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Strategy for generating social value to promote development and combat poverty: the case of Guatemala

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The purpose of this article is to describe the internationalisation of smaller companies as a strategy for generating social value to promote development and combat poverty.
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Competitiveness for Industry,
Science and Education
JOSÉ SÁNCHEZ GUTIÉRREZ
Coordinator
PAOLA IRENE MAYORGA SALAMANCA
ELSA GEORGINA GONZÁLEZ URIBE
JUAN GAYTÁN CORTÉS
JUAN ANTONIO VARGAS BARRAZA
Assistant Coordinators
Competitiveness for Industry,
Science and Education
Universidad de GUadalajara
Centro Universitario de Ciencias Económico Administrativas
Primera edición, 2016
D.R. © 2016, Universidad de Guadalajara
Centro Universitario de Ciencias Económico Administrativas
Av. Periférico Norte 799, Edificio G-306
Núcleo Los Belenes
Zapopan, Jalisco
45100, México
Tel-fax: +52 (33) 3770 3343 ext. 25608.
ISBN: 978-607-9490-04-1
Impreso y hecho en México
Printed and made in Mexico
[ 55 ]
3
Strategy for generating social
value to promote development
and combat poverty:
the case of Guatemala
Tania Elena González-Alvarado1
Sara González-Fernández2
V. Ma. Antonieta Martin-Granados3
Abstract
The purpose of this article is to describe the internationalisation of
smaller companies as a strategy for generating social value to promote
development and combat poverty. An exhaustive study was perfor-
med on the study population, and therefore a statistical sample was
not used. The research methods used were: questionnaire, systematic
observation over five years, and review of documents. Guatemalan
companies were found with the same study profile as those in Mexico,
Argentina and Spain, but due to their geographic position the local
impact was greater. These Guatemalan companies direct their social
responsibility and value generation activities towards malnutrition
1. Centro Universitario de Ciencias Económico Administrativas-Universidad de
Guadalajara.
2. Universidad Complutense de Madrid.
3. Universidad Nacional Autónoma de México.
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Tania Elena González-Alvarado, Sara González-Fernández & V. Ma. Antonieta Martin-Granados
problems that aect the population in extreme poverty. The main con-
clusion is that “it is not the amount of development cooperation that
provides the greatest impact, but rather it is the way in which these
resources are directed and applied.” In the case analysed here, the
focus on smaller companies in economically poor areas is what allows
for the greatest impact.
Keywords: SME, Al-Invest, economically poor areas, rural devel-
opment.
Introduction
In the last decade, the international cooperation system has con-
sidered the use of new types of aid with the participation of new
actors (Sumner and Mallett, 2012; Pino, 2012; Cabral and Weinstock,
2010; Berger and Wissenbach, 2007; Grimm, et al., 2009).4
Even the first of the 17 Sustainable Development Goals aims
to “end poverty in all its forms everywhere” by 2030. The targets
aim to eradicate extreme income poverty (measured as less than
$1.25 a day), reduce multi-dimensional poverty by half, universalise
social protection, guarantee economic rights and strengthen the
resilience of vulnerable people (Arriola, 2015).
Despite these changes, economically poor areas continue to
receive key aid in the form of basic goods and services that other
parts of the world take for granted, such as access to water, food
(Berg, 1973) and housing. Studies on this type of development coop-
eration show that many projects have not been successful due to
the lack of strategies that add value that can be shared (Renninger,
2013; Chandy and Kharas, 2011; Bardhan, 1993; Sanyal, 1991).
4. China has cancelled nearly USD 1.3 billion in debt owed by 31 African countries, abolished
taris on 190 kinds of goods from 29 least developed countries in Africa and promised
to do so for more than 400 goods; China’s development assistance is set to increase
substantially. Since 1956, China has completed some 900 projects of economic and
social development in Africa, provided scholarships for 18,000 students from 50 African
countries to study in China and it sent 16,000 medical personnel who have treated more
than 240 million patients in 47 African countries (Berger and Wissenbach, 2007).
[ 57 ]
Strategy for generating social value to promote development
and combat poverty: the case of Guatemala
Economic development cannot be approached exclusively
using a vision based on aggregate average indicators and the
assumption that its operations are regulated only by national states
or an alleged, unstoppable globalising logic (Alburquerque, 2001).
