Conflicts between Indigenous Communities and MNEs:
the Influence of Community Autonomy and MNE
Sustainability Focus on the Resolution of Conflict, and the
Influence of NGO Participation
Master Thesis
MSc Business Administration International Management Track
Name: Maren Fuhrich Student number: 11373911 Date: 23.06.2017
Thesis supervisor: Dr. Ilir Haxhi Second reader: Drs Erik Dirksen
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Statement of originality
This document is written by Maren Fuhrich 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 completion of the work, not for the contents.
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Abstract
Conflicts have negative impacts on both multinational enterprises (MNEs) and indigenous communities. While MNEs suffer from financial and reputational consequences, the ecosystems, cultures, and beliefs of indigenous peoples are threatened. Existing research has several limitations, such as the exclusively qualitative nature of studies, the focus on one unit of analysis and the one-sided perspective of studies, which is usually from a community standpoint. In this study we analyze the influence of community autonomy and MNE sustainability focus on the resolution of conflicts, as well as the interaction effect of the participation of non-governmental organizations (NGOs) in conflicts. We argue that a higher autonomy of indigenous communities and a stronger sustainability focus of MNEs lead to shorter and less severe conflicts between indigenous communities and MNEs. Furthermore, we argue that the participation of NGOs in conflicts strengthens these relationships. Our sample consists of 545 conflict cases from 61 countries worldwide. By analyzing these cases, our study finds contradicting results to previous research. First, the results indicate that higher levels of community autonomy lead to longer and more severe conflicts. Second, a higher sustainability focus of MNEs increases the length of conflicts; nonetheless, sustainability focus has no impact on the type of conflict. Finally, NGO participation in conflict situations further increases the violence of conflicts, when the autonomy of indigenous peoples is high. Our contribution is threefold: first, our study brings into question the traditional view of community autonomy and MNE sustainability focus as drivers of conflict resolution. Second, by taking a neutral researcher perspective, our study gives new insights into mechanisms behind conflict resolution. Third, methodologically, our study contributes to existing literature by taking a quantitative approach, thus adding empirical evidence and deepening the understanding of the phenomenon. Moreover, our study looks at various countries, industries, and conflict cases. Finally, our study adds practical value by offering new insights for MNEs, governments, and the research field of conflict resolution. By investigating factors that influence the length and type of conflicts, our research gives information on how to resolve conflicts effectively.
Keywords: indigenous communities; MNE; sustainability focus; CSR; community autonomy;
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Table of Content
1. Introduction 5
2. Literature Review 11
2.1 Indigenous Communities 11
2.2 Conflicts between MNEs and Indigenous Communities 12
2.3 The Recognition of Indigenous Communities 14
2.4 Corporate Social Responsibility of MNEs 16
2.5 NGO Participation in Conflict Situations 18
3. Theoretical Framework 20
3.1 Autonomy of Indigenous Communities 21
3.2 MNE Sustainability Focus 23
3.3 NGO Participation and Conflict Resolution 24
3.4 Conceptual Framework 27
4. Methodology 29
4.1 Sample and Data Collection 29
4.2 Dependent Variables 29
4.3 Independent Variables 30
4.4 Moderating Variable 31
4.5 Control Variables 31
4.6 Method of Analysis 32
5. Results and Analysis 34
5.1 Descriptive Statistic Analysis and Correlation Test 34
5.2 Regression Analysis 38 6. Discussion 42 6.1 Findings 42 6.2 Theoretical Implications 45 6.3 Practical Implications 46 6.4 Limitations 46 6.5 Future Research 47 7. Conclusion 49 8. References 51 9. Appendix I 56
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List of Figures & Tables
Figure 1. Conceptual framework. 28
Table 1. Summary of regression analyses. 33
Table 2. Tolerance and VIF values. 35
Table 3. Descriptive statistics and correlation. 37 Table 4. Linear regression analysis with type of conflict. 39 Table 5. Logistic regression analysis with length of conflict. 41 Table 6. List of countries in the dataset. 56
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1. Introduction
In the last decades, globalization and the structural transformation of the resource extraction industry, especially the mining industry, opened up new opportunities for multinational enterprises (MNEs) to exploit these new resources in distant areas of the world. However, MNE activities have great social and environmental impacts on the indigenous communities living in these regions (Bebbington & Bury, 2009; Lertzman & Vredenburg, 2005; Reed, 2002; Szablowski, 2002). Often, this social and environmental impact of companies in the resource extraction industry is characterized by environmental destruction, health and safety issues, influencing of the livelihoods of indigenous peoples, as well as violations of human rights (Mutti, Yakovleva, Vazquez-Brust, & Di Marco, 2012), thereby threatening the identity of these communities (Bruijn & Whiteman, 2010). All over the world, this exploitation has thus led to increasing conflicts between indigenous peoples and MNEs, raising various ethical challenges and concerns (Calvano, 2008; Fontana, Sastre-Merin, & Baca, 2015; Lertzman & Vredenburg, 2005; Reed, 2002; Szablowski, 2002). Nonetheless, these conflicts do not only negatively influence the ecosystems of indigenous communities (Lertzman & Vredenburg, 2005); they also have financial and reputational consequences for MNEs (Calvano, 2008; Laplante & Spears, 2008).
Conflicts between indigenous communities and MNEs arise due to several reasons. Primarily, they are caused by resource struggles between the two parties (Ballard & Banks, 2003; Franks, 2009). However, they also emerge due to diverging interests (Calvano, 2008), differing ethical values, reasoning processes, and behaviors (Buller, Kohls, & Anderson, 1997). These conflicts, having negative impacts on all involved actors, can be short or long and have different levels of severity (Ballard & Banks, 2003; Getz & Oetzel, 2009; Laplante & Spears, 2008). Therefore, it is important for MNEs as well as indigenous peoples to identify factors leading to the resolution of conflicts. Research on these dynamics is limited, as most studies focus on isolated cases only (Calvano, 2008). This study intends to fill this gap by investigating the influence of the autonomy of communities, MNE sustainability focus, and the participation of NGOs on the resolution of conflicts in a cross-country study.
The recognition of indigenous communities all over the world is growing, but is still contested. Instruments, such as the United Nations Declaration on the Rights of Indigenous People (UNDRIP) and the Convention No. 169 by the International Labor Organization (ILO) help to increase the recognition of indigenous peoples by acknowledging and protecting their
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human rights, culture, and common beliefs (Bellier & Préaud, 2012). Such international laws protect indigenous communities from harm resulting from the actions of the resource extraction industry (Foster, 2012; Wiessner, 2011). The basis of sustainable futures for indigenous peoples is the increasing interest regarding their rights, the evolvement of good relations and good governance practices, and autonomy and responsibility within communities as well as between communities and the government (Howitt, 2012). Furthermore, governments strengthen the autonomy and self-determination of indigenous peoples by including their rights in national laws and accepting international legal guidelines (Bellier & Préaud, 2012; Foster, 2012). Nevertheless, indigenous peoples’ recognition by law suffers from several shortcomings, because many countries do not have the needed institutional capacity or financial assets to enforce the laws sufficiently (Foster, 2012).
