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MNEs and Indigenous communities conflict management

The impact of corporate social responsibility initiatives as conflict resolution tool, with

government interference and NGO partnership as moderators

Alessandro Di Venanzi

11373644

MSC Business Studies: International Management track

University of Amsterdam

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Statement of originality

This document is written by Alessandro Di Venanzi, I declare to take full responsibility for the content of this document. I declare that the text presented in this thesis 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 of the University of Amsterdam is responsible solely for the supervision of completion of the work, not for the content.

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Acknowledgment

I write this acknowledgement at the end of my thesis and almost at the end of my journey at the University of Amsterdam. I can say without a doubt that this has been one of the most important

formative experience of my entire life. Although this thesis is the direct results of my efforts, I wouldn’t be here if not for the help and support of other people along this journey. For that reason, I would like, first, to thank my supervisor Dr. I. Haxhi for his support, his patience and passion. It amazed me how, despite his very busy, almost global, schedule he always was there for me as well for my colleagues to provide guidance and answer our questions regarding our individual project. Second, I would like to thank my family, my friends and my fellow students of the International Management track for the love, the support and the laughs that they provided me all over the year. Finally, I would like to thank my grandad, whom I lost this year and to whom I dedicate this thesis, for the courage and dignity he displayed through the advancement of his illness. He never backed down. He never surrendered. I am proud to be called his nephew.

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3 Abstract

Thanks to the ever-increasing interest in sustainability, many companies have implemented more and more measure of corporate social responsibility (CSR) in the development of their operations. This evolution appears to involve all industries indiscriminately, although indubitably firms operating in the resource extraction sector (RE) have undertaken the biggest transformation. We wonder if this renewed incentive towards the adoption of CSR practices does apply to RE multinational corporations (MNCs) operating in indigenous communities (ICs) territories, as well. For that purpose, we will, first, assume that a CSR focus leads to conflict resolution between MNCs and ICs. To do that we examine the effect of CSR focus on a conflict between multinational enterprises and indigenous people in the resource extraction industry worldwide. Second, we assume that CSR focus leads to no conflict resolution, and this might change with the involvement of stakeholder, such as government and NGOs. We performed a quantitative cross-sectional research, including 497 cases. According to the findings, no matter how strong the focus on CSR, no notable effect seems to be produced over he length, the type, and the content of conflict between MNCs and ICs. Additionally, in almost all cases there was no significant interaction effect of the stakeholder involvement. Nevertheless, our findings possess strong relevance as it provides new academic and managerial insights for practitioners .In fact, our findings provide a higher context on geographic and corporate level in respect to conflict resolution. Finally, the results should be considered as an argument for implementing CSR by multinationals.

Keywords: Indigenous people – Resource extraction industry – Conflict – Corporate Social Responsibility

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4 Table of contents 1. Introduction……….7 2. Literature review………...12 2.1 Conflict………..………... 12 2.2 CSR………...14 2.3 Government Intervention………...16 2.4 NGO Influence……….19 3. Theoretical Framework………..21

3.1 Factors that Affect Conflict Resolution between RE MNEs and ICs……….21

3.2 Corporate Social Responsibility (CSR) Initiatives Effect on the Length, the content, and the Type of Conflict Between MNEs and ICs………...25

3.2.1 CSR Effect on the Length of Conflict………...25

3.2.2 CSR Effect on the Content of Conflict………..27

3.2.3 CSR Effect on the Type of Conflict………..28

3.3 Stakeholder Involvement and Effect on MNEs’ CSR Initiatives………...29

3.3.1 Governmental Interference, NGO and Indigenous Communities Partnership Effect on the Length of Conflict……….29

3.3.2 Governmental Interference, NGO and Indigenous Communities Partnership Effect on the Content of Conflict………..30

3.3.3 Governmental Interference, NGO and Indigenous Communities Partnership Effect on the Type of Conflict………...32. 3.4 Conceptual model………..33 4. Methods………...34 4.1 Variables……….34 4.1.1. Dependent Variables……….34. 4.1.2. Independent Variable………35 4.1.3. Moderating Variable……….………35 4.1.4. Control Variables………..36 4.2. Method of analysis………36 5. Results………..38

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5 5.1 Descriptive Statistics……….38 5.2 Correlation Matrix……….38 5.3 Multicollinearity………....40 5.4 Regression Analysis………..41

5.4.1. Regression Analysis – Length of conflict ………41

5.4.2 Regression Analysis – Content of Conflict………44.

5.4.3. Regression Analysis – Types of violence………..48

5.5 Appendix………...50 6 Discussion………58 6.1. Findings………....58 6.2. Limitations………59 7. Conclusion………...…60 8. References……….……..62 List of abbreviations

CSR: Corporate Social Responsibility IP: Indigenous people

IC: Indigenous communities RE: Resource extraction MNE: Multinational Enterprise MNC: Multinational Corporation NGO: Non-governmental organization IV: Independent variable

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6 DV: Dependent variable

MV: Moderating variable CV: Control variable

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7 1. Introduction

In the past few decades Multinational Enterprises (MNEs) operating in the extractive industry have been forced to search for natural resources in progressively distant locations. This trend is mainly due to the increase of human population at the global level, which in turn increases the scarcity of natural resources and fuels the exploration and exploitation of new territories. As outlined by Ballard and Banks (2003), the majority of those expansions took place in geographic areas, either greenfield territories or frontier zones, home to Indigenous Communities (ICs). To understand how, and to what extent, MNEs activities in those territories affects the lives of ICs we need first to clarify the concept of Indigenous Community itself. Although a universal definition of the concept does not exist, the United Nations have identified a series of unique characteristics that sets ICs apart from other kind of local communities:

self-identification as indigenous people, historical continuity with pre-colonial and/or pre-settler societies, strong link to territories and surrounding natural resources, distinct social, economic or political system and distinct language, culture and beliefs (UN Special Rapporteur on the Rights of Indigenous Peoples, 2016). In that regard, Smith (1999) argues that the identity of indigenous communities is, necessarily, tied closely to the history of colonialism. Almost every ICs in the worlds has been subject to the colonization of their lands and cultures, and the denial of their sovereignty, by foreign colonizing societies that have come to dominate and determine almost every aspect of their lives (Smith, 1999). MNEs do play a vital role in the context of the aforementioned societies and have, therefore, the power to significantly influence the shape and quality of life of indigenous communities as well (Pellow, 1999; Pellow, 2001) . Very often that influence produces negative effects for ICs. In particular, the latest report of the UN concerning the rights of Indigenous People highlights that an alarming number of investments in the mining, oil and gas, hydroelectric and agribusiness sectors have resulted in serious violations of indigenous populations rights all over the world in the past few years (UN Special Rapporteur on the

