Conflict Resolution between Multinational firms and Indigenous Communities
An Analysis of Indigenous Community’s Autonomy, a Firm’s Policy towards Indigenous communities and Co-management in Conflict Resolutio
Student: Fleur van Iersel Student number: 10912541
Supervisor: Dr. Ilir Haxhi Study: MSc Business Administration
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TATEMENT OF ORIGINALITY
I, Fleur van Iersel, declare that this master thesis is my own work and has not been submitted in any form for another degree or diploma at any university or other institute of tertiary education. Information derived form the published and unpublished work of other has been acknowledged in the text and a list of references is given.
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ABLE OF
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ONTENTS
STATEMENT OF ORIGINALITY ... 2
ABSTRACT ... 4
1. INTRODUCTION ... 5
2. LITERATURE REVIEW ... 9
2.1 INDIGENOUS COMMUNITIES ... 9
2.2 MULTINATIONAL FIRMS THAT DO BUSINESS WITH INDIGENOUS COMMUNITIES ... 10
2.3 CONFLICT RESOLUTION ... 11
2.4 CO-MANAGEMENT ... 11
2.4.1 Why use co-management ... 13
2.4.2 When does co-management work? ... 14
3. THEORETICAL FRAMEWORK ... 16
3.1 THE THEORETICAL FRAMEWORK ... 16
3.1.1 Autonomy of the community ... 17
3.1.2 Firm’s Policy ... 17
3.1.3 Co-management ... 18
3.1.4 Mining industry ... 19
4. FRAMEWORK MODEL ... 21
5. DATA AND METHODS ... 22
5.1 SAMPLE ... 22
5.2 DATA COLLECTION ... 22
5.3 METHOD ... 22
5.3.1 Dependent variable ... 23
5.3.2 Independent variables ... 23
5.3.3 Moderator ... 23
5.3.4 Control variables ... 24
5.4 METHODS & ANALYSIS ... 24
6. STATISTICAL ANALYSIS AND RESULTS ... 25
6.1 DESCRIPTIVE STATISTICS AND CORRELATION ... 25
6.2 REGRESSION ANALYSIS ... 26
7. DISCUSSION ... 28
7.1 FINDINGS ... 28
7.2 THEORETICAL IMPLICATIONS ... 29
7.3 PRACTICAL IMPLICATIONS ... 30
7.4 LIMITATIONS AND IMPLICATIONS FOR FURTHER RESEARCH ... 31
8. CONCLUSION ... 33
9. TABLES ... 35
10. REFERENCES ... 39
A
BSTRACT
This thesis examines the effect of the community’s autonomy, the firm’s policy and co-management on conflict resolution between nations indigenous communities and corporations. In addition it also examines whether or not the effect of co-management on conflict resolution in the mining industry is different. Indigenous communities and multinational firms have a history of conflicts. Multinational firms are attracted by the often resource rich land of the indigenous communities and therefore like to do business there. These business practices often destroy or pollute the land of the indigenous communities, which leads to opposition from the indigenous community. Those conflicts are negatively impacting the development of the indigenous communities and on the other hand they are also negatively impacting a firm’s business practices. Resolution of these conflicts would benefit both parties. In order to find ways that resolve conflict this thesis builds upon previous literature, from which the majority is qualitative in nature. This study on the contrary aims to systematically identify determinants that contribute to conflict resolution. We argue that both characteristics of the indigenous community, as well as characteristics of the multinational firm have an important role in conflict resolution. Using a data sample of 348 worldwide and industry wide cases the relationship between length of conflict and autonomy of the community, a firm’s policy towards indigenous communities and co-management is explored. Later a data sample of 251 worldwide cases in the mining industry is used to conclude whether or not the effect of co-management on conflict resolution is different in the mining industry. Despite the fact that the statistical analysis did not significantly support the relationships between the dependent variable and the independent variables, this study does take the first step in schematically determining which possible factors have a positive effect on conflict resolution.
1.
I
NTRODUCTION
There are roughly 370 million indigenous people in the world, who constitute approximately 5% of the world’s population. There are over 5,000 different indigenous communities in 90 countries worldwide. Although there’s no generally accepted definition for indigenous people, they do have several characteristics in common, indigenous communities live within nations but have their own traditional lifestyle, legal system and a distinct culture apart from the national population (International Labour Organization, 2014). Very often these groups are isolated from the nation’s society. Some examples of indigenous communities include the Inuit, Native Americans, Masaai and Tribal peoples. Recent years have shown improved representation and quality of life for indigenous communities. Studies show that the ultimate goal for indigenous communities is autonomy (European Roma Rights Center, 2013). Autonomy improves communities’ quality of life and it also positively affects their development.
In the post-colonial era, imperial powers drew borders that have undermined the historical claims of indigenous communities across the world ever since (Shinn, 2015). Those communities lack governmental representation and do not have access to basic human rights (UN, 2010). There are organizations that have developed policies in order to protect the rights of indigenous communities. In the beginning of August 2016, the World Bank implemented a new policy regarding the rights of indigenous communities. While recent years have shown an improvement regarding the recognition of indigenous communities, this new policy threatens to undermine that progress. The new policy gives countries the option to be exempted from the policy regarding the recognition of indigenous communities when they are concerned that applying the policy would generate ethnic tension or be inconsistent with their national constitution. In practice countries tend to undermine the rights of indigenous communities in order to facilitate business projects (Gordon and Shakya, 2016). A core part of the identity and spirituality of indigenous communities is their land. “Indigenous communities see a clear relationship between the loss of their lands and situations of marginalization, discrimination of underdevelopment of the community” (The Kimberley Declaration, 2002).
Indigenous communities’ land often contains natural resources, which makes it interesting for multinational firms to exploit. Besides exploiting indigenous communities’ natural resources, multinational firms can also use an indigenous community’s land for a new pipeline or use their manpower. It is extremely difficult for a multinational firm to engage with indigenous communities, though it is vital, since failure can cause problems (Hunt, 2013). Especially in the mining industry, failed community relationships have caused millions of dollars in losses for multinational firms, e.g. Manhattan Minerals in Peru (Oxfam America, 2001). Various multinational firms have developed programs and policies to manage their relationship with indigenous communities; those multinational
firms comprehend that they need to go beyond legal restrictions (Hunt, 2013). Policies towards indigenous communities can improve prospects but do not guarantee success; a multinational firm might spend a lot of time and effort on a policy towards indigenous communities and then find the community unresponsive (Zandvliet & Anderson, 2009).