Research has overlooked a specific relationship between business and community conflict and has thus produced limited and conflicting results in terms of the relationship between MNEs, communities, and the resolution of conflicts (Calvano, 2008; Kemp, Owen, Gotzmann, & Bond, 2011). Most of the previous research on business and community conflicts has three main limitations: first, methodologically, the research is exclusively of a qualitative nature (Kolk & Lenfant, 2013). Second, regarding the unit of analysis, it focuses on one specific country or industry, and mostly on isolated cases (Calvano, 2008; Kolk & Lenfant, 2013). And finally, in terms of a broader understanding of the phenomenon, the problem usually has been tackled from a community standpoint (Kemp et al., 2011). Therefore, this research limitation, as pointed out by several studies (e.g. Calvano, 2008; Barber & Jackson, 2012; Bebbington & Bury, 2009) has impaired our understanding of the reasons, solutions and impacts of company interventions in conflict situations (Getz & Oetzel, 2009). However, there is an increasing interest in international business research on the role played by the autonomy of the community with respect to the local government, which allows community self-determination and property rights in national and international laws (Bellier & Préaud, 2012). Moreover, the United Nations, human rights institutions, and scholars increasingly support indigenous peoples in the movement towards the recognition of their rights (Foster, 2012). Therefore, this study is trying to fill this gap by studying the influence of the recognition of indigenous communities by the government using a quantitative research design. Moreover, this thesis is a cross-country study, looking at various industries and cases from a neutral researcher perspective. Accordingly, the first research question is as follows:
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RQ1a: To what extend does the autonomy of indigenous communities affect the resolution of conflicts between indigenous peoples and MNEs?
Traditionally, indigenous communities had very little or no power compared to other stakeholders (Calvano, 2008; Wiessner, 2011; O’Faircheallaigh, 2013) and mining industries used to be completely antagonistic towards the recognition of such communities (Crawley & Sinclair, 2003). Deprived of their power or property, indigenous peoples demand the protection and thriving of their land that they are generally inseparably connected to, often in a spiritual way (Wiessner, 2011). Nowadays, companies operating in the resource extraction industry try to take responsibility and improve their social impact on indigenous peoples by increasing their sustainability focus, thereby actively managing community conflict and conflict resolution mechanisms (Kemp et al., 2011; Kolk & Lenfant, 2013; Porter & Kramer, 2007). Furthermore, MNEs adopt more and more Corporate Social Responsibility (CSR) policies in order to improve the sustainability and development of a country (Mutti et al., 2012). These CSR initiatives are supposed to reduce environmental impact, improve the compliance of indigenous’ rights, and strengthen the company’s reputation (Schepers, 2006). By implementing CSR policies, MNEs hold themselves responsible for activities that have an effect on human beings, their communities, and the environment (McCartin, 2013). Researchers pay increasing attention to the position of MNEs in conflict situations and conflict resolution in the form of CSR initiatives, the issues these companies face, and the possible positive influence of their involvement (Kolk & Lenfant, 2013).
Companies can improve the lives of indigenous peoples by strengthening their sustainability focus and introducing CSR policies. By that, MNEs acknowledge the cultures, beliefs and environments of indigenous communities (Kolk & Lenfant, 2013; Mutti et al., 2012). Moreover, the higher focus of companies on CSR initiatives increases the MNEs’ positive social impact on indigenous peoples and decreases the negative effects of their business on the communities and the environment (Porter & Kramer, 2007). Therefore, there is an increasing interest in international business research on the influence of MNE sustainability focus on the resolution of conflict and its impact on indigenous communities (Kolk & Lenfant, 2013). Nonetheless, research on these relationships is limited and previous studies mainly focus on length and type of conflict as separate constructs, thus leaving the interaction between them unstudied (Calvano, 2008; Fontana, Sastre-Merino & Baca, 2015; Kolk & Lenfant, 2013). Therefore, this study aims to fill this gap. Accordingly, the second research question is as follows:
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RQ1b: To what extend does the sustainability focus of MNEs affect the resolution of conflicts between indigenous peoples and MNEs?
Due to their social ideals and their strong positions against external pressures, non-governmental organizations (NGOs) are highly trusted entities compared to governments or MNEs (Teegen, Doh, & Vachani, 2004). NGOs put pressure on MNEs to change their practices regarding human and labor rights, environment, economic development, poverty, pollution, corruption, and other social and humanitarian issues (Waddock, 2008b). There is consensus in the literature that the participation of NGOs can increase sustainability and that companies regulating themselves cannot suffice to mitigate conflicts (Kemp et al., 2011).The influence of NGOs on the conflict resolution process is getting increasing attention by researchers of international business (Teegen, Doh, & Vachany, 2004) investigating the relationship between NGOs and MNEs (Kolk & Lenfant, 2013; Kourula & Laasonen, 2010). NGOs are becoming more important and powerful influencers of the government and companies, and they increasingly target MNEs in their advocacy efforts (Schepers, 2006). NGOs can impact the decisions and actions of governments and MNEs in certain directions through their positions as trusted organizations. They can positively influence the recognition of indigenous communities by being involved in the conflict resolution process between communities and MNEs (Schepers, 2006; Teegen, Doh, & Vachani, 2004).
Researchers, especially from the international business field, pay attention to the importance of NGOs as advocacy groups (Khor, 2011; Yamin, 2001). Nevertheless, they should increase their focus on the challenges resulting from the emerging role of NGOs that is changing the political-economic landscape around the world (Teegen, Doh, & Vachani, 2004). Moreover, previous studies fail to address the influence of NGOs’ involvement in conflict settings on the duration and the severity of conflicts. This study is trying to fill this research gap by including NGOs and their influencing role on governments and MNEs. Therefore, this study researches the interaction effect of NGOs in conflict situations between MNEs and indigenous communities. Accordingly, the third research question is as follows:
RQ2: To what extent does NGO participation moderate the relationship between the autonomy of indigenous communities and conflict resolution, as well as the relationship between MNE sustainability focus and conflict resolution?
Laws and policies introduced by governments determine the recognition, protection and implementation of indigenous’ rights (Bellier & Préaud, 2012) and also international guidelines, such as UNDRIP and ILO improve the communities’ position in conflict situations
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(Foster, 2012; Wiessner, 2011). We therefore argue that a better recognition of indigenous peoples promotes the resolution of conflicts. Moreover, the sustainability research field has constantly grown in the past years, putting more pressure on companies to introduce CSR policies (Mutti et al., 2012). Executives, activists, and community leaders are also pushing MNEs to increase their sustainability focus and reduce conflicts with indigenous communities (Calvano, 2008). Hence we argue that a stronger sustainability focus of MNEs leads to shorter and less severe conflicts between MNEs and indigenous peoples. The purpose of this study is therefore to show empirically as to what extent the recognition of indigenous communities as well as the sustainability focus of MNEs influences the type and length of a conflict between indigenous peoples and MNEs. We propose that shorter and less violent conflicts are the result of the increasing recognition of communities and the adoption of CSR initiatives by MNEs. In addition, we propose that the participation of NGOs in conflicts between indigenous peoples and MNEs further strengthens these effects and thus the resolution of conflicts, due to the positive influence that NGOs exert on both governments and MNEs (Teegen, Doh, & Vachani, 2004; Schepers, 2006).
