Theme 6: Key Issues to Doing Business in Conflict Zones

(Peace Through Commerce) #1
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A discussion moderated by Timothy Marshall, Chairman, International Institute of Peace Through Tourism

Visit Biographies for more about presenters

How can business handle the key issues in conflict zones?
This session focuses on flashpoint issues that arise in conflict sensitive zones. While some issues are common in any business settings, certain issues recur that businesses must address as part of their overall strategic focus.

Presentations:
Key Issues in Doing Business in Conflict Zones
Watch the three videos and join the discussion with presenters below.

Igor Abramov, Counsel, Heenan Blaikie LLP

"Building Peace in Fragile States: Building Trust is Essential for Effective Public-Private Partnerships"(5:48)

Don Mayer, Professor of Business Ethics and Legal Studies, University of Denver

"Peace Through Commerce and Private Militaries"(3:36)

Tara Radin, Wharton School of Business, University of Pennsylvania

"Justice and Reconciliation in Post-Conflict Markets"(6:10)


Working Papers




Discussion: How can business mitigate the key issues in conflict zones?

- While some issues are common in any business settings, which issues recur that businesses can address as part of their overall strategic focus?

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(Tim Fort) #2

Hi Everyone,

This week we look again at issues of Doing Business in Conflict Zones. Throughout the eConference, tourism has come up again and again as an industry with a particular interest in and history in promoting peace. Our moderator this week has been immersed in exactly this dimension of tourism for a long time. Timothy Marshall is the Chairman of the Board of the International Institute of Peace Through Tourism. His knowledge about these issues is deep and he brings a tremendous, engaging, spiritual commitment to this topic that inspires everyone he touches. I am delighted to having Timothy lead this week's theme.

Tim

Timothy L. Fort, PhD, JD
Exec. Director, Institute for Corporate Responsibility Lindner-Gambal Professor of Business Ethics George Washington University School of Business Professorial Lecturer, George Washington Law School

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(Tim Fort) #3

Hi Everyone,

If there is someone who should be credited for being there “at the beginning” of the formulation of how specific business practices can contribute to peace, it would be Lou D’Amore. Lou is the founder and President of the International Institute of Peace Through Tourism. Lou is going to moderate the first few days of this week’s session before passing the baton to IIPT’s Chair of the Board, Tim Marshall. I’m delighted to welcome Lou to these week’s discussion.

Tim

Timothy L. Fort, PhD, JD
Exec. Director, Institute for Corporate Responsibility
Lindner-Gambal Professor of Business Ethics
George Washington University School of Business
Professorial Lecturer, George Washington Law School

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(Louis D'Amore) #4

Hello Everyone,
I am most pleased to be moderating the start of week 6 “Doing Business in Conflict Zones.” We have excellent presentations by Igor Abramov, Counsel, Heenan Blakie, LLP; Don Mayor, University of Denver; and Tara Radin, Wharton School of Business, University of Pennsylvania; as well as recently added videos featuring Mark Levine and a second on Tourism in Sierre Leone - an exemplary success model of tourism’s contribution to economic recovery following conflict.
We look forward to your comments, observations, and questions.
Louis D’Amore
Founder and President
Intenational Institute for Peace through Tourism

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(William Becker) #5

While I agree that tourism can be one important industry that is vital to reviving conflict zones, I feel that there is still tremendous reticence for most individuals and organizations to travel to these areas. Most are discouraged by the travel advisories by the U.S State Department as well as by the lack of effective and reliable transportation to and within these areas. Additionally, these negative perceptions about these zones can continue well after conflict has ended, further hindering the ability of tourism to help revitalize these areas.

With all these hindrances, what can we do to encourage people to travel to some of the most interesting yet conflict-ridden areas of our world? Is it the role of business (the tourism industry specifically) to help build infrastructure within these areas that would help promote the development of tourism, even if significant tourism in these conflict zones might not happen for years or decades?

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(Kristen Simpson) #6

It is truly fascinating to see what a difference tourism can make in a hostile environment’s road to recovery. After watching the “Tourism in Sierra Leone” video, I found myself comparing Sierra Leone to destinations I had been considering for travel after graduation! There is a lot to be said about their transition when you can see a video and imagine that nothing had ever run them off track.
Going back to Tara Radin’s second point on transition economies about how people experience conflicting values-the past and those they are aspiring towards- I think of Sierra Leone. The tone of voice and pride in what they have to offer leads me to believe that they are overcoming those conflicts in values. I believe that having that new found set of values can lead to an increase in an entire society’s confidence–they can say with pride what amazing things they have to offer, which will ultimately draw tourists to it. More tourists for areas in post-conflict means an increase in and replacing of stakeholders.