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Rights of Indigenous Peoples, 2016). Typically, those violations took place either with the approval or the indifference of the States and governments of the countries at issue. In fact, very often, those same States employ economic development policies aimed at the exploitation of energy, mineral, land and other resources which are predominantly located in the territories of indigenous populations (UN Special Rapporteur on the Rights of Indigenous Peoples, 2016). This persistence of conflicts between

indigenous people and multinational corporations is problematic for at least two reasons, ethical and economic in nature. Ethically speaking the violations of indigenous people’s rights represents, under the field of International Human Rights Law, a form of violation of the principle of self-determination recognized by the Charter of the United Nations, which states that all nations have the rights to freely choose their sovereignty and international political status, without being subject to any kind of

interference from any foreign pressure (Charter of the United Nations, 1945. Therefore, from a strictly ethical point of view, the illegitimate appropriation and/or exploitation of indigenous people’s territories and/or resources is akin to the violation of the rights of self-determination of a sovereign nation, even when approved, or not sanctioned, by the local government. From a more economic point of view, the continuation and/or tightening of conflicts between indigenous people and MNEs represents a net loss, in terms of collective value, at the global level. In fact, what can be identified as traditional ICs

territories encompass up to 22 percent of the world’s land surface and they coincide with areas that hold 80 percent of the planet biodiversity. Loss in that biodiversity, due to MNEs activities, is costly for the human society because it alters the ecosystems functioning and, consequently, the quality and quantity of goods and services our societies can obtain from those same ecosystems (Chapin et al., 2000). MNEs do not perceive this economic loss because most of them are focused on their financial performance as measure of the value created for the collectivity, which, of course, does not consider the real costs of damaging the normal functioning of an ecosystem. However, by having MNEs implementing measures

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of Corporate Social Responsibility it should be possible to resolve and prevent conflicts between firms and ICs. A strong focus on CSR might, in fact, force MNEs to take responsibility for their activities and make sure they are in harmony with society’s ethical, legal and public objectives (Jamali et al., 2008). In that regard, Kirat (2015) argues that, especially, firms operating the extractive industry should have a strong moral obligation to take responsibility for their operations and provide safe and healthy products without damaging the external environment. In this context, the purpose of this paper is to verify whether firms with a strong focus on corporate social responsibility, and not on financial performances, have a lower incidence and/or a higher frequency of conflict resolution with indigenous communities, and are, therefore, better able to create real value for the collectivity than other firms. In that regard, the currently existing academic literature does explain that CSR can used to solve or even prevent conflicts between MNEs and ICs, however, most of this literature is based on qualitative studies with a very limited number of case studies, focusing only on one specific geographic region (Bond, 2014). Almost no quantitative research exists on the matter, which presents us with a valid research gap. Therefore, we conduct a quantitative research focused on explaining to what extent a strong focus on CSR can reduce or prevent conflicts between MNEs operating in the extractive industry and ICs. As a result, our first research question will state:

RQ1: To what extent a focus on corporate social responsibility does help in preventing and reducing conflicts between multinational enterprises operating in the extractive industry and indigenous communities?

Before we e answer the previous question, we have to take into considerations some other factors, which might affect the rigor, and quality, of our answer itself. In fact, the academic literature does not provide a sufficiently accurate evaluation on what factors might affects the commitment of MNEs towards CSR.

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First and foremost, as noticed by Calvano (2008), the focus on CSR by MNEs might not be sufficient for a variety of reasons, all concerning the possibility that MNEs can use CSR initiatives to manipulate their relationship with indigenous communities, specifically, and local communities, in general. For example, MNEs can use corporate philanthropy to buy-off or silence communities that oppose their activities, as exemplified by the so called ‘‘trinkets and beads’’ phenomenon. Munshin and Kurian (2005) observe also that companies might also use CSR initiatives as a form of “greenwashing” to cover up, from the media and popular attention, their misdeeds or violations. For example, Nike responded to charges of using sweatshop labor by getting the endorsement of environmental groups for a proposal to eliminate the use of PVC products (Beder, 2002). A focus on CSR by itself is, therefore, unlikely to produce the desired effect. MNEs might, in fact, engage in both real as well as “just for show” CSR initiatives. However, it might be argued, that if the CSR initiatives of MNEs are monitored by an institutional player, such as a local, national or even supranational government, the results could be different. Although, as we have previously mentioned, most of the contemporary violations of ICs rights committed by MNEs happened with either the approval or the explicit endorsement of the local governments, there also reported cases of governmental intervention capable of settling long-lasting feuds between our two key players (Cullen et al., 2010). In this sense, we can safely assume that the attitude that governmental players might hold towards indigenous communities is the direct product of the public policies stance adopted by the governments themselves (UN Special Rapporteur on the Rights of Indigenous Peoples, 2016). Additionally, we look at how the lobbying capacities displayed by non-governmental organizations (NGOs) can affect the implementation of real CSR initiatives. In fact, in the past years NGOs have become more and more involved in collaborations with MNCs for the

development of CSR agendas. Indeed, a partnership can be an effective way to win a corporate clientele to an NGO’s cause, which incidentally, might coincide with a local community cause as well. A positive

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consequence of such partnerships is an increase in notoriety: the association with a firm with a strategic position in the market is one way for an NGO to strengthen its reputation and political influence (Selsky and Parker, 2005). The current literature addresses the aforementioned factors individually, without considering their interaction and the effects that interaction might produce over the MNEs’commitment towards true CSR initiatives. This provides us with a second valid research gap, which we can address through the following research question:

RQ2: To what extent governmental interference and NGO partnership affects the commitment of multinational enterprises towards true corporate social responsibility initiatives?

The final aim of this study is to investigate the impact of true CSR initiatives over MNEs and ICs conflict, with governmental intervention and NGO partnership as moderator. We will, first, explore how CSR initiatives affect the length, the content, and the type of conflict between MNEs and ICs. Second, we will research the same effect again but including governmental influence and NGO partnership as moderators.

With this research paper, we provide some theoretical contributions. First, we conduct a quantitative research that focuses on the role played by CSR initiatives into MNEs and ICs conflict resolution. Second, we highlight the role played by governmental intervention and by non-governmental

partnership in the enactment of real CSR initiatives by MNEs. Third, we provide a bigger context, both at the geographic and corporate level, by focusing on multiple case studies worldwide.

The study is organized into several differing sections. First, we provide a literature review aimed at explain the main concepts of the paper: conflict, CSR, governmental influence, NGO influence. Second, we provide a description of the theoretical framework and we illustrate the plausible influence of the concepts of CSR, governmental, and lobbyist influence, on the concept of conflict. We describe the

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methodology part, including the research design, sample, case selections, and method analysis. After collecting and codifying the data, we present the regression analyses. Next, we elaborate with the discussion part on the interpretation of the findings, the academic and managerial relevance, the limitations, and suggestions for future research. Finally, we provide the concluding remarks.