To address these three research questions, we conduct a quantitative cross-country analysis including 120 cases of conflicts located in over 25 countries in Africa, North and South America, Asia, and Australia. We analyze the effect of the recognition of indigenous communities, MNE sustainability focus and NGO participation on conflict resolution, which is measured in length and type of a conflict. We expect that the recognition of indigenous peoples by governments and a greater sustainability focus of MNEs will positively influence the resolution of conflicts. Thus, conflicts will be shorter and less violent, the more indigenous communities are recognized by governments and the more MNEs adopt CSR policies. Furthermore, we expect these relationships to be positively influenced by NGO participation.
The current study makes several contributions to the existing literature on conflicts between indigenous communities and MNEs. First, by taking a neutral researcher perspective, this study deepens the understanding of the topic in looking at conflict dynamics from different viewpoints; those of indigenous communities and MNEs. Second, by including length and type of conflict as well as community autonomy, MNE sustainability focus, and NGO participation into one framework, this study adds to existing literature by shedding new light on the interaction effects between the various constructs. Third, this study is contributing to previous literature methodologically by taking a quantitative approach, while existing studies mainly conduct qualitative research, thus adding empirical evidence and providing broader insights
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into the phenomenon. In addition, this study provides a broader context for analysis by looking across countries and industries. Finally, this research adds practical value for indigenous communities, governments, and managers by increasing research on factors influencing the length and type of conflicts, thereby giving information on how to resolve conflicts effectively. In order to answer the research questions, the structure of the thesis is as follows. The study begins with a literature review regarding indigenous communities, conflicts, community autonomy, the sustainability focus of MNEs, and NGOs. The theoretical framework follows this overview of the previous literature, introducing the hypotheses for this research. Chapter four presents the methodology of the analysis, explaining the different concepts and method used and is followed by the results and analysis. The theoretical and practical implications, the limitations and possibilities for further research are presented in chapter six, followed by the conclusion in the last chapter.
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2. Literature Review
2.1 Indigenous Communities
According to the United Nations (2009) there are more than 370 million indigenous peoples around the world in about 90 countries. These indigenous peoples live in communities. Even though there is no common definition of communities, the multiple definitions can be differentiated by categories of geography, social interaction, and identity (Calvano, 2008). In this study communities are defined as “aggregates of people who share common activities and/or beliefs and who are bound together principally by relations of affect, loyalty, common values, and/or personal concern” (Brint, 2001, p.8). Dunham, Freeman, and Liedtka (2006) view communities as groups of stakeholder and divide them into four categories. First, communities of place are defined by the physical proximity of its members. Communities of interest are advocacy groups sharing a common purpose and area of focus, such as AIDS activist groups and groups concerned with issues of public policy. Virtual advocacy groups are in contrast characterized by an “oppositional” sense of identity. They share no common agenda and they usually do not have a common area of focus. The fourth type of communities are the communities of practice, which are professional work groups that share a common sense of interest, value, and purpose.
A uniform definition of indigenous peoples is missing as well. Nevertheless, the United Nations (2009) and other indigenous leaders argue that a universal definition is neither necessary nor desirable (Pelosi & Adamson, 2014). International laws, such as UNDRIP and ILO stress the importance of self-identification of indigenous peoples. This entails the peoples’ right to define their individual identity or membership of their institutions according to their specific customs and traditions. As identity is essential for indigenous communities, harm to it can be a central aspect during conflicts (Bruijn & Whiteman, 2010; United Nations, 2009). The United Nation’s understanding of indigenous peoples is based on their self-identification, historical link with pre-colonial and/or pre-settler societies and their strong connection with territories and natural resources. Furthermore, it includes the indigenous peoples’ distinct social, economic or political systems, as well as language, culture and beliefs (Pelosi & Adamson, 2014). In addition, it also entails the indigenous communities’ tradition of sharing everything with each other as an organic group (Wiessner, 2011).
Industrial evolvement, especially of the resource extraction industry, impacts the environment, the lands and lives of indigenous peoples (Lertzman & Vredenburg, 2005; Bruijn
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& Whiteman, 2010). However, these communities strongly rely on their land and resources and are vulnerable due to their small size, discrimination and social disadvantage, leaving them with little power compared to companies and other stakeholders (O’Faircheallaigh, 2013). Power imbalances result to a large extent from the lack of land rights of indigenous peoples (Bruijn & Whiteman, 2010; Calvano, 2008; Whiteman, 2009). Because of their weak positions coming from political and economic disadvantages, indigenous communities have difficulties with negotiating agreements with the state and companies (Castro & Nielsen, 2001; Garvey & Newell, 2005). Therefore, companies should use their advantage over indigenous peoples when interacting with them to take into account the needs and perspectives of these poor, weak, and isolated communities (Calvano, 2008).
2.2 Conflicts between MNEs and Indigenous Communities
Ethical conflicts across cultures result from differences in ethical values, reasoning processes, and behaviors between individuals, MNEs, industries or nations (Buller, Kohls, & Anderson, 1997). Especially MNEs in the mining industry cause conflicts or worsen existing or latent grievances with indigenous communities (Kemp et al., 2011). Conflicts can have negative consequences for both MNEs and indigenous communities. On the one hand, conflicts lead to costs for companies due to delays or denials of government support, impaired infrastructure, diminished reputation, legal costs or even shutdown. On the other hand, communities lose their cohesion, identity, amenity, and health (Franks, 2009; Kemp et al., 2011). Company-community conflict is here defined as “interactions that range from minor disagreements, to escalated or violent conflict” (Kemp et al., 2011, p.93). There are several interrelated, but distinctive dimensions to measure conflicts (Getz & Oetzel, 2009). Two of these dimensions are length and type of conflict. Length of conflict relates to the duration of a conflict. While some conflicts can be very short-lived, others can continue for decades or centuries. Short-lived conflicts that are unlikely to reoccur attract less attention from MNEs than conflicts of very long duration (Getz & Oetzel, 2009). Type of conflict refers to the severity or violence of a conflict. Violent conflict is defined as “the organized and sustained use of physical force that results in injury or death to persons or damage or destruction to property. It includes war, revolution, rebellion, insurgency, and sustained campaigns or violence or terrorism” (Getz & Oetzel, 2009, p.376). Conflicts can be characterized by the ideological differences and arguments or the extensive loss of lives, livelihoods, and environments (Ballard & Banks, 2003).