I’m thankful that I’ve had the chance to see what an impact tourism can make in an area like Sierra Leone, and I apologize if this has been addressed in one of the videos already, but I am curious as to what kind of timeline is appropriate for something like this to be affective. Say I want people to visit a post-war area and I am concerned about their willingness to go. Is the idea to try and turn the area’s image around as quickly as possible so to attract people to visit, or is it something that needs to happen over a prolonged period of time as people slowly decide to visit on their own? I understand that nothing like this happens overnight, but I was hoping someone might be able to shed more light on the concept of what needs to happen outside the area in conflict to “brand” it as a vacation destination.

Thank you!!
Kristen Simpson

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(Louis D'Amore) #7

Kristen Simpson and Michael William Becker have raised some interesting questions:
How to improve the image of a country that has recently experienced conflict and to
“brand” it as a vacation/tourist destination?

How to overcome the negative influence of travel advisories?

How to deal with the lack of adequate transportation to and within the area – and the
general lack of infrastructure?

Do any of you have examples of how any one – or each of the above obstacles have been overcome.
Your comments and observations are welcome.

Louis D’Amore
Moderator

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(Solomon Brayant Mpapale) #8

Dear All,

Businesses can indeed undertake a number of measures to mitigate key issues in conflict zones:a number of them:

1.Undertake comprehensive risk assesments and always base key investment decisions on those assesements.

2.Resonably and with sufficient safeguards and constraints explore any mechamisms if available that could go towards building peace,conflict resolution or even helping to mitigate the suffering of the victims for example civilians.This can creatively be inlcluded in CRS programmes like for example a compony that mines minerals in a conflict zone somewhere undertaking to buy guns from demoblized combatants and instead of leaving them jobless, offering them some jobs in its plants.

3.In the same way, a compony can invest in pre-emption by for example ensuring that there is minimal interference with peoples’ livelihoods which could trigger conflicts over scarce resources.

4.Mechanisms for compensation can also be contemplated.

5.In worst case scenarios, a decision not to invest, to divest,scale down or pull out the investment altogether can be contemplated if the risk cost benefit analysis determines that the continued operation of a compony somewhere does not serve its interests of that of the locals.

6.In certain isolated cases, it would be prudent to invest through local frinchises,subsidiaries,nominees,partners or even enter into strategic mergers with local componies or governments as a way of spreading risks and also ensuring better efficiency in understanding the anatomy of conflicts.If this happens perhaps there is a better inclination to honuor CSR.

Mpapale,

London.

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(Steven Sciuto) #9

I am curious to know how shareholders can ensure that the multinational they are invested in is maintaing the proper corporate responsibility within the conflict zones they do business in. This mainly pertains to companies in the mining, oil exploration, and manufacturing industry as they seem to be the most abundant in conflict zones. As a shareholder of such a company, I would like to know if multinational companies are required to publicly announce or reveal what actions they are taking in conflict zones to either reduce or prevent conflict in their respective area.

I would think that if shareholders were to find out that the company they are invested in is not doing enough or is in fact worsening the situation, they would think twice about their investment in that business. Any feedback would be greatly appreciated.

Steven Sciuto

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(In Je Yeo) #10

From watching this week’s video lectures, I realized many important aspects of business society. According to the video from Mr. Abramov, he mentioned that there are many conflicts in trusting other partners in doing businesses and corruptions in between companies and governments.
Way I view this business world, those conflicts cannot be avoided unless unconcious, no thoughts of robots are working. We are humans. It is very difficult to trust someone because individuals thrive to make their own profits.
Therefore, in those cases, we cannot expect to gain other party’s trust completely. They might deceive you to make it look like they trust you, thus get your trust and betray you.
In dealings with other parties, we always should try to make win-win situation. We are there to make profits of your own, and no one wants to give up their hand to others.It will be ideal if we can find a benefitial point for both parties.

In my opinion, Conflict zones are inevitable. But also, solutions can be found always since we always have room for negotiation, thus we can keep our peace in commerce.

Thank you for Professor Fort for this great opportunity.