Similarly, studies on development must go beyond quantifications
to identify the “universal” (Perez and Mainwaring, 2015; Canul, et
al., 2015, Cortés, 2015), focusing more on the nuances involved in
local development which will allow for a greater understanding of
dierent socio-economic realities.
This is the case of the reality of local development in Guatemala
(Böckler and Herbert, 1970; Comas, et al., 1998; Bastos and Camus,
2003; Casas, 2007). Without being fully aware of it, societies such as
Guatemala are immersed in globalisation. They enjoy the benefits
globalisation provides (telecommunications, greater market oppor-
tunities), but they do not realise the damage that may be caused
to their economy (extinction of companies with a certain level of
competitiveness, invasion of foreign products that substitute their
own), their culture (prioritisation of consumption, loss of values,
loss of culture related to their Maya heritage), their natural resources
(exhaustion of resources, climate change, greenhouse eect), to
mention just a few (Del Cid, 2013; Chávez, 2015; Gorestein, 2015).
This international presence does not guarantee the sucient
dissemination of technical progress among the various local pro-
duction systems. Productive linkages with external dynamic activi-
ties are reduced, net creation of skilled jobs is limited, and the
eects of disseminating innovations in the productive base of each
territory are diminished. This makes territorial policies to promote
productive innovation and business development necessary, as well
as policies to train human resources according to the needs in each
local production system, and to ensure conditions of environmental
sustainability in the dierent activities undertaken (Alburquerque,
2001). The important thing is to know how to incorporate this exog-
enous dynamism as a part of a local development strategy (Albur-
querque, 2001; Colina, 2015; Diez, and Urtizberea, 2015).
One of the reasons that explain inequality in Guatemala is its
multiculturalism; for decades, conditions have not facilitated the
incorporation of all groups into the national education, health and
justice systems under conditions that met their needs depending
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Tania Elena González-Alvarado, Sara González-Fernández & V. Ma. Antonieta Martin-Granados
on their identity. In recent decades, institutional eorts have been
made, both by international bodies as well as national organisa-
tions, to implement programmes that promote inclusion and adapt
to a certain (modest) degree the services oered to the unique
characteristics of each group (Del Cid, 2013). The critical situation
of the Guatemalan people is reflected in the percentages of poverty
in its dierent regions (called departments). The tendency is for
poverty to be concentrated in rural areas. Departments that are
more rural have the highest poverty rates (Del Cid, 2013).
Diaz (2015) analysed four Guatemala municipalities. Two were
characterised by large-scale production, while the other two had
small-scale production. The study concluded that agriculture can
be a driver of local development when it is small-scale and oriented
toward the market, as occurs in Almolonga and El Progreso. When
agriculture is larger-scale, the contribution to local development
may be lessened, as was the case in Santa Lucía Cotzumalguapa, or
null, as in the municipality of El Estor. Statistical evidence, which
was significant, indicates that in Guatemala local development
generated by agriculture, especially small-scale agriculture, may
contribute to reducing poverty (Diaz, 2015).
Guatemala has the highest population of any country in Central
America. In 2011 it had 14.7 million inhabitants, with a population
density of 135 inhabitants per km². The attached population pyra-
mid shows that the majority of the population is young, as the pyra-
mid has a wide base, and the age groups decrease as age increases.
This distribution makes sense if we keep in mind that Guatemala
has the largest population growth in Central America, with a rate of
2.4%. Thus, the average age of Guatemalans is barely 20 years old,
which is again the lowest in Central America. Forecasts indicate
that Guatemala will have 16.2 million inhabitants in 2015, 20.0 mil-
lion in 2025, and 25.2 million in 2040.
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Strategy for generating social value to promote development
and combat poverty: the case of Guatemala
Poverty and population in Guatemala
The distribution of the population by area of residence shows that
42.8% live in rural areas, while 57.2% live in urban areas. Guatemala
has the largest indigenous population of any country in Central Ame-
rica; the distribution of ethnicities is estimated to be as follows: 59.4%
Ladino, 40.3% Maya, 0.2% Garifuna, 0.3% Xinca, and 0.1% other. Multi-
dimensional poverty increased by four percentage points, rising from
59.5% in 2006 to 62% in 2011. Obstacles to human development are even
more severely felt among the indigenous population. 83% experience
shortages in the three basic aspects (income, education and health)
compared to 49% of the non-indigenous population (Valérie, 2015).
