Spain from a paternalistic past to sustainable companies

Abstract

During the last seventy-five years in Spain there have been great and sometimes spectacular changes in what the country expects of companies, and these changes include the way of doing business, the corporate role in society and the constantly evolving profile of directors and managers in charge of business organisations. At the beginning of the 20th century, Spanish business enterprises generally understood that their responsibility was to make profits and to comply with the law, especially where penalties were effectively applied. Apart from this, some companies also assumed a certain paternalism towards their workers in matters such as housing, food, grants for children's studies, etc. After the Spanish civil war (1936 - 1939), Spain was under General Franco's authoritarian regime up to 1975. Democracy arrived with a new Constitution in 1978, which established a parliamentary monarchy system. In the post-war era, an autarchic economic system came into play, which was liberalised from 1959, opening the Spanish economy to external markets. In the sixties, sensible economic development began. During Franco's time many regulations protecting workers from dismissal were promulgated and a wide social security system was developed. However, as in many other countries, there were scarce regulations in matters such as consumerism, the environment and fair competition. The hidden economy and tax evasion were relatively pervasive. Lack of democracy was frequently offered as a pretext for tax evasion, but the cause was probably more complex, since this problem has persisted up to now, although currently an efficient monitoring and a relatively rigid inspection system has been introduced, and tax fraud has reduced considerably. Since the 1940s Spain has had numerous nationalised companies and seen many regulations and state interventions in the economy. A mixed economy persisted after economic liberalisation. A new boost to the Spanish economy took place in 1986, when Spain became a member of the European Economic Community. In the 1980s and above all in the 1990s, most state companies were privatised, as happened in other West European economies. A great number of big companies is now operating in Spain as a consequence of these privatisations, as well as of mergers and acquisitions and the establishment or consolidation of well-known transnational companies. Since the 1990s a great number of Spanish companies have expanded their business to Latin America and, significantly less commonly, other industries have set up business in Morocco, Eastern Europe and elsewhere. Now large companies of financial services, energy and telecommunications are well-established in Latin America. Throughout the 20th century many business, especially the largest, assumed their responsibilities to some extent, implementing policies and practices related to this topic. In Spain, as in other countries, two waves can be distinguished regarding Corporate Social Responsibility (CSR). The first, which was rather weak, was in the 1970s, and the second at the beginning of the 21st century1. Since then a renewed interest in CSR has arisen in Europe and worldwide (Fernández, 2004). With respect to business directors and managers, we might generally affirm that Spain has definitely developed a better image of them, along with ample social acceptance, instead of a certain mistrust and even rejection in the past. Spanish capitalism has thus stopped being oligarchic and has advanced towards a popular form of it. As proof we may look at Spain's growing number of stockholders and the increasing importance of the Spanish stock exchanges in the last eight or ten years. Still, a lot remains to be done in the areas of corporate governance and the exercise of power in the large corporations. Like their counterparts in the developed world, Spanish companies have on their agenda the challenge of Corporate Social Responsibility and what it means for management, internal structuring and interaction with society. Up to now, there have not been many studies on the situation of CSR in Spain. An exception is the work of de la Cuesta and Valor (2003), who, among other things, present measurement systems and some observations on the development of CSR in Spain. In addition, some limited surveys on CSR in Spain have been carried out by Forética (2002) including 398 companies and PriceWaterhouseCoopers (2003) including 43 companies (most of them quite sensible with sustainability and CSR). Also worthy of note is the annual report on activities related to CSR in Spain which the Fundación Ecología y Desarrollo began to publish a few years ago. All of these works can be considered as exploratory studies, while a research in depth on CSR in Spain is still to be made; something that this paper will not attempt. Its purpose is only to give an overview of the current situation of CSR in Spain, paying particular attention to the cultural factors and driving forces for CSR and major documents, milestones and institutions in its development. A summary of the current situation in academia and in business, and future trends, will also be provided.