By Professor Andre de Waal MBA (HPO Center)
This paper contains an exploratory analysis whether there exists a relation between the Corporate Social Responsibility (CSR) and High Performance Organisation (HPO) concepts. The literature study showed there are seven CSR aspects which can be related to characteristics in the HPO framework. These seven aspects were verified at two mining companies in Peru. The case study research showed that the mining company which had the best financial performance also had the highest scores on the seven CSR aspects. The central assumption of the HPO concept - there is a direct correlation between a high HPO score and high competitive performance - seemed to be thus verified. Although this is a tentative result, as the research sample is only small, there is a clear an indication there exists a direct relation between a high score on the CSR related characteristics and competitive performance. A direct consequence of this finding is that it makes both social and economic sense for companies to work on their CSR practice and behaviour.
Introduction
The importance of Peru in world mining goes back to the 16th century, when Spanish colonial rulers first started exploiting Peruvian mines. Nowadays Peru is the world’s number 2 producer of silver, number 3 producer of lead, zinc and tin, number 5 in copper, and number 8 in gold. Mining has represented a major part of Peru’s exports for over 350 years and still plays a central role in the Peruvian economy as the main provider of foreign exchange funds. Peru produces and exports different minerals (silver, lead, gold, copper, zinc and iron as the main ones within a set of more than 25 minerals) from mines located mainly in the central and southern parts of the highlands and the coastal region. In the past two decades, mining export has accounted for 45 to 50 percent of total exports, and its share of gross domestic product has ranged between 8 and 9 percent. At the same time, mining is only a minor direct provider of employment; in 2004 this industry employed only 1.3 percent of the working population. This is because of technological developments which cause mining to require less and less personnel. In 2006, Peruvian mineral exports brought in $14,465 million, an increase of 56 percent over the previous year, representing 61.7 percent of Peru’s total exports. The international boom in metal prices in the last three years has been a major incentive for new mining investments in Latin America and especially Peru.
Notwithstanding its economic importance, the mining sector has been and still is responsible major environmental degradations. Indeed, mining was catalogued as the most contaminating activity in Peru since the eighties. It is estimated that around $977 million investment is needed to mitigate the environmental pollution caused by operating mining factories (IDCR, 2005). As in other mining regions worldwide, the past years have been marked by conflicts all around Peru between mining companies and the surrounding communities, which have complained about the negative impacts of mining activities on the natural resources and the health of the people. In general, local communities state that they have seen few or no tangible benefits from mining activities carried out in their communities, and they increasingly demand a more participative process in the decision-making with regard to mining. The national authorities publicly acknowledge the environmental problems created by the mining industry. However, although the Peruvian regulatory framework for the mining sector attempts to be mainly environment driven - through the adoption of for mining companies compulsory Environmental Impact Assessments - in practice a lack of enforcement by the executive branch exists, allowing mining companies to operate with minimal oversight (Barretto et al., 2006). Another issue related to the mining sector is
poverty. Paradoxically, the regions with the greatest investment in mining are also among the poorest in the country. Mining companies often work in areas where the state has a limited presence and mining activity is seen as a source of wealth for improving the local living conditions. The regions of Cajamarca and Ancash that are home to the case studies described further on in this paper are among the poorest regions. At the same time...
Read the full article in PDF:
