Mega-Sporting Events and Human Rights –
A multidimensional model
Abstract:
This research explores the perception of human rights violation in different kind of countries and the effect international business units, such as sporting organizations, have on the degree of abuse taking place. The thesis starts with a detailed literature review, including describing the reciprocity theory, the stakeholder theory and the institutional theory, which results in the basis of the multidimensional model developed here. The aim of this thesis is to find out, how different institutions, as business units, impact the countries, where mega-events took place.
Master: MSc Business Administration (MSc BA) Supervisor: Erik Dirksen
Second Supervisor: Michelle Westermann-Behaylo Track: International Management Author: Moschda Sham (10732764)
Date of Submission: 29th of January 2015
STATEMENT OF ORIGINALITY
This document is written by Moschda Sham who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completi-on of the work, not for the ccompleti-ontents.
I TABLE OF CONTENT
1 Introduction ... 1
2 Literature Review ... 3
2.1 International business and human rights ... 4
2.2 Mega-sporting events and the perceived impact of host countries ... 9
2.3 Reciprocity theory, institutional theory and stakeholder theory ... 13
2.3.1 Reciprocity theory ... 13
2.3.2 Institutional theory ... 14
2.3.3 Stakeholder theory ... 16
3 Conceptual Framework ... 18
3.1 Institutions in host countries ... 20
3.2 Institutions in home countries ... 21
3.3 Institutions themselves ... 23
4 Methodology ... 24
4.1 Multiple case study approach ... 27
4.1.1 Semi-structured interviews ... 28
4.1.2 Newspaper articles ... 29
4.2 Coding ... 29
5 Case Studies ... 31
5.1 Case 1: The institutions in Germany – the host of the 2006 WC ... 33
5.2 Case 2: The institutions in South Africa – the host of the 2010 WC ... 34
5.3 Case 3: The institutions in Brazil – the host of the 2014 WC ... 35
5.4 Case 4: The institutions in China – the host of the 2008 Olympics ... 37
5.5 Case 5: The institutions in Canada – the host of the 2010 Olympics ... 38
5.6 Case 6: The institutions in Russia – the host of the 2014 Olympics ... 40
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6.1 Results of the semi-structured interviews ... 41
6.2 Results of the newspaper articles ... 44
6.2.1 Within-case analysis ... 46
7 Model and Discussion ... 59
7.1 Institutions in the host country ... 61
7.2 Institutions in the home country ... 63
7.3 Institutions themselves ... 65
8 Conclusion ... 66
8.1 Limitations ... 68
8.2 Scientific relevance and managerial implications ... 68
8.3 Future research ... 69 References ... IV Appendix 1: Interview ... XII
III LIST OF TABLES
Table 1: Comparison of theories ... 17
Table 2: Overview Cases 1-6 ... 32
Table 3: Influences according to fairness, legitimacy and different interests ... 43
Table 4: Case 1 - World Cup in Germany, 2006 ... 48
Table 5: Case 2 - the World Cup in South Africa, 2010 ... 51
Table 6: Case 3 - the World Cup in Brazil, 2014 ... 53
Table 7: Case 4 - the Olympics in China, 2008 ... 55
Table 8: Case 5 - the Olympics in Canada, 2010 ... 56
Table 9: Case 6 - the Olympics in Russia, 2014 ... 58
Table 10: Working propositions - Institutions in host countries ... 63
Table 11: Working Propositions - Institutions in home countries ... 64
Table 12: Working propositions - Institutions themselves ... 66
LIST OF FIGURES Figure 1: The stakeholder and the firm ... 17
Figure 2: Conceptual framework ... 19
Figure 3: Structure of methodology ... 25
Figure 4: Differences in the publications of the number of articles, The INYT and Die Zeit . 45 Figure 5: A multidimensional model - a FIL model ... 61
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1 Introduction
During globalization, climate change, environmental accidents and information transfer modify how society sees corporations' role in the world and what society expects from them. Corporate social responsibility (CSR) has become a big issue, along with human rights and international business (Idowu & Papasolomou, 2007). Since these issues have been raised, corporations aim to treat employees equally, respect human rights, make donations and host socially responsible actions in order to show social responsibility. Governments and institutions have developed many treaties against human rights abuse and exhibit a higher level of social responsibility. However, it is questionable what good these treaties do if they do not enhance human rights practice (Hafner-Burton & Tsutsui, 2005). The United Nations as well as many business and human rights organizations have developed frameworks, governments have integrated human rights issues in their legislation and corporations have inserted them into their codes of conduct (Ruggie, 2007/2008; Institute for Human Rights and Business, 2013). As the literature shows, many scholars are in unison in stating that corporations have the power to influence human rights abuse (Anderson, 2000; Cassel, 1995; Weissbrodt, 2005; Mena et al., 2010).
Due to the fact that the range of businesses affecting human rights abuse is significantly large, we will focus on one sector that deals most obviously and most currently with human rights abuse: mega-sporting events. Little research has been done so far in this area, which is why we will concentrate on it. Big sporting events, such as the World Cup and the Olympics, which are organized by the International Association of Federation Football (FIFA) and the International Olympic Committee (IOC), inspire both enthusiasm and anger simultaneously. Events include the Olympics in China in 2008, the Sochi Olympics in Russia in 2014, the World Cup in Brazil in 2014, the Olympics in Brazil in 2016 and the next World Cup that is planned in Qatar in 2022; business and human rights organizations aim not to eliminate these
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events but to change the way these events are organized so that one can be passionate about the games without having to think about the abuse that is taking place (Institute for Human Rights and Business, 2013; Lesaffer, 2013; National coalition of local committees for a people's World Cup and Olympics, 2012).
The power FIFA and IOC have is considerably great; for this reason, the aim is to raise awareness and, more than anything, change these organizations so that they are more responsible. Hosting mega-events brings opportunities for tourism on the one hand and risks of abuse on the other hand. The cost and benefit factors depend on the perceived value of the impact of sporting events by the citizens of the hosting country. The way the impact is perceived affects their support for tourism (Gursoy & Kendall, 2006). This is further discussed in this research paper.
The research question here is how and to what extent mega-sporting events, as an international business, can influence the perception of human rights with regard to different institutions in host and home countries; what kind of factors are moderating the type of influence? To find responses to these questions, the thesis will build a conceptual framework from in-depth multiple case studies, semi-structured interviews, newspaper articles and secondary data. The conceptual framework can be seen as the basis of a theory of international business and human rights. It aims to generalize how international business can influence human rights abuse, derived from the sector of mega-sporting events.
The subsequent chapter gives a first glance into the literature of international business and human rights and narrows the literature down to the specific sector of sport events and human rights. Afterwards, three theoretical views will be portrayed: the reciprocity theory, the stakeholder theory and the institutional theory. The three theories build the foundation for the
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conceptual framework, which is illustrated in the third chapter. The working propositions are developed here.
