Theme 7: Partnership Approaches to Involving Business

Peace
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ALSO CHECK OUT this link:

http://londonminingnetwork.org/2009/04/rio-tinto-attacked-from-all-sides/

[The Rio Tinto board] responded to issues of Indigenous Peoples’ rights by stating that some people were opposed to the projects in question, others in favour, that they would create jobs and that they would therefore go ahead with them. They refused to deal with the underlying issue of contention – the pursuit of mining projects on Indigenous land against the express wishes of Indigenous communities.

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I agree that is so important that management take a strong position in leading the development of partnerships. I think for the entire company to be successful in this, management needs to lead by example. Once the management begins to perform and maintain certain attitudes, those further down in the company will begin to act that way. If the company continues to perform in a certain manner and respond to events in a particular way, their behavior will soon become part of the corporate culture. Once values and norms are firmly established in the organization, the surrounding communities will begin to be effected and hopefully change for the better.

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I agree with this idea of reducing stress in the workplaces so that the employees can work more efficiently and productively, which will benefit the company in large amount because of the extra spillovers by reducing turnover costs. I thought that Google’s idea of providing wireless program in employee’s car was very interesting and thoughtful. Many companies are currently providing retirement benefit, childcare, health and wellness benefits to their employees. All of these benefits are giving positive influences to the employees so that the employees can contribute themselves better on their works. However, I thought that there might be negative impacts on theses benefits in the future where the employees would believe that those benefits are not actually the “benefits” but the rights what the companies must provide to the employees. Therefore, the employees would be more demanding to get more advantages from the company while the companies will have to cost more to get those employee’s needs.

I really enjoyed watching the video about the fair trade certification. This is a really great idea because it not only gives the economic benefits to the producers but also it actually provides those producers an apportunity to directly participate in the business. Even though there are many companies who hold businesses in the third world, the buyers of the product do not know if the producers in the third world are treating farily with dignity. However, because of this fair trade certification, the producers can now have more hope which will bring better future by creating peaceful community. This program brings success in the triple bottom line: economic, social, and envrionmental aspects as well as in the sustainability that we seek mostly in today’s world.

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MY SUMMARY TO DISCUSSION: How can partnerships help business in contributing to peace and stability?

1. For the business partnership models presented, what are the unique strengths? Are these models replicable, and what are the hurdles to replicating?

Business partnership models arising between:-

(1) governments and governments;

(2) governments and multinational businesses;

(3) multinational businesses and local business enterprises;

(4) multinational businesses and communities;

(5) multinational businesses, local businesses and communities; and

(6) multinational businesses (eg. ExxonMobil, Rio Tinto), public or private enterprises and communities and international NGOs (e.g. London Mining Network (LMN) - an alliance of human rights, development and environmental groups that pledge to expose the key role of companies listed on the London Stock Exchange, London-based funders and the British Government in the promotion of unacceptable mining projects).

I would like to focus on partnership model (6) as I see it as having the most potential to succeed in dealing with conflict. The unique strength of partnership model (6) is that it empowers external stakeholders (e.g. a community) who are otherwise powerless, through publicizing business irresponsibility thereby swaying public opinion, especially of investors and potential investors. Thus when a multinational is threatened by devestment, etc., it shall be persuaded to exercise business responsibility.

2. Where should the discussion of business partnership models be initiated – is this primarily a management-led issue or a board/governance-led issue? Who could most make positive action happen?

In my considered opinion, the question “Where should the discussion of business partnership model be initiated?” is primarily a Board/governance-led issue. Corporate law lays down clearly the fiduciary duties of directors to the company and its shareholders. Any business partnership that purports to extend duties beyond the company and its shareholders (internal and external) to stakeholders, must necessarily come from the Board. Management can be a pull factor to persuade the Board on the impact of stakeholders (internal and external) on long-term shareholder value and on business sustainability. Positive management action is then possible through engaging in stakeholder management.

3. Does the partnerships described in the presentations reduce risk? Create value? How would a newly hired MBA-graduate who has participated throughout the “Business Fights Poverty” eConference make the pitch for their company to “get on board”?
In the context of this econference “Peace through Commerce”, partnerships are intended to REDUCE RISK OF CONFLICT but whether they do or not depends ultimately on whether businesses embrace such risk as risk to shareholder value and business sustainability since their first corporate duty is to shareholders and not stakeholders.