2. Literature review 2.1 Conflict

The concept of conflict is of crucial importance for the purpose of this paper, therefore a proper definition is needed before we move forward. The word “conflict” comes from the Latin word

conflictus, which can be roughly translated as collision or clash. Nevertheless, the academic world has not produced a universal definition of the concept. Coser (1956) defines it as struggle between

opponents over values and claims to scarce status, power and resources. Deutsch (1973) defines conflict as process that takes places whenever two or more parties are involved in incompatible activities, and in which at least one of those parties is actively interfering, disrupting, obstructing or in some other way make the other part’s initiatives less effective. Similarly, Wall (1985) outlines conflict as a is a process in which two or more parties attempt to frustrate the attainment of the other’s goals. In Wall’s definition, the key factors underlying conflict are threefold: interdependence, differences in goals, and differences in perceptions. According to Calvano (2008) conflict must be understood necessarily as dynamic

process, that unfolds and evolves over time, instead as discrete event. This observation is also supported by previous studies such as the one of Galtung (1969), which states that conflict is a dynamic process in which the structure, of the conflict, the attitude and behaviours, of the actors, are constantly evolving and influencing one another.

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Given those initial definitions, it would seem natural to assume that conflict necessary entails the presence of violence, however that would be a wrong assumption to make. Conflict, to a certain degree, is present in every human community and it rarely escalate to a point in which violence is seen as the only viable option (Castro & Ettenger, 1997). Many differing factors influence the way in which community’s handle conflict: knowledge, opinion, material wealth, power and status. However the nature of the conflict itself can influence the degree of effectiveness with which local communities handle it, which means, in other words, that communities might be more or less effective in dealing with differing kind of conflict (Castro & Ettenger, 1997). In this context, we recognize that MNCs possess a tremendous potential for transforming environments, economies and communities (Davis and Franks, 2001). In fact, in the past few years, thanks to effects of globalization and economic liberalization, MNCs have expanded massively, on average, allowing them to become more powerful than their country of origin (Pellow, 1999; Pellow, 2001). However, the transforming powers of MNCs, and especially of MNCs operating in the extractive industry, might spark conflicts with local communities whose life’s shape and quality is affected by their activity (Davis and Frank, 2001). Calvano (2008) argues that conflict between local communities and MNCs ensues whenever they both possess conflicting interests in a geographic area. This obviously also applies to indigenous communities as well. Specifically, and as outlined by Ballard and Banks (2003), conflict between ICs and MNCs usually arise for the control of cheap natural resources and geographic areas, located in greenfield territories or frontier zones home to the indigenous communities themselves. Additionally, the nature of MNC and the ICs conflict itself varies according to several factors, the first of which is the role of the MNC. An MNC might, in fact, either get involved in a direct conflict with an indigenous community or exacerbate existing civil unrest among different ethnic groups (Pinkey, 2005). Borrowing concepts from the

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between MNCs and ICs can be seen as nothing more than the result of the confluence of three interrelated factors including stakeholder power inequality, stakeholder perception gaps and cultural context. In other words, the author suggests that conflict between ICs and MNCs can be explained through the existence of asymmetries in power, distorted perception about each other’s actions or cultural resistance at the micro-or community-level. Those observations are supported by Kemp et al. (2010) which state that different stakeholders experience change differently, and this can fuel conflicts when costs and benefits of MNCs’ activities are not experienced in the same way, or when expansion or development project do not coincide with the interests or values of different stakeholders.

2.2 CSR

In the past decades, the concept of corporate social responsibility has shifted from a simple ideology to reality, and many in the academic and managerial world consider it necessary for organizations to define their roles in society and apply social and ethical standards to their businesses (Lichtenstein et al. 2004). In this context, Jamali et al. (2008) state that modern MNCs should focus their efforts into ensuring that their activities are in line with ethical, legal and public objectives. Kirat (2015) strengthen the previous statement by claiming that MNCs should possess a strong moral obligation to take responsibility for their operations and provide safe and healthy products without damaging the external environment. Carroll’s (2004) argues through his Global Pyramid of Social Responsibility model that every firms possess a hierarchy or responsibilities of different nature: economic, legal, ethical, and philanthropic. The economic responsibilities of course represent the cornerstone, the foundation on which all other responsibilities rests, but all of the others must be met as well, because otherwise the firm is not creating real value for the collectivity. However, although organizations increasingly adhere and demonstrate their commitment to CSR (Pinkston and Carroll 1994), many struggles with this effort (Lindgreen et al.

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2009). This development reflects the influence of various theories, including agency theory, institutional theory, the resource-based view of the firm, stakeholder theory, stewardship theory and the theory of the firm which results in various conceptualizations of CSR (Pinkston and Carroll 1996; Snider et al. 2003). This clearly makes also extremely difficult to measure objectively the degree of effectiveness of CSR initiatives undertaken by MNCs (Murray and Vogel, 1997). In this sense, considerable attempts have been made to measure the socially responsible activities of organizations both in the academic and business communities. However, as Wolfe and Aupperle (1991) outline, there is no single best way to measure corporate social activities. Waddock and Graves (1997) also pointed out the difficulties of measuring corporate social performance and assessed the alternative methods, including forced-choice survey instruments, reputation indices and scales, content analysis of document, behavioural and perceptional measures, and case study. Maignan and Ferrell (2000) categorized these alternative methods into three main approaches: expert evaluations, single- and multiple-issue indicators, and surveys of managers.

Some academics argue that corporate social responsibility is very often defined by narrow business interests and serve to curtail interests of external stakeholders. For example, Banerjee (2008) states that much sponsored corporate social responsibility reports are a form of “greenwashing” that often does not reveal the grim realities that lie behind them. Munshin and Kurian (2005) strengthen the previous statement by claiming that MNCs can effectively use CSR as a form of “greenwashing” to cover up, or shift the media and popular attention, their misdeeds or violations. Calvano (2008) too states that MNCs can use CSR to manipulate their relationship with local communities, and of course indigenous

communities as well. Additionally, Banerjee (2008) that MNCs might have a strong interest in taking over the role of governments, especially in developing countries where governmental institutions are not particularly strong, to further their economic interest. However, the author also observes, corporations

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do not have the ability to take over the role of governments simply because their basic function is inherently driven by economic needs. Local communities, and ICs especially, might in fact become completely dependent for their economic, social and environmental welfare on MNCs. Once the economic opportunity of operating in one area is exhausted, a MNC will leave it, and the local

communities that depend on it will inevitably face the negative consequences of the subsequent vacuum of power. Kapelus (2002) argues that CSR initiatives can have either of two functions and,

correspondingly, may be undertaken for either of two forms of motivation. From the perspective of business ethics, CSR programs can help corporations to discern and fulfil their obligations to

stakeholder groups. From the perspective of business strategy, however, CSR programs may be viewed as a method for minimizing costs. In other words, MNCs can undertake CSR initiatives either because they have a strong moral commitment or because they have pragmatic interests in doing so. In this context it is crucial to understand the function and motivation underlying CSR programs, because they have practical implications with respect to local communities. If firms tend to be more morally

motivated, then they will employ CSR as a tool of moral discernment. Under these circumstances, MNCs will be willing to live up to their obligations to stakeholders, even when it involves costs in terms of shareholder value. If, on the other hand, MNCs are primarily guided by pragmatic interests, then CSR can become exclusively a business tool rather than an approach to discerning moral responsibility. Under these circumstances firms will be interested more in the appearance of social responsibility than actually being socially responsible. In this scenario, CSR initiatives are ultimately concerned with minimizing disruption to the firm’s (processing, transportation, marketing, etc.) activities and, thereby, minimizing costs.