The thesis then proceeds with the empirical part, starting with a description of the methodology, which is followed by the delineation of each single case. The results are analyzed through the method of thematic coding, where the codes will be clustered into categories. A discussion follows in the seventh chapter, in which the validity of the propositions are reviewed and the conceptual framework is modeled. The research concludes with a summary about the key findings; it portrays the limitations of the research, shows the scientific relevance and possible managerial implications. Finally, the thesis gives recommendations for future research.
2 Literature Review
"What does it mean to exercise leadership in a world of Yugoslavias, Somalias, Haitis...to name just a few? What are the values for which we want to stand and how far will we go to support those values?" (Keller, 1994, p.271). Multinational business and human rights are not only an issue now, but also have been since the inception of business overseas. Multinational business and human rights have been discussed early in the literature. However, especially since the declaration of the UN Guiding Principles, international business and human rights have been debated more frequently.
The literature can be divided into three categories. First, there is a great deal of literature about international business in general and human rights. After scholars did research on that, treaties were developed to change human rights violations. Thus, there is literature about the development and effectiveness of these treaties. Second, tourism and the perceived impact of residents comprise a category. This will lead us to the area with the most current literature, although there is little literature about mega-sporting events and human rights. Third, we will
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also take a look at reciprocity theory, institutional theory and stakeholder theory. So, let us consider the literature so far.
2.1 International business and human rights
One of the main reasons why corporations go abroad is to match costs and prices, simply to be competitive in the global world. When manufacturing operations in one developing market become too expensive, the operations move to another developing market with a less costly environment. Governments of developing countries that do not obey their own laws and norms treat their citizens dishonorably, barbarously and, frankly, intolerably. According to Keller (1994) international corporations have different options on how to deal with human rights violations in these countries. Either they go to that country to reach their goal by paying low wages, saving on costs and gaining profits without caring about the human rights violations (ignoring their own values), or they refuse to do business in a country with such an extent of human rights violations, treat the people fairly and bear the loss in profit they would make, as they are not moving their manufacturing operations to developing countries (Keller, 1994). On the other side, Spar (1999) argues that foreign investments improve the condition of the residents living in developing countries. His article describes how the presence of Western firms allies with political changes, especially with human rights conditions. The link between developing and industrialized countries is created by multinational firms, and foreign investments lead to closer contact between firms and the local population. Power and influence can then change the environment around them (Spar, 1999). Spar (1999) agrees with Keller's (1994) statement that firms only invest abroad because of their own benefits that allow them to compete in the global world. However, Spar's (1999) arguments are accompanied by benefits in the host country that only accompany Western firms. Multinational firms bring undeniable assets such as capital, technology and know-how. He
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then concludes that these factors are not the only ones that can lead to growth – although they are necessary (Spar, 1999).
The literature also takes a deeper look at businesses in specific countries where human rights abuse is remarkably high, such as in China or in Latin American countries. For instance, Orentlicher & Gelatt (1993) investigated business in China and researched whether companies should invest in countries with significant human rights abuse or restrict their operations in these countries. Their major contribution is the shift in public debate about human rights abuse and the responsibility the companies have that invest in countries with little respect for human rights (Orentlicher & Gelatt, 1993).
Another topic often discussed by scholars is the influence and power of multinationals in host countries (Cassel, 1995; Spar, 1999; Anderson, 2000; Stiglitz, 2007; Drimmer, 2010; Nolan, 2014). Very precisely and briefly defined, "Corporations are legal entities governments create to enhance the well-being of their citizens." (Stiglitz, 2007, p. 553). This definition concisely expresses the meaning of corporations in connection with human rights. It implies that corporations exist to improve lives and well-being through the possibility to work, earn and consequently build up lives. In spite of that, the power and along with that the responsibility multinational corporations have is often underestimated (Cassel, 1995). Cassel (1995) examines the role of multinational corporations (MNCs) in regards to human rights protections and contributes in shifting the focus of responsibility from governments to the private sector. In contrast with that, Spar (1999) stated that firms have argued that human rights are a topic of government policy, not of business. However, Cassel (1995) concludes that especially MNCs may have the power and even duty to warrant human rights and not only governments. Anderson (2000) agrees with Cassel (1995) and observes both the economic and political power of multinationals. He infers that they should have a legal duty to respect human rights. Moreover, Anderson (2000) suggests that respecting human rights
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should be enforced in legislation and examines the role of multinationals taken into consideration by boards of governance of the corporations who want to invest abroad. Governments should choose the right way of abandonment and intervention before abuse is already existent (Anderson, 2000).
Stiglitz (2007) then addresses the issue of host country policy. Foreign individuals and companies that want to conduct business abroad should be aware of the rules and regulations of the host country. Foreign firms gain more protection by investment provisions than domestic firms because of certain agreements – special interest treaties – that enable large corporations to have greater opportunities than with domestic processes only. This process, however, results in an increased degree of uncertainty because of the different processes between foreign and domestic firms. Even though one of the main arguments when developing these treaties was to decrease uncertainty, it changes completely. This is why Stiglitz (2007) claims for a need for international law regarding the conduct of cross-border businesses. However, this claim is also provided with constraints. Developing countries see this as a restriction to their introduced democratic processes. They wonder what the point of democracy is “when the things they care about are decided in Washington.” (Stiglitz, 2007, p. 557). Because of this behavior democracy is undermined, and so is the reliance on the fairness of the international market system. It can be conducted that MNCs have played both a positive and negative role in terms of globalization. They are responsible for many achievements as well as for many key problems (Stiglitz, 2007). They are complex, and so are human rights.
Recently, the issue about business and human rights was addressed more frequently; this is why the UN Human Rights Working Group has developed an international framework for the world. John Ruggie is the first person who openly framed the issue about business and human rights and put it into the UN Guiding Principles that must be applied by all nations. In 2011,
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the UN Human Rights Council in unison accepted the UN Guiding Principles. The Working Group developed a mandate on business and human rights that supports implementation (UN Working Group in BHR). In his 2007 paper, Ruggie discusses business and human rights as an evolving international agenda and gives an overview of the Special Representative of the Secretary-General (SRSG) mandate's work to date. He presents the international standards and practices regarding business and human rights up to that point in time and refers to the term “grand strategy” when suggesting a strategy in order to reduce human rights protection gaps in relation to corporate activities (Ruggie, 2007). After Kinley et al. (2007) discuss the status of the norms within the context of the notion of CSR, they declare that the norms have been a beneficial and fruitful initiative, renewing the attention to human rights. Ruggie (2008) has developed a framework that talks about protecting, respecting and remedying of human rights. With this framework, he presents a three-principle-based conceptual and policy framework that intends to support the international community's aim to protect corporate-related human rights harm (Ruggie, 2008). Ruggie (2009) continues to consider business and human rights issues and, based on previous research, examines the scope of state obligations to provide access on how to resolve abuse under international and human rights treaties. Kaufmann (2009) directly refers to Ruggie’s three-principle-based framework and discusses the issue of operationalizing the framework. She argues that the framework is theoretical and needs an update of practical guidelines and recommendations. In saying so, she gives an overview of all state obligations under international and main regional human rights treaties (Kaufmann, 2009).