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Conflicts between MNEs and communities result from grievances with mining operations, from the control over the resources that are being extracted, as well as from the competition for the social and environmental resources that both the community and the company use. Other reasons for conflicts are indigenous rights, security problems, and health issues resulting from pollution (Ballard & Banks, 2003; Franks, 2009). Environmental and human right issues therefore belong to the most common reasons for the emergence of conflicts between indigenous peoples and MNEs. The lack of developmental benefits and an adequate compensation for the loss of ancestral lands and livelihoods, as well as weakened rights of the poorest and most marginalized communities increase conflicts with companies. While MNEs are getting more rights and easier access to resources, the economic impact of their foreign direct investments (FDI) in host countries remains very low, leaving indigenous communities without benefits and poor (Laplante & Spears, 2008). MNEs’ reaction to conflicts is increasingly the acknowledgement of indigenous communities as vital stakeholders. However, few indigenous peoples regard themselves as such, adding complexity to the relationship between both parties. Through improved communication and the building of common institutions, MNEs can establish ethical relationships with communities (Bruijn & Whiteman, 2010).
Deutsch developed a theory of cooperation and competition that has been widely applied and empirically tested by researchers of conflict management. According to this theory, the connection between the goals of two parties creates a degree of conflictual independence or cooperative interdependence. Both parties expect the interaction to be long-term and relationship-based and to result in the achievement of their goals. The relationship between them is based on trust, as a result both want to increase their reputation. The concept of cooperation is based on three sociological dimensions: substitutability of goals, cathexis (commitment to a certain goal), and inducibility (openness to external influence) (Danskin, Dibrell, & Kedia, 2005).
The model of conflict, as part of the international business political behavior literature (Jamali & Mirshak, 2010), differs in its assumptions from the theory of cooperation and competition by stating that the parties involved in a conflict do not care for the goals of the other parties and that interactions are seen as short-term and transaction based. Therefore, their relationship is based on suspicion, whereas reputation building is not seen as a priority. The model was adapted to MNE activity by Gladwin and Walter in 1980, including the two dimensions cooperative and dominative behavior. While, cooperativeness refers to the degree
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to which one party is willing to consider the concerns and interest of the second party, dominativeness refers to the degree to which one party is willing to be assertive to fulfill its own concerns and interests (Danskin, Dibrell, & Kedia, 2005).
Strategies for managing conflict belong to the practitioner business and society literature (Jamali & Mirshak, 2010). They range from strategies of engagement of businesses in conflict areas (compliance strategy), risk minimization strategies to value creation or peace building strategies (Nelson, 2000). First, companies should try to comply with the regulations of the countries they are operating in and with the international laws and standards. Second, MNEs should try to minimize the risks and harm coming from their operations. Third, companies should try to contribute to societal value creation (Jamali & Mirshak, 2010). These activities are supposed to promote peace and sustain operations to increase wealth (Kolk & Lenfant, 2012).
Another research stream is concerned with a principle-based grievance mechanism, the Protect, Respect, Remedy framework, developed by the Special Representative of the United Nations Secretary-General on Business and Human Rights, Prof. John Ruggie. The framework consists of three pillars and forces companies to include transcendental justice ideals into their operations to avoid or minimize undesirable consequences of conflict. Remedies can be judicial and non-judicial. Contrary to judicial remedies, non-judicial ones are based on soft law and are therefore voluntary (Kemp et al., 2011; Onuoha & Barendrecht, 2012).
2.3 The Recognition of Indigenous Communities
Governments are external stakeholders that can mediate conflicts between MNEs and indigenous communities by defining the degree of recognition of communities and their interests (Calvano, 2008). Nevertheless, governments can also increase conflicts to their own benefit. Governments can take a negative role, or lack the capability to resolve conflicts due to their weak infrastructure or institutional capacity. Moreover, the recognition of indigenous peoples by law suffers from shortcomings, because governments may not have the necessary financial resources to enforce them properly (Acuña, 2015; Foster, 2012; Getz & Oetzel, 2009). Another reason may be the countries’ financial involvement in resource extraction projects. In such cases governments often ignore legal violations of MNEs, because they profit from the companies’ business activities in their countries (Foster, 2012).
Yet, the national and international recognition of indigenous peoples around the world is increasing, giving communities more and more autonomy and self-determination (Foster,
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2012; O’Faircheallaigh, 2013; Wiessner, 2011). Autonomy is defined as “the institutionally guaranteed capacity of a social entity or territory to rule itself within the ambit of sovereignty of a state” (Assies, 2005, p.159). Countries, such as Canada, Colombia, Nicaragua and the Philippines have granted or increased rights of indigenous peoples (O’Faircheallaigh, 2013). The state of Peru, for instance, recognizes 52 indigenous communities (Acuña, 2015). Even though Australia has not formally recognized the indigenous’ rights to land, the Australian High Court acknowledged the native title (indigenous rights and interests) in 1992, changing the relationship between the indigenous communities and the resource extraction industry significantly (Barber & Jackson, 2012; Crawley & Sinclair, 2003).
International laws, such as UNDRIP and ILO set standards for the improvement of the social, economic, and political circumstances of indigenous communities worldwide. They give indigenous peoples autonomy by recognizing their rights and by protecting their heritage, language, traditions, and land (Foster, 2012; Wiessner, 2011).These laws then need to be adapted to domestic law and policy (Bellier & Préaud, 2012). UNDRIP is seen as the most significant legal development in this area (Foster, 2012; Wiessner, 2011). As a Declaration adopted by the General Assembly of the United Nations, it has a non-binding status. Nonetheless, it stands for the common views of the United Nations and must therefore be taken into consideration by member states in good faith. Moreover, UNDRIP has legal significance and can reflect the responsibilities of states under other sources of international law. UNDRIP, as well as the ILO Convention No. 169, use advocacy, capacity building, research and other means to improve human rights of indigenous communities (Foster, 2012; ILO, 2007; Wiessner, 2011). States adopting UNDRIP acknowledge the indigenous peoples’ individual and collective rights and view them as a legal person respected by and within states (Bellier & Préaud, 2012; Foster, 2012).
Additionally, tools, such as the Indigenous Rights Risk Report increase the self-determination of indigenous peoples over their lands and resources. Communities use such instruments to protect the unparalleled recognition of their rights from governments (Pelosi & Adamson, 2014). Legal instruments improve the environment for accountability, regarding access to key resources and determination of economic entitlements. They also set the level of recognition granted to indigenous peoples (Garvey & Newell, 2005). However, the implementation and enforcement of these laws is still problematic, particularly when related to resource extraction (Pelosi & Adamson, 2014; Wiessner, 2011). Furthermore, the accessibility of such instruments is not always granted for poor and marginalized communities (Garvey &
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Newell, 2005). Historically seen, governments do not only protect indigenous peoples, but have violated their rights continuously. Therefore, indigenous communities should not only rely on governments for the protection of their rights from industries (Pelosi & Adamson, 2014).