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Despite the strong management focus, and widely accepted voluntary character, of CSR governments have developed, especially in past decades a strong interest over MNCs’ CSR agendas. The literature has tried to explain this phenomenon, and its effects through five main arguments. First, governments are interested in CSR because the respective business efforts can help to meet policy objectives on a voluntary basis. This motivation touches not only on policy objectives related to sustainable

development and environmental protection, but also to foreign policy goals such as human development and development assistance (Haufler 2001). Henderson (2001) states that CSR is now 'a common body of doctrine' that requires MNCs to play a leading part in achieving the shared objectives of public policy. Second, CSR policies are regarded as an attractive complement for hard-law regulations in cases where new regulations are politically not desirable or infeasible (Haufler, 2001). Compared to hard-law regulations, the soft-law character of CSR and CSR policies implies comparatively low political costs in terms of resistance by special interest groups (Moon 2002; Moon 2007). Third, a look into the

governance literature of recent years shows that the soft approach of CSR policies coincides with a broader transition of public governance altogether, which leads away from hierarchical regulation towards more network-like and partnering modes of self- and co-regulation (Kooiman, 2003; Pierre, 2000). In this respect, CSR is not simply a feature of the new global corporation but is also increasingly a feature of new societal governance (Moon 2007). The implication for MNCs is that they are becoming increasingly involved in meeting not only their business objectives but also the social and environmental issues that are raised by their stakeholders, such as investors, regulators, employees, suppliers,

cusstomers and local communities more in general. Therefore, since CSR is far more than a management approach that could be left to the discretion of managers, governments have a natural interest in co-defining the shifting involvements of different sectors rather than being passive object of change.

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Howlett and Ramesh (1993), state that policy instruments are tools of governance. They represent the relatively limited number of means or methods by which governments effect their policies. Although, as outlined by Hood (1983), there is no single agreed characterization of government resources or

instruments in the literature on public administration, one can distinguish a widely acknowledged standard set consisting of informational, economic and legal policy instruments (Howlett and Ramesh 1993; Bemelmans- Videe et al., 1997; Jordan et al., 2003): Informational instruments are based on the resource of knowledge. Their rationale is moral persuasion. As they are usually restricted to highlighting options and the possible consequences, they imply thereby no constraints. Economic instruments are, instead, based on the resources of the taxing authority and money. Their rationale is to influence behaviour with financial incentives and market forces. Legal instruments, finally, prescribe the desired choices and actions by making use of the state's legislative, executive and judicial powers. The

underlying rationales are hierarchy and authority. All three types of these instruments can also be found in the context of CSR policies, but the following two deviations are obvious. First, the economic and legal instruments assume uniquely soft characteristics. If legal CSR instruments have a mandating character that goes beyond recommendations, they are either not universally binding, or enforcement is non-existent or weak (Joseph, 2002). If economic instruments are employed in the context of CSR, they are not concerned with taxes that are statutory for all, but rather with tax breaks and subsidies. The second deviation is that the tripartite instrument set must be expanded by two additional instrument type: partnering and hybrid ones. Partnering instruments build on a co-regulatory networking rationale,

assuming that different actors are interested in working together towards shared objectives, for example, because they can exchange complementary resources and avoid conventional regulations. Due to the voluntary character of CSR, one would assume that CSR policies make extensive use of stakeholder forums, negotiated agreements and public-private partnerships (Fox et al., 2002). Adding hybrid

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instruments as a fifth type is necessary because numerous government initiatives on CSR agendas either combine or orchestrate two or several other instruments as mentioned above (Rittberger and Richardson, 2003).

2.4 NGO Influence

Calvano (2008) states that community of interests can exercise lobbyist power to pursue a common interest. Similarly, virtual advocacy groups, just like community of interest, share a common purpose, but which is usually broader than an individual interest and entails mobilizing people to participate in a short-term effort. In that sense, virtual advocacy groups can exercise lobbyist influence by intertwining differing interests and motives of differing actors towards one singular objective. That lobbyist pressure can be exercised to have CSR agendas forced upon MNCs. NGOs play a crucial role in this context more and more over the years. Van den Berghe and Louche (2005) consider NGOs to be non-market forces that form a new invisible hand confronting companies, capable of coordinating virtual advocacy groups iniatives.

The increasing role of NGOs in CSR may be explained by three phenomena related to the information asymmetry between firms and citizens/consumers: free-riding (Hardin, 1968), moral hazard (Arrow, 1971), and adverse selection (Akerlof, 1970). CSR may be associated with free-riding behaviour from MNCs. Indeed, greenwashing may be compared to free-riding behaviour, as firms may lie about their CSR activities and may receive the benefits related to CSR attributes (Lepoutre et al., 2006). This problem can also be compared to moral hazard, which arises when an agent’s behavior is not

appropriate. Partnerships can solve free-riding and moral hazard problems with respect to the intangible aspects of business because third-party certification and monitoring improves communication about these issues. The adverse selection problem is related to the difficulty of obtaining information about a

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firm’s operating practices. Sustainable goods have attributes that consumers cannot evaluate even when they use them. Consumers cannot inspect produce items and, simply by purchasing and using them, determine whether they were grown organically, whether they are the product of biotechnology, or whether an MNC harms the environment, promotes employment discrimination, or builds strong relationships with local communities. Such products are called credence goods (Nelson, 1970). For consumers concerned with an MNC’s CSR practices, an alternative source of information is thus required. For this purpose, labels may be used as a signal to reduce the information asymmetry between sellers and customers. Indeed, quality signals, especially labels, can transform credence attributes into search attributes, whose quality is readily observable prior to purchase (Caswell and Mojduszka 1996). These market failures may be partially resolved by NGO interventions because NGOs can provide an important source of information for citizens/consumers who value the behaviour of firms. NGOs may affect the information that is available to consumers for their purchasing decisions through two main channels: cooperation and confrontation. These channels are described within the terminology of Lyon (2010) as “Good Cop/Bad Cop”. The so-called “bad cops” or polarizing NGOs, such as Greenpeace, tend to achieve change by disrupting the status quo through confrontation. By contrast, “Good cops” or integrating NGOs, such as WWF, aim to promote their goals through constructive partnerships with businesses, governments, and other civil society organizations (Elkington and Beloe, 2010). In a

proactive approach, MNCs may thus approach NGOs to use its existing label or to create a new standard together. Indeed, when a firm wants to promote a credence good or information, it must offer a

warranty. Certification systems involve specified standards, verification procedures, certification, and, very often, labels. Labels are a visible means to signal to consumers that products meet a required standard. In this context, NGOs act as certifying agencies that assure consumers that the products that they have purchased were produced in a sustainable manner. Through their external intervention, NGOs

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allow firms to credibly signal that their products possess sustainable attributes. In this way, NGOs provide credibility and legitimacy through the trust that they inspire among consumers.