Misol (2009) confirms that Ruggie (2007) contributes one important strand of the UN's struggle to protect human rights. His article assesses the work carried out by the UN Working Group and suggests the next steps, saying that stronger rules are needed in order to ensure efficient business practices (Misol, 2009). Mena et al. (2010) belong to the few who suggest
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solutions on how to deal with human rights challenges and business abroad. They suggest five possible solutions that all build on empowerment, dialogue and constructive engagement (Mena et al., 2010). Jerbi (2009) also concludes that what seems important is the shift toward a greater corporate responsibility.
The costs of negative publicity and the threat of punitive damage for transnational corporations (TNCs) that lead them to rethink their behavior is another issue that is addressed. The cost of negative publicity has made TNCs realize that respecting human rights makes good business (Reinisch, 2005 in Alston, 2005).
Moreover, the literature shows a three-stepped process in business and human rights issues. First, there was and still is a huge amount of case studies and analyses about international business regarding human rights. Second, human right treaties and assessments that were seen as a necessary first solution were developed. Third, the literature investigates how effective human rights treaties are in the real world. Hathaway (2002) asked whether human right treaties make a difference. She observed that countries that ratify treaties usually have better human rights ratings than countries that do not. Nonetheless, better ratings for ratifying countries are not necessarily triggered by ratifying treaties, but could possibly accrue because certain factors that lead to good human rights ratings might also lead countries to ratify the treaties. Hathaway (2002) suggests thinking about what factors other than human rights treaties might affect human rights practice. She attributes variables to poorer and to stronger human rights records. Variables such as international war, civil war, population size, population growth and the newness of the regime in power are assigned to poorer conditions, whereas gross national product per capita, global economic interdependence and dependence on foreign aid are assigned to stronger conditions. In general, she concludes that improved human rights do not come only from treaty ratification but is also often associated with worse practice (Hathaway, 2002).
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In contrast, Shermann and Lehr (2010) conclude that human rights due diligence is about preventing and limiting risk. They find that human rights due diligence might increase a company's risk of liability. A short response to that is that potential human rights risks can be recognized more easily through human rights due diligence. Companies can address these risks before they appear, which should reduce complaints against companies upholding them. Due diligence should aim to evaluate and decrease the risk of corporate involvement in human rights abuse. Thus, the authors conclude that it is too risky for both business and society if due diligence is not undertaken (Shermann & Lehr, 2010).
The most current investigations have been made by the Business and Human Rights Center, a non-governmental organization (NGO) that reports how business impacts human rights, both positively and negatively. The Business and Human Rights Center deals with over 5,000 companies in more than 190 countries and 150 issues. Business can impact human rights in different ways in terms of child labor, unsafe labor conditions, violence and sexual abuse, to mention just a few. In addition, the Global Business Initiative on Human Rights deals with this issue in different regions such as Asia, China, East Africa, the Middle East and North Africa, India, and Latin America (Business and Human Rights Center, Global Business Initiative on Human Rights).
From this part of the literature review, it can be inferred that many scholars agree that corporations are powerful and should integrate human rights into their business models when doing business abroad. Corporate responsibility is accepted as one of the most deeply rooted developments in human rights history. Moreover, it can be seen that this issue is a broad topic.
2.2 Mega-sporting events and the perceived impact of host countries
In the second part of the literature considered in this thesis, we turn to tourism and the perceived impacts of mega-sporting events. There are several studies about the perceived
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impact of tourism by residents and hosting of sporting events (Belisle & Hoy, 1980; Bramwell, 1997; Faulkner & Tideswell, 1997; Brunt & Courtney, 1999; Fredline & Faulkner, 2000; Barker et al., 2002; Fredline, 2005). Mega-sporting events can be defined as one-time
occasions that create unique moments, creating a specific ambiance celebrated with ceremony and rituals (Goldblatt, 1997; Newton, 2009). For instance, Belisle & Hoy (1980) investigated
quite early the perceived impacts of tourism in Colombia. They found confirmation that the perception of tourist impact varies, dependent on the distance a person lives from the tourist zone and on the socioeconomic status of a resident. In general, they found that despite some negative aspects, the impact of tourism is experienced as beneficial. This is why they want their governments to stimulate tourism (Belisle & Hoy, 1980). Social effects were also researched by Brunt & Courtney (1999) and declared as so important that they should be studied before any other aspect. The rapid expansion of tourism is relevant in two respects. First, tourism is one factor that has contributed to changes in society. Some changes are welcome, such as improved education and employment structure, but others are not, such as social and family values that are challenged through that change. Second, the contact among different countries and cultures has increased, as tourism can be now referred to as a unique export industry (Brunt & Courtney, 1999).
However, tourism can have disadvantages as well. One area examined is the crime rate connected to tourism by Barker et al. (2002). They find that oversea crimes differ from domestic crimes. However, at special events, crime is regulated by the range of coherent variables associated with the event and the host destination (Barker et al., 2002). Fredline (2005) says that the lives of the residents of host communities can be enriched by sport tourism activity through improving economic prosperity. Although tourism is ephemeral, these events add value to the region and can raise the popularity of the host city and country.
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Especially high-profile events can induce significant advantages by the mass they reach via media (Fredline & Faulkner, 2000).