Three cycles of constitutional changes in Central and South America promoted the issues and improved the situation of indigenous peoples worldwide. First, multiculturalism and the right to cultural diversity developed in Guatemala, Nicaragua, and Brazil (1982-1988). Second, the concept of a pluri-cultural nation-state, as well as the recognition of legal pluralism emerged in Argentina, Columbia, Ecuador, Mexico, Panama, Paraguay, Peru, and Venezuela (1989-2005). Last, indigenous communities and nationalities were included in the formation and instrument of a pluri-national state, especially in Bolivia and Ecuador (since 2006). Changes in constitutions thus led to the inclusion of policies of territorial demarcation and recognition, addressing land conflicts and including several forms of autonomies, as well as laws concerned with linguistic and cultural heritage protection. Nevertheless, as mentioned above, the local implementation and enforcement of international laws, such as UNDRIP, is still contested (Bellier & Préaud, 2012; Wiessner, 2011).
2.4 Corporate Social Responsibility of MNEs
As a result of the development of worldwide standards, MNEs increasingly introduce CSR or sustainability policies in order to manage community conflict, establish local-level grievance mechanisms or dispute resolution systems (Kemp, et al., 2011). Shell and other MNEs in the resource extraction industry use the concept of CSR to demonstrate their sustainability focus and corporate attitude towards stakeholders (Wheeler, Fabig, & Boele, 2002). Thus, CSR can be a strategy of MNEs or a reaction of MNEs to different drivers (Young & Thyil, 2014). The more positive actions a company takes, the more responsible it is (Strike, Gao, & Basal, 2006). CSR has many definitions including economic, social, and stakeholder dimensions (Young & Thyil, 2014; González-Rodríguez, Díaz-Fernándes, & Biagio, 2015). In this study it is defined as “the set of corporate actions that positively affects an identifiable social stakeholder’s interests and does not violate the legitimate claims of another identifiable social stakeholder (in the long run)” (Strike, Gao, & Bansal, 2006, p.852).
Stakeholder theory is fundamental to the analysis of CSR (González-Rodríguez, Díaz-Fernándes, & Biagio, 2015). It is concerned with the question to whom companies owe their responsibility (Onuoha & Barendrecht, 2012). Stakeholder theory of CSR is based on the notion that “corporations have an obligation to constituent groups in society other than stockholders
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and beyond that prescribed by law or union contract” (Jones, 1980, p.59-60). Companies are not only responsible to their shareholders, but also to different stakeholders that might influence or be influenced by the decisions made in a company (Freeman, 1998). These stakeholders can be divided into primary and secondary ones, according to their importance to the business (Onuoha & Barendrecht, 2012). Freeman (1998) considers suppliers, customers, employees, stockholders, and local communities as the stakeholders of a firm. Even though communities are increasingly acknowledged as stakeholders of MNEs, their rights, cultural relations, and extended residence times, as well as their special connections to the locations and resources are still diminished by the stakeholder model (Barber & Jackson, 2012).
Porter and Kramer (2007) develop a model of CSR introducing four justifications for CSR that advance thinking in the respective literature area, even though it suffers from practical limitations. The four dimensions are moral obligation, sustainability, license to operate, and reputation. First, moral obligation refers to the responsibility of companies to being a good citizen and “doing the right thing”. Second, sustainability promotes environmental and community guidance. Third, license to operate relates to the company’s needs for tacit and explicit authorization of governments, communities and other stakeholders to do business. Finally, reputation refers to the idea that CSR policies positively influence the image, brand, morale, and stock value of a company. Porter and Kramer (2007) further categorize these four justifications into Strategic and Responsive CSR. Strategic CSR improves the company’s social impact and business benefits. Responsive CSR is related to being a good citizen, caring about social concerns of stakeholders, and to reducing negative effects from the company.
According to Calvano (2008), the Global Pyramid of Social Responsibility developed by Carroll (2004) is the most popular model for studying CSR in the international business literature. It implies that the neglect and reduction of companies’ nonfinancial obligations leads to conflicts between MNEs and communities (Calvano, 2008). The pyramid of CSR portrays the four kinds of social responsibility of companies to their stakeholders around the world: economic, legal, ethical, and philanthropic responsibility. On the bottom of the pyramid lies the economic responsibility of an MNE, related to being profitable and fulfilling the requirements by global capitalism. On top of that comes the legal responsibility. Companies have to obey the law and do what is required by global stakeholders. This building block stands for the acceptable and unacceptable practices in a country defined by law. Ethical responsibility requires MNEs to be ethical and do what is expected by global stakeholders. It is the duty of a company “to do what is right, just, and fair and to avoid or minimize harm to stakeholders”
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(Carroll, 2004, p.117). On top of the pyramid is the building block of philanthropic responsibility. Companies are supposed to be a good global corporate citizen and do what is desired by global stakeholders. Taken together, these four categories define how MNEs should behave in the international environment. Nevertheless, they are not mutually exclusive (Carroll, 2004).
2.5 NGO Participation in Conflict Situations
In scientific literature there is an increasing interest in NGOs (Harangozó & Zilahy, 2015; Kourula & Laasonen, 2010). NGOs are among a number of parties that put pressure on companies to deal with conflicts between MNEs and indigenous communities (Kemp et al., 2011). They often participate in the conflict situations due to their position as legitimate stakeholder and their institutional power (Calvano, 2008). NGOs are the civil society’s equivalent of MNEs and governments, key players in governance and creating value worldwide. NGOs often emerge when the interests in a social movement develop structurally to create a free standing entity, therefore following one social purpose (Teegen, Doh, & Vachani, 2004). NGOs are built according to common ideals, such as environmentalism, human rights, or local, national, or international causes. Campaigns by NGOs threaten projects, economic policies and political forces that might further impact indigenous communities or ecosystems negatively (Schepers, 2006). Furthermore, NGOs gain technical expertise and experience by working in difficult environments or with indigenous communities (Teegen, Doh, & Vachani, 2004). Examples for such NGOs are environmental groups and human rights organizations (Teegen, Doh, & Vachani, 2004). NGOs, such as Human Rights Watch and Global Witness, observe MNEs and partly expose them publicly, through that influencing their reputation negatively (Kolk & Lenfant, 2012). NGOs can be defined as “private, not-for-profit organizations that aim to serve particular societal interests by focusing advocacy and/or operational efforts on social, political and economic goals, including equity, education, health, environmental protection and human rights” (Teegen, Doh, & Vachani, 2004, p.466). There are several types of NGOs, such as NGOs concerned with direct aid, empowerment, and advocacy, or hybrid forms of NGOs, combining two or more types. This thesis is concerned with advocacy NGOs, whose goal is to have an impact on governments or the formation or conduct of policies of MNEs (Schepers, 2006).