One of the key, motivation for NGO collaboration with MNCs is the rise of societal problems. Indeed, a partnership is a way to sensitize corporate clientele to an NGO’s cause, which incidentally, might coincide with a local community cause as well. A positive consequence of such partnerships is an increase in notoriety: the association with a firm with a strategic position in the market is one way for an NGO to strengthen its reputation and political influence (Selsky and Parker, 2005). Of course, the commitment to the relationship, and the nature of the relationship itself, of partners in MNC-NGO partnerships can vary. In practice, a MNC has several options for dealing with CSR agendas, depending on the level of the CSR process at which the NGO intervenes and the level of the partners’ involvement. First, the relationship between an NGO and a firm may be limited to a communication campaign, which can be viewed as a co-branding operation. Second, an NGO may act as a monitoring agency to control the code of conduct implemented by an MNC. The third option for a company is the creation of a partnership with an NGO to develop a code of conduct or a specific standard. This type of partnership implies three steps of construction: the establishment of standards or “recognition”, the creation of evaluation mechanisms with independent enforcement or certification, and the recognition of the control party by an authoritative body or accreditation (de Boer, 2003)

3. Theoretical Framework

3.1 Factors that Affect Conflict Resolution between RE MNEs and ICs

The scarcity of natural resources, the need for economic growth, as well as the increase in global

population, have driven resource extraction (RE) Multinational enterprises (MNEs) to search for natural resources foreign nations, which in consequence has led to conflicts with the Indigenous Communities

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(ICs). In essence, due to globalization, there is a need for more resources as the MNEs expand on a global scale to make profits. Since most of the developing nations have not exploited their natural resources, the MNEs usually target them for the resources. There are various factors that affect conflict resolution between resource extraction multinational enterprises and indigenous communities. For instance, Rees, Kemp, and Davis (2012) in a joint research project that was implemented by the Corporate Social Responsibility Initiative and the Centre for Social Responsibility (CSR) in Mining at Harvard Kennedy School and the Sustainable Minerals Institute of the University of Queensland, recognized that the factors that are external to mining MNEs can have a significant influence on the success of conflict management with the indigenous communities. They identified a variety of factors, including co-operating structure and hierarchy, the role of the corporate’s legal function, the role of the formal processes, modes of engagement with the communities, internal influences of community relations staff, assessing social performance, and company attitudes towards conflict management and the community relationships. In addition, staff attitudes towards hiring and training also played a significant role in conflict management.

As such, factors that are external to resource extraction companies, such as mining companies affect the success of conflict management efforts. These include the broader legislative framework, political context, as well as the preexisting community dynamics (Rees, Kemp, and Davis, 2012). For this reason, indigenous communities (ICs) are seen as strong stakeholders in resource extraction sites because they primarily control the natural resources, and these companies depend on the resources. Therefore, there is bound to be conflicts in most instances because as Murphy and Arenas (2010) articulate, the MNEs are more poised to consider ICs as fringe stakeholders because they deem them to be minor compared to larger stakeholders, for example, the natural government. Therefore, there has

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been considerable research into the matter, and many authors, including Kolk and Lenfant (2013) and Castro and Nielsen (2001), who have unanimously pointed the need of dealing with ICs sustainably.

Also, according to Chatham House (2013), the factor of community relations remains an important challenge for ICs in emerging producer countries, including Mongolia, Peru, Guinea, Mozambique, and South Sudan particularly. In these areas, the established environmental frameworks are particularly weak because the communities lack a political voice, and land tenure and water rights are insecure. In essence, this subsequently makes the ICs vulnerable to exploitation by MNEs. In addition, the

demographic pressures coupled with the mounting environmental stress globally is expected to magnify the challenge in future.

To avoid social pressures and conflicts between ICs and RE MNEs, the MNEs need to comprehend how Corporate Social Responsibility influences the reduction of conflicts. However, as Lertzman and

Vredenburg (2005) and point out, there is minimal descriptive and quantitative research that can establish the relationship between RE MNEs, sustainability, and ICs regarding conflict avoidance. Therefore, conducting a quantitative research that explains to what extent a strong focus on CSR can reduce or prevent conflicts between the MNEs operating the resource extraction industry and the ICs. For this reason, the first research question will be:

RQ1: To what extent a focus on corporate social responsibility does help in preventing and reducing conflicts between multinational enterprises operating in the extractive industry and indigenous communities?

It can be deduced that the external environment is vital for monitoring and control because it could lead to conflicts with ICs because the RE activities that MNEs embark on directly affect the land, as well as the lives of people. MNEs can embark on CSR initiatives, for example, using eco-friendly products and

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embarking on waste reduction, which can subsequently lead to cleaner environments and highlight the empathy efforts of MNEs towards ICs.

CSR focusses mainly on reduction and avoidance of social conflicts, but in some occasions, it has worsened the conflicts. Even so, institutional level stakeholder pressure is vital because it leads to RE MNEs to undertake CSR initiatives. The MNEs are required to include CSR endeavors that highlight their actions and activities to the public. However, such actions are questioned because they can significantly diminish the focus of CSR primarily because, as pointed out by Aguinas and Glavas

(2012). In some instances, they are just a cover up by the MNEs for them to exploit the resources of ICs. According to Munshi and Kurian (2005), companies use CSR initiatives of “greenwashing” so that they can cover up their violations and misdeeds from the media. Besides, Beder (2002) provided as an example where Nike responded to charges of using sweatshop labor by getting endorsements from environmental groups for a proposal to eliminate the use of PVC products. For this reason, it can be derived that a focus on CSR initiatives by themselves is unlikely to produce the desired effect on ICs.

Due to ICs concerns on RE MNEs projects, there have been recent cancellations and delays of various high-profile projects, which highlights the need for maintaining good relations with ICs to facilitate business success. In essence, good relations are facilitated by CSR endeavors. According to Sainsbury, Wilkins, Haddad, Seeney, et al. (2011), a Citibank survey that encompassed 400 of the largest greenfield mining projects revealed that two-thirds of them were at a risk of cancellation or delay. In addition, Davis and Franks (2011) pointed out that a study that was conducted in 2008 of 190 oil and gas projects initiated by Goldman Sachs revealed that lead times to production had doubled and a follow-up study found out that half of the risks that faced those projects were non-technical in nature, and were mostly

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related to stakeholder-related risks. Costs that resulted from delays due to ICs concerns and conflicts between the RE MNEs and the communities.

Besides, lobbying activities initiated by Non-Governmental Organizations (NGOs) can also affect implementation of CSR primarily because these establishments have been actively involved in collaborations with MNEs in coming up with CSR agendas. Partnerships between MNEs, ICs, and NGOs is particularly important as it can pave the way for a common cause. However, the current

literature addresses the factors individually without considering the effects of such interactions, and how they might influence the MNEs’ commitment towards the implementation of true CSR initiatives. In effect, this provides the second gap of the research, and thus, the research will address a second research question, which is stated below:

RQ2: To what extent governmental interference and NGO partnership affect the commitment of multinational enterprises towards true corporate social responsibility initiatives?