High-profile events can occur in the form of mega-sporting events. Mega-sporting events and human rights violation captures attention because of the antagonism of international sporting events (Gursoy & Kendall, 2006; Collins et al., 2009; National coalition of local committees for a people's World Cup and Olympics, 2012; Institute for Human Rights and Business, 2013). Scholars and organizations talk not only about the benefits a mega-event can raise, but also discuss the costs they bring with. In Gursoy & Kendall's study (2006), they found five determinants that affect community in the host country directly or indirectly, which they call the “level of community concern, ecocentric values, community attachment, perceived benefits and costs” (Gursoy & Kendall, 2006, p. 603). In addition to the factor of ecocentric values of this paper, Collins et al. (2009) emphasized further the environmental impacts a mega-event can trigger. However, it is difficult to measure the environmental impact, as this is a time-consuming process. The selected techniques Collin et al. (2009) used can measure the consequences of the events in varying degrees. For instance, they found that the transport is responsible for the mass of environmental impacts connected with long-distance tourism. As sustainable development commitments are stated as becoming increasingly necessary in constitutions and mission statements of sports organizations, the demand for monitoring tools rises (Collin et al., 2009). The National Coalition of Local Committees for a People's World Cup and the Olympics (2012) discusses the injustice to society and to the environment for the World Cup 2014 in Brazil. According to them, people were treated unfairly and violently, the law was disregarded, and the right to information and the participation in public decision-making processes had been neglected. National as well as international companies made the country do things that were only about the companies’ own profit. As it is the case most often, the public gets stuck with the costs while the private firms gain the profits. Thus, the National
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Coalition of Local Committees for a People's World Cup and the Olympics (2012) has called for awareness and a struggle for legalization and suggested several solutions. They declared the general law of the World Cup unconstitutional. One of their exact demands is, for instance, that they do not want to give medals as long as labor rights are not respected (National Coalition, 2012). Families suffer daily from the risks the events bring with them, e.g., the renovation work of the Beiro Rio Stadium in Brazil triggered risks of accident and flooding. There was the risk of violence in different kind of ways every day. It is said that FIFA and transnational corporations have no interest in supporting small- to medium-sized firms. Thus, emerging benefits do not happen to them. There is even the statement that mega-sporting events create a “parallel state” (National Coalition, 2012, p. 32). However, the Institute for Human Rights and Business (IHRB) (2013) explains the effort of organizing and planning mega-events. Pursuant to IHRB, not only the renovation of infrastructure but also a revitalized image of the hosting country can be generated. Furthermore, IHRB (2013) demonstrates the positive and negative sides of international sporting events. These events capture attention not only because of the sports but also because of the bidding process, which means a competition between the host countries. Mega-sporting events not only bring risks, but also a lot of opportunities. Organizing and planning mega-events demands a lot of effort. This is not only due to renovation of infrastructure etc., but also because of the new positive, revitalized image if successful (IHRB, 2013).
Research so far has focused on analyzing situations in different areas, what kind of role the host country government has and what kind of role the home country governments play in regards to human rights violations, how the situation can be improved, and what kind of change has been made so far. However, the literature has not analyzed and coded the behavior of international businesses, such as sporting organizing units, into a general theory in terms of business and human rights violations. A guiding principle frame has been developed by
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Ruggie (2007, 2008). However, this research builds on existing theories and creates a new model considering already-developed human rights treaties and literature. The next section illustrates the three theories relevant for this research.
2.3 Reciprocity theory, institutional theory and stakeholder theory
We can find three theoretical approaches fitting the aspects discussed above. Reciprocity, institutional theory and stakeholder theory will be explained in the following.
2.3.1 Reciprocity theory
We begin with the reciprocity theory. Based on the findings of Reinisch (2005, in Alston, 2005), Hahn (2012) states what profits respecting human right treaties could bring. He not only examines how human rights treaties affect the poor but also how the poor can be integrated into the business models of corporations and their value chains. He reveals how different business approaches that include the poor affect one important aspect that has not been addressed so far in business and human rights: dignity. The article focuses on the one hand on the influence of inclusive business approaches on several human dignity aspects, and on the other hand it provides explorative insights as a basis for future theory building (Hahn, 2012). Along with dignity comes the aspect of reciprocity. Bosse et al. (2008) discuss stakeholders, reciprocity and firm performance. A great amount of the literature accounts for selfish utility-maximizing behaviors. Bosse et al. (2008) state that this behavior is bounded by norms of fairness. They find positively reciprocal behavior if employees perceive fairness from their employees and are willing to punish those (with costs) they perceive as unfair. There are thus two kinds of reciprocity: 1) Extension to all stakeholders of the firm 2) Reciprocity affecting firm performance (Bosse et al., 2008). Reciprocal behavior may be based on treating people with dignity, which then should be inserted in the value chain as a virtue.
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Reciprocity is also analyzed in connection with long-term relationships. Repeated behavior occurs when interaction affects are huge and are based on reciprocal behavior. It is claimed that reciprocity and repeated game incentives reinforce each other and are complementary (Gächter & Falk, 2002). Reciprocity and repeated game effects, which are referred to as reputation, are found to be conducive to increased effort levels in relation to inefficient reference outcome (Bowles, 1998; Crosson, 1998; Gächter & Falk, 2002). Reciprocity theory can be further broken down (as it involves many existing theories) into moral reciprocity and mutual reciprocity. Janjuha-Jivraj & Spence (2009) discuss reciprocity in regards to family firm success and analyze intergenerational reciprocity. They argue that intergenerational succession is the most crucial determinant of the long-term survival of family firms. Understanding the dynamic within a family is an important aspect to examine in understanding organizations on the next level (Janjuha-Jivraj & Spence, 2009; Morris et al., 1997). Reciprocity is based on mutual behavior based on kindness and trust. Bosse et al. (2008) consider stakeholders when examining reciprocal behavior. Reciprocal behavior results because of different interests, which is the basis of the stakeholder theory. Before we can elaborate on that, we look at institutions that direct how things are done in society.
2.3.2 Institutional theory
Institutional theory concentrates on social structure aspects and processes. Institutions set rules and norms that direct the interaction between markets, organizations and individuals and set authoritative guidelines for social behavior (Scott, 2004; Aguilera & Jackson, 2010). As with many theories and terms, institutional theory has no universal definition. However, Scott (1995) has suggested a quite extensive definition, saying that institutions are social structures that have obtained a high degree of endurance. Cultural-cognitive, normative and regulative elements are the components of institutions and, in combination with corresponding activities and resources, they supply balance and relevance to social life. Institutions work at variable
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levels covering a range from individual personal relationships to world systems. By and large, institutions stand for stability but are submitted to a modification process (Scott, 1995). Moreover, they are often associated with legitimacy and different processes of isomorphism. DiMaggio & Powell (1983) described isomorphism as a stinted procedure in which one unit in a population becomes like another unit under the same set of environmental conditions. The authors differentiated between three types of institutional isomorphic change: coercive isomorphism, mimetic isomorphism and normative isomorphism. Coercive isomorphism occurs from informal and formal pressures arising from political influence and the problem of legitimacy. Mimetic isomorphism originates from uncertainty. Organizations tend to imitate organizations that tend to be successful in that area as their response to uncertainty. Unlike mimetic isomorphism, normative isomorphism accrues from external pressures, such as professionalization (DiMaggio & Powell, 1983). As an example, we can consider international business, such as sporting organizations. When a sporting organization, such as FIFA, is operating in a country, it has to face several pressures. It has to deal and overcome these pressures, which is possible through isomorphism.
Another aspect that is as important as isomorphism is the aspect of legitimacy. Legitimacy is crucial for the survival of organizations and is primarily obtained by isomorphism mechanisms. It is the affirmation and acceptance of organizational operations by external constituents. The process of legitimation is complex and different under each environmental condition, cultural value and tradition (Eisenhardt, 1998; Kostova et al., 2008). Institutions change over time and shape the nature across levels, but above all they change themselves in efficacy and power and cannot be seen as previously assumed and taken for granted structures that have developed and been accepted over time (Stinchcombe, 1965; Clark, 1972; Pfeffer, 1982; Scott et al., 2002).