The percentage of dependents is the highest in Central America
at 85%, not because there is a high percentage of people over 65
years old (just 4.4%), but rather due to the large numbers of chil-
dren and adolescents under 14 years old, 41.5% (BCIE, 2012).
Table 1
Mortality rates due to malnutrition, 2005 and 2013
Region 2005 2013 Difference
República 20.7 11.5 -9.2
Guatemala 18.9 13.8 -5.1
El Progreso 10.3 7.3 -3.0
Sacatepéquez 31.3 17.6 -13.8
Chimaltenango 25.2 7.6 -17.6
Escuintla 23.1 11.2 -11.9
Santa Rosa 20.6 7.5 -13.1
Sololá 47.2 10.6 -36.7
Totonicapán 10.1 4.7 -5.4
Quetzaltenango 18.8 12.1 -6.7
Suchitepéquez 16.3 4.1 -12.2
Retalhuleu 7.5 7.9 0.3
San Marcos 26.6 13.5 -13.0
Huehuetenango 14.4 3.6 -10.8
Quiché 16.3 6.3 -10.0
Baja Verapaz 41.0 9.8 -31.2
Alta Verapaz 37.0 25.5 -11.5
Petén 3.3 3.8 0.5
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Tania Elena González-Alvarado, Sara González-Fernández & V. Ma. Antonieta Martin-Granados
Region 2005 2013 Difference
Izabal 18.8 5.5 -13.3
Zacapa 24.6 5.2 -19.4
Chiquimula 16.5 6.2 -10.3
Jalapa 12.1 3.9 -8.2
Jutiapa 9.7 4.2 -5.5
Source: Instituto Nacional de Estadística (National Institute of Statistics) (2015).
Note: Deaths due to malnutrition in one year, divided by the average population
for that same year, multiplied by 100,000.
Malnutrition is a scourge that aects the country and children in par-
ticular. Child malnutrition in children under five years old is 49% by
height and 23% by weight (BCIE, 2012).
Table 2
Percentage of chronic malnutrition in children under 5 years old by region
Year
Guatemala
Alta and Baja Verapaz
Chiquimula, Izabal, El
Progreso and Zacapa
Santa rosa, Jalapa and
Jutiapa
Sacatepéquez,
Escuintla and
Chimaltenango
Sololá, Totonicapán,
Quetzaltenango,
Suchitepéquez, San
marcos and Retalhuleu
Huehuetenango and
Quiché
Petén
1987 44.2 49.8 43.3 54.0 67.4 63.0 67.7 ND
1995 33.5 55.3 43.9 45.4 45.7 59.5 69.9 ND
1998 28.6 56.7 49.1 45.6 45.5 54.8 69.2 46.2
2002 36.1 61.0 39.7 46.6 42.1 58.5 68.3 46.1
2009 20.6 51.1 41.3 33.9 38.5 47.1 64.8 36.6
Source: National Survey on Maternal and Infant Health 2002 and 2008/09.
The housing deficit is high: close to 40.5%, but it is estimated that this
problem is much more pronounced in terms of quality (61%) than
quantity (39%). With regard to the provision of basic services, a high
percentage of homes lack basic services: just 76.3% of homes have
running water, just 81.8% have electrical lighting and only 40.3% have
a waste removal system. Logically, these shortages are much more
pronounced in rural areas than in urban areas (BCIE, 2012).
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Strategy for generating social value to promote development
and combat poverty: the case of Guatemala
The country faces high poverty rates and marked income inequa-
lity. Poverty aects more than half of the population, 54.8%, while
extreme poverty aects almost a third of the population at 29.1%. As
with the housing deficit, the phenomenon of poverty is much more
pronounced in rural areas, particularly in the country’s high plateau,
where there is a larger indigenous population, as can be seen on the
attached map (BCIE, 2012).
In Guatemala, a third of young people 15 years of age leaves school
and takes precarious jobs. To sum up, reducing poverty means elimina-
ting the barriers that prevent people from flourishing. Investment and
earning power are not enough. Guatemala must recognise its multidi-
mensionality and the diversity of its expressions. This is only possible
within the framework of a country-based development strategy, aimed
at human beings and in the context of a shared, complex and poten-
tially vulnerable planet (Arriola, 2015).