Public institutions and private firms often fail to create value. Since the goal of NGOs, which are increasingly becoming international, is not to make profit, they have the possibility
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to offer services and/or support missions serving public interest across borders (Teegen, 2003). NGOs are important for the society, because they fill gaps where governments and companies cannot meet the needs of consumers and citizens, thus making a further investigation of NGOs necessary (Teegen, Doh, & Vachani, 2004). In countries marked by poverty and conflict, NGOs carry out campaigns to bring attention to the impact and potential contributions of MNEs. Furthermore, their interest in MNEs and conflict situations is very large (Kolk & Lenfant, 2013), and they often aim to influence MNEs to change their CSR policies (Schepers, 2006). Harangozó and Zilahay (2015) argue that NGOs can only control MNEs by developing and enforcing fair rules and by pushing companies to adopt them through demonstrations or legal methods. Moreover, they argue that control can be exerted by participating in legislative processes, or by influencing consumers and stakeholders. HP, for example, created a first-mover advantage by adopting CSR policies, exchanging knowledge with other groups, and partnering with NGOs (McCartin, 2013). Brown and Timmer (2006) identify five roles NGOs can take in transnational governance: by identifying emerging issues, by facilitating grassroots voice, by building bridges to link diverse stakeholders, by amplifying the public visibility and importance of issues, and by monitoring problem-solving performance.
There are several forms of partnerships between NGOs and MNEs: engagement in the projects or in the knowledge and information transfers, participation in the environmental and social advisory processes, measurement of the environmental impacts of companies, development of standards or guidelines, and helping in fundraising (Harangozó & Zilahay, 2015). These partnerships are viewed as a strategy to community relationship, to help MNEs to manage the expectations of communities, to reduce costs related to CSR and prevent conflicts with communities (Idemudia, 2010). Traditionally, the relationships between NGOs and MNEs have been rather adversarial, following confrontational strategies, whereas they are mainly cooperative nowadays (Harangozó & Zilahay, 2015; Kourula & Laasonen, 2010). Indigenous communities enter partnerships with NGOs in order to have a voice in conflict situations, to receive feedback and technical expertise (Calvano, 2008; Pelosi & Adamson, 2014).
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3. Theoretical Framework
The conflict resolution literature is concerned with drivers of conflict, methods of conflict resolution, and actors influencing the mitigation of them (Danskin & Dribell, 2005; Getz & Oetzel, 2009; Idemudia, 2010). However, it should not only focus on decreasing the negative outcomes of conflict, but on resolving them completely (Getz & Oetzel, 2009). Conflict arises when the interests of MNEs and indigenous communities collide in a certain region (Calvano, 2008), leading to environmental destruction of the lands of indigenous communities and the deterioration of their living standards (Lertzman & Vredenburg, 2005; Mutti et al., 2012), as well as to bad reputation and legal risks for MNEs (Calvano, 2008; Kemp, Owen et al., 2011; Laplante & Spears, 2008). Especially cooperation and communication are seen as instruments of conflict resolution (Jamali & Mirshak, 2010). Generally, researchers look at isolated cases, such as Fontana, Sastre-Merino, & Baca (2015) who investigate the resolution of a conflict situation in Lima, Peru. Others only consider a specific industry, such as Jenkins and Yakovleva (2006), who look at ten cases in the mining industry. Both studies use a qualitative research design, which is very common in this field of research. Furthermore, previous studies generally research length and type of conflict as separate constructs. This study is filling this gap, first, by empirically looking at various cases, providing more general insights into conflicts in different countries and industries, compared to the specific case study results of previous research. Second, by using a quantitative research design, this study adds empirical evidence and deeper understanding of conflict resolution processes. Finally, this study uses length and type of conflict to measure conflict resolution, as conflicts differ in duration and severity (Getz & Oetzel, 2009). By looking at both concepts together, this thesis adds to the conflict resolution literature.
Recognizing indigenous peoples in conflict areas can help to resolve conflicts between MNEs and communities (Kolk & Lenfant, 2013). On the one hand, governments can acknowledge the rights and lands of indigenous peoples as well as improve their relationship to them, giving indigenous peoples more autonomy for their own lives (Bellier & Préaud, 2012). On the other hand, MNEs can acknowledge the needs and interests of indigenous communities by creating a greater sustainability focus of their business and by adopting CSR policies (Bond, 2014; Schepers, 2006). MNEs introduce CSR policies as a tool for the avoidance or the management of conflicts (Fontana, Sastre-Merino, & Baca, 2015). Consequently, this study argues that the recognition of indigenous peoples by governments and the introduction of CSR policies by MNEs can lead to less violent and shorter conflicts, or even to the complete
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mitigation of a conflict. By that, this study is filling the gap of missing empirical studies on this research field from a neutral researcher perspective. This provides a broader understanding of conflict resolution processes by displaying the difficulties for both MNEs and indigenous communities.
NGOs, the so-called third sector, can strengthen the relationship between the recognition of indigenous communities and conflict resolution, as well as the relationship between the sustainability focus of MNEs and the resolution of conflicts. Nowadays, the number of NGOs is rising steadily, they are becoming more and more international and they have established themselves as powerful stakeholders (Schepers, 2006; Teegen, 2003). Due to their substantial power on governments and MNEs, these non-profit organizations support the resolution of conflicts by driving governments and MNEs to improve their conflict management with communities. NGOs force MNEs to introduce or improve their CSR policies, they push governments to adopt international and national laws in favor of communities, and drive both, MNEs and governments, to increase the acknowledgement of indigenous peoples (Foster, 2012; Kemp et al., 2011; Teegen, Doh, & Vachani, 2004; Waddock, 2008b). By including the participation of NGOs in conflict situations between MNEs and indigenous communities, this study is filling a vastly neglected research field and provides new and highly relevant insights into conflict resolution processes (Teegen, Doh, & Vachani, 2004).
3.1 Autonomy of Indigenous Communities
Indigenous studies are more and more subject to international literature. Anglo-Saxon, Latin American, and Northern European universities increasingly research indigeneity and ethnic politics. Furthermore, indigenous communities are being partly considered as subjects of rights in political research literature (Bellier & Préaud, 2012). Governments can promote and protect the rights of indigenous communities by introducing policies and legal frameworks. Nevertheless, the effectiveness of these standards rely on the willingness and ability of governments to successfully implement those (Foster, 2012; Garvey & Newell, 2005; Wiessner, 2011). Furthermore, governments can decide the outcome of a conflict over resources between communities and MNEs, due to their power to decide who gets access to them. Governments also give incentives or disincentives to CSR policies by providing the legal environment for companies (Garvey & Newell, 2005). Sustainable indigenous futures can only derive, if governments develop good relationships with indigenous communities and acknowledge their rights, land, water, and resources (Howitt, 2012). Forcing companies to be more responsible, transparent, and sustainable in their actions by introducing laws for corporate disclosure on
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environmental, social, and governance issues (Waddock, 2008a), reduces conflicts between indigenous communities and MNEs. Garvey & Newell (2005) argue that legal frameworks set by the government determine the degree of corporate disclosure demanded, the degree of dialogue companies must engage in with communities, as well as the degree of recognition of indigenous peoples.
Autonomy and good relationships between governments and indigenous peoples are important for the futures of the communities (Howitt, 2012). Indigenous communities are often marginalized, due to a lack of power over their rights and lands (Whiteman, 2009). Governments are powerful forces that have an impact on the lives of indigenous communities and conflicts between the peoples and MNEs (Getz & Oetzel, 2009; Laplante & Spears, 2008). They can support indigenous peoples in their conflicts with MNEs by introducing laws and standards for the recognition of interests and rights of indigenous communities (Calvano, 2008; Garvey & Newell, 2005), thus increasing the equal distribution of power between the communities and the MNEs (Bruijn & Whiteman, 2010; Whiteman, 2009). This study argues that the more indigenous communities are recognized by the government and the better their relationship is developing, the higher is their autonomy and the lower is the duration and severity of conflicts in those countries. Thus, governments positively influence the resolution of conflicts.