16 2.3.3 Stakeholder theory
The basis of stakeholder theory is different parties that are part of the environment of a corporation. These different parties, such as owners, employees, customers, suppliers, governmental bodies and political groups, have different interests that have to be maintained. Stakeholder theory is a theory of organizational management addressing morals and values and has developed in different areas such as firm performance and firm action and responses (Freeman, 1984, Laplume et al., 2008). Rowley (1997) and Donaldson & Preston (1995) consider it in terms of organization theory. They emphasize how an organization functions, considering the environment and relationships of a firm. Environmental influences have to be responded to by organizations. Firms have concentrated not only on dyadic relationships but also on simultaneous responses to the needs of multiple stakeholders. From any perspective, a firm has to identify its stakeholders and determine which kind of influence they have on the firm. It is not only about identifying, but also about how a firm responds to its set of stakeholders. Thus, it is necessary to analyze all the relationships existing in a firm’s environment (Oliver, 1991; Rowley, 1997). Donaldson & Preston (1995) clarify more aspects of the stakeholder theory and summarize their statements about the approach in four central theses: descriptive, as it describes what a corporation is in explaining that a corporation is a “constellation of cooperative and competitive interests possessing intrinsic value” (Donaldson & Preston, 1995, p. 66); instrumental, as it investigates ties between the stakeholder managements' activities and the accomplishment of different corporate performance goals;
normative, as this creates the basis of the theory because all the different interests of the
stakeholders are based on legitimacy and all of them are of intrinsic value; and finally
managerial, as it recommends stakeholder management (Donaldson & Preston, 1995). Figure
1 is based on a paper by Donaldson & Preston (1995) illustrating the different stakeholder influences of a firm:
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Figure 1: The stakeholder and the firm
Source: Donaldson & Preston (1995), p.69
This model shows that all participants who are in the interaction with the firm are equidistant to the firm, and no group or individual stands over the other. All legitimate interests have the same importance (Donaldson & Preston, 1995). However, not only the number of relationships but also the intensification in them can change over time. This aspect is important to consider and should not be neglected. Corporations have become aware of this and became sensitized to changing issues of environmental conditions (Friedman & Miles, 2002). Stakeholder theory goes hand in hand with institutional theory because corporations and their environmental influences can be seen as institutions; how to respond simultaneously is also a matter of fact in institutional theory and depends on the existent rules and norms (Rowley, 1997). Table 1 compares the three theories and points out their key aspects:
Table 1: Comparison of theories
Reciprocity Theory Institutional Theory Stakeholder Theory
Firm
Governm ents Emplo yees Political Groups Suppliers Custo mers Internatio nal Affairs18 Key Issue Increases firm
per-formance and re-sults in mutual kindness
Institutional rules and norms conduct interactions be-tween markets, organizations and individuals
Different interests of different parties con-cerning the environ-ment of a firm
Basic Value Fairness Legitimacy Different Interests
Underlying Intention Trust and Kindness Work under differ-ent environmdiffer-ental conditions
Consensus of coop-erative and competi-tive interests
Contribution Increase
perfor-mance Increase perfor-mance Increase perfor-mance Source: Author
The table contrasts the key issues, basic values, underlying intention and final contributions of each theory. The next chapter, the conceptual framework, uses the basic values of each theory as influencing factors. Why this is done so will be explained subsequently.
3 Conceptual Framework
Based on the three theories, reciprocity theory, stakeholder theory and institutional theory, the conceptual framework is elaborated and synthesized in this chapter. Nine propositions are developed considering the impacts of human rights treaties and the perception of tourism, which is worked out in the literature review.
Human rights abuse can be performed through three different institutions: organizations and governments in the host country, organizations (e.g. sponsors) of the home countries, and the sporting organization (such as FIFA and IOC) themselves. Institutions are very widely defined and range from interactions between individuals, organizations and markets. Organizations, such as corporations, can be institutions, but changes in the regulations and law can also be termed as institutional changes. In order to be specific in the following, I will use the word “institutions” as a generic term for organizations, governments and changes in regulations.
19 Institutions in the host country Institutions in the home country Institutions themselves
The conceptual framework depicts each of these three kinds of institutions as one pillar. Three factors are opposed to these pillars that influence institutions, either positively or negatively. For the three influencing factors I choose the basic values of the theories examined before: fairness, different interests and legitimacy. The reason why I have chosen the basic values is because these three factors compose the foundation of each of the examined theories. In my research, it is of no use to use the contribution the theories make or to further investigate the underlying intention. The underlying intention is a byproduct of the basic value, and together both lead to the contribution. Hence, I chose to work with the fundament of the theories. Each of the three factors can have an impact on each of the three pillars. Figure 2 illustrates the conceptual framework. The propositions are derived and explained in the next sections.
Figure 2: Conceptual framework
FAIRNESS LEGITI-MACY DIFFERENT INTEREST WP1: Positive Influence WP2: Positive Influence WP3: Negative Influence WP4: Negative Influence WP5: Positive Influence WP6: Negative Influence WP 7: Positive Influence WP 8: Positive Influence WP 9: Negative Influence
20 Source: Author
3.1 Institutions in host countries
Institutions are units that set and define rules and norms. These can be the government of the country, the corporations, schools, churches and more. When considering the reciprocity theory, we recognize that the basic value is fairness (Falk & Fischbacher, 2001; Cox, 2004; Bosse et al., 2008; Aguilera & Jackson, 2010). Reciprocity arises through mutual fair and trustful behavior. When the behavior of institutions in the host countries is perceived as fair by their residents, the residents will react with reciprocity. Tourism, as such, is assessed positively so far in the research and as a contribution to society. On the one hand, it brings changes such as better education, working skills and a higher economy, but on the other hand, it challenges social and family values and higher crime rates might occur (Brunt & Courtney, 1999; Barker et al., 2002; Fredline, 2005). Overall, high-profile events, such as the World Cups, are perceived as valuable by the residents (Fredline & Faulkner, 2000). When norms and rules during those events are perceived as fair, residents will have a strong feeling of well-being and be treated well by their institutions. Hence, human rights abuse might occur less when mutual behavior is based on fairness.
Proposition 1: Institutions in host countries do influence the perception of human rights positively by means of fairness.
Degree of
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Fairness is close to legitimacy. Aspects and behavior can be perceived as fair, when norms and rules are based on legitimacy. As is discussed in the literature review, human right treaties are already developed, find appliance globally and make a difference as well. Constitutions of a country can be affected by variables such as international or civil war, population size and growth, and various more aspects. However, things can be regulated again and find their way to rules and norms when they are based on legitimacy and properly executed (Hathaway, 2002; Shermann & Lehr, 2010). Thus, countries that possess institutions existing on a legitimate foundation can influence the way the people of that country can be and are treated:
Proposition 2: Institutions in host countries do influence the perception of human rights positively when legitimacy is the basis.
