Theme 5: New Research on Corporate Risk in Conflict Zones


In your paper you discuss collaborative partnerships with NGO’s and other non-profit organizations, and how they can be particularly effective because the NGO/non-profit often has skills and knowledge about the particular country and conflict. I was thinking about countries such as Zimbabwe and South Africa, which in my opinion fall into the category of what you describe as ‘fragile states’. Specifically then, in these countries I was wondering about collaborations between MNE’s and institutions such as NEPAD. NEPAD, The New Partnership for Africa’s Development, seems to address many of the same issues as Peach Through Commerce (though specifically in Africa) such as escalating poverty and underdevelopment. Further, many of their principles are compatible, their first being “good governance as a basic requirement for peace, security and sustainable political and socio-economic development”.

On the other hand, their goal is to address the problems by establishing partnerships between African people, and increasing African ownership and leadership. I was wondering what your thoughts were on this, because I feel like if there is no attempt to collaborate with NEPAD a situation may arise where MNE’s in general become enemies of NEPAD. I’m sorry if I haven’t articulated this particularly well, but I thought you might have some interesting insight into the notion that no collaboration, or unsuccessful collaborations, may increase conflict with local organizations and people.


You raise a number of interesting points. One of which is the importance of using CSR creatively. This is broadly consistent with the comments posted by one of this week’s panelists, Jennifer Oetzel (see above). Both companies and communities need to move away from traditional approaches to CSR — which have yielded few sustainable results. In my view, if companies see CSR as risk-mitigating investments in the business climate and workforce, it would become easier for them to internalize both costs and approaches in their profitability calculations. For instance (using one of your examples), oil companies in the Niger Delta region could reduce shut-downs, delays and related costs through strategic CSR investments in infrastructure, services and human capacity. Of course, these investments must be complementary to local, state and federal initiatives. Such an approach will help them consider CSR more as part of their business models in high risk areas, rather than philanthropy demanded by outside pressure.

You also alluded to the need for companies to adhere to international standards. This raises the age-old question of enforceability. Most global CSR initiatives are self-policing with few (if any) real sanctions for non-compliance. Other contributors are absolutely right that civil society should demand compliance — but, unfortunately, that is not always effective and requires significant momentum. Charles Koerber’s paper (see the top of page one) outlines some of these challenges. Do you agree with his conclusions?




May I suggest the attached paper which summarizes NEPAD’s opportunities and challenges? You have probably seen it already, but I think it does a great job of presenting the issues – particularly in the area of economic governance.

i am sure Jennifer will respond to your question regarding the collaboration and conflict.


468-NEPAD_IMFWorkingPaper.pdf (1.21 MB)

As someone who emigrated from a conflict area (South Africa) to America, I found the paper to be very interesting as well. Based on myself and other immigrants I know, I would disagree with you that it is psychologically beneficial to ‘leave it behind’. Dr. Riddle mentions in his paper that the psychological tie diasporans have to their origin country result in a sense of hope for the future. I understand this, but I don’t think it’s completely accurate. Many people leave their countries of origin because they don’t have much hope for the future there, and think therefore that they would be safer and better off elsewhere. Believing this, whilst still having a strong psychological tie to that country results in strong feelings of guilt, and I think this is largely what leads such people to invest in their countries of origin. I actually don’t even think it’s that they believe there is no hope for the future, but more that they would prefer to do their hoping from somewhere else. Part of that then becomes the desire to not sever their ties with their country of origin in case things do improve. I know that I would love nothing more than to move back to what I still consider to be home, but I recognize that right now I would never have the same opportunities or security there that I have in the US.

On a side note, all one has to do is look at the current news and Cuba to know that people working outside their countries of origin still see sending money back home as incredibly important. It’s also clear from current news how essential this money is to the country’s economy.


Thank-you, I actually hadn’t read the entire thing before, and there were several things I found interesting, especially as they relate to this week’s discussion.
On page 19 the paper discusses how having institutions is less important than having functioning institutions. It then poses the question of ‘which institutions matter’ and which institutional reforms have to be implemented and when. I was actually amazed at how similar this sounded to the research in Getz & Oetzel’s paper. I think it’s important though that NEPAD’s research specifies that reform priorities, and therefore the needed initiatives, differ between countries. If they differ so much between just African countries, it’s hard to imagine how different they must be between various countries on different continents.