3.2 Corporate Social Responsibility (CSR) Initiatives Effect on the Length, the content, and the Type of Conflict Between MNEs and ICs

3.2.1 CSR Effect on the Length of Conflict

According to Laplante and Spears (2008), conflict with communities increases the legal and reputation risks for RE MNEs. Importantly, reputation in the extractive industry is the lifeblood of an MNE because it is key to attracting quality partners, as well as gaining the opportunity to dist inguish one company from another. Reputation, therefore, is built using CSR initiatives, especially for resource extraction companies, for example, those that are involved with mining activities. Many MNEs support CSR because, at the organizational level, they lead to significant recognition, which increases the MNE’s financial performance. Non-financial benefits that are facilitated by CSR initiatives include

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increased product quality, desirability to investors, better brand image, operational competencies, as well as better management practices (Aguinas and Glavas, 2012). Besides, CSR initiatives, as Husted and Allen (2006) articulate, are vital towards increasing market share, as well as providing the company with competitive advantage. Competitive advantage is obtained through the better brand image that is

associated with CSR. The benefits generated by CSR go beyond reputation-building to developing valuable organizational capabilities (Sharma and Vredenburg, 1998). The failure to manage CSR strategically, however, can lead to serious economic consequences to an MNE. If the ICs do not recognize the CSR initiations, it can subsequently lead to more conflicts over the resources. For this reason, if an MNE decides to adopt CSR, it should be strategic enough to ensure that positive outcome. Even so, as pointed out by Porter and Kramer (2006), strategic CSR is essential because that is when the society will recognize it. As the authors articulate, when the social issue is closely related to the

business, the greater the chance that the CSR initiative will influence the capabilities and resources of the MNE, and consequently, the more the benefits that the society obtains from such a program. In this respect, as Helwege (2015) asserts, to avoid and minimize social conflicts between ICs and MNEs, the resource extraction MNEs should have a focus on CSR.

Based on these theoretical findings, the research recognizes the positive effect of CSR initiatives on the reduction of conflicts between MNEs and ICs. For this reason, when a resource extraction MNE takes into consideration of the external environment, and in this case, where ICs live, it will attempt not to harm the habitant, and thus, the ICs do not consider it as a threat, which eliminates the likelihood of conflicts. Therefore, the research’s first hypothesis is:

Hypothesis 1: “Resource extraction multinational enterprises focus on corporate social responsibility positively influences the length of conflicts between them and indigenous communities.”

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27 3.2.2 CSR Effect on the Content of Conflict

The content of a CSR initiatives is directly correlated to sustainability. For this reason, MNEs should implement CSR initiatives that affect sustainability positively. For this reason, a collaboration between the ICs and MNEs regarding sustainability is vital. According to Ingles et al. (1999), the promotion of collaborative management is usually based on the assumption that a more effective management is more likely to be achieved when the local resource users have exclusive or shared rights to make decisions about the benefit of the resource. As such, the motivation to manage a resource sustainably on the ability to be assured of possessing long-term access or benefit to it. For this reason, CSR is vital in this

paradigm as it shows that the MNEs and the ICs have a mutual benefit, which subsequently reduces or completely eliminates the propensity of conflicts.

However, as Crawley and Sinclair (2003) argue, industrial expansion mainly in the resource extraction industry, mainly in the mining sector, is not sustainable and people are underestimating the effects the MNEs’ activities have on the natural systems for ICs. Essentially, the lives of ICs are directly affected by unsustainable activities where the MNE operate. However, focusing on CSR has a positive effect. For this reason, based on this theoretical foundation the research argues that when RE MNEs focus on

sustainable CSR initiatives on the habitats of ICs, it will positively affect the environment, thereby affecting the content of the conflict positively. The RE MNEs obtain a license to operate more quickly from ICs and governments if they have a better environmental performance. As such, the second hypothesis is:

Hypothesis 2: “Resource extraction (RE) multinational enterprises (MNEs) focus on corporate social responsibility (CSR) positively influences the content of conflicts between them and indigenous communities (ICs).”

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28 3.2.3 CSR Effect on the Type of Conflict

According to Smith (2003), there have been numerous violent conflicts since the Cold War, which directly affect MNEs. However, as Getz and Oetzel (2009) point out, even though there has been a prevalence of the conflicts some governments have not solved them, and there is a reluctance of multilateral institutions to intervene. In some instances, however, the conflict may be directed to the MNE. As Oetzel, Getz and Ladek (2004) articulate, the participants, mostly the ICs, to the conflict may view the MNE as culpable in exacerbating or causing problems within the host country, mostly due to the nature of the business, such as mining activities that lead to environmental degradation, or when the behavior of the managers in the ICs location is deemed to be unethical, for example, obtaining contracts via corruption and bribery. However, MNEs can mediate in conflicts, and thus, a company can

positively influence the conflict resolution process indirectly and directly. Directly, RE MNEs can capitalize on mediation and negotiation, and indirectly, they can focus on diminishing factors of violence. Besides, MNEs can intervene through human resource practices that minimize religious or ethnic division, as well as establish strategic philanthropy to increase the operational capacities (Kidder, 2006. However, CSR initiatives can be geared towards the interests of the MNE. Also, it can be derived that indeed CSR initiatives can reduce the type of conflicts considerably, especially if they are marred by violence. Conflicts, in most instances, are attributed to economic stagnation (Stewart, 2002) or the unequal distribution of wealth (Rogers and Ramsbothem, 1999). As such, CSR initiatives have a direct influence on the type of conflict between RE MNEs and ICs, leading to the third hypothesis, stated below:

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Hypothesis 3: “Resource extraction (RE) multinational enterprises (MNEs) focus on corporate social responsibility (CSR) positively influences the type of conflicts between them and indigenous communities (ICs).”

3.3 Stakeholder Involvement and Effect on MNEs’ CSR Initiatives

3.3.1 Governmental Interference, NGO and Indigenous Communities Partnership Effect on the Length of Conflict.

a. Government Interference

Governments may lack capacity and resources to control or resolve conflicts, and their ability to control and intervene in intrastate conflicts becomes low (Hironaka, 2005). Besides, governments can be bribed by MNCs, which can lead to conflicts with the ICs. However, it is expected that if the government has these resources, then it will it will have more capacity to deal with the conflict. Besides, if the

government does not accept bribes and adopts an ethical framework for protecting the environment, then the conflicts will be shorter. In light of this view, the fourth and fifth hypotheses can be derived as:

Hypothesis 4: “Resource extraction (RE) multinational enterprises (MNEs) focus on corporate social responsibility (CSR) positively influences the length of conflicts between the MNES and the indigenous communities (ICs) if government interference is positive, for example, doing away with unethical practices, and the government has enough resources to control conflicts.”