All these aspects can be achieved; however, there is one crucial point why systems do not work, constitutions are existent but not executed and governments exist but are corrupt. This crucial point occurs in different interests. This is derived from the stakeholder theory that a corporation has to consider different stakeholders' interest and should not seek for value maximization only if it wants to achieve high performance, contemplating different interests of different parties is one fundamental point. People treat other people fairly because they expect this kind of behavior in return, which again makes them feel good. Rules and norms are not functioning because of different interests the various parties have. Because of them, systems are corrupt and regulations will not be valid if they are not based on legitimacy.
Proposition 3: Institutions in host countries do influence the perception of human rights negatively when different interests of different parties are existent to a high degree.
3.2 Institutions in home countries
In this research, we also take a look at institutions from the home countries of sponsors and other participants and how they can influence human rights abuse during a mega-sporting event. Human rights abuse has been discussed very early in the literature. In my literature
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review I explained the treaties that have been developed, the UN Guiding Principles and the framework by Ruggie (UN Working Group in BHR; Ruggie, 2007; Kinley et al., 2007; Ruggie, 2008; Ruggie, 2009; Misol, 2009; Kaufmann, 2009). This is one possible way how institutions of the home countries can influence human rights abuse in other countries. By creating laws and regulations that have to be universally applied, countries with human rights abuse are set against universal standards and punishments. However, in contrast to that, single corporations and other kind of institutions do not have a great possibility to influence this. For example, Adidas (the sporting goods company) is a sponsor of the World Cups and is headquartered in Germany; Germany is a country where a constitution, regulation, laws and a great deal of security exists, and they are all based on fairness. Even though Adidas is practicing norms and values in their own company based on German fair standards, they do not have the possibility to set the standards in the host country as well. Hence, we can conclude:
Proposition 4: Institutions in home countries do not influence the perception of human rights, even when they follow standards of fairness.
When we consider legitimacy, this might mean a stronger effect. We can elaborate on the example of Adidas. The company has social structures, sets authoritative guidelines for mutual behavior of the employees and provides a meaning to life, according to Scott (1995). Their constitution is accepted and acknowledged by each of the other social systems and organizing units in Germany. Legitimacy as a crucial aspect of institutions is important for the survival of organizations, which is given so far for Adidas (Eisenhardt, 1998; Scott, 2004; Kostova et al., 2008; Aguilera & Jackson, 2010). Despite that, Adidas cannot regulate and set the standards for labor rights in the host countries. However, influence is possible because of the power multinational companies have when going abroad; this has been discussed in the
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literature review (Cassel, 1995; Spar, 1999; Anderson, 2000; Stiglitz, 2007; Drimmer, 2010; Nolan, 2014). From that, we can derive:
Proposition 5: Institutions in home countries do influence the perception of human rights positively, when legitimacy is their basis.
Multinational companies execute their power if they see a benefit for themselves. They go abroad because they want to be competitive in the global world (Keller, 1994; Spar, 1999). Thus, again, it depends on the different interests and selfish utility-maximizing behaviors of institutions in how far they want to influence the human rights abuse. When different interests are strong, each party is fighting for its own benefit. Hence, we can state:
Proposition 6: Institutions in home countries do influence the perception of human rights negatively when different interests of different parties are existent to a high degree.
The next section discusses FIFA and IOC.
3.3 Institutions themselves
When FIFA chooses a country for the World Cup, preparation and renovation start, such as projects in building new houses. This has to be understood as a beautification strategy, as the country is going to represent itself to the world. But along with the beautification strategy is a huge slum eradication (Hiller, 1998; Andranovich et al., 2001). For instance, when the World Cup took place in South Africa, the country not only built new houses but also improved the infrastructure in general, building new stadiums, developing sports programs in deprived neighborhoods, and evolving programs that improve the medical services and also art centers (Newton, 2009). Mega-events are described as powerful opportunities for image enhancement with visitors from all around the world. Even people who do not visit the country look at the country. Consequently, the country has to convey the best possible image, because it is an opportunity to contribute to the image of the country (Eisinger, 2000; Essex & Chalkley, 2003; Matheson & Baade, 2004; Pillay & Bass, 2008; Spaans & Chen, 2009; Yang et al.,
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2010). This can have not only economic but also social effects on the country and creates huge pressure on the countries’ developers, government and other stakeholders. When the country is chosen as the host country of a mega-event, the country wants to represent itself via its best side. However, the reverse side of the medal has to be acknowledged as well (Newton, 2009). Long-term effects of such events are not always as positive as the decision makers describe them to be. Necessary for such occasions is not only the written promise of how the country is going to develop and enhance but the conduction in reality (Andranovich et al., 2001; Matheson & Baade, 2004; Pillay & Bass, 2008; Newton, 2009). For these reasons, the organizing units can have the following influences on human rights:
Proposition 7: Institutions themselves do influence the perception of human rights positively when fairness is integrated in their constitutions.
Proposition 8: Institutions themselves do influence the perception of human rights positively when their constitution is based on legitimacy.
Proposition 9: Institutions themselves do influence the perception of human rights negatively when different interests have a higher priority than legitimacy.
After developing the conceptual framework and these working propositions, we can continue with the methodology of this research in describing how the conceptual framework can find affirmation or rejection.
4 Methodology
The research method of this thesis is a qualitative and exploratory approach to attain an exhaustive understanding of international business and human rights. As this method provides full in-depth data, it is possible to gain an insight in understanding the extant complexity of the influence international organizations can have on human rights (Strauss & Corbin, 1990).
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The aim of the study is to build a grounded theory on international business and human rights from the range of information gained (Eisenhardt & Graebner, 2007).
We are going to look at multiple cases that are holistic. The unit of analysis will be six cases (Yin, 2009). The research question this thesis is going to deal with is how mega-sporting
events, as an international business, can influence the perception of human rights, with regard to different institutions in the host and home country. The following sample is used to find a
proper answer for this question.
These data collection methods provide a range of credibility, confirmability and data dependability. Because in my thesis six different cases in different countries and environments are going to be analyzed, the construct validity is higher than it might be with other case study approaches. The use of multiple sources of evidence increases the construct validity (Miles & Hubermann, 1984). Figure 3 shows the structure of the methodology.