Regardless, I am still a bit hesitant. Specifically, I was wary of the fact that in their discussion of international involvement, they specify that what they need is international financial assistance. Personally, I would be a bit reluctant to give financial assistance to NEPAD before seeing some concrete advancements especially in government behavior. Moreover, there’s only so much that financial assistance and even the best of initiatives could accomplish in an unstable country with an unstable and corrupt government.

Below is an article from the SA news on NEPAD’s accomplishments thus far… I was disappointed, though not completely surprised to find they aren’t doing as well as expected.

To build upon AIana’s comment there was a recent Wall Street Journal article (3/23/09 Private but Public) by Valente and Crane that describes the role some corporations are playing in providing services in developing countries which are usually provided by governments in more developed countries.
To the extent these types of activities are crucial to a company’s ability to produce goods and services they appear to be the type of integrated CSR activities that are needed to create a reduction in risk for the firm and to make a contribution to reducing the potential for additional conflict.


Could you comment on challenges related to the universality and enforceability of international CSR initiatives. Some of the examples you discussed during the November symposium would be great.



If a company is spending increased amounts of money to try and operate in a conflict/ post-conflict area, they are most likely not going to focus on spending money in different ways to benefit the community. However, CSR is extremely important in order to better the environment which in turn will help reduce the business risks found in these areas. In many cases, governments are not equipped to handle large crisis that occur in countries and most likely need outside help to recover after an event. It is the responsibility of these corporations to help better the environment in a particular area and this will only benefit the corporations’ operations in the long run. Every corporation should have several initiatives in place to help the community within which they operate. For example, corporations could set up the equivalent to a soup kitchen so that individuals in the area would be able to receive hot meals every day or training programs to train individuals in basic skills. This is a small step towards improvement, but one that would create a better relationship with the community which is necessary in order to reduce risk.

In terms of enforceability, I think it will be interesting to see what happens in the next few years. We are witnessing what can happen when businesses are left to their own devices. Yes, CSR is a growing concern for management now that such programs are increasingly publicized and important to shareholders. Koerber in his paper, brings up existing standards used to address peace, such as Kimberly Process, to highlight the obstacles that could arise from stretching standards too far. Would they loose their effectiveness as a result? It is true that research indicates that peace can stem from positive business ethics and behavior, but it remains to be seen if this should become an enforceable effort for all companies across industries.

Many have already mentioned the sustainable benefits a company can reap from CSR initiatives in conflict regions. I am hoping that the momentum Raymond mentions above is enough for companies to incorporate CSR efforts into their business ventures in conflict zones. By expecting businesses to utilize self-policy, the resulting actions will hopefully be more useful in the particular region depending on circumstance. It would be a failure of any such blanket regulation to somehow discourage a business from being able to address a unique situation abroad through CSR activities.

Additionally, there is a larger magnifying glass on management culture and practices than ever; people are really looking at what businesses are doing. By ignoring or exploiting the political environment of a place of business, a company would also fail to meet shareholders’ and the public’s standards for a sustainable, promising future. It would be unwise for a business to disregard the situation in a conflict region ethically, and also because people would find out - and this will have obvious repercussions. At this point, a given company should know better than to further toy with shareholders’ and the public’s confidence in their business practices. They will be exposed sooner rather than later, no regulation required.

Am I being too optimistic? Do you think there needs to be some sort of regulation to govern how corporations incorporate CSR into their operations? Like Koerber mentioned in his paper, enforceability could be a huge obstacle to these efforts.

Hello Jennifer,

The research that you and Kathleen have done is impressive and very important, especially since businesses are operating in such a global environment nowadays. I believe that firms have a responsibility to all stakeholders, and this includes getting involved in any conflicts that may arise. Unfortunately, there are many things that are out of firms’ control that they still have to deal with.

Having said that, I have a few questions. Were firms that were directly involved in resolving conflict viewed more favorably by the public than firms who indirectly responded to conflict ?In your research, was the rate of violent conflict higher in firms that operated in many regions overseas? In the future, do you think businesses will hesitate before going global so they do not have to deal with conflict that may occur outside the region they normally operate?

I am responding to the 4th question ie. Does investing in corporate social responsibility help reduce business risk?

Is emphatically yes. CSR is a Tool corporations can use to to reduce risk on thier investment. Corporations operating in conflict areas have this option (CSR) to thier advantage.

The result will be phinominal if CSR is well implemented by corporations with marketing attache’. They will record profits.

I think that this firm in Boston is a good example of what many companies are migrating towards. With a large majority of the consumer population becoming more aware of company practices it is increasingly more important for businesses to exercise CSR. Also with the big push in the green movement, whether it be a trend or not, companies who openly invest in helping the environment gain even more positive media. These are companies that will sustain during finacial pitfalls because the consumer population views them as being ethical and giving repeat business based off of the CSR and environmentally friendly practices they establish.