Hypothesis 5: “Resource extraction (RE) multinational enterprises (MNEs) focus on corporate social responsibility (CSR) negatively influences the length of conflicts between the MNES and the indigenous communities (ICs) if government interference is negative, for example, tolerating bribery and

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30 b. NGO and Indigenous Communities Partnership

As pointed out earlier, reputation is the lifeblood of MNEs. However, it can be tarnished by NGO investigations and media reports, activist campaigns and lawsuits that lead to international attention about the negative effects that an MNE’s projects bring to indigenous communities (Laplante and Spears, 2008). In fact, mounting public relations campaigns that are initiated by NGOs, as well as implementing CSR initiatives for damage control due to negative publicity, as well as settling and defending lawsuits are expensive endeavors that can take up resource extractive MNEs’ managerial time. Also, lawsuit settlements are usually costly and necessitate expensive posthoc CSR programs that are intended to repair the public relations and the community. Therefore, NGO and IC partnership will positively affect the length of the conflict, which leads to the 6th Hypothesis:

Hypothesis 6: “Resource extraction (RE) multinational enterprises (MNEs) focus on corporate social responsibility (CSR) positively influences the length of conflicts between the MNES and the indigenous communities (ICs) if there is a partnership between NGOs and ICs towards issues of environmental protection.”

3.3.2 Governmental Interference, NGO and Indigenous Communities Partnership Effect on the Content of Conflict.

a. Government Interferences

According to Laplante and Spears (2008), companies that make enemies out of the populations affected by their projects experience high political and corporate risks. As the writers, articulate, controversial projects and MNEs may be unable to obtain licenses or other crucial means of support from the home-country governments. In effect, this ensures that the RE MNEs’ activities are sustainable, but if the

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government is corrupt and accepts briberies from the RE MNEs, then sustainability will be

compromised. Also, resource availability is paramount to the governments. As such, this leads to the 7th and 8th hypotheses.

Hypothesis 7: “Resource extraction (RE) multinational enterprises (MNEs) focus on corporate social responsibility (CSR) positively influences the content of conflicts between the MNES and the indigenous communities (ICs) if government interference is positive, for example, doing away with unethical practices, and the government has enough resources to control conflicts.”

Hypothesis 8: “Resource extraction (RE) multinational enterprises (MNEs) focus on corporate social responsibility (CSR) negatively influences the content of conflicts between the MNES and the indigenous communities (ICs) if government interference is negative, for example, tolerating bribery and

corruption, and the government lacks resources to control conflicts.” b. NGO and Indigenous Communities Partnership

Hamman (2003) points out that partnership among local stakeholders is a key component towards the achievement of sustainable development. Focusing on the mining sector in South Africa, he established that partnership is an important component, not only between MNEs and NGOs but also NGOs and ICs. As Kolk and Lenfant (2013) establish, problems that are directly related to conflicts may adversely affect partnership, regardless of the cooperation’s objectives. However, with the NGOs working together, it can lead to a positive effect on the content of the conflict, primarily because it ensures that the RE MNEs activities are sustainable, which leads to the 9th hypothesis:

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Hypothesis 9: “Resource extraction (RE) multinational enterprises (MNEs) focus on corporate social responsibility (CSR) positively influences the content of conflicts between the MNES and the indigenous communities (ICs) if there is a partnership between NGOs and ICs towards issues of sustainability.”

3.3.3 Governmental Interference, NGO and Indigenous Communities Partnership Effect on the Type of Conflict.

a. Government Interference

While the RE MNEs may have a solid business rationale to respond, they would prefer that the host country government resolves a conflict. According to Fagre and Wells (1982), in the past, MNEs facing political hazards addressed the conflict challenges via bilateral negotiations with the government, with the assumption that it had the capacity and willingness to implement agreement arrived in MNE-host government negotiations. Unfortunately, for those countries that experience violent conflicts, the governments lack the capacity to provide basic security and services, and thus, the countries may be characterized by corruption (Fort and Schipani, 2004), institutional voids (Khanna et al., 2005), and overall incapacity. Also, the government may play a role in advocating unethical conduct, such as bribery with the RE MNEs, which can exacerbate the type of conflicts. As such, this derives the 10th and

11th hypothesis, which are:

Hypothesis 10: “Resource extraction (RE) multinational enterprises (MNEs) focus on corporate social responsibility (CSR) positively influences the type of conflicts between the MNES and the indigenous communities (ICs) if government interference is positive, for example, doing away with unethical practices, and the government has enough resources to control conflicts.”

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Hypothesis 11: “Resource extraction (RE) multinational enterprises (MNEs) focus on corporate social responsibility (CSR) negatively influences the type of conflicts between the MNES and the indigenous communities (ICs) if government interference is negative, for example, tolerating bribery and

corruption, and the government lacks resources to control conflicts.” b. NGO and Indigenous Communities Partnership

NGO partnership with ICs is vital and has premises, but should be formed on assessment of needs, which is managed by the commitment and negotiations to accomplish various agreements. In this case, ICs and NGOs can partner to ensure that the environment is not adversely affected by RE MNEs’ activities. As Kolk and Lenfant (2013) point out, “watchdog” NGOs are less motivated to operate with the RE MNEs that service delivery, which has a clear focus on peace, thereby positively influencing the type of conflict by shortening them. In effect, the last hypothesis is:

Hypothesis 12: “Resource extraction (RE) multinational enterprises (MNEs) focus on corporate social responsibility (CSR) positively influences the type of conflicts between the MNES and the indigenous communities (ICs) if there is a partnership between NGOs and ICs towards issues of sustainability.”

3.4 Conceptual Model

Figure 1 establishes the relationships between the concepts. It is proposed that MNE’s CSR focus, as well as NGO and ICs partnership positively influence the length, content, and type of conflict. It is further predicted that government interference positively and negatively affects the length, content, and type of conflict, depending on the capability of the government and the ability to maintain ethics and keep corruption at bay.

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34 4. Methods

4.1. Variables

4.1.1. Dependent Variables

The dependent variables are the length of conflict, content of conflict and the types of conflict. The length of conflict is given in total months which measures how long there have been conflicts between MNC and RE IP, while some conflict may have ended and other conflict may still be ongoing. Instead of predicting the duration of the conflict, an appropriate approach is to predict whether the conflict is either a long conflict (1) or short conflict (0). The descriptive analysis of the whole 706 cases for Length of conflicts (which are given in total months) shows that the median number of month is 84 months and we code those cases with the number of months under 84 as short conflict and those cases with over 84 months as Long conflict which is now a dummy variable and those cases with total months close to 84 with ongoing conflict between RE MNC and IP are coded as 1 while those with over 84 months of conflicts and ongoing conflict are automatically coded as 1. Then, the logistic regression is performed to examine the effect of the CSR focus on the length of conflict, first of all, using only the control variables, from which we obtain

RE MNE CSR Focus

Government Interference

NGO and ICs Partnership

Type of Conflict between MNE and ICs

Content of Conflict between MNE and ICs

Length of Conflict between MNE and ICs H5,H8,H11 (-) H4, H7, H10 (+) H1(+) H2 (+) H3(+) H6,H9,H12 (+)

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the Nagelkerke R2 which can be used for comparing two or more models and we subsequently add the IV and MV. Similar procedure is done using 78 and 90 months as boundaries and we fit the logistic regression of coded length of conflict on only the independent variables, from which we also obtain the values of the Nagelkerke R2. We observe that the Nagelkerke R2 when the boundary is 90 months provide greater R2 compare to the other boundaries.