When a multinational firm wants to do business near or on the land of one of these communities, conflicts arise easily. These multinational firms often use or destroy the community’s land without sharing the benefits of the business with these communities. In many cases the natural resources are obtained from the lands of these indigenous communities. The past shows us several cases where this has led to conflicts, even violent ones. While specialists on conflict resolution emphasize that conflicts are inherent to human interaction, the conflicts that arise with indigenous communities are asymmetrical (Lutz, 2005). The indigenous communities are not protected by the rules under which the conflict materialized and must be resolved. It is because of these conflicts that indigenous communities are still underdeveloped and discriminated (The Kimberley Declaration, 2002). For multinational firms, these conflicts cause delays that are not accepted in the fast-moving business environment, as well as attract criticism from outsiders such as NGO’s.
An instrument that is used to decrease the amount of conflicts is co-management. Co-management can be explained as joint decision-making by the state, indigenous communities and corporations. Co-management agreements between indigenous communities, other stakeholders and state agencies offer substantial promise as a way of dealing with natural resource-based conflicts. These collaborative natural resource management arrangements can foster a sense of community empowerment as local stakeholders participate meaningfully in decision-making and benefit sharing. One important outcome of a significant research on conflict resolution between indigenous communities and multinational firms was the triad stakeholder model; this model preluded the recognition of the indigenous community as a relevant stakeholder in negotiations. Co-management is also seen as a way to deal with conflicts with communities because the communities’ interests are preserved through joint decision-making.
There have been many studies on the relationship between multinational companies and indigenous communities (Calvano 2008, Crawley, Sinclair 2003, Lertzman 2009) and the concept of co-management has been the subject of research as well (Borrini-Feyerabend, 2000). However, it is still not clear what the effect of co-management is on the probability of conflict resolution, since different studies show different results. Under which circumstances does co-management solve conflicts between indigenous communities and companies? Is it recommended for companies to use co-management when starting an operation on indigenous community’s soil? These crucial questions are still unanswered in current literature. What is required is a clear assessment of the benefits and limitations of co-management as a mechanism for promoting conflict resolution, peace building and
sustainable development and a clear understanding of how co-management affects the practices of multinational firms. In order to answer these questions, a main research question must first be posed, one that provides a clear answer on whether or not co-management is a solution for conflict resolution. Therefore the following research question is proposed: In what way do the autonomy of the indigenous community, the firm’s policy towards indigenous communities and co-management influence conflict resolution?
In order to see where the conflicts between indigenous communities and both multinational firms and governments come from and how it affects business practices, this research will focus on co-management and the factors that might have a moderating effect. The hypothesis is that there will be a negative relationship between co-management and conflict resolution. Conflicts between indigenous communities and multinational firms arise in a diverse range of industries; all of those firms apply dissimilar practices in their affairs with indigenous communities. The importance of indigenous communities’ land is great and therefore this study hypothesizes that conflicts that arise within an extractive sector, such as mining, tend to be more intense and have a reduced probability of conflict resolution. There exist many different indigenous communities, all with different characteristics; therefore co-management will not have the same effect in all situations. All indigenous communities seek autonomy; autonomy leads to greater self-determination (Daes, 1993). This self-determination involves greater decision-making power, which has a direct effect on co-management (Reconciliation News, 2010). Therefore it is interesting to look at the degree of autonomy of an indigenous community. When a community’s rules and culture are generally recognized, it is assumed that the autonomy is rather high. On the other hand, when a community is not recognized at all, the autonomy of the community is low. It is hypothesized that when the community has higher autonomy, the probability of conflict resolution is lower. With high autonomy, the differences in interest between the stakeholders will be greater than when the community has certain overlaps with the nation (Castro and Nielsen, 2001). Past experiences of a multinational firm with indigenous communities can help to increase the efficiency of the co-management practices (Castro and Nielsen, 2001). Therefore the effect of a firm’s policy towards indigenous communities on the relationship between co-management and conflict resolution will be researched. This study predicts that a policy towards indigenous communities will increase the positive effect of co-management on the probability of conflict resolution.
An explanatory quantitative study will be conducted that builds on 350 worldwide cases of conflicts between multinational firms and indigenous communities. The characteristics of these conflicts will be examined. Firstly the relationship between co-management, a community’s autonomy and a firm’s policy towards indigenous communities and conflict resolution will be analyzed and secondly the moderating effect of the industry type will be analyzed. This will be done with an extra data sample
conflict is, the higher the likelihood of violence becomes, so in this study conflict resolution will be measured by the duration of conflict. A regression analysis will be used to analyze and test the data. Empirical results will be presented by evaluating the descriptive statistics and correlations among the variables. The statistical models within this thesis will be assessed with assistance of the statistical package SPSS.
Unlike former studies on the topic of co-management and its effect on conflict resolution between indigenous communities and companies, this study will provide insight in the extent to which co-management helps to prevent and solve conflicts between indigenous communities, nations and companies. This study will clarify the relationship between co-management and conflict resolution and it will show whether or not factors such as the autonomy of the indigenous community and firm’s policy towards indigenous communities, have any influence on this relationship. This study will prove whether or not co-management practices are a good solution for conflict resolution between indigenous communities and companies. Furthermore, it will show how the autonomy of the community and the relationship between the community and the multinational company, affects the relationship between co-management and conflict resolution. This way, this study adds to existing literature with a clear assessment on the ongoing debate whether or not co-management practices increases conflict resolution. Moreover, it also addresses the effect of two independent factors, the autonomy of the community and the firm’s policy towards indigenous communities. This study contributes practically with a multi-level analysis of conflicts. The outcome of this study clarifies whether or not it is recommendable for companies to use co-management when starting an operation on indigenous community’s soil. Also, the results of this study will illustrate to what extent the autonomy of the community has to be taken into account. Furthermore, this thesis will emphasize whether maintaining a policy towards indigenous communities helps to increase conflict resolution. A decrease in conflicts between multinational firms and indigenous communities is beneficial for both the development of indigenous communities and the business environment of multinational firms. This thesis is structured as follows. First, the relevant literature regarding indigenous communities and co-management will be discussed. This section also mentions the research questions and the conceptual model. Secondly, the theoretical framework will be outlined, including different hypotheses testing the effects of co-management on conflict resolution. Next, the research design section will be stated, which discusses the data collection, the sample, the variables and the method of analysis. Finally, a summary of the statistical analysis, discussion of the findings, implications and limitations will be given.