Table 3
Earned income in Guatemala by year for each group (2002-2014)
Year
Total
Male
Female
Indigenous
Non-
indigenous
From 15 to
24 years
old
25 years old
and above
Urban
Rural
2002 1,216 1,412 879 923 1,434 967 1,303 1,597 853
2003 1,424 1,634 1,050 881 1,688 1,068 1,570 1,878 1,019
2004 1,205 1,339 951 817 1,397 1,008 1,269 1,502 820
2010 1,680 1,831 1,393 1,119 2,001 1,214 1,817 2,109 1,133
2011 1,685 1,801 1,443 1,198 1,988 1,229 1,828 2,113 1,223
2012 1,734 1,880 1,465 1,214 2,056 1,241 1,877 2,154 1,258
1-2013 1,917 2,028 1,703 1,325 2,241 1,490 2,039 2,274 1,499
2-2013 1,893 2,006 1,682 1,367 2,236 1,481 2,012 2,242 1,478
1-2014 2,083 2,253 1,758 1,235 2,457 1,492 2,263 2,652 1,345
2-2014 2,207 2,298 2,028 1,561 2,538 1,517 2,401 2,773 1,471
Source: Instituto Nacional de Estadística (National Institute of Statistics) (2015).
Inequality is high, regardless of the indicator used. The poorest decile
receives just 1.0% of the national income, while the richest decile recei-
ves 47.4%. The Gini coecient is 0.59. Guatemala has one of the hig-
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Tania Elena González-Alvarado, Sara González-Fernández & V. Ma. Antonieta Martin-Granados
hest levels of inequality in Latin America and the Caribbean and this
region has the highest inequality levels in the world (BCIE, 2012).
Development cooperation and business relations:
European Union-Guatemala
Business relations between the European Union and Guatemala have
become more important in recent years. Currently, the European
Union is the fifth largest receiver of exports from Guatemala, and is
the fourth largest importer of goods to Guatemala. More than 172,000
Europeans visited Guatemala in 2009 (EU, 2015).
As a member of the Central American Integration System (SICA, for
its Spanish acronym), Guatemala has a wide-ranging relationship with
the European Union that includes political dialogue, a far-reaching
cooperation agenda and, at the same time, it benefits from a favourable
business system under the initiative to promote sustainable develop-
ment and good governance included in the new Generalised System
of Preferences (EU, 2015).
The interest in strengthening business ties between the EU and
Guatemala has increased significantly thanks to the Association Agre-
ement between the European Union and Central America (EU, 2015).
During the Fourth European Union-Latin America and Caribbean
Summit held in Vienna, Austria in May 2006, heads of state and gover-
nment from the European Union and Central America made the deci-
sion to begin negotiations regarding an Association Agreement, which
implies establishing mutual commitments in three complementary
areas: political dialogue, cooperation and trade (EU, 2015).
In terms of trade, the Association Agreement provides for the
establishment of a free trade area between Central America and the
EU, which means the eective implementation of a Customs Union bet-
ween the Central American countries, a process that has made signi-
cant advances recently. Thus, one of the goals of the Country Strategy
that provides the framework for European cooperation activities in
Guatemala for the period 2007-2013 is to strengthen the country’s capa-
bilities in the fields of economic development and trade. Along these
lines, the Project to Strengthen Guatemala’s Position in International
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Strategy for generating social value to promote development
and combat poverty: the case of Guatemala
Markets —Foguami, for its Spanish acronym— (10 million) aimed
to contribute to equitable, sustainable growth in the economy and
employment by strengthening foreign trade in regional and European
markets, promoting foreign investment, and increasing competition
and competitiveness (EU, 2015).
Additionally, the project to Facilitate Guatemala’s Participation in
the Regional Integration Process and the Association Agreement with
the European Union (6.8 million) aims to improve the capabilities of
the Guatemalan government institutions in charge of implementing
the commitments arising from the Central American Regional Inte-
gration Process and the Association Agreement, and to encourage the
participation of civil society in both processes (EU, 2015).
In addition to these bilateral programmes, the European Union
finances the Regional Programme AL-Invest IV, whose Central Ame-
rican component includes specific activities for Guatemala (2.6
million). The programme’s goal is to contribute to improving social
cohesion in the region (Mexico-Central America) by strengthening
SMEs, increasing competitiveness, incorporating new technologies,
improving processes and facilitating connections that contribute to
better environmental management and internationalisation of pro-
ducts/services so as to take advantage of the opportunities oered by
regional integration and free trade and business cooperation agree-
ments with Europe (EU, 2015).