In Je Yeo

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(Emma Werlin) #11

Tourism is an especially important component of the global economy and should be evaluated as a necessary market stakeholder in the economy. Travel and tourism in conflict zones are an interesting dichotomy due to the fact that most would steer clear of travel to places such as Sierra Leone. In terms of attempting to encourage travel to these areas there needs to be increased civic engagement on the part of the government and tourism industry. If outsiders are able to see that the inhabitants of the conflict-zones and the organizations that are stationed there have good relations it may be a way to entice visitors to come to the foreign lands.

Another action that the tourism industry could take would be to advertise the positive and unique aspects of conflict-zones that may have been overlooked. This type of action would need to be spearheaded by the tourism industry and perhaps supported by local governments. CSR and consumer protection must be aptly applied in all of these actions in order for them to be successful at inviting individuals to come to these uncharted destinations.

The question of building the infrastructure in these areas still remains and is important to answer. I too am wondering what sort of timeline and specific operations would need to be implemented in specific conflict zones in order to brand them as a tourist destination.

Thank you!

Emma Werlin

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(Jacquelyn Vinnedge) #12

I will be working and traveling for the next year in a third world country. I am expecting extreme culture shock when I arrive and I have been doing a great amount of research to subdue the initial shock. I will be in Thailand for the first month and with the current conflict occurring I am extremely apprehensive. This conflict is harming innocent civilians and it makes those individuals who have always had plans of traveling to these foreign areas thinking twice about such decisions. I understand organizations can participate in different CSR programs, but if they are working with a corrupt organization this does not stop the corrupt organization from participating in attacks.

Organizations benefit from global operations, how will then ensure they are working with an equally responsible company? How can organizations trust working with foreign firms will not result in conflict?

I look forward to hearing the feedback on this particular topic in which I have a vested interest.

Jacquelyn Vinnedge

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(Timothy Kim) #13

I think its important for businesses and individuals to be able to trust in their foreign counterparts especially in conflict ridden areas where there are local disputes, as well as kidnappings of travelers. Tourism is great for promoting peace and helping the nation’s economy but for a business to be able to assess the risk involved in operating in another country I think that there has to be measures already in place that are there to protect foreign businesses and their human and other assets. It would be hard for businesses to go into a conflict ridden area knowing there are few protection measurements, and I feel it would be hard for tourism to follow up if there are no protective measurements.

A questions to all, would it be wise, to integrate businesses with locals in order to promote a sense of peace and harmony that would attract more tourists?

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(Adam Difrawy) #14

I completely agree with this. I think that integrating business with locals would greatly improve the sense of peace and harmony and would attract more tourists to the area. If business start integrating with the locals it begins to change the general image of the destination. Businesses will be providing the necessary funding to improve the image of their own business and then eventually competitors and other businesses within the destination do the same and a postive, creative and forward mentality is created and followed. I think a fantastic example of this is in Dubai or Bahrain which are both in the middle-east. I lived in Bahrain for most of my life and when I was young it was still very undeveloped and starting to get onto its feet. As time went by more foreign businesses came in and started building new new bases for their operations etc. Eight years later, and I can no longer recognize my home country, Bahrain is very much the new Dubai in that modern buiding s and skyscrapers are now changing the image of bahrain. If you look at Bahrain now as opposd to 20 years ago, you would see a highly advanced nation in terms of technology and business and this makes it very attractive for tourists or travellers to go to Bahrain. Many American’s would not even think twice about going to the middle-east given what is going on there right now, but if they visit Bahrain or Dubai they may seriously change their perceptions on the middle-east in a very positive way, which in turn will encourage them to visit.

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(Igor Abramov) #15

You raise some very important and interesting issues. I would particularly stress the need to work with local partners in all stages of a CSR program. I would add that in considering CSR companies should consider closely the needs of the community in which they operate. Too often multinationals have their own notions of CSR instead of targeting the specific needs.

I would also add to your list the need for capacity building, empowerement, and education that companies can engage in much more effectively than governments.

Igor Abramov

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(William Becker) #16

This question also brings to mind a paper from last week’s theme about Diaspora Investment by Professors Nielsen and Riddle.

I also think that in addition to locals, diasporans can help build and sustain tourism efforts in their own home countries. These individuals have just as much local knowledge as existing residents, and can also be among the first to offer foreign investment in areas that have just emerged from conflict.