2.
L
ITERATURE
R
EVIEW
This chapter looks at the relevant literature regarding indigenous communities, multinational firms and co-management. In order to answer the research question, it is important to know more about indigenous communities. The autonomy of the indigenous communities will be discussed in order to know whether or not this autonomy has an effect on the relationship between co-management and conflict resolution. The other party, namely the multinational firms that do business with those communities, will be examined, in particularly the policies of those firms, to see if policies have an effect on the relationship between management and conflict resolution and whether or not co-management in the mining industry has a different effect on conflict resolution. Thirdly, the conflicts that arise between the indigenous communities and those multinational firms will be looked at. Lastly co-management will be explained thoroughly and the effect it has on the conflicts between indigenous communities and multinational firms will be shown.
2.1
I
NDIGENOUSC
OMMUNITIESGlobally there exist over 370 million indigenous people in more than 5000 different communities (UN, 2009). There is a lot of diversity between indigenous communities and therefore there is no generally accepted definition of what an indigenous community is. However there are distinct characteristics that differentiate indigenous communities from other populations. The indigenous communities’ land is often the core of their identity and a fundamental element of their religious, spiritual, cultural and physical survival (UN, 2009). Indigenous communities have a historical continuity with pre-invasion and pre-colonial societies developed their territories and consider themselves distinct from other sectors of the societies prevailing on their territories (UN, 2009). Over the years the recognition of the rights of indigenous communities has increased. This process has been brought about by events such as the establishment of the United Nations Working Group on Indigenous Populations in 1982, the subsequent development of a United Nations Draft Declaration on the Rights of Indigenous Peoples and the increasing importance of indigenous social movements and non-governmental organizations dedicated to indigenous rights (Ali & Behrendt, 2001).
For indigenous communities the ultimate goal is autonomy, since it helps to improve their development and quality of life (European Roma Rights Center, 2013). Autonomy is a method for indigenous communities to afford internal self-determination. Autonomy can be defined as degree of control over one’s own affairs, however in relationship with indigenous communities, autonomy is more than just self-determination (Gilbert and Castellino, 2003). The autonomy of an indigenous community will lead to a better relationship with the multinational firm and better engagement in dialogue about the businesses (Castro & Nielsen, 2001). This better dialogue will improve the
co-management practices; therefore higher autonomy of the community will have a positive effect on the relationship between co-management and conflict resolution.
2.2
M
ULTINATIONAL FIRMS THAT DO BUSINESS WITH INDIGENOUS COMMUNITIESClearly indigenous communities are only one side of the problem; the other party is the multinational firm that does business on the lands or territory of the indigenous community. The land of indigenous communities is often rich in natural resources, which makes it interesting for multinational firms to exploit. Private sectors see the unexploited traditional lands of indigenous peoples as an opportunity for economic growth and exclusive profits. However, the distribution of the benefits and the negative impacts of the industry is not fair. History shows that the relationship between multinational firms and indigenous communities is often characterized by conflicts and violations of fundamental freedoms and human rights (UN, 2009). Indigenous communities are mostly impacted by extractive industries such as mineral, oil and gas extractions. Mega-projects such as mining are very likely to cause problems for indigenous communities. Those problems include environmental damage, loss of culture, traditional knowledge and livelihoods (Larmer, 2009).
Some multinational firms that have prior experience with doing business with indigenous communities have created policies. Those policies are a helpful guideline for multinational firms when doing business with indigenous communities and therefore increase efficiency (Castro & Nielsen, 2001). It is argued that efficiency enhances conflict resolution as a result of having higher quality data for decision-making processes; at least when both local and scientific expertise are taken into account (Singleton, 2000). This shows that a firm’s policy towards indigenous communities positively affects the relationship between co-management and conflict resolution.
It is possible for firms in all industries to get involved in conflicts with indigenous communities, however for some industries those conflicts tend to arise more and are more intense. One of those industries is the mining industry. The minerals boom of the 1980s led to an aggressive expansion of mine development in traditional lands, many of which were the domains of indigenous communities. Most of the more recent mining projects are located in traditional lands or frontier zones, among relatively isolated or marginalized indigenous communities (Howard, 1988). Relationships between the different actors in the mining industry are often characterized by conflicts. The consequences of mining practices are very high for the indigenous communities, very often their land and rivers, which are their primary source of food, are destroyed. This is illustrated by several examples of low-level conflicts such as the Bougainville rebellion in Papua New Guinea, the ecological disasters of the Ok Tedi mine and the human rights abuses in the Freeport mine in Irian Jaya (Taylor, 2011). Since the impact of mining practices on indigenous communities is very high, co-management used with mining firms is not likely to have a positive effect on conflict resolution.
2.3
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ONFLICT RESOLUTIONThe relationship between indigenous communities and multinational firms is characterized by conflicts. Several organizations have created policies and agreements in order to resolve these conflicts. Also, scholars have developed theories and practices in order to resolve conflicts between indigenous communities and multinational firms. This paragraph gives an overview of what has been researched and developed in order to resolve these conflicts.
National resource conflicts between firms, nation-states and indigenous people have received significant attention in the past years (Castro & Nielsen, 2001). Both the nation and the firm as well as the indigenous community all want to pursue their own interests to the fullest and in doing so, end up contradicting, compromising or even defeating the interest of the other (Castro & Nielsen, 2001). These conflicts can become devastating and possibly result in violence, resource degradation, the undermining of livelihoods and relocating of communities. If they are not properly addressed, such conflicts can make a whole society collapse (Suliman, 1999). On the other hand, the conflicts also have a negative impact on multinational firms. When the indigenous community is not collaborating with the multinational firm, it can cause delays. Besides this, the violation of indigenous communities rights may attract activist NGO’s that will make those violations public, which causes a bad reputation for the multinational firm (Wilsey & Lichtig, 2013).
