Lucía Sanou [10868690]
Submission final version: 29th of June 2015
MSc. in Business Administration – International Management Track University of Amsterdam UvA
Supervisor: Dr. Ilir Haxhi
Second reader: Msc. Robert Kleinknecht
POWER DISTRIBUTION BETWEEN MULTINATIONALS AND
INDIGENOUS COMMUNITIES: THE AFFECT OF MNE
GOVERNANCE PRACTICES ON CONFLICT DYNAMICS
Statement of originality
This document is written by Lucía Sanou who declares to take full responsibility for the contents
of this document.
I declare that the text and the work presented in this document is original and that no sources
other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of
Table of content
List of tables and figures... 4
Abstract ... 5
1. Introduction ... 6
2. Literature review ... 11
2.1 Indigenous communities ... 11
2.1.1 Indigenous people in South Africa ... 11
2.1.2 Indigenous people in Nigeria ... 12
2.2 Conflict Dynamics ... 13
2.3 The Stakeholder Power distribution... 15
2.4 MNE Corporate governance practices ... 19
2.5 The National government as a moderator ... 22
3. Theoretical framework ... 25
3.1 Hypothesis 1 ... 26
3.2 Hypothesis 2 ... 28
3.3 Hypothesis 3 ... 30
3.4 The National government as a moderator ... 31
4. Data & Method ... 34
4.1 Sample & Data collection ... 34
4.2 Data assessment ... 34 4.2.1 Dependant variables... 36 4.2.2 Independent variables ... 36 4.2.3 Moderating variables ... 37 4.2.4 Control variables... 38 4.3 Method ... 38
4.4 Data Cleaning & dealing with missing values ... 40
5. Results ... 43
5.1 Descriptive statistics ... 43
5.1.1 Normal distribution ... 43
5.1.2 Frequency distribution analysis ... 44
5.2 The Variance Inflation Factor (VIF) ... 45
5.3 Correlation ... 46
5.4 Regression ... 47
5.5 Chi-Square test ... 48
6. Discussion & Conclusion ... 53
6.1 Limitation... 56
6.2 Conclusion ... 58
List of tables and figures
Figure 2.1 The stakeholder Typology, one, two, or three attributes present p. 16
Figure 3.1 Conceptual framework p. 26
Table 4.1 The different variables used for this study p. 36
Table 4.2 Stepwise linear regression model specification p. 40
Table 4.3 Chi-Square test model specification p. 40
Table 4.4 Frequency table of the ‘DJWSI & FTSE4Good Index’ p. 42
Table 5.1 Descriptive analysis of the scale variables p. 43
Table 5.2 Frequency distribution analysis of ‘Degree of violence’ p. 44 Table 5.3 Frequency distribution of ‘MNE stated policy towards Indigenous
communities’
p. 45
Table 5.4 The Variance Inflation Factor of the Independent variables, the moderators, and the control variables
p. 45
Table 5.5 Bivariate correlation matrix p. 46
Table 5.6 Stepwise linear regression analysis p. 47
Table 5.7 Frequency table of the Chi-Square test between the ‘Degree of violence’, ‘The MNE stated policy’, the ‘DJWSI 2014’, and the ‘FTSE4Good Index’
p. 49
Table 5.8 Chi-Square test results of table 5.7 p. 50
Abstract
Conflicts between Multinational Enterprises (further mentioned as MNEs) and Indigenous
communities are often about natural resource extraction, resulting often in conflicting relationships
with different degrees of violence. Within a conflict the power is not equally distributed between the
main stakeholders, such as the MNE, the Indigenous community, and the national government. In fact
due to overpowering MNEs and ineffective and corrupt governments, the Indigenous community is
mostly a demanding external stakeholder lacking legitimacy and power, since their needs and right are
often ignored. This is an important issue; however, little research has been conducted on the extent
to which existing governance practices effect this power distribution and especially how MNE
governance practices affect the conflict dynamics. Contrary to previous research, by taking a
quantitative approach, this study has been set up as a pilot study to explore the relationship between
several MNE governance practices (e.g., global sustainability benchmarks: Dow Jones World
Sustainability Index & FTSE4Good Index, MNE memberships with organisations that regard Indigenous
policies, MNE policy towards Indigenous people) and conflict dynamics (i.e., degree of violence and
length of the conflict). The national government (i.e., Government effectiveness and Control of
corruption) acts as a moderator in this research. Our findings show that only the number of MNE
memberships has a significant effect on the Length of Conflict, although not the expected effect. This
effect was not significantly moderator by the National government. The other hypotheses were
rejected. This paper contributes in two ways to the existing International Management literature, first
a theoretical gap has been filed by examining if the existing MNE governance practices have the
perceived and desired effect on MNE and Indigenous conflicts. Second, this study shows a new,
quantitative, research approach to the topic. By rethinking the application of MNE governance
practices the findings show their practical implication.