In the United States, the Sarbanes-Oxley Act of 2002 is a legal instrument to create standards for the accountability and transparency of companies (Waddock, 2008a). In Australia, the Mabo decision and the Native Title law, established by the government, recognize the interests and rights of indigenous peoples. This law significantly improved the relationships between the indigenous communities and MNEs in Australia (Crawley & Sinclair, 2003). In Kerala state in India, Coca-Cola was in conflict with local communities for contaminating water and creating water shortages through their bottling plants. In Plachimada, the government stopped this conflict by denying the renewal of a license for Coca-Cola to operate a bottling plant. The High Court of the Kerala state ruled in favor of the communities, forcing the MNE to stop distributing waste (Burnett & Welford, 2007). These examples demonstrate the possibility of governments to positively influence the outcomes of conflicts, in these cases in favor of communities. Based on the reviewed literature and examples we propose:
H1: The higher the recognition of indigenous peoples by the government, the lower the degree of violence in the conflict.
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H2: The higher the recognition of indigenous peoples by the government, the shorter the duration of the conflict.
3.2 MNE Sustainability Focus
In the conflict resolution literature, the overall importance of MNEs as conflict resolvers, peace builder and conciliators as part of their CSR strategies is growing (Kolk & Lenfant, 2013). An increasing number of MNEs worldwide, especially in the resource extraction industry, adopts CSR policies in order to address community-level conflict management and conflict resolution systems (Kemp et al., 2011). These changing business policies by MNEs towards indigenous communities (O’Faircheallaigh, 2013), demonstrate their respect for indigenous peoples and their rights as well as the company’s willingness to sign agreements with communities (O’Faircheallaigh & Ali, 2008). Companies introducing CSR policies increase their positive social impact on communities and reduce their negative effects of their activities (Porter & Kramer, 2007). In that way MNEs address not only human rights and environmental sustainability, but also transparency, and safety issues (Waddock, 2008b). MNEs adopt CSR initiatives in order to repair the environmental and reputational harm they cause with their businesses and in order to enhance the fulfillment of human rights (Schepers, 2006). McCartin (2013) argues that the goal of MNEs is to build peace by supporting economic safety, social inclusion, and the empowerment of indigenous peoples, thereby taking responsibility for the effects their businesses have on individuals, indigenous communities, and the environment.
Companies adopt a stronger sustainability focus in their businesses in order to reduce their environmental impact and harm on indigenous communities (Kemp et al., 2011; Schepers, 2006), as well as the severity and duration of conflicts by building peace (McCartin, 2013). Moreover, these companies strengthen their reputation and acknowledge the rights, cultures, and beliefs of indigenous peoples (Kolk & Lenfant, 2013; Mutti et al., 2012; Schepers, 2006). By building a strong sustainability focus, MNEs take responsibility and contribute to the resolution of conflicts (Kolk & Lenfant, 2013). This study argues that incorporating CSR policies in their businesses makes MNEs try to develop better and more peaceful relationships with indigenous peoples. As a result, a stronger sustainability focus of MNEs positively influences the resolution of conflicts, leading to shorter and less violent disputes.
In Puente Piedra, a town in Peru, the company Graña y Montero carried out a project between 2006 and 2007 whose main purpose was to build reservoirs, water tanks and sewage pumping stations and install secondary water and sewerage networks. However, this project
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was endangered by continuing conflicts with local groups, mainly resulting from the very high unemployment rate and low wage level in Puente Piedra at that time. Local inhabitants, such as the unemployed and people with a criminal record, the union of civil construction, and a group called “vests” threatened the company continuously and created violence within the firm. In order to resolve these conflicts, the company decided to introduce a social management team. This team constantly communicated with the community and organized workshops for them to be able to recruit more local people. As a result, the local high unemployment was resolved, the project improved the infrastructure and supported local businesses. Furthermore, the community felt as a part of the project, thus facilitating and supporting the work of the MNE (Fontana, Sastre-Merion, & Baca, 2015). Based on the reviewed literature and example we propose:
H3: The stronger the MNE sustainability focus, the lower the degree of violence in the conflict. H4: The stronger the MNE sustainability focus, the shorter the duration of the conflict.
3.3 NGO Participation and Conflict Resolution
NGOs display the counterpart of MNEs and governments and create value and governance worldwide. Through their greater trust from the public compared to MNEs and governments (Teegen, Doh, & Vachani, 2004), the power of NGOs over governments as well as companies is rising (Schepers, 2006). Moreover, their emergence is posing challenges in the more integrated and globalized world that researchers must address (Teegen, Doh, & Vachani, 2004). Furthermore, the ideas, desires, goods, and services NGOs provide in order to promote the social issues in the world, demand increasing research attention. Researchers from various areas, such as sociology, economics, and political science, and now also from international business, acknowledge the importance of NGOs, which engage in all sorts of exchanges between companies, communities, and government. Most efforts of NGOs are not antagonistic, but cooperative (Teegen, Doh, & Vachani, 2004). Governments rely on NGOs and their advice due to the NGOs’ ability to build political and hierarchical partnerships and their scientific, technical, and political expertise, especially related to sustainable development (Yamin, 2001). NGOs provide governments with information through publishing reports and briefing papers. Their ability to exert influence on states depends on their expertise and the degree of public pressure they can use, as well as on the level of access they have to policy makers and significant documentation (Yamin, 2001).
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This study argues that NGOs involved in conflict settings positively moderate community autonomy and the resolution of conflicts, due to their great influence on governments. Governments are powerful forces that can have an impact on conflicts between indigenous peoples and MNEs (Getz & Oetzel, 2009) by introducing laws and regulations, as well as by setting standards for the recognition of indigenous communities. In that way governments can help local communities in conflict situations (Calvano, 2008; Garvey & Newell, 2005). As NGOs can impact the decisions governments make regarding the treatment and acknowledgement of indigenous communities living in their country, the participation of NGOs in conflicts leads to greater recognition and autonomy of indigenous peoples (Yamin, 2001). Thus, the change of attitudes and laws by states in favor of indigenous peoples as a result of NGO participation further reduces the severity and duration of conflicts between MNEs and indigenous communities.