Due to policies from global organizations such as the United Nations, the rights of indigenous communities are increasing. Local communities have been introduced as stakeholders into the relationship between states and corporations. This development has led to the widespread adoption by industry analysts of a three legged or triad stakeholder model (Howitt et al., 1996). This triad stakeholder model has served usefully as a provisional analytical device, allowing for some flexibility in the identification of key agents and their interests. Although the indigenous communities are recognized as stakeholders, they are still negatively impacted by the mining operations in many cases and therefore conflicts continue to arise. In these situations a conflict can be defined as “any relationship between opposing forces, whether marked by violence or not” (Deloges & Gauthier, 1997). Besides the triad stakeholder model, policies and mechanisms need to be introduced to manage disputes in order to address both the immediate manifestations of conflict and the underlying causes in an unbiased and continuous manner (Castro & Nielsen, 2001). The triad stakeholder model is a helpful method to recognize the indigenous community as a stakeholder, but it does not actively involve the indigenous community in the decision-making process. Recent research shows an increased interest in seeking innovative policy and institutional arrangement for resolving and managing natural resource conflicts in a peaceful and participatory manner.
All in all, conflicts are bad for both the indigenous community and the multinational firm and therefore there is interest in a method that helps to advance conflict resolution. Existing practices, such as the triad stakeholder model, are helpful but do not contribute to conflict resolution. One other way of dealing with conflicts is co-management. In order to know what the advantages of co-management exactly entail, it is important to first define co-management. In literature, the concept refers to a range of degrees of participation of the involved stakeholders in decision-making processes. At its core, the concept refers to the connections made across levels of political organizations (Reid et al., 2006). The term can be defined as a process of sharing power and responsibility between a governmental institution and local, indigenous communities (Berkes, 2009). Other analysts refer to co-management as the joint decision-making by the state and communities about one or more aspects of natural resource access or use. McCay and Acheson (1987) use co-management to signify local political claims to the right to share resource management power and responsibility with the state. Borrini-Feyerabend et al. (2000) on the other hand, state that co-management is a situation in which two or more social actors negotiate, define and guarantee amongst themselves an equitable sharing of the management functions, entitlements and responsibilities for a given territory or set of natural resources. Other definitions refer to a broader range of actors, including government agencies, local communities, local resource users, NGO’s, INGO’s and other stakeholders (IUCN, 1996). Moreover, co-management has been conceptualized as being a form of adaptive management, taking into account that co-management is intrinsically dynamic in nature, maturing in time, involves complexity and requires learning and flexibility in order to cope with this complexity (Armitage, 2007). These learning processes are necessary in order to solve conflicts in several situations generated by change (Berkes, 2007). In short, while a number of authors have drawn the attention to the need of a more precise definition of co-management (Pinkerton, 2003), a single definition of co-management remains evasive. The authors Plummer and Fitz (2004) suggest using co-management as an overarching term, while specifying the amount of power that is shared and which stakeholders are involved. In this study, co-management will be used as an overarching term where the power lies in the involvement in the decision-making process before a business project has started, and where the stakeholders are the indigenous communities and the multinational firms. Past conflicts show that governments are often corrupt, despite their laws on the recognition of the rights of indigenous communities (Hand, 2005). The contribution of the government to conflict is unclear, since despite their policies and official statements, in reality their actions frequently don’t correspond with these official policies and statements. This study will focus on co-management between indigenous communities and multinational firms. Although these stakeholders hold different interests, the fundamental assumption is that sharing authority and decision-making will enhance the process of resource management, making it more responsive to a range of needs (McCay & Jentoft, 1998). There are several forms of co-management varying from weak to strong. It depends on how authority and responsibility are shared between partners. The sharing of power can be conceptualized in a hierarchical way and varies
between sharing no power at all, a centralized management by government, informing and consulting without sharing power, increasing amounts of power sharing and community self-control (Berkes et al., 1991). The IUCN defines the indigenous co-management of protected areas as collaboration with the indigenous communities as stakeholders. In collaborative management, the formal decision-making authority, responsibility and accountability usually rests upon one single agency (which is often a non-governmental agency). However, the agency is required to collaborate with other stakeholders. In its weakest form, collaboration entails informing and consulting stakeholders. In its strongest form, collaboration entails a multi-stakeholder body, creates several proposals, concerning for example protected area regulation and management, and this will later be submitted to the decision-making authority.
2.4.1 WHY USE CO-MANAGEMENT
In order to answer the research question and know whether co-management can resolve conflicts between indigenous communities and multinational firms, it is important to know how co-management works and how it affects conflicts.
Co-management seeks to increase the extent of global protected areas and empower the public support for protection of the natural resources (Borrini-Feyerabend, 2004). Co-management arrangements are believed to entail advantages in effective management of natural resources and in this way they lead to sustainable use and support the management of conflicts over the use of resources. These arguments for adopting co-management are usually based on the value of achieving efficiency, legitimacy and equitability (Houde, 2007). Moreover, local participation increases efficiency through helping achieve adequate monitoring results and stricter enforcement of rules (Singleton, 2000). The argument is mainly based on the assumption that working with complementary forms of knowledge and responsibility at a local and national level can heal the weaknesses of both a top-down or community-based approach to natural resources management. Collaboration in decision-making processes increases the perception of rules as legitimate at the local level and thus greater compliance is achieved. Singleton (2000) underlines that although co-management does not eliminate conflict, it does have the potential of restructuring established relationships, opening possibilities for new forms of constructive engagement. In the last three decades collaborative arrangements for environmental management between the multinational firms and indigenous communities have been promoted as a governance model that guarantees sustainability of resource usage, decentralizes management decisions and moreover reduces conflict, which can be the result of competing property rights over land and its resources. Although co-management agreements may enact restrictions on natural resources access or use, their main purpose may not be preservation or resource protection. Co-management denotes a collaborative institutional arrangement among diverse stakeholders for managing or using a natural resource.
2.4.2 WHEN DOES CO-MANAGEMENT WORK?
A large part of the literature on co-management focuses on the conditions needed for the success of co-management and under certain circumstances co-management practices only make the collaboration between indigenous communities and multinational firms worse (Pomeroy, 2007). Those conditions are important to know in order to answer the research question and know whether or not co-management has a positive effect on conflict resolution.