Thank you, Isaac. I want to push you a bit more by asking, EXACTLY which aspects of CSR, or to move beyond CSR, which specific types of corporate behavior most likely to result in reducing/preventing conflict?

I would be inclined to think that corporate actions that increase both the perceptions and reality of opportunity and fairness would be high among the behaviors, though there may be others. That said, even if we were to agree that “actions that increase both perceptions and reality of opportunity and fairness” should be encouraged, it is not at all clear what those actions might be; they probably vary considerably based on local circumstances.

On the other hand, if the goal is conflict reduction, then I’m inclined to believe that other agendas may be more of a distraction than a benefit. For instance, I know of many CSR activists who care passionately about, say, the health benefits (or lack thereof) of products such as Coca Cola, or about carbon emissions due to global warming. In a near conflict situation, should Peace through Commerce advocates focus exclusively on issues related to improving the perception and reality of opportunity and fairness (or similar immediately relevant issues), or should they also get into diverse other issues, such as the nutritional qualities of foods or the long-term environmental impact of actions?


I would like to follow up with your comment about firms like Blackwater who have “been exempted from Iraqi law in a curious and weird immunity provision in Iraqi law that guarantees them virtual impunity”. For a company that is in the business of protection and militaristic operations, who are employed in a war zone and forced to use their quick judgment in hostile circumstances , is it fair to say the firm has no CSR? Blackwater was initially contracted by the US Government in 2003 to provide security for Iraq’s transitional government, a major target of terrorist attacks. Within the first year of service, Blackwater had been ambushed and attacked numerous times by Iraqi insurgents. In certain circumstances, it is claimed by the media and public that Blackwater employees were not warranted with how they dealt with things. If by focusing on CSR (e.g. managing risks), you forgo fully performing your job (e.g. if one of the “innocent civilians” blew up a diplomatic building), aren’t you as a firm failing your client, and subsequently your stakeholders?

Thank you, flowidealism, for putting the question of “distraction” on the table. When conflict already exists and reduction is needed, we can surely be distracted and delayed by discussions about what creates peace and prosperity in the first place.

However, it is important I believe to discuss the LONG TERM impact of business on poverty and peace, otherwise we never get out of crisis mode.

That said, could we also consider how health (human and environmental) is a key underpinning for peace and reduction of poverty? Examples are not likely needed here, but consider: poor health can destabilize both families and economies. What people consume and the environmental toxins to which they are exposed are large factors, and this brings us to what business is producing and how it is being produced. (This,of course, begs the question of consumer education and responsibility but this then points to another piece for discussion since business is fully influenced by the consumer. But let’s save the important consumer role for later.)

If we then consider the impact business has on health (human and environmental) to be significant, then WHAT a company produces and HOW it is produced becomes important to a discussion of business fighting poverty, especially in the longer term.

So my view is this: objections to the health impact of a company’s product (e.g. CocaCola’s contribution to childhood obesity, diabetes, etc), or to the environmental consequences of business activity (e.g. pharmaceutical production and water pollution) – are issues that belong in Business Fights Poverty discussions, regardless of how tender or hard to solve they may be.


I think it is particularly interesting that you point out the importance of ‘non-traditional’ approaches to CSR within an international context. Many of the largest - i.e. fortune 500 - companies have realized the importance of the global business environment and leading in developing markets. Many of those developing markets have unstable governments, poor infrastructure, and limited oversight. Inevitably as these regions become more sophisticated (both financially and structurally) the business potential and competitive opportunity that will exist for those who capitalize on these “opportunities” (even with the current financial crisis) will serve to define the global conglomerates in the coming decades. This effect is compounded by business seeking synergies in their product lines and with suppliers - through economies of scale - on a global basis.

To engage the communities around them - to aid in their maturation - is pivotal for these corporations, even in areas of potential conflict and unrest. Working in Southeast Asia I first hand, was able to experience the constant tension between the potential and the unknowns in these markets for companies used to operating within the realm of the “developed” world. Outside-the-box thinking in terms of engaging the local communities and governments can both aid in the maturation process and serve as a source of positive public relations. Schools, scholarships, and training are all good places to start. It would be interesting to watch the companies - their employees - themselves constitute the brunt of CSR rather than having a 3rd party carry out much of the work for a fee…


I would be happy to Raymond. I think there are number of challenges and lots of open questions—some of which we have been brought up already.

