaviors and outcomes of the firm. That is, justification of CSR shortcomings perpetuates the phenomenon as “accepted” status quo for the firm. A CSR shortcoming that is rationalized and defended through justification risks becoming an accepted ongoing reality, even when those making sense of the behaviors and circumstances have a sense that things could and should be better, i.e., that CSR shortcomings could be addressed and resolved. For individuals with responsibilities for their firm’s CSR activities or outcomes, justification serves as a cognitive buffer and salve for when they “look in the mirror” and consider discrepancies between the firm’s CSR performance relative to their familiarity with CSR standards and common norms. Through sensemaking, justification enables individual managers to acknowledge performance shortcomings while easing their own conscience and excusing themselves from a sense of personal responsibility. Because sensemakers further enact the ongoing reality of their firms (Weick, 1993), this research provides a grounded example in which justification can be understood to cycle-back into the perpetuation of pre-established behaviors. This study provides an empirical context in which justification can be understood as a powerful sensemaking mechanism that perpetuates existing CSR shortcomings.
Detachment as Underlying Driver of CSR Shortcomings
Insights from this study suggest that firm leaders and managers responsible for CSR activities in Latin America often are not in touch with or integrated in the immediate social or physical environment shared by other local stakeholders. In parallel, firms operating in these markets often are not sufficiently connected with or invested in the local or regional operating environment. Such individual and organizational-level detachment occurs against the backdrop of substantial extra-organizational-level detachments in the Latin America context, which further derails the potential for CSR performance.
Latin America, similar to other developing regions, is characterized by extreme contrasts (Bruton et al., 2009). These are evident in social, economic, and racial contexts of the region (Khoury et al., 2015). Societal groupings emerge as individuals with similar characteristics navigate toward each other based on common interests (Kosfeld et al., 2009). Once groups are formed, the focus of their members turns inside the group as opposed to toward other groups within society (Michalopoulos & Papaioannou, 2013). Consistent with Dacin et al. (1999), these stronger social ties displace weaker social ties. Actors tend to be most loyal to and take action to benefit the interests of the group to which they are most closely tied and identified (Ashforth & Johnson, 2001).
In this study, leaders and managers of CSR strongly relate to and feel closely connected with the organizational entity for which they work. However, their accounts suggest that they may have a lessened—or less urgent—sense of responsibility for and commitment to initiating, implementing, or stewarding social initiatives for the communities in which they work. This is particularly likely to be true when there are perceived tradeoffs—when acting in the interest of the other stakeholders is viewed to occur at the expense of the firm. For example, we would expect that if leaders and managers and their firms would be more embedded in and identified with the social and physical environment in which they are operating, they might be more likely to take more responsible and committed action—and to achieve more of the firm’s CSR potential—for the benefit of other stakeholders.
Leaders and managers in this study characterized their own and other firms as being disconnected from local or regional operating environments. Firms were described as not yet having a substantive interest in or commitment to CSR. This corresponds to Mirvis and Googins (2006) conceptualization of the stages of corporate citizenship, which considers a firm’s actions and social contract principles with regard to its responsiveness to stakeholders and financial results. Several participants in this study described firms operating in Latin America as being at earlier stages of development, such as those corresponding to stage 1 “Elementary,” involving a sense of CSR as job creation, supply, profit generation, and compliance, or to stage 2 “Engaged,” involving a sense of CSR as philanthropy, environmental protection, and license to operate. Firms at these stages are typically focused on meeting minimum expectations of social responsibility as governed by laws; however, there is little effort to exceed legal or other local expectations. While the accomplishment of locally required CSR initiatives is expected in these phases as firms build their credibility in CSR, achievement of CSR standards or norms recognized globally—but not locally or regionally mandated—is not.