Having diasporans help fund (and even direct) tourism efforts in their own home country would allow tourism to take root much quicker than relying upon MNCs and even locals, as the diasporans have the willingness and necessary capital in order to make sure the necessary tourism investments are made.

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(Igor Abramov) #17

Congratulations for identifying a milion dollar question. Your question goes to the complex and difficult question of corporate law of ownership and control. While, a shareholder may be an"owner", a shareholder has virtually no say in the decision making process. The strategic decisions -investment, ethical standards and risk management decisons are made by the board of directors. I am not aware of any regulation requiring the decisions of the board or the management be publicly available.

However, increasingly there is a strong movement towards “shareholder activism”, where a shareholder seeks to influence or seek changes in the company’s strategy. I am afraid that the United States is somewhat behind on this than our European friends. In the U.S., “shareholder acitivism” tends to be undertaken by institutional investors rather than individual shareholders. This is not to say that individual shareholder is left completely in the dark. A shareholder, for example can demand access to documents, decide to sell shares in a company it believes involves in unethical practices, and through voting.

A very simple response to a complex and good question.

Thank you.

Igor Abramov

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(Adam Difrawy) #18

Protective measures are most definetly a major factor in determining whether or not a business will enter the toursim industry in a nation recovering from conflict. All countries who are looking to attract new businesses to promote tourism need to have some sort of protective measures and guarantees of safety for the human and other assets as Timothy just mentioned. I am trying to think of some sort of safety and protection measure that would make the countr more desirable for the new businesses, but nothing is coming to mind. Anyone have any ideas? I think that Timothy has made a great point about how potential businesses looking to enter a conflict ridden area wouldnt even think twice about it if it didnt seem safe. So I think this should be a major focus of discussion right now because it is a serious factor in whether or not a new business will enter a new country or region, especially one that is riddled with conflict.

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(Igor Abramov) #19

While conflicts may not be entirely avoided and are bound to exist, especially when a multinational company seeks to do business in a country with different cultural norms and business behavor, it can however, be significantly reduced if the company works to develop and gain trust in society in which it operates. There are many ways to accomplish this. I will just list a few obvious suggestions:

  1. Do not impose your cultural norms (e.g., allow flexibility on how people dress in a workplace)
  2. Create a forum in which engagement and dialogue among employees and stakeholders takes place. Take the time to listen and learn from your local staff. For example, I just returned from Kazkahstan and was amazed how many foreign country managers of companies did not know Russian (common language spoken) and even those who have been there for a number of years. Certainly, not knowing the language or taking the time and effort to learn is not a way to gain trust.
  3. Provide a forum in which ideas and common ineterests are exchanged and shared.

From my own travels and engagement with governments and private sector, in societies where government controls or playes significant role in business, there is significant corelation and increase in corruption and distrust not only between business and government but also between and business. Sooner or later every one loses in such an environment. Even large companies can not sustain business in such environments where corruption is endemic. China, where intellectual property piracy has always been a significant problem for western firms, is now beginning to fully appreciate the problem because domestic chinese companies are beginning to experience the same piracy problems. Chinese companies are beginning to align themselves with western partners in fighting piracy. This is a win-win solution, where common cause and interests bring bring people together even if they are competitors.

I disagree with the notion that making profits stand in the way of cooperation, exchange, and sharing of ideas among even a competing group of people and companies. In fact, there is great evidence that opposite is true. Given many challenges that exist in conflict zones, building trusting relationship with governments and other stakeholders is a way to manage and reduce the many risks prevalent when doing business in conflict zones.

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(Emma Werlin) #20

I agree entirely that businesses should integrate with locals in order to promote a sense of peace. Civic engagement and businesses giving back to the societies in which they operate is of the utmost importance. I think that it plays an even more paramount role in these conflict areas that receive a wealth of negative publicity. Those foreign businesses that are in these nations have the ability to drastically change its image and presence in the global market and economy. Businesses can give back in fruitful ways including the arts, education, tourism, technology, and increased awareness. Civic engagement, activism, and institutions are some of the cornerstones of a successful environment. Changing the image through corporate involvement and interest will allow these conflict and developing areas to thrive. Moreover, it is necessary for the businesses that enter the new market and location to generate a great amount of trust between themselves and society.

My question is how do businesses spearhead this type of action and how do they adequately and effectively convince their new market of their genuine interests and trustworthiness?

Thanks,

Emma Werlin

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