Due to the advocacy efforts of NGOs in Indonesia, the president of the country starts changing the government’s policies towards more sustainable growth strategies and more engagement in environmental issues (Khor, 2011). In the Canadian British Columbia, in the Chilcotin region, the indigenous community Tsilhqot’in Nation was in conflict with the mining company Taseko. The Tsilhqot’in Nation wanted to protect their sacred Fish Lake for habitat, wildlife, grizzly, and for salmon spawning areas from the gold and copper mining project (Baker, 2014). The project was putting the lake in irreversible environmental risks, but was also seen as an opportunity to build around 500 permanent jobs in the area, thus increasing economic development. However, indigenous peoples felt “bullied” by Taseko (Smart, 2014). The NGO First Nation Summit (FNS) was actively involved in the case, supporting the Tsilhqot’in Nation, but also all First Nations in British Columbia in general. The FNS speaks on behalf of indigenous communities involved in treaty negotiations with the government. Moreover, other NGOs, such as Amnesty International and Canadian Friends Service Committee, were also intervening in support of the indigenous peoples (First Nations Summit, 2013). On June 26, the Supreme Court of Canada ruled in favor of the Tsilhqot’in Nation, granting them title to more than 1,700 square kilometers of land in British Columbia. This title gives the community the authority to decide on who uses and who benefits from their land. Furthermore, it is a big step for indigenous communities in Canada towards recognition overall (Walker, 2014). Based on the reviewed literature and examples we propose:
H5a: NGO participation positively moderates the influence of the recognition of indigenous peoples by the government on the type of conflict (the conflict will be less violent).
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H5b: NGO participation positively moderates the influence of the recognition of indigenous peoples by the government on the length of a conflict (the conflict will be shorter).
The academic literature is likewise increasingly concerned with the relationship between companies and NGOs (Kourula & Laasonen, 2010), since MNEs are more and more the targets of advocacy efforts of NGOs and the power of NGOs over companies increases (Schepers, 2006). NGOs mainly focus on environmental and human rights, especially indigenous rights related to communities marginalized by mining companies. Moreover, the advocacy groups have the power to influence the corporate behavior of these MNEs through campaigns (Ballard & Banks, 2003). NGOs make MNEs address conflicts between them and the indigenous communities (Kemp et al., 2011), because the relationship between these companies and communities is viewed as a battleground (Calvano, 2008). As MNEs’ power increases as well, NGOs provide a counterweight and challenge for them (Fassin, 2009). As NGOs differ from each other, they can exert influence in various ways. On the one hand, there are NGOs working directly with companies in the resource extraction industry through dialogues or contracts. These NGOs are partly hired by MNEs to be the mediator with indigenous peoples. On the other hand, there are NGOs supporting local indigenous communities and their environment directly. The latter ones are usually implacably opposed to the resource extraction industry (Ballard & Banks, 2003). Murphy and Arenas (2010) show that NGOs, supporting indigenous communities with societal issues regarding environmental protection, poverty reduction, and the protection of human rights, can influence MNEs to adopt a more sustainable focus.
This study argues that NGOs can positively influence the decision-making of MNEs in conflict with indigenous communities, thereby reducing the violence and duration of a conflict. NGOs can support MNEs in building up and forming relationships with communities. NGOs exert political pressure on MNEs to conduct their business with more responsibility (Scherer & Palazo, 2011). Through the extensive knowledge and expertise of NGOs of the local environment and their long-term partnerships with other local actors, NGOs are valuable to MNEs. Companies can learn from them how to operate and engage with indigenous communities, thus improving their communication strategies and creating more peaceful relationships. NGO participation therefore increases the CSR activities of MNEs (Kolk & Lenfant, 2013). For that reason it can be argued that NGO participation in conflict situations between MNEs and indigenous communities positively moderates the influence of MNE sustainability focus on the resolution of conflicts.
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NGOs were able to convince global players in the palm oil industry, such as KFC, to change their buying policies and to stop using palm oil, which reduced the companies’ environmental impact (Khor, 2011). Moreover, a NGO contributed to the resolution of a conflict between BHP and an indigenous community, by making communications between the company and the indigenous peoples possible and by influencing BHP to adopt a stronger sustainability focus (Murphy and Arenas, 2010). Likewise, Chevron built up a partnership with the NGO SCG in order to resolve conflicts with indigenous communities in Angola. SCG helped Chevron to establish a more peaceful environment and to change potential conflict dynamics by facilitating communication and negotiation between the company and the community. The goal of the NGO was to change the business practices of the company. In the end, Chevron went from having a bad reputation to being a company supporting community development by “improving access to basic human needs and education to supporting sustainable income sources, such as agriculture, fisheries and small enterprise development” (Kolk & Lenfant, 2013, p.51). Based on the reviewed literature and examples we propose:
H6a: NGO participation positively moderates the influence of the sustainability focus of MNEs on the type of a conflict (the conflict will be less violent).
H6b: NGO participation positively moderates the influence of the sustainability focus of MNEs on the length of a conflict (the conflict will be shorter).
3.4 Conceptual Framework
Figure 1 represents the conceptual framework of this study, depicting the relationship between the recognition of indigenous communities, measured by the independent variable community autonomy, and the type and length of a conflict, as well as the relationship between the independent variable sustainability focus of MNEs and the type and length of a conflict. It is proposed that the independent variables have a positive influence on the dependent variables conflict type and conflict length. These relationships are positively moderated by NGO participation.
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Figure 1. Conceptual framework.
H6b H6a H5b H5a Community autonomy Sustainability focus Conflict type Conflict length NGO participation NGO participation H1 H2 H3 H4
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4. Methodology
4.1 Sample and Data Collection
This study uses a cross-sectional research design to study the relationship between the recognition of indigenous communities by the government and the sustainability focus of MNEs, NGO participation and conflict type and length between communities and MNEs. The analysis is conducted at the firm-level and draws on 706 cases located in more than 55 countries around the globe. The conflicts take place across North and South America, Africa, Asia and Australia. Table 6 displays a list of all countries included in the dataset. The data selection and review is performed by a group of students, in which each individual collects and verifies data of 50 cases. The case selection is based on the type of industry, including resource extraction industries, such as mining, oil and gas extraction, but also agriculture, utilities and manufacturing. However, most conflicts are related to companies in the resource extracting industry, as this sector is generally associated with involvement in community conflict (Lertzman & Vredenburg, 2005; Mutti et al., 2012). The data is collected from databases, such as EJOLT, Intercontinentalcry, Business & Human Rights Resource Center, Minewatch, and the American University of Washington Database. Further websites are used to gather additional information on the conflict cases. After the case collection, the information is coded according to a coding manual, including variables of each group member.
4.2 Dependent
Variables
The dependent variable in this research analysis is conflict and can be studied using various dimensions (Getz & Oetzel, 2009). This study uses the two dimensions length and type of a conflict, as the duration of conflicts can vary (Getz & Oetzel, 2009) as well as the degree of violence (Kemp et al., 2011).
Conflicts can be either short or long (Getz & Oetzel, 2009). The length of a conflict is measured by using a binary categorical variable based on the duration variable where short conflicts are coded as 0 and long conflicts are coded as 1. To define the difference between short and long conflicts, the median of the overall sample is used, which is 84 month. Conflicts taking place for a longer period of time are defined as long conflicts, whereas conflicts with a shorter duration than the median are defined as short conflicts. 161 ongoing cases are then removed from the sample, because it cannot be determined whether they are short or long, leaving 545 cases for the analysis. In Ecuador, for example, the government shut down the