Co-management agreements between indigenous communities and multinational firms offer substantial promise as a way of dealing with natural resource-based conflicts. However, success is in the eye of its beholder and therefore several scholars have warned about co-management having negative effects on the collaboration between stakeholders (Nadasy, 2003). After all, co-management is a dynamic process, meaning that both the identification of successful outcomes and the patterns of conditions leading to success will change over time (Brockington et al., 2008). Moreover, it has been emphasized that local conditions for success are specific to social, economic and ecological contexts (Spaeder and Feit, 2005). In order to be able to understand historical, regional and a global context it is important to cherish successful collaboration between indigenous and conservationist interests (Brockington et al., 2008). Elementary conditions for success include respect, building of trust, building of institutions and capacity (Carlson and Berkes, 2005). Also, the learning-by-doing process is very important (Borrini-Fereyabend, 2004).
There are several types of variables leading to successful co-management, which are often divided into exogenous and endogenous sources at three different levels. Firstly there’s the supra community and firm level, enabling policies and legislation, provision of financial and technical assistance. Secondly, there’s the community level: the participation by those who are affected, local leadership and community organisations. And thirdly, there’s the household level, which is concerned with incentives and the benefits that should outweigh the costs (Berkes and Folke, 2002). Other conditions that are vital for the success of co-management and conflict prevention include adequate financial sources, accountability, and assistance by external agents, the building of quality relationships such as social networks, trust and leadership. Other conditions are flexible institutions, effective conflict management, social learning and the existence of bridging organisations (Folke et al., 2005). Examples of bridging organizations are associations, networks and social movements (Brown, 1991). In short, these conditions need to be in place in order to facilitate the creation of successful co-management. Incorporation of traditional ecological knowledge in decision-making along with mutual social, political and economic benefits are vital for the existence of co-management and conflict prevention (Wietzner and Manseau, 2001).
Moreover, several scholars have underlined the importance of relationship building among the several stakeholders as the core of co-management (Plummer and Fitz Gibbon, 2006). A certain amount of
time and effort is elementary for building respect and trust among the several stakeholders. Furthermore, bridging organizations are essential to create qualitative relationships among the actors. Especially when it comes to cross-cultural co-management within indigenous communities, the cultural and power differences require effort in building mutual understanding (Natcher et al., 2005). Individuals as well as institutions play an influential role in connecting local, national and international levels in order to generate collaboration in resource management.
Existing literature shows that a lot of research on the topic has already been done. Indigenous communities’ rights are often neglected and for most communities’ right to be autonomous which is their ultimate goal is not or only partial recognized. Their land, which is important for their identification, is often exploited and destroyed by multinational firms that facilitate business projects and want to make exclusive profits without sharing the benefits. Because of the unequal distribution of benefits, conflicts between indigenous communities and multinational firms arise. Some multinational firms have policies towards indigenous communities; those policies increase the efficiency of doing business and help to solve conflicts. Several methods have been created to increase conflict resolution. Nevertheless, conflicts do still arise and the problem remains to be solved. Co-management is a new method that is created in order to decrease conflicts. Co-management involves the indigenous community as a stakeholder that has an equal amount of decision-making power. Co-management has already been researched, but existing literature does not show whether the degree of autonomy of the community has any influence on co-management. Current research also does not involve a firm’s policy towards indigenous communities, when the relationship between indigenous communities and multinational firms is discussed. Therefore a theoretical framework is established, which takes into account the effect of co-management on the conflict resolution and also includes a community’s autonomy and a firm’s policy towards indigenous communities. This theoretical framework also looks at the mining industry in comparison with other industries. In the next chapter this framework will be explained more thoroughly.
3.
T
HEORETICAL FRAMEWORK
Current research has provided the basis for this research but with only existing literature an answer to the research question: “In what way does the autonomy of the indigenous community, the firm’s policy towards indigenous communities and the industry type influence the effect of co-management on conflict resolution?” cannot be given. In this chapter a theoretical framework will be established to provide an answer to the research question. With this framework the relationship between the dependent and independent variables is explained and hypotheses are created that provide a predicted answer to the sub-questions. Firstly, the effect of co-management on conflict resolution will be examined. In order to know whether autonomy, a firm’s policy and the mining industry have an influence on the relationship between co-management and conflict resolution, it is vital to know how the relationship between co-management and conflict resolution is without these moderators.
3.1
T
HE THEORETICAL FRAMEWORKCo-management is used to decrease conflicts between indigenous communities and multinational firms. Co-management, which is a joint-decision making process, tends to bring the two parties closer together and therefore facilitates awareness of all interests that are involved. Instead of agreements where indigenous communities have a weak negotiating position against the multinational firms, co-management strives for joint decision-making where each party has an equal input. Co-co-management will lead to different business practices, where not only the goals of the company and the government are taken into account but also the rights and needs of the indigenous communities. Conflict resolution with the indigenous community will also be affected by co-management since the voice of the indigenous community is being heard from the beginning and therefore the violation of the community’s rights will either diminish or even disappear completely. Co-management also ensures understanding of each other’s needs and rights, which also increases conflict resolution. Business practices will be adapted since there is an increased insight in the interests of the other party and future conflicts will be decreased similarly. An autonomous community, a community that has nothing or very less to do with the nation, has different rules, different leaders, different cultures and often a different language. These autonomous communities will react differently to co-management practices and other stakeholders will react differently to an autonomous community than when that particular indigenous community already has some overlap with the nation (Daes, 1993). Furthermore, a firm’s policy towards indigenous communities implies that the firm is more aware of the needs of the indigenous community and the step towards joint decision-making will be less big. These prior experiences will lead to better management and therefore also affect the relationship between co-management and conflict resolution (Castro and Nielsen, 2001). It is very likely that fewer problems will occur while establishing the co-management and therefore conflict resolution will increase.
Different factors could change this relationship and in this study we will look at the mining industry as moderating variables. These variables have been chosen because of the lack of research and literature that included these variables, as well as their high relevance within the topic.
3.1.1 AUTONOMY OF THE COMMUNITY
One major characteristic contributing to the decision-making power of indigenous communities is their autonomy. Full autonomy is what all indigenous communities strive for, but what not many of them actually have. Indigenous communities can be autonomous on different levels. In this study, a indigenous community with no recognition at all, has no autonomy while a indigenous community with recognized rules and rights is seen as autonomous.
A report by the World Conservation Union Working group states that community involvement is proving to be a cost-effective approach to stabilize practices (Poffenberger, 1996). The collaboration with communities is very often rule rather than exception. This study assumes that when the indigenous community has higher autonomy, the co-management practices will be less successful than when the community is less autonomous. With high autonomy the differences in interest between the stakeholders will be greater than when the community has certain overlaps with the nation. Castro and Nielsen (2001) argue that an autonomous community where the power is decentralized rather than joint, can add to the power of the central government.