The Guatemalan projects that could avail themselves of the Spa-
nish Carbon Fund encompass a wide variety of technologies, including
biomass and agricultural waste. Agricultural waste such as rice hulls,
sugarcane bagasse and paper plant residue, among others, are used to
generate heat and electricity (Perez, 2012).
There is a Spanish Fund for Latin America and the Caribbean in
collaboration with the World Band (SFLAC). This fund is directly related
to the International Finance Corporation. This fund is particularly
focused on providing better access to financing for micro, small and
medium-sized enterprises. It also promotes infrastructure develop-
ment with participation from the private sector and encourages social
and environmental sustainability in the private sector.
Within this framework, the Spanish government has supported
the CoST Initiative (Construction Sector Transparency Initiative) in
Guatemala. This initiative began in the United Kingdom in 2008 with
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Tania Elena González-Alvarado, Sara González-Fernández & V. Ma. Antonieta Martin-Granados
the aim of combating corruption in the construction sector. Since then,
seven countries have adopted this initiative. They are: Philippines,
Vietnam, Tanzania, Ethiopia, Zambia, Malawi and the United King-
dom. Guatemala joined CoST as an associated country in November
2009, with financing from the Spanish government and technical sup-
port from the World Bank (Perez, 2012).
In 2008, Spain supported the creation of the Spanish Fund for
Social Entrepreneurship (FEES, for its Spanish acronym), managed by
the Multilateral Investment Fund (MIF). This fund provides resources
to Latin American micro and small enterprises through productive
activities and the provision of basic services (Perez, 2012).
The fund is part of the Social Entrepreneurship Programme (SEP)
of the IDB, which promotes the development and implementation of
financial mechanisms that encourage sustainable solutions to the
socio-economic problems that aect poor, marginalised populations.
The SEP provides financing through associated local organisations to
individuals and groups who would normally not have access to com-
mercial or development loans at regular market rates. Under the pro-
gramme, the Bank awards loans and donations to private, non-profit
organisations and local or regional governmental organisations that
provide financial, business and social assistance, as well as commu-
nity development services to disadvantaged populations (Perez, 2012).
This cooperation between small units of production combined with
the support provided through development cooperation have enabled
economic activities to have a positive impact upon local development
in economically poor areas. To better understand this phenomenon,
this study used a combination of tools, an overlap of methods and
triangulation of results.
Research method
The evidence gathered has been based on companies in the agro-
industrial sector that participated in one or more international busi-
ness fairs. The agro-industrial sector is the most representative in
terms of the number of events held by the Eurocentro Nafin in the
period between 2002-2009 (seven events of sixteen; of the 2724 com-
panies that participate in the events, 1171 are from the agro-industrial
[ 65 ]
Strategy for generating social value to promote development
and combat poverty: the case of Guatemala
sector). By number of participants, Mexican and Spanish companies
had a larger presence at said events.
European companies were eliminated from the list, except Spanish
companies, leaving us with a group of 1112 companies for analysis. This
last group was given an exploratory questionnaire that allowed us to
identify enterprises that no longer existed so as to perform a second
filter. Some directories used for the study were over ten years old
(2002). Records of a considerable age were used so as to be able to
retrospectively analyse the behaviour of the links between companies
and other local agents.
Using this second filter, a group of 476 companies was obtained
(42.8% of the 1112) who had a presence in directories; of these, 435 had
a website (39.1% of the 1112). The Spanish companies (219) in this sec-
tor showed a greater ability for using virtual media: their websites are
more visible; their web pages oer greater quality and use of resources,
so much so that entering their websites translates into a virtual visit to
the company; they have spaces to announce their attendance at fairs,
missions and business meetings, describing their experiences at said
events and the establishing of new contacts.
A third filter was performed according to the company’s age, size,
social responsibility, and strategies for creating links abroad. This
resulted in a new group made up of 234 companies. Of these, 209
were from Mexico, Spain and Argentina (Gonzalez, 2015). Only 25 of
the 234 companies were located in other Latin American countries. In
this last group (234), six companies were identified as being the most
representative in terms of social responsibility actions that had an
impact upon local development (critical cases). Five of these compa-
nies were located in countries such as Mexico, Spain and Argentina,
and one was located in Guatemala. Thus, the research results direct
us to the particular study of Guatemalan companies. There are fewer
Guatemalan companies compared to those from the other three cou-
ntries. However, Guatemala is not as big as the others. This last point
leads us to consider Guatemala to be a representative country, with
the same importance to the project as Argentina, Spain and Mexico,
although without the same ability to draw comparisons on the country
level. Therefore, the company is analysed independently and within
the framework of the 25 remaining companies.