Figure 3: Structure of methodology
QUALITATIVE RESEARCH DESIGN
26 Source: Author
As the aim of the thesis is to seek and find a causal relationship in the exploratory research between the aforementioned factors in the sector of human rights, internal validity might not be given as it would be in an explanatory research. Depending on the responses given by the interviewed respondents from different organizations, the answers can be seen as
INDUCTIVE APPROACH MULTIPLE CASE STUDY APPROACH CASE 1: WC Germany CASE 2: WC South Africa CASE 3: WC Brazil CASE 4: Olympics China CASE 5: Olympics Canada CASE 6: Olympics Russia Semi-structured interviews Newspaper articles Secondary data THEMATIC CODING DEVELOPMENT OF GROUNDED THEORY
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generalizable, so that the external validity again is high. The thesis' reliability is given as well because the respondents will give the same answers to the same set of questions if the given conditions now will not change the next time (Miles & Hubermann, 1984).
In sum, the research design will be a cross-sectional mixed strategy with multiple case studies, semi-structured interviews, newspaper articles and secondary data. From that a grounded theory based on positivism and interpretivism will be inducted through thematic coding.
4.1 Multiple case study approach
Participants were identified using purposive sampling methods (Stone, 1978). There are several reasons why I have chosen precisely these six units of analyses. Taking a look at the last three World Cups and the last three Olympics, we can see that they all took place in both developed and developing countries. Not only governance but also institutions, labor rights and human rights differ in each country. To find the best possible answer to how corporations and organizations can influence human rights abuse, it is important to have a look at it from different perspectives and be able to decide what kind of factors play a role in business and human rights. Thus, a case study approach that investigates a contemporary phenomenon in depth within its real-life-context is the most appropriate methodology (Yin, 2009).
In each case the environment of each country was analyzed with respect to host country conditions (government and political institutions). Getting an overview of the host country conditions facilitates understanding the behavior of those. Government, educational institutions, cultural foundations and economic freedoms are the viewed criteria. The reason why I have chosen these four criteria is the following (and will be further explained in the next chapter). The government of each host country builds the fundament of all laws and regulations. The cultural foundation explains the traditions and behavior and development of
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the constitution that legalizes the government. Educational level and economic freedom might be dependent factors, again depending on governmental and cultural structures. Moreover, education and economic status give statements about the advancement of a country.
4.1.1 Semi-structured interviews
Three pillars of participants were focused on to give semi-structured interviews: sports organizations, NGOs and corporations that are the sponsors of FIFA and/or IOC. These organizations were chosen for the following reasons: 1. They are directly involved in the topic 2. The point of view on the topic differs from each pillar and 3. A comprehensive understanding will be possible.
50 samplings, including both Dutch and international organizations, were obtained. The organizations represented a multiplicity of branches, such as finance (e.g., VISA), clothing (e.g., NIKE), food industry (e.g., Coca-Cola) and human rights organizations (e.g., Amnesty International). Unfortunately, only four responded positively and these were a Senior Researcher for the Global Governance Program of The Hague Approach, a Senior Researcher of the Asser Institute of Netherlands, a Consultant of the Institution of Human Rights and Business of England (IHRB) and a Press Officer of the Dutch sports federation NOC*NSF. The interviews consisted of open-ended questions to get the point of view of the specific organizations about that topic. Participants were given the 10 questions beforehand. They were asked to have a first glance at those and were interviewed in detail during either a phone call or visit in their office. Participants were not given any more details and were asked to give their opinion freely so that the exploratory nature of the research could be maintained. In order to gain a richer understanding of some questions, additional questions were asked during the interviews. Participants were asked, among other questions, what kind of factors the home country and the host country play, what kind of role NGOs as a third institution
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played and what role the media had in influencing human rights abuse. The questions were structured from open to detailed and left enough space for the members of organizations to relate the most important aspects coming to their mind. From 50 organizations and corporations e-mailed, interviewed in person and called, a total of four organizations were ready to give me an interview, and these were nonprofits or sports organizations. Not one single corporation wanted to give an interview.
4.1.2 Newspaper articles
Second, answers were searched for in current and archival collection of information of the events. This data collection process was conducted by looking at two newspapers, the German
Die Zeit and the American The International New York Times (INYT). A total of 1,517
newspaper articles were examined, and the time frame for each case was one year before and after the event for each case. The single factor that was investigated and focused on was host country perception before and after the events. In doing so, a comparison in host country perception about big sporting events could be found. This data collection method provided a rich amount of data.
4.2 Coding
The data collected has been thematically coded. The results are presented then in the within-case analysis and in the semi-structured interviews analysis. This method is an appropriate approach when a summative, salient and essence-capturing portion of language-based data is available (Eisenhardt, 1989; Saldana, 2009). There are two cycles of coding. The first cycle of coding is the precoding phase and can range from a single word to an entire page. The second cycle of coding can be portions coded exactly the same size or reconfigured into shorter or longer portions. A code is similar to a title. Just as a title can catch the content of movie or book, a code catches the content and essence of a specific abstract. Patterns then are characterized by similarity, difference, frequency, sequence, correspondence and causation
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(Hatch, 2002; Saldana, 2009). Coding is an exploratory problem-solving technique and leads you from the language-based or visual data to the idea. It is a cycling act and is a process to get things segregated, grouped and regrouped to subsequently get the meaning of the collected data and derive a grounded theory (Saldana, 2009). This is the reason why thematic coding is a very appropriate method to use in my research. I have coded the semi-structured interviews and the newspaper articles thematically and have generated 23 codes in the interview with the Asser institute, 32 codes in the interview of The Hague Approach, 32 codes in the interview with NOC*NSF and 24 codes in the interview with IHRB. Among all these codes, I found patterns and grouped the codes into categories. From the interviews, five categories were developed, which are “host country”, “home country”, “NGOs and media” and “governance structure” (of FIFA and IOC). Host country is generated by codes such as basic rights, state, certain standards, nation country, state obligations, etc. Home country is framed from codes such as corporations’ responsibility (they talked about the ones in the home country), reputational costs of corporations, global principles and corporate standards. NGOs and media are one category and are developed from codes such as scrutinizing roles, raising awareness, information sharing, highlighting conflicts and the role in the public. The last category, governance structure, was created from codes such as immense power, strong influence, sports performance, aim with the sports and effect of games.
The same procedure was executed with the newspaper articles. The newspaper articles resulted in different categories than the semi-structured interviews. The patterns clustered into categories here are “security building,” “nation building,” “perception of the residents” and “governance structure.” One category could be found among both types of data that were collected. The total number of codes collected with the newspaper articles is 293 (41 codes for WC in Germany, 105 for WC in South Africa, 63 codes for WC in Brazil, 29 codes for Olympics in China, 10 codes for Olympics in Canada and 45 codes for Olympics in Russia).
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In the result sections, some quotes will be represented from which I have inferred some of my codes, which finally resulted in the categories generated.
