4 mechanisms to boost stakeholder engagement

There’s no doubt about it: companies that genuinely aspire to leave a positive and long-lasting mark in the world need to engage their stakeholders. But what are the most effective strategies to achieve this aim?

To answer this question, I joined forces with Prof. Anabella Dávila from EGADE Business School (TEC de Monterrey) and IESE Prof. Carlos Rodríguez-Lluesma to evaluate the sustainability and CSR reports of 28 Latin American multinationals included in the AméricaEconomía ranking. More than half of these firms – also known as “multilatinas” – are family-owned.

Here are just a few examples of the types of stakeholder engagement initiatives these companies lead:

  • The Brazilian firm WEG collaborates with a local foundation to implement internal training programs.
  • In SIGDO KOPPERS, a construction company based in Chile, 100 employees worked alongside 300 community volunteers to embellish public parks.
  • The Juntos Crecemos Más (Together We Grow More) program, spearheaded by the Chilean company ANTOFAGASTA, offers a competitive fund to finance joint actions to improve the community’s quality of life and human capital.

Featured in Journal of Business Ethics, our study identified four mechanisms frequently used by multilatinas to enhance stakeholder engagement:

  1. Foster ties with local entities
    Establishing close relationships with local social and governmental organizations gives companies a front-row view of the community’s needs. These collaborations include partnerships with local foundations, educational institutions and NGOs, as well as collaborations with local government institutions like WEG does with its training programs.
  2. Establishing a dialogue with community members
    The multilatinas analyzed in our study use surveys, expert interviews, focus groups and public meetings to gather stakeholder feedback and gain a deeper understanding of explicit community needs. In some cases, companies create community boards, committees and other communication platforms to enhance dialogue with their main stakeholders.
  3. Encourage corporate and local volunteering
    Corporate volunteer programs enable employees the chance to share their knowledge with the community and contribute via financial and in-kind donations. Other initiatives focus on rebuilding public infrastructure or encouraging collaboration with local volunteers, like SIGDO KOPPERS’ public park restoration project.
  4. Strengthening the social fabric
    In our sample, companies’ efforts to boost stakeholder involvement often included the creation of foundations, community centers, schools and health organizations to strengthen the social fabric of the community. These initiatives enhance the company’s integration into the local community and its ability to bolster its long-term socioeconomic development. The Juntos Crecemos Más program is a prime example of this approach.

“From their origins, family businesses are committed to local communities, which they build upon over time through philanthropy.”

Far more than an exercise in public relations, stakeholder engagement is a cornerstone in the corporate missions of multilatinas. Family businesses are committed to local communities since their creation and instill this commitment through philanthropy, which is an excellent way to preserve their legacy for future generations.

While critical, values and a legacy aren’t enough to ensure the long-term success of family firms, according to the 10th edition of the PwC Global Family Business Survey. Among its findings, the report highlighted the need for a new mindset to better respond to pressing sustainability challenges.

Although more than half (55%) of the family businesses in the PwC study feel equipped to respond to global sustainability issues, only 37% have a strategy in place to address them. Eighty percent (80%) have implemented social responsibility programs yet only 49% cite sustainability as an essential element of their corporate strategy.

In this regard, the company’s size and life stage play an important role: larger companies and those led by younger generations tend to be more sustainability-focused. There are also substantial differences among countries, with family firms in Spain demonstrating a greater commitment to sustainability and community over their European and American counterparts.