[ 66 ]
Tania Elena González-Alvarado, Sara González-Fernández & V. Ma. Antonieta Martin-Granados
For a greater understanding of the local economic context of said
companies, document analysis was performed. This consisted of sear-
ching for written sources on the economic reality of Guatemala writ-
ten by Guatemalan authors, so that the critical vision of those who
were experiencing this reality could complement the analysis of the
results obtained in this project. The information collected was used to
better understand the current state (Villaseñor, 2014) of the analysis
of local development in the country. Two key authors were identified
who hold positions at a university in the country in question.
Table 4
Latin American companies with an impact on local development that
participated in the study group (2010-2014)
Country Number of companies Percentage
Brazil 2 0.08
Chile 3 0.12
Colombia 4 0.16
Ecuador 2 0.08
Guatemala 5 0.2
Uruguay 5 0.2
Venezuela 4 0.16
Total 25 1
Source: Created by the authors based on the results obtained in the ULSA CA 0012/10
project.
For a greater understanding of the local economic context of said com-
panies, document analysis was performed. This consisted of searching
for written sources on the economic reality of Guatemala written by
Guatemalan authors, so that the critical vision of those who were
experiencing this reality could complement the analysis of the results
obtained in this project. The information collected was used to better
understand the current state (Villaseñor, 2014) of the analysis of local
development in the country. Two key authors were identied who hold
positions at a university in the country in question.
This first step involved identifying and selecting published sou-
rces. Research articles and essays published in open-access journals
specialising in economic development, international economics, and
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Strategy for generating social value to promote development
and combat poverty: the case of Guatemala
business were used. This media was chosen as it is considered to be
the communication channel with the greatest degree of immediacy
and precision to reflect how the Guatemalan reality is approached in
terms of local development.
Analysis of results
The analysis presented here is focused on a group of companies due to
their degree of representability in terms of their representative profile:
Guatemala. The study is based on observable reality and focuses on
practices that lead to the generation of social value for local systems.
The traits identified may or may not coincide with some prescriptive
models regarding corporate social responsibility (Gonzalez, 2015).
Based on the study group obtained in the second research phase (435
companies), which allowed us to analyse the age and size of the com-
panies, distinctive social responsibility traits were identified for each
company. In order to perform an exhaustive study, dierent open-
access sources of business information were used to complement and
confirm the information provided by the companies themselves.
When a research project on n observable realities (each company
represents a single reality) lasts for several years, the group of compa-
nies studied tends to naturally diminish. Including new companies to
maintain the same number would be a detriment to the coherence of
the study. This research project aims to understand the unique featu-
res of each case, and therefore a natural reduction in the study group
is preferable, as there is more space to investigate the phenomenon
more in depth. Therefore, this analysis phase includes five companies
within the study (table 1).
Using descriptive statistics, tables have been created so as to
understand the traits that identify companies as socially responsible.
Some of these traits may coincide with other models, but not neces-
sarily. These overlaps are due to the fact that the company is influen-
ced in one way or another by the models prescribed by international
bodies. However, as these companies are also sensitive to local needs,
they also include subtle nuances in terms of social responsibility, given
that they link said responsibility more to providing value at a local
level over receiving international certifications and/or marketing.
[ 68 ]
Tania Elena González-Alvarado, Sara González-Fernández & V. Ma. Antonieta Martin-Granados
There are traits that are extremely specific because they respond
to the unique needs of the company’s own reality. They even include
traits that the prescriptive models do not consider to be part of social
responsibility, which in the academic and regulatory scope would per-
haps be placed in other types of models, such as organisational sus-
tainability (Garcia and Mercado, 2013). However, from the company’s
point of view and based on its local commitment due to its knowledge
of and close connection with the area, they are distinctive social res-
ponsibility traits.
Graph 1
Activities that generate value and have an impact on local development,
according to 5 small Guatemalan agro-industrial companies (2010-2014)
Source: Created by the authors based on the results obtained in the ULSA CA 0012/10
project.