Specifically, this means for my thesis that the within-case analysis explains to what extent human rights are influenced by the factors taken from the reciprocity theory, the stakeholder theory and the institutional theory. Fairness, legitimacy and different interests are the influencing factors that have an impact on the categories generated by thematic coding. A scale from 'Positive Influence' (+), 'Moderate Influence' (O) and 'Negative Influence' (-) reveals how fairness, legitimacy and different interests affect each developed category. Following from that, I seek to identify which institutions meet the working propositions and which ones find no confirmation. Besides that, secondary data and web content is used to find the information for the six cases, which are depicted in the next chapter.
5 Case Studies
In the following the six cases will be portrayed. Each case was examined under certain factors. Table 2 gives an overview of each country the events took place in. The four factors are the government, the economic status, the educational level and the cultural foundation. First, I examine institutions, referred as organizations and governments, and their influence in regards to human rights. Thus, it is important to know what kind of government is ruling the country and how the constitutions are composed. Especially in terms of legitimacy it is relevant to investigate the rules and regulations. Second, the economic structure goes hand in hand with political institutions – the governments. One example for measuring the score is the economic freedom. I have explicitly chosen this score because economic freedom is linked to the issue on human rights. Third, I looked at the cultural foundation in terms of tradition, historical background with regard to behaviors, international war and human rights conflicts. Finally, the educational status gives information about the advancement of a country.
32 Table 2: Overview Cases 1-6
Government Economic Freedom (World Average: 60.3) Educational Level Cultural foundation Case 1: WC Germany 2006 - federal republic - parliamentary democracy - chancellor is the head of government - 73.4 > average - 18th freest economy in the world - top- quality developed industries with high economic growth and high international involvements -social welfare program
- highly skilled labor force and technically mature education system - diligence and performance in every era - manufacturing industries, such as the automotive industry - division between West and East Germany Case 2: WC South Africa 2010 - constitutional multiparty democracy - three-tier system - 62.5 > average - 75th freest economy - increasing international integration - public education low - Apartheid system - Nelson Mandela - -- - “Rainbow nation” Case 3: WC Brazil 2006 - federal republic - presidential democracy - 56.9 < average - 114th freest economy - increasing international integration - improving - constraints in education policy - volatility changes every time administration changes - dynamic of policy making Case 4: Olympics China 2008 - one-party state - strong military force
- 52.5 < average - 137th freest economy in the world - economic reforms lead to a fast-growing economy - average tariff 4.1% - well-developed - education gains great importance as it can improve one's life
- communism - control of speech, religion and assembly - state-owned enterprises - hard work and discipline Case 5: Olympics Canada 2010 - federal, parliamentary democracy - constitutional monarchy - 80.2 >> average - 6th freest economy in the world - institutionalization in global trade and commerce - low trade tariffs: 0.9%
- high degree of openness
- educational status is distinctive
- more than 50% have degrees
-ethnic diversity and multiculturalism Case 6: Olympics Russia 2014 - constitutional federation - republic - presidential - 51.9 < average - 140th freest economy in the world - slightly opening towards the world - regulations not always efficient because of its inconsistency in enforcement - basic public education - improving - communism - absence of private productive capital and salient state- owned enterprises
-Sources: Alston et al (2006); Annual Report (2013/2014); BBC News (2009); Cavalcenti (2008); Canadian Heritage; Canadian Olympic Team Website; Encyclopaedie Britannica; Factmonster Russia; FIFA World Cup Brazil (2014); FIFA WM Deutschland 2006; globalEDGE; Government of Canada; Grossmann (2012) TIME; Hali & Lange (2010); Higgins
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(2011) The Washington Post; Index of Economic Freedom Germany/Brazil/South Africa/China/Russia/Canada (2014); Infoplease; OECD Studies (2007); Olympic Beijing 2008; Olympic Sochi 2014; Parliament of Canada (2014); South African government, Sweig (2010) Foreign Affairs; White (2013) The Telegraph.
5.1 Case 1: The institutions in Germany – the host of the 2006 WC
The 18th FIFA World Cup took place in Germany in 2006. Thirty-two teams from six federations took part in the games. Italy won the World Cup in a penalty shootout against France. Germany lost in the semifinals against Italy and placed third. The World Cup in 2006 is claimed to be one of the most-watched events on television in history. Its finals were watched by about 715 million people (FIFA WM Deutschland 2006, 14th of November 2014). The federal republic of Germany is the fifth-largest economy, and as a parliamentary government, it has a democratic constitution. Endowed with a highly skilled labor force and a technically mature education system, it belongs to one of the top-quality developed economies (globalEDGE Germany; Infoplease Germany; 14th of November 2014).
Germany has the largest economy in Europe and is well incorporated into the global marketplace. Unemployment is low in Germany compared with other European countries, and it is the most powerful nation in the EU, both politically and economically (Index of Economic Freedom Germany, 2014).
Germany’s economic freedom scores 73.4 and is clearly above the world’s average, being the 18th freest economy in the world. Its score reflects moderate improvement in areas such as investment, labor and trade freedom; this score is also the highest score it has ever had. Open-ness and market freedom underpin Germany’s economy and ensure development and further growth (Index of Economic Freedom Germany, 2014).
It is highly internationally integrated and cultivates foreign relations and investments (NATO, EU member, UN, OSCE).
All in all, it can be stated that Germany plays a significant role in facilitating the development of democratic institutions in the EU being economically firmly active (globalEDGE Germany,
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14th of November 2014). Germany is a well-developed country with functioning institutions and non-corrupt corporations and government.
5.2 Case 2: The institutions in South Africa – the host of the 2010 WC
The 19th FIFA World Cup took place with 32 teams in South Africa in 10 host cities, including Johannesburg as the biggest city. Spain won the tournament against the Netherlands in Johannesburg; South Africa was eliminated in the first round.
South Africa, as the regional economic power of Africa, has a constitutional multiparty democracy – local, provincial and national. The ANC is the dominant party since the end of the apartheid regime in 1994 (Index of Economic Freedom South Africa, 2014). Its constitution is claimed to rank among one of the most progressive in the world and is acknowledged worldwide. No law is superior to the measures and procedures of the constitution.
South Africa is sometimes referred as the “rainbow nation” because of its different ethnicities. It is marked because of the past conflicts between the whites and nonwhites, Nelson Mandela being one important person to mention in the history and development of institutions in South Africa. By now it embraces the concept of ubuntu, which means “humanness” – affirming their humanity when they affirm the humanity of the others. This attitude has been an important strand in the process of democracy and nation-building (South African government
(b), 06th of November 2014).
Even though infrastructure is developing, unemployment and crime are high. Public education
is low and basic services are not available for all (Index of Economic Freedom South Africa,
2014). Its economic freedom has a score of 62.5, which makes its economy the 75th freest in the world. This is a high number, as the world’s average is 60.3. Over the years, South Africa has opened its markets, higher trade freedom has occurred and the management of the public finance has been cleansed from corruption aspects and tend toward higher business and