When a community is autonomous, this community has self-determination, which leads to greater decision-making power (Daes, 1993). In Mexico, the recognition and autonomy of indigenous communities such as Oaxaca and the Huicholes decreased conflicts. Those communities felt heard when they were given autonomy and therefore were more open for collaboration with other parties. It is expected that higher autonomy of the communities will positively affect the relationship between co-management and conflict resolution. Therefore the following hypothesis is proposed:
Hypothesis 1: Higher autonomy of the communities will have a positive effect on conflict resolution.
3.1.2 FIRM’S POLICY
Some firms have a policy towards indigenous communities. Most of those firms have prior experience with indigenous communities or have researched indigenous communities and have developed a guideline on how to deal with indigenous communities. Co-management regimes can lead to conflicts when there is a lack of local participation. Consultation between the different stakeholders provides an opportunity for people to share their interests and knowledge. These different interests and knowledge sources offer decision-makers a wider insight in the issues, concerns and needs (Ingles et al, 1999). This study assumes that a prior relationship between the indigenous community and the company results in better and more efficient co-management practices. Past experiences can help to increase the
management on the length and degree of the conflict. When the consulting is performed optimally, this process is a form of top-down resource management. While in the worst case, when the consulting is performed less than optimally, people find that they are members of advisory groups from which no significant advice is taken. It is assumed that when there is prior experience in working together, the co-management practices will be more successful (Castro & Nielsen, 2001).
Singleton (2000) shows that in the Pacific Northwest case, co-management would not have worked without the firm having clear internal policies. In this case the managers that used co-management and collaborated with the indigenous community were rewarded and those who did not were punished. It is expected that a firm’s policy will have a positive effect on the relationship between co-management and conflict resolution. Therefore the following hypothesis is proposed:
Hypothesis 2: A firm’s policy towards indigenous communities will have a positive effect on conflict resolution.
3.1.3
C
O-
MANAGEMENTCo-management is a possible resolution for conflicts between indigenous communities and multinational firms. With co-management the indigenous community is actively involved in the decision-making process and therefore the community can effectively express their opinion.
McCay and Jentoft (1998) on the other hand think that despite the diversity of interests between the different stakeholders, the fundamental assumption is that sharing authority will lead to enhancement of the decision-making process and makes it more responsive to a variety of needs. Although the thoughts of Castro and Nielsen (2001) this research expects that co-management practices decrease the length and degree of conflict. Co-management ensures awareness of each other’s needs and interests and therefore will provide a greater understanding between the different stakeholders. This greater understanding will cause business practices to be adapted. According to Ingles et al. (1999) increased stakeholder participation will enhance the efficiency of common property resource management. They argue that people will respond in a positive manner to material and social incentives. The Food and Agriculture Organization declares: “The promotion of collaborative management is based on the assumption that effective management is likely to occur when local resource users have shared or exclusive rights to make decisions about and benefit from recourse use.” When the community has the power to make decisions and also benefit from the mining practices, there will be greater involvement of the community and this will lead to fewer conflicts. Furthermore, increased sharing of power over decision-making processes through co-management has the potential to better align decisions with local realities and needs, in this way generates a reduction of conflict (Mabee and Hoberg, 2006). Despite the fact that co-management agreements offer a promise as a way of dealing with conflicts between indigenous communities and multinational firms Castro and Nielsen (2001) claim that
co-management regimes can set new conflicts into motion and let old conflicts escalate. They state that the result of co-management will increase the state’s control rather than power sharing.
The Pacific Northwest case, researched by Singleton (2000), shows an interesting outcome of the use of co-management. In this region the Native Americans depended largely on fishing in order to survive. Later, several firms were established on soil that the indigenous community used to fish and those firms prohibited the indigenous community to fish on their grounds. A conflict arose, since the community couldn’t survive without the fishing. Through co-management a resolution was found, where the indigenous community was allowed to fish as much as they needed to survive. This case illustrates that in order to increase the likelihood of collaboration; managers should consider the well-being from the indigenous communities. It is expected that co-management has a positive impact on conflict resolution and therefore the following hypothesis is proposed:
Hypothesis 3: Co-management practices have a positive effect on conflict resolution.
3.1.4
M
INING INDUSTRYMining is the process or business of extracting ore or minerals from the ground. Mining has a lot of different effects on the environment including erosion, sinkholes and the contamination of water (Larmer, 2009). Besides those effects, there’s also a lot of waste involved by mining practices, one ton of gold for example produces 200.000 tons of waste. Indigenous communities attach great value to their lands and any damage to their lands will have great impact on their lives therefore, indigenous communities will be more impacted by multinational firms in extractive industries.
Lots of industries can cause damage to indigenous communities and their lands however the mining industry is different because of its inherent obsolescence and their monopsony power. In other words, the mining industry generally has a large leverage where they do business, since they are often the only source of employment, very often indigenous people are used to work in mines (Moody, 1992). There are several cases where mining practices led to conflicts with indigenous communities, such as the civil war in Sierra Leone with the rebels about diamond mining, the strife in Congo about diamond and cobalt mining and the continuous strife in Angola, which is one of the most resource-rich countries in the world (Larmer, 2009). Since mineral resources are a source of profit for governments, they will not protect the rights of the indigenous community, while other businesses that are less beneficial for the state might encounter more resistance from the government.
An example where the mining business led to enormous conflicts is the Irian Jaya case, where the actions of mining company Freeport McMoRan had major consequences for the Amungme community in Papua, Indonesia. Their mining activities resulted in steepened slopes, earthquakes and heavy rainfalls. The waste produced by mining activities has polluted the rivers, land surfaces and groundwater. Over two dozens of people have been killed or died because of starvation and over a
hundred homes and churches were destroyed (Thompson, 2009). The Irian Jaya case shows that conflicts between indigenous communities and mining companies are very intense. It is expected that co-management will have a less positive effect on conflict resolution when it’s done in mining business, therefore the following hypothesis is proposed:
Hypothesis 4: Co-management in the mining industry will be less successful in the resolution of conflict than in other industries.
In this chapter the theoretical framework is explained, the relationship between the variables are explained and the hypotheses have been stated. The next chapter will provide a schematic view of the theoretical framework, to give a more clear understanding of the analysis.
4.