The content of conflicts is measured by the variables “Indigenous land rights”, “Lack of consent/no involvement IPs”, “Social Impact”, and “Economic Impacts” and these data were collected for every case. This variable is coded with a dummy variable: If one or more of the elements above were applicable to the case, it is coded with a 1 and if not, it is coded with a 0.

The type of conflict is measured with the types of violence used which ranges from low level to high level of violence. A low level of violence can be considered as a conflict with little or no violence involved while a high level of violence consists of conflicts with great level of violence. From the previous thesis you sent to me, this type of violence varies: 1) peaceful negotiations or protests, 2) court actions, 3) low-level of violence (from either side) and intimidation tactics, 4) high-low-level of violence (from either side), including physical damage, kidnappings but no deaths, and 5) high-level of violence (from either side), including deaths.

4.1.2. Independent Variable

The Corporate Social Responsibility (CSR) focus is the independent variable used in this research work. This is measured using an indicator called the CSRHUB score which are given in percentages and they ranges from 0 to 100. The higher the CSRHUB score, the stronger the focus. I observed that most of the CSRHUB score just as I have previously explained to you and this is backed up with a point made in the sample thesis you sent on page 48 that having a CSRHUB score does not automatically means that it does not contain a sustainable focus.

Out of the 706 MNCs considered, we observed that 3 cases of CSRHUB scores are missing and they are excluded from our further analysis because this score is the predictor in the fitted model and it becomes important it should be included in the analysis.

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The moderating variable for this study are NGO partnership and government interference. The NGO partnership is measured using the question addressing “partnership between NGOs and ICs towards issues of environmental protection”

The government involvement/interference is measured with the variables which are: “Government effectiveness” and “Corruption control by the government”. These are measured using the WGI score which are coded as follows: 90-100th Percentile = 6, 75-90th Percentile = 5, 50-75th Percentile = 4, 25-50th Percentile = 3, 10-25th Percentile = 2 and 0-10th Percentile = 1. We use “Government effectiveness” and “Corruption control by the government” as moderating variable for government interference.

4.1.4. Control Variables

The first control variables used for the analysis are the HDI score which is a quantitative and interval variable. The second control variable is the NGO SIZE/type (which has the levels local, regional, national, international, and global) and this is an ordinal variable since the various categories are in order even though the distance between two categories cannot be quantified and the last control variable is the NGO_MNC relationship which is also an ordinal variable with three various level of support/relationship (supportive, neutral and antagonistic) between the MNC and RE indigenous people.

4.2. Method of analysis

We include three DVs (length of conflict, type of conflict, and content of conflict). Therefore, we performed a research for three different DVs that combine one element: conflict. For each DV, we implemented a regression analysis to observe the strength of a cause and effect relationship between the DV and IV and the possible interventions of the moderator and of the CVs with the IV and DV. This analysis was done implemented in the SPSS software program.

First, we applied a hierarchical logistic regression analysis to examine the effect of the MNE’s CSR focus (IV) on the length of conflict between the RE MNE and the IP (DV), including the CVs (model 1). Here, we selected this analysis because the DV is a binary variable. Specifically, we codified the length of conflict as a dummy variable (0 = short conflict and 1 = long conflict) as it contains a nominal variable (Federici, 2016). We implemented this analysis with a stepwise approach. For each type of variable there was a step: the first step was the DV, the second was the CVs, followed by the IV (model 2) and the final step was the MVs (model 3, 4, and 5).

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Second, we implemented a logistic regression analysis to observe the effect of CSR focus (IV) on the content of conflict between the RE MNE and the IP (DV), including all the CVs. Here, we selected this analysis because the DV is a binary variable. This analysis is done using a stepwise approach. For each type of variable there was a step: the first step was the DV, the second was the CVs (model 6), followed by the IV (model 7) and the final models will include the MVs (model 8, 9, and 10) to check the moderating effects.

Finally, we performed a hierarchical linear regression analysis to examine the effect of CSR focus (IV) on the type of conflict between the RE MNE and IP (DV), including all the CVs.

We also performed a hierarchical linear regression analysis. First, we added the DV and the CVs (model 11), followed by the IV (model 12) and the final step include the MVs (model 13, 14 and 15) to examine the moderating effects of these MV on the DV.

In conclusion, the final sample includes 497 different conflicts between RE MNCs and IPs. We measured the concept conflict with three different dimensions. We measured the CSR focus with CSRHUB score and we considered two moderators as well as three different CVs. The results from the research analysis using the SPSS software program are presented below in the next section:

Table 1: Summary of Linear Regression Analyses

Independent Variable Length of conflict Content of conflict Type of conflict NGO size NGO-MNC

relationship HDI CSRHUB

Government Effectiveness Corruption Control NGO-MNC Partnership Model 1 * * * * Model 2 (hypothesis 1) * * Model 3 (hypothesis 4) * * Model 4 (hypothesis 5) * * Model 5 (hypothesis 6) * * Model 6 * * * * Model 7 (hypothesis 2) * * Model 8 (hypothesis 7) * * Model 9 (hypothesis 8) * * Model 10 (hypothesis 9) * * Model 11 * * * * Model 12 (hypothesis 3) * * Model 13 (hypothesis 10) * * Model 14 (hypothesis 11) * * Model 15 (hypothesis 12) * *

Dependent Variable Control Variable Moderator

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38 5. Results

This section presents the results of the statistical data analysis to examine the hypothesis formulated in the previous sections. First, we conducted a frequency analysis to identify errors in the data. No errors were found after which we further checked for missing cases. Some variables had missing values, we decided to only use cases that had no missing values in the variables by using the option ‘list wise’ and this brought the total sample from 706 to 497 cases.

The descriptive statistics were first obtained which include the mean and standard deviations for each of the variables of interest in this research work. We also present the correlation matrix, test of multicollinearity table and results of regression analyses.

5.1 Descriptive Statistics

The final sample of this research work contains 497 conflicts between RE MNC and IP. Table 2 illustrates the descriptive statistic of the variables.

Table 2: Descriptive Statistics

Mean Std. Deviation Length of conflict .51 .500 Types of conflict 2.93 1.450 Content of conflict .96 .197 NGO_type 3.13 1.116 HDI_score .701 .151 Relat_NGO_MNE 2.76 .551 CSRHUB 28.39 29.505 Disc_NGO .21 .409 Govr_effectiveness 3.62 1.467 Corruption_control 3.29 1.592

From Table 2, the dependent variable, type of conflict has a mean of 0.51 (σ=0.5) which means that, on average, most of the conflicts occur for a fairly moderate duration of time which is neither short nor long. The dependent variable, type of violence has a mean of 2.93 (σ=1.455) which means that, on average, a conflict deals with low-level of violence. The dependent variable, content of conflict has a mean of 0.96

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