Although there are a few corporate responsibility codes or standards (I use the terms pretty broadly) that address issues of conflict and peace directly (e.g., Voluntary Principles on Security and Human Rights, Kimberley Process Certification Scheme) many of the standards adopted by businesses do not. But many attempt to shape business behavior in ways that we think will create peace in the long run. With hundreds of standards in existence business are faced with conflicting demands from various stakeholders and overall standards fatigue. Each standard has a specific history, context, and stakeholder group advocating for it. This creates challenges and opportunities.

Evidence from voluntary environmental programs (mainly using data from the United States) suggests that voluntary initiatives that lack enforcement mechanisms are less effective at changing firm behavior. This begs the question of how do you build in effective enforcement mechanisms especially given the many different types of issues firms face in areas prone to conflict.

How do we balance the desire for universality (e.g., to address issues of basic human rights) but leave room for creative CSR that engages the local community and meets the unique situation at hand as Raymond, Scott, and Devon have mentioned? This also gets to the issue of the how the CSR standards are created and implemented—and in part the reason for the existence of so many standards. Firm size is also a big factor as large MNEs tend to get involved with these types of standards much more than local and small businesses—perhaps due to difference in priorities, knowledge, and resources.

Some wonder if there is a tradeoff between enforcement based standards and aspirational standards (e.g., UN Global Compact)? Do enforcement base standards create only a floor for CSR while aspirational standards help firms stretch and create more creative and locally focused initiatives? Would it be possible to create standards that combine both? Is the new ISO 26000 an attempt?

Standards that include enforcement mechanism tend to lead to the creation of detailed rules (e.g., the history of accounting rules in the United States) as those subject to potential enforcement want bright lines to follow. If local engagement, specificity, and creative CSR are desired perhaps more aspirational standards that provide guidance on how firms can and should engage with local communities and governments are what we need to create the conditions needed for peace. The flip side being the lack of enforcement provides cover for those firms seeking a quick reputation bump without integrating the principles or processes into their organizations–perhaps ultimately undermining the integrity of the standard and those organizations associated with it.

I agree with you on this. The health impact of a company’s operations can never be ignored. It also begs the question as to whether environmental standards should be enforced on a global level. A company’s operations may be illegal in one country and legal in another. The United States, for example, has stricter environmental standards than Pakistan. That certainly does not mean, however, that the health impact of the company’s operations would be different in the two countries. Why are Americans saved from environmental pollution because the company sets up operations in Pakistan due to its less stringent environmental standards? The answer comes down to one factor and one factor only: Profits. These companies lure developing countries such as Pakistan with the idea that they will set up factories in the country and create jobs. CSR, therefore, takes a backseat to these profits. With global environmental standards, however, these companies would suffer greatly in terms of their profitablity. It is easy to think idealistically, but the fact is that poverty and CSR do not go hand in hand. A developing country in dire need of jobs and foreign direct investment will never prefer CSR to their immediate and pressing need of resources.

I recently attended a lecture that focused on finding a job internationally. One of the points that was made was that we should no longer view the world as a series of individual isolated countries, but instead as a series of integrated countries whose actions, conflicts, resources, and prosperity all largely effect one another. I think the current financial crisis is a primary example of this. Due to increasing global integration, more and more companies are going to have to deal with and rely on, not only the countries they operate in, but on all countries worldwide. It is therefore necessary that corporations (especially MNCs) work to mitigate conflicts and bring peace to conflict environments. Business in this global environment is cyclical and bringing peace to a single area of conflict could end up effecting and bringing opportunities to a number of countries and companies worldwide.

Solomon Brayant Mpapale argues that CSR in conflict areas is an additional (but necessary) cost to business. I would argue that CSR, if implemented correctly, might actually prove to be more cost effect (at least in the long run). As stated by many before, in order to make CSR effective for both business and conflict regions, the CSR undertaken by the business must align with the business’s core competencies and strategy. Simply throwing money will not prove to be sustainable in the long run.

In terms of investing in CSR, I absolutely do think that it can help reduce a company’s risk. Global stakeholders’ voices, influence, and power are getting stronger and stronger, media is getting faster and more accessible, and accessing information is getting easier each day. A company that does not practice CSR runs the risk of upsetting any or all of these groups as well as creating a conflict within a country that then (through globalization) has the potential to spread to other countries. This is a huge risk to undertake, and can be reduced or even mitigated through socially responsible actions.

Participants have made excellent points about the effectiveness and/or potential profitablilty of CSR. Any further thoughts or examples of how CSR could help promote peace?