F
RAMEWORK MODEL
In order to get a clear understating of the theoretical framework and the relationships between the variables, this chapter shows the framework model. Arrows point out the influence of variables while the + and – show if this influence is either positive or negative.
Figure 1 represents the analysis of the resolution of conflict between the indigenous communities and the multinational firm. The variables mining and policy are characteristics of the multinational firm while the variable autonomy is a characteristic of the indigenous community. Co-management is expected to have a positive effect on conflict resolution. In this study conflict resolution is measured by the length and degree of conflict. The firm’s policy and the communities’ autonomy are also expected to have a positive effect on conflict resolution. Mining is a moderating variable and it is expected that it will have a negative effect on the relationship between co-management and conflict resolution.
In this chapter the framework model is created, which provides a clear and schematically understanding of the relationships described in this study. The following chapter explains in detail which variables are used, how the data is gathered and how it is analyzed.
5.
D
ATA AND
M
ETHODS
This chapter explains the data and the methods used to gather and analyze this data. Firstly, a clear understanding will be provided on what data is necessary to answer the research question and an explanation will be given on how the data will be gathered and how this data will be analyzed. Next, the hypotheses will be given and explained.
5.1
S
AMPLEThis analysis of the relationship between co-management and the resolution of conflict between indigenous communities and multinational firms was conducted at the level of the firm. In order to answer the research question a sample was drawn from a conflicts between indigenous communities and multinational firms. This study focused on conflicts all around the world that arose from the 1957 onwards in all industries. In the other data sample that is used, only the cases that operated in the mining industry were used. In this way the analysis of both samples can be compared and a conclusion can be drawn.
5.2
D
ATA COLLECTIONFor the purpose of this study the collected data was codified according to similar characteristics. The cases of conflict between indigenous communities and multinational firms were sources from the Environmental Justice Atlas (EJ Atlas) Database. EJ Atlas is a teaching, networking and advocacy resource. This database was used because it is an objective source that gives a clear overview of conflicts between indigenous communities and multinational firms. EJ Atlas provided databases and reports of conflicts between indigenous communities and multinational firms and it also redirected to external articles on the topic. Complementary information on indigenous rights was also found in UN reports.
5.3
M
ETHODIndividual cases of conflict were analysed through the codification of different variables and characteristics. Variables were mostly derived from qualitative studies and the relevant information was coded as common variables. These cases all were conflicts between indigenous communities and MNE’s. Data was gathered from 348 cases of conflict between multinational firms and indigenous communities, all around the world from 1957 onwards in both the mining industry and other industries. The relevant variables and characteristics were coded into a table.
5.3.1 DEPENDENT VARIABLE
The dependent variable is conflict resolution, which will be measured by the length of the conflict. The length of conflict is coded in number of months and is measured by the beginning and end date of a conflict. However, the majority of the cases were on going, for those cases the end of the timeframe November 2015 was count as the end date. It is a continuous variable.
5.3.2 INDEPENDENT VARIABLES
Co-management is the first independent variable in this study. Co-management will be measured by the fact whether or not involvement took place between the MNE and the indigenous community before the business project started. Dummy variables were created where 1 is yes, for involvement of the indigenous community and 0 is no involvement of the indigenous community.
The second independent variable is the degree of community autonomy. This is the extent to which an indigenous community has autonomy within the country. This continuous variable is coded from government regulations available online as a stage in continuum as follows:
1. No autonomy at all 2. Cultural recognition
3. Limited recognition of rules, meaning that they can issue some minor rules like marriages, recognized as valid by the government
4. Partial recognition of rules or right of consultation
5. Almost full recognition of community rules by government with autonomy or right of consent. The last independent variable is the multinational firm’s policy towards indigenous communities. Some corporations take the views of the indigenous community explicitly into account while other operate completely isolated from those communities. This variable is measured in two ways, firstly on the fact whether or not the corporation mentions the community in their policy. This variable will be coded from company websites and reports in a continuum as follows:
1. No mention of community consent
2. Vague statements like “supports consultation”
3. Strong statements like “supports prior and informed consent”
5.3.3 MODERATOR
The moderator of the relationship between co-management and conflict resolution between indigenous communities and multinational firms is the industry type. Industry was used to examine whether or not the mining industry showed a difference in effect on the relationship between indigenous communities
and multinational firms. A dummy variable was created with 1 for a case in the mining industry and 0 for a case in other industries.
5.3.4
C
ONTROL VARIABLESControl variables at the community, firm and county level controlled the analysis of this study. At the community level, population size in terms of community members was used as a community level control. The experience of the firm in the community’s country, in terms of number of years was used as a firm level control. Finally the average country voice & accountability was calculated as an average of the World Bank’s 2013 figures for World Governance Indicators (The World Bank, 2013).
5.4
M
ETHODS&
A
NALYSISThe relationship between the dependent and independent variables can be expressed in the following statistical equation:
𝑌 = 𝛽0 + 𝛽1𝑋1 + 𝛽2𝑋2 + 𝛽3𝑋3 + 𝜀
Here Y represents the response variable or dependent variable, the length of conflict. The independent variables, Co-management, Autonomy and Firm’s Policy are represented by 𝑋1, 𝑋2, and 𝑋3 respectively. The parameters in the equation are 𝛽0, which is the Y-intercept and 𝛽1, 𝛽2, and 𝛽3 which are the regression coefficients. The regression coefficients represent the slope of the line relating the dependent variable Y to the independent variables 𝑋𝑖. Finally
𝜀
stands for the residual error, which is an unmeasured variable. It can be explained as the difference between the estimated 𝑋𝑖 and the actual 𝑋𝑖 (Bougie, Sekaran, 2009).These relationships were further explored using the statistical package, for data analysis, SPSS. This package is chosen because if its full set of statistical tests and easy access to descriptive statistics and frequencies (Field, 2008). The relationship between the variables were explored using regression analysis. A regression analysis is a statistical model for estimating the relationships among variables (Hazewinkel, 2001). In this study multiple linear regression is used, since there are more independent variables.
6.
S
TATISTICAL
A
NALYSIS AND
R
ESULTS
In this chapter the data that was gathered in order to answer the research question will be analysed. The analysis of this data can help to see whether or not significant relationships exist between the variables and if this relationship is either positive or negative.