Additionally, developing market contexts have generally weaker institutional actors and structures (Gardberg & Fombrun, 2006; Rivera, 2010) and may be characterized as having a “hazy” institutional landscape with high uncertainty and volatility (Dorado, 2005). Literature proposes that firms in such markets do not always have a strategic approach to CSR (Logsdon & Wood, 2005). Instead, CSR activities are often the result of institutional isomorphism of the location where a given firm operates (Husted et al., 2010). This means that firms are more likely to mimic CSR activities established by other firms than to establish their own programs. In locations with an underdeveloped institutional environment, firms are not incentivized or held accountable for adopting more widely recognized CSR strategies. The study contributes to CSR scholarship by surfacing that detachment based on influences at individual, organizational/industry, and macro-environmental levels can be understood as an underlying driver of CSR shortcomings, leading to CSR activities that deviate from recognized CSR standards or common practices.
Limitations, Future Directions, Managerial and Policy-Maker Implications
The identification, specification, and explanation of CSR shortcomings in the four developing countries of Latin America included in this study provides valuable theoretical and practical insights into how managers make sense of such shortcomings. Much remains to be explored in continuing to advance a comprehensive understanding of CSR shortcomings. The sampling, developing market contexts, and localized institutional conditions of this field study pose limits on broad-based geographical generalizability. We suspect that CSR shortcomings are relevant in other countries of Latin America, in emerging economies globally, as well as within more developed regions. It would be interesting to consider CSR shortcomings, sensemaking, and detachment in additional Latin American countries, as well as in different developing and emerging regions such as in Africa or Asia. Comparative studies involving developed regions with more mature CSR understandings and more extensive CSR capabilities, stricter or more stable regulatory environments, and more receptive conditions to implementing CSR activities in line with standards, would also provide generative future directions. Future studies can examine further nuances of CSR shortcomings, including whether there is intent to achieve global CSR standards, as well as comparative considerations across multiple countries, types of firms, and managerial role or experience.
In terms of operationalizing CSR shortcomings, one approach could be to employ measures from broadly recognized global standards or indices associated with CSR such as the Global Reporting Initiative (GRI), United Nations Global Compact (UNGC), and Dow Jones Sustainability Indices (DJSI), among others. For firms with rankings or metrics below the maximum, the gap between actual and maximum score could be interpreted as a shortcoming point of reference. At a minimum, such an approach makes visible and establishes a baseline awareness—by both leaders and managers as well as other internal and external stakeholders—of opportunities for the firm to achieve more CSR and associated positive outcomes. In parallel, it would be valuable to measure managers’ direct experience or knowledge of CSR through their prior jobs or training. Operationalizing a firm’s capabilities to achieve more or better CSR would also be a useful next step, as would measuring a firm’s engagement potential and intention for CSR achievement.
A limitation of this research is that due to the nature of the data, we do not explicitly address the relationships among levels of detachment, justification, and CSR shortcomings. Future research could explore such relationships in more depth with both qualitative and quantitative approaches. Additional generative areas of study could focus on other mechanisms of CSR shortcomings. We highlight justification as a key mechanism of CSR shortcomings; however, we do not explore whether gender, national or socio-ethnic culture, or other potential attributes or antecedents may be influential. Future research could also explore why and under what conditions might those besides those responsible for CSR, e.g., other individuals both inside and outside a firm, make sense of CSR shortcomings. Additionally, future research might look at CSR shortcomings from different theoretical lenses that might unpack the degree of persuasiveness of justifications for this phenomenon. Finally, detachment holds promise for understanding a wide range of issues and behaviors relevant to business ethics that expand beyond this study’s focus on firm CSR shortcomings. Detachment might offer a potentially powerful explanation for why individuals and groups decouple from a wide range of complex societal, environmental, and ethical issues. For example, how might detachment facilitate a lack of commitment to, inaction toward, or underperformance of social justice?