Given that descriptive statistics have been used, an eort has been
made to ensure that the sub-groups do not sacrifice the unique features
of the cases studied.
For the five companies studied, their connection with the local area
is a common distinguishing feature (appendix). This refers to the close
[ 69 ]
Strategy for generating social value to promote development
and combat poverty: the case of Guatemala
work that the company performs with the community, which can be
seen in their clear knowledge of the area’s needs and the correspon-
ding mechanisms that enable the company to participate in the res-
ponse to those needs.
Table 5
Actions that companies take to generate value
for local development (2010-2014)
Company code
Decreasing
environmental
impact
Organic
production
Products aimed
at increasing
the consumer's
quality of life
Promoting
activities for the
social wellbeing
of the local area
Incentivising
local economic
development
ali574 1 1 1 1 1
ali575 1 1
ali576 1 1
ali578 1 1 1
ali579 1 1
Source: Created by the authors based on the results obtained in the ULSA CA 0012/10
project.
For these companies, the following traits which had been identified
in other companies and which only company ALI576 considered were
removed: obtaining certifications, observing good practices, R&D
aimed at food quality, labour improvements and worker quality of
life. None of the five companies included practices on the use of tra-
ditional techniques.
The main action carried out by these companies is to provide the
local area with products that increase the consumer’s quality of life in
terms of wellbeing. According to Diaz (2015), there are two types of
agriculture in Guatemala: “large-scale” and “small-scale.” The first is
practised on large plots of land and is generally linked to traditional
exportation products, such as sugar and bananas. In economic organi-
sation terms, it is commercial agriculture based on large companies.
On the other hand, “small-scale” agriculture is carried out on small
areas of land, generally less than 10 hectares, and production is aimed
[ 70 ]
Tania Elena González-Alvarado, Sara González-Fernández & V. Ma. Antonieta Martin-Granados
at the internal or external market. This type is based on small compa-
nies, often family-owned, and includes the cultivation of corn, beans,
and vegetables (Diaz, 2015).
The five companies studied can be placed in the second group
described; only a percentage of their production was destined for
international markets. This situation allows us to understand the busi-
ness vision of “increasing the population’s quality of life through the
products oered.
In situations of extreme poverty like those faced in these compa-
nies’ local areas, food security is essential; therefore, the quality of
agro-food products comes before quantity. In these companies, the
main activity that generates value is precisely their oering products
that increase quality of life. On the other hand, and in contrast to the
results presented by Diaz (2015), these companies do not only focus
on national consumption. The youngest company is 24 years old and
the oldest 38. This shows that they are relatively young companies,
whose international activities have developed in parallel with national
activities.
There are two activities that are close behind providing products
that increase the consumer’s quality of life for these companies: pro-
moting social wellbeing activities in the local area and incentivising
local economic development.
Conclusions
The reality regarding economic development is determined by the
heterogeneity of each local area. In turn, understanding economic
development in economically poor areas of Latin America allows us a
greater understanding of the way in which instruments and techniques
that aim to incentivise development and fight poverty in these regions
should be adapted. The same occurs with programmes aimed at the
business sector and local economic units. These instruments will be
more ecient in “terms of competitiveness for local development” if
they are adapted to local patterns instead of standardising the local
area to good international practices regarding social responsibility,
sustainability, generation of value for the region, and other related
aspects.
[ 71 ]
Strategy for generating social value to promote development
and combat poverty: the case of Guatemala
Smaller companies that operate internationally generally maintain
closer links to local agents, and therefore have a better understanding
of what the community needs. Tracing international cooperation-local
cooperation, business-business cooperation, business-government
cooperation is viable when the focus is put on smaller companies
that are already catalysing local development. Given that it is not the
amount of aid that provides the greatest impact, but rather it is the
way in which these resources are directed and applied, in the case
analysed here, the focus on smaller companies in economically poor
areas is what allows for the greatest impact.
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Appendix. Profiles of each company
Company code ALI574
Informant General manager
No. of employees 45
Years in operation 24
Details on
international
collaboration
Since 2003 the company has successfully exported its products to the
Central American, Mexican and American markets. In 2006, with the aim
of more efficiently serving the Mexican market, it formed a distribution
company in Mexico. It is a company that is open to forming ties with other
organisations that share its values. In recent years, thanks to its solar en-
ergy plant, it has had close relations with international organisations that
promote the use of renewable energies.