6.1
D
ESCRIPTIVE STATISTICS ANDC
ORRELATIONTable 1 shows the descriptive statistics of the variables in the full sample. These descriptive statistics show a mean value for Length of Conflict of 102.91 that implies that the average conflict lasts approximately 103 months, which is almost 2 years. The mean for Community Autonomy is 3.93 this means that on average the indigenous communities have partial recognition of rules or right of consultation. This shows that indigenous communities indeed are on its way to get more recognition but are not fully recognized yet. The mean of Co-management is 0.29; this number shows that the majority of cases did not use co-management in order to resolve conflicts. The mean of Firm’s Policy is 2.08, this number shows us that the average firm does have a policy towards indigenous communities but it only consists of vague statements without explicit mention of consent. Firms have a mean Experience in Years, with indigenous communities, of 40.11. This shows us that the average firm has over 40 years of experience with indigenous communities; this result is supported by the fact that the average firm does have a policy towards indigenous communities.
Table 2 shows the descriptive statistics of the variables in the Mining sample. Surprisingly the mean value for Length of Conflict is 98.19, which is lower than in the full sample. The mean Experience in Years, is with 44.38 slightly above the mean in the full sample in the mining industry. This implies that firms in the mining industry have more experience with indigenous communities than firms in general. The mean Firm’s Policy is also somewhat higher in the mining industry. This implies that mining firms more often and stronger policies towards indigenous communities have. This result is in line with the former that firms in the mining industry have more experience with indigenous communities. What is interesting is the mean of Co-management in the mining industry, with 0.13 it is significantly lower than in the full sample. This implies that co-management is less often used in the mining industry than in the full sample.
The relationship between the independent variables and the dependent variable is the main purpose of this analysis; a relationship among the independent variables is not favourable. In order to make sure that the independent variables are not strongly related, a test is done to check the multicollinearity of the variables (Field, 2005). Table 3 and 4 show the Variance Inflation Factor (VIF) that is used as a measurement of possible multicollinearity between variables. The VIF shows that multicollinearity is not an issue in this model, since all values are under 5.
The relationship between the dependent variable and the independent variables is showed by the correlation between variables. Table 5 shows the correlation between the variables in the full sample. A Kendall’s Tau bivariate test was chosen to test the relationship between the variables, since it is a statistics test to measure the ordinal association between measured quantities (Field, 2005). The data used in the regression analysis were approximately 350 cases, from which many variables were categorical. The correlations show the relationships between the variables, but in order for the correlation to be significant, the significance factor should be below 0.01. Table 5 shows that the dependent variable Length of Conflict was significantly correlated with the Community Autonomy, the Community Population and Voice and Accountability. The correlations between Length of Conflict and Community Autonomy and Community Population were both positive, meaning that the greater the autonomy and population of the community, the longer the conflict lasted. The correlation between the Length of Conflict and Voice and Accountability was negative, meaning that the greater the voice and accountability in a country, the longer the conflict lasted. There were also positive correlations between Co-management and a Firm’s Policy and Voice and Accountability, meaning that the stronger a firms policy and the greater a country’s voice and accountability, the chance of the use of co-management is higher. Lastly there is also a negative correlation between Voice and Accountability and Community Autonomy, meaning that the higher a country’s voice and accountability the lower a community’s autonomy.
Table 6 shows the correlation between the variables in the mining sample. A difference can be seen immediately since in the mining sample there are only two significant correlations. The Voice and Accountability was negatively correlated with Community Population, meaning that the higher the voice and accountability the lower the community population. Co-management is positively correlated with a Firm’s Policy, meaning that the stronger a firm’s policy towards indigenous communities the more likely it is that co-management is used. This relationship is stronger than in the correlation of the full sample.
6.2
R
EGRESSIONA
NALYSISResults of the multiple regression analysis can be found in table 7 and 8. Table 7 shows the regression analysis of the full sample while table 8 shows the regression analysis of cases in the mining industry. The importance of the predictor can be read from the beta values (Field, 2005). Hypothesis 1 predicted that higher autonomy of the community would result in better conflict resolution and therefore shorter length of conflict. However as seen in table 7 and 8 the regression analysis shows that there was no significant relationship between the two variables. For a relationship to be significant the significance factors should be above the threshold of 0.05. The significance of the regression analysis in the mining industry returned an even less significant relationship. Hypothesis 2 predicted that when a firm has a clear policy towards indigenous communities it would lead to better conflict resolution and therefore
shorter length of conflict and Hypothesis 3 predicted that co-management would lead to an increased resolution of conflicts and therefore shorter length of conflict. Hypotheses 2 and 3 were also not supported by the regression analysis; both those relationships have no explanatory power since the significance factors are below 0.05. Hypothesis 3 predicted that co-management in the mining industry would be less successful compared to other industries, the regression analysis in table 7, for the full sample, show a negative relationship between Co-management and the Length of Conflict meaning that co-management decreases the length of conflict. Table 8 on the other hand, shows a positive relationship between co-management and the length of conflict, this implies that in the mining industry co-management increases the length of conflict. That is in line with Hypothesis 3, however these relationships are not significant and therefore have no explanatory power. Although the control variables Experience in Years and Voice and Accountability in fact are significant, it can be concluded that none of the independent variables are determinants of the Length of Conflict since the significant factors all were above 0.05.
Table 9 and 10 show the model summary for the regression in the full sample and the regression in the mining sample respectively. Table 9 shows an R2 of 0.083, this implies that the model only accounts for 8.3% of the variation in the dependent variable Length of Conflict. The model that only used cases form the mining industry did not show different results. Table 10 shows similar results, with an R2 of 0.098. There are no significant relationships between Length of Conflict and the Community’s Autonomy, a Firm’s Policy and Co-management. From this it can be concluded that these variables are not good determinants in the variation of Length of Conflict.
Despite the fact that there was no significance in the model, a conclusion can be drawn from these results. Firstly, Length of Conflict is not a function in conflict resolution between indigenous communities and multinational firms. A reason for the lack of significance in the models could be that other underlying variables are more dominant but were not considered in the data analysis of this study. Whether or not this is the case can be shown by a new correlation matrix that includes all collected variables. Table 11 shows the new correlation matrix. This matrix returned a few relationships that are significant and therefore worth examination. The relationships between Length of Conflict and Concentration of Power of the indigenous community, Inequality of the country, the Relationship between the MNE and NGO’s and the Relationship between the MNE and Civil Society organizations are significant. Future studies could research these relationships further.