Our focus in this empirical study is advancing new understandings about how leaders and managers responsible for CSR make sense of their perceived firm’s shortcomings from recognized CSR standards and common practices in four developing countries of Latin America. An implication for firm leaders and managers in these developing regions is that there are strong sensemaking and detachment influences at individual-, organizational/industry, and macro-environmental levels that prevent firms from crafting and enacting CSR activities that conform to broader CSR standards or norms of practice. Insights from this study are also anticipated to help leaders and managers responsible for CSR disaggregate the causes of their firm’s CSR shortcomings in order to tackle obstacles across multiple levels that are common to developing regions, industries, and types of firms.
Implications for policymakers also emerge from this study. In developing economies such as Latin America, policymakers must overcome numerous hurdles in working with firms to better address social and environmental needs. This study surfaces the obstacle of CSR shortcomings by firms and encourages policymakers to become more familiar with the nuances of this phenomenon. Ongoing inquiry and candid cross-sector dialog between local, national, and global policymakers and firms in terms of areas in which CSR achievement may be lagging recognized CSR standards or common practices is an initial leverage point for generative action. By paying attention to the justifications communicated by firms about why more or better CSR is not happening, policymakers can gain insight about the landscape of opportunities for strengthening CSR. By recognizing detachment as an underlying driver of CSR shortcomings, policymakers can work on innovative and holistic approaches at organizational/industry, and macro-environmental levels to help firm actors better identify and understand the needs of stakeholders in the communities in which they operate. It is particularly important for policymakers supporting the implementation of the United Nations Sustainable Development Goals (SDGs) in developing economies to acknowledge and address the limitations that detachment imposes on the success of associated CSR initiatives by firms in these regions.
Conclusion
Firm behaviors that hinder the achievement of recognized CSR standards and common practices limit the opportunity horizon for positive CSR outcomes. The insights advanced by this study expand business ethics scholarship and deepen an applied understanding of the challenges to implementing CSR best practices in developing economy contexts of Latin America. In particular, this research contributes to theory by making visible and explaining the common yet inconspicuous phenomenon of firm shortcomings in CSR practice and performance. We adopt a sensemaking lens to explore the phenomenon of CSR shortcomings in organizational settings, and we identify and explain justification as a key mechanism and detachment from the local environment as an underlying driver of firm shortcomings from recognized CSR standards and common practices, both of which further perpetuate this phenomenon. This study spotlights CSR shortcomings as a consequential phenomenon that merits more in-depth investigation in these and other developing market contexts, as well as in more developed regions where we suspect there might be important parallels as well as distinctions. This research also contributes to and extends the literature on CSR in developing economies, and in particular advances CSR-related scholarship in Latin America. Overall, insights from this research provide generative trajectories for better understanding and addressing CSR shortcomings—and advancing CSR opportunities—across global business contexts.
Data availability
Due to the sensitive nature of the research, the anonymized data supporting the findings of this study are available from the corresponding author upon reasonable request.
Notes
Transcripts are double-spaced with font size 12.
We provide illustrative quotes using anonymized participant identifiers that cannot be paired with the list of participants.
See Appendix A for list of external experts.
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Acknowledgements
The article benefited from helpful suggestions and comments on earlier versions by participants at the Academy of International Business Annual Meeting in Copenhagen and at the Academy of Management Annual Meeting in Boston, where it was nominated for the Carolyn Dexter Award for Best International Paper. Furthermore, the authors are grateful to Dawn R. Elm and Jorge E. Rivera for their insightful and constructive feedback, which helped improve the manuscript. The authors would also like to thank section editor Antonino Vaccaro and two anonymous reviewers for their valuable guidance and ideas. The usual disclaimer applies.
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Open access funding provided by University of Applied Sciences of the Grisons. This study was co-funded by the Konrad-Adenauer-Stiftung (KAS) (project number IB17-003).
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Hauser, C., Godinez, J. & Steckler, E. Making Sense of CSR Challenges and Shortcomings in Developing Economies of Latin America. J Bus Ethics (2023). https://doi.org/10.1007/s10551-023-05550-6
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DOI: https://doi.org/10.1007/s10551-023-05550-6