It is possible to argue that reducing risk of conflict through external stakeholder management creates long-term shareholder value and business sustainability. This attempt at stakeholder management was illustrated by Rio Tinto Response to Business & HR Resource Centre at :

http://www.business-humanrights.org/Documents/Rio-Tinto-response-6-May-2009.pdf

A newly hired MBA-grad who has participated throughout the “Business Fights Poverty” eConference should make the pitch for their company to “get on board” by stressing on : the fact that peace is inextricably linked to long-term shareholder value and business sustainability. The risk of conflict obliges multinational businesses to become good corporate citizens through responsible business and a commitment to peace through commerce. The lesson of ExxonMobil in Acheh, Indonesia is aptly illustrative of this. Please refer to :-

http://news.bbc.co.uk/2/hi/asia-pacific/1401733.stm

FINALLY, I would like to express my appreciation to the Moderator and Presenters in the conduct of this discussion as well as to my fellow participants for sharing their views and experience. SELAMAT TINGGAL (goodbye in Malaysian language)! If you wish to explore research collaboration, possible investment in a community based tourism model, etc. please contact me at ong_msa@yahoo.com. :slight_smile:

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Marilyn,

I want to further discuss state dominated economies and tourism - before expanding any further on this topic let me point out TWO very extreme examples. North Korea, and China (before the 1980’s). North Korea currently has EXTREMELY limited possibilities for foreign tourists (at least from non-allies) - if business, and I understand the business case for any operations in North Korea are limited at best - were able to establish some type of relationship with the North Korean government allowing tourism I believe that in some capacity whatever intellectual capital is transferred through such an arrangement could only better the prospects of North Koreans not diminish them. The public may not initially understand this, and yes, it is possible said entity could receive some degree of bad press - but the opportunity would likely outweight the fall-out.

China, and similar situations, become a little more precarious. Prior to Deng Xiao Ping deciding “to get rich is glorious” China was very much the same in many respects as North Korea is today. However through gradual political and corporate partnerships, J-V’s, and offshore operations the Chinese have largely moved through the phases of economic development to a point where, today, they are becoming innovators. Without the initial foray into this unknown territory by many foreign instiutions much of this “progress” may not have been possible?

I am not saying that through tourism, etc… into these regions (even if it were possible) that guaranteed peace, or good will ensue - but the track record presents compelling evidence.

Additionally, Democracy does not work in many of these places - especially right off the bat - to adapt our values, and norms which promote and sustain peace to their style of government would be far more effective then unbridled support of democracy.

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In total agreement with Joshua’s arguments, I find Kimberly Eaason’s title to be an effective one: Director of Strategic Relationships. Now, the most complicated process in social sciences usually turns out to identify the stakeholders: who will be affected by the processes and who should be invited to take active roles in the processes? In an attempt to create peace through commerce, an ideal answer would be ‘everyone should be invited as everyone will be affected’. However, it is not possible to include everyone at the same level of activity, this is why I believe the relationships should be analyzed strategically and build up according to these analyzes. To answer your question, I would draw my point from our discussions a few weeks ago and claim that the most important partnerships between businesses and local entrepreneurs. This partnership will clearly establish the credibility of the business and provide the necessary financial sources and infrastructure to promote peaceful understanding between the conflicting parties.

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Thank you for your thoughtful response to this line of thinking. It is clear you are genuinely engaged in considering the value of partnerships, and how to pursue them.

I’d like to point out that there are different types of partnerships, and two of them stand out. First, we can look at the tourism example as an industry that has a direct stake in peace. The non-profit group Vision of Humanity and its Global Peace Index have focused attention on the sectors that would most benefit from peace–the “peace industries,” and therefore would be a good place to start in developing partnerships: tourism, retail, financial services, and commercial aviation. Second, we can look at sectors that have been directly implicated in causing or facilitating conflict, whether intentionally or not: oil and gas, mining and minerals, timber and cocoa, and the financial services that support them. These also should be encouraged to participate in partnerships, but of a different sort than the ones in the peace industry.

This has been a very interesting discussion, and the participants contributed thoughtful, valuable comments. I look forward to the next thematic discussion in this conference.

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I sought to find a copy or link to the “Corporate Governance: A Stakeholder Interpretation” you identified, but I was unable to do so, as our research library is not a subscriber to Journal of Behavioral Economics. I did run across another article, recently published and which I have not yet read, which may be of interest: “Stakeholders vs. shareholders in corporate governance” by Alberto Chilosi and Mirella Damiani. The link is at http://mpra.ub.uni-muenchen.de/2334/

Hope this helps-
Dean

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To all discussion participants and readers - Thank you for your participation and your thoughts & comments on this interesting discussion. I also want to especially thank all of the presenters for their valuable work on these topics and for sharing it with us. I look forward to continuing the dialogue and collaboration (or “partnership” if you will) on both this thread and the remaining themes of the conference.

Thanks again-
Dean

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Thanks a lot, Dean! I just printed it out. A good 48 pages read.

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Thank YOU, Virginia, for the interesting perspectives.