Product or service Company specialised in the production, marketing, and exportation of
dehydrated foods.
Contribution or
generation of
value for the local
community
Within the strategy of sustainable development, the company's sustain-
ability policy has three facets: the environmental facet, the social facet,
and the economic facet. The company's policy regarding the environ-
mental facet establishes a serious commitment to decreasing the envi-
ronmental impact of the company's operations. Specifically, the com-
pany plans to make a change in technology so as to use solar energy as a
heat source for dehydrating fruit.
Results analysed in the ULSA CA 0012/10 project.
[ 74 ]
Tania Elena González-Alvarado, Sara González-Fernández & V. Ma. Antonieta Martin-Granados
Company code ALI575
Informant Manager
No. of employees 75
Years in operation 38
Details on international
collaboration
Product or service Company that produces nutritional and healthy foods, such as
grains, biscuits, toast, granola bars, oats.
Results analysed in the ULSA CA 0012/10 project.
Company code ALI576
Informant Manager
No. of employees 70
Years in operation 33
Details on international
collaboration
Production is aimed at satisfying the local market, both in supermar-
kets as well as the retail market, and exports to Central America, Mex-
ico, the United States and the Caribbean.
Product or service High-quality salty and sweet snacks that are 100% natural, fried or
baked, and extruded products that combine local and imported raw
materials with certified origins, both in terms of where they come from
and their composition, which is combined with a production process
that is especially concerned with the results of the products.
Contribution or
generation of value for
the local community
Production and packaging processes backed by the strictest health
standards and commercial certifications. iso 9000 certified suppliers.
Production based on gmp (Good Manufacturing Practices), application
of haccp hygiene regulations, in addition to parameters established by
international entities, the fda (usa Food and Drug Administration),
the Ministries of Health, Farming and Food and the Environment, as
well as audits by our business partners. Application of the haccp (Haz-
ard analysis and critical control points) food safety system, a concept
that covers biological, chemical, and physical risks in food production.
Master cleaning plan and standard operating procedures (sops). We
were chosen along with 9 other food companies to participate in the
Cleaner Production Programme (backed by the Swedish government
along with the Guatemalan Chamber of Industry).
Results analysed in the ULSA CA 0012/10 project.
[ 75 ]
Strategy for generating social value to promote development
and combat poverty: the case of Guatemala
Company code ALI578
Informant General manager
No. of employees 200
Years in operation 24
Details on international
collaboration
Suppliers to the main fast food and hotel chains in the world.
Product or service Supplier of products for the food industry such as: natural juices,
pasteurised juices, soft drinks, soda, tomato sauce, dairy products,
ice cream mixes, sauces and dressings, honey. It also has its own
R&D department, which allows the company to develop products in
accordance with the specific needs of its clients.
Contribution or generation
of value for the local
community
It has several social programmes. They established an alliance with
the Secretary of Social Works of the President's Office, which helps
the company to carry out said programmes. Their human team
includes a person with a minor mental disability and a deaf-mute
employee. The latter was hired through an alliance with the Pro
Blind and Deaf-Mute Association. Furthermore, the company sup-
ports local schools through different activities and providing ma-
terials so that the community can grow along with the company.
The company is also a member of the United Fund, Corporate Social
Responsibility Association, Businesses for Education, the Guatema-
lan Solidarity Union, and the Association of Exporters of Guatemala.
Results analysed in the ULSA CA 0012/10 project.
Company code ALI579
Informant General manager
No. of employees 110
Years in operation 32
Details on international
collaboration
The company began by exporting products for Nicaraguans in Flor-
ida. Then they expanded to a Guatemalan community and worked
with an El Salvadoran company which they exported to. In 1996
they exported 30 to 50 boxes a week by plane, and in 2010 they
exported approximately 12,000 boxes a week via containers.
Product or service The company provides fruit preserves and frozen fruit.
Contribution or generation
of value for the local
community
On June 1, 2011 they began their second literacy course, backed
by Conalfa (Ministry of Education). The number of participants
doubled to 33. The programme will finish in mid-2012. This second
intensive course covers the content of 2nd, 3rd, 4th, and 5th grades
of primary school. The programme lasts approximately three years,
and offers participants the chance to obtain their 6th grade diploma.
Results analysed in the ULSA CA 0012/10 project.
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