Key words: Indigenous community, conflict, Multinationals (MNE), stakeholder model, power distribution, Corporate governance, Nigeria, South Africa
1. Introduction
During the 1990’s when the economic globalisation started to emerge, an era of increased
cooperation between Multinationals (further mentioned as MNEs) and national governments started.
(Dunning, 1998) Even formerly hostile governments opened up their boarders to MNEs as they
believed the opportunities of trade and free market capitalism would improve the overall standard of
living. (Greider, 1997) New regional forms of cross-border production networks emerge. Therefore, all
interest groups, including indigenous communities, were effected by production activities of MNEs.
(Dunning, 1998) Due to the processes described above, Local communities have gained importance in
MNE activities, which has reputational as well as financial consequences. (Calvano, 2008)
An example of this transition is shown in the Niger Delta. Well before the 15th century the Niger Delta
region of Nigeria has been occupied by Indigenous communities of whom the Ogoni are one of the
largest with a population of 500.000. Traditionally the Ogoni live from fishing and agriculture until oil
was discovered in the second half of the 20th century. In 2009, oil accounted for 90 percent of Nigeria’s
export earnings and 80 percent of government revenue. (International Labour Organization and
African Commission on Human & Peoples’ Rights, 2009) The rights to sell or dispose of land belongs to
the community, while individuals of the community only have the right of usufruct, based on
customary law. The Ogoni claim that their culture and way of living is threatened by degradation of
the environment due to oil pollution. And even though they are the owners of the land, ‘the revenue
allocation formula places the control of oil revenues in the hands of the federal government of Nigeria.’
(International Labour Organization and African Commission on Human & Peoples’ Rights, 2009)
As stated by the literature and shown in the example above, in most conflicts MNEs are involved who’s
main business activity is concerned with resource extraction such as in the oil & gas industry, mining,
hydro-electric power generation, and agriculture. (Whiteman, 2009) Most conflicts in states that are
rich in natural resources are characterized by violence to control those resources. (Reno, 2003, p. 45)
a negative interaction or relationship throughout history. Over time the expectations of the public
demand improvement of ethical behaviour from resource industries towards Indigenous communities
which now adds more complexity to the matter. Industries are under pressure for sustainable resource
development with growing public investigation of corporate social and environmental performance.
(Lertzman & Vredenburg, 2005) As extraction of resources has an obvious impact on the environment
and therefore on the lands and lives of Indigenous people, this has led to ethical challenges often
resulting in conflict. (Lertzman & Vredenburg, 2005) Resource conflicts can become severe, inducing
violence and undermine the livelihood of communities and need to be addressed. (Suliman, 2005)
A conflict comes into existence when ‘‘Each party wants to pursue its own interests to the full, and in
so doing ends up contradicting, compromising, or even defeating the interest of the other.’’ (Ochieng
Odhiambo, 2000, p. 8) Therefore, we can say that conflict is a type of relationship between opposing
forces. (Deloges & Gauthier, 1997, p. 4) Those opposing forces in a conflict consist out of at least three
stakeholders; The National Government, The Indigenous community and the MNE. A large part in MNE,
national government and Indigenous community conflict is the stakeholder power inequality. Power
is "the probability that one actor within a social relationship would be in a position to carry out his own
will despite resistance." (Weber, 1947) According to Mitchell et al. (1997) an actor in a relationship has
power but only to ‘the extent it has or can gain access to coercive, utilitarian, or normative means, to
impose its will in the relationship.’ Traditional theories on stakeholder relevance tend to neglect the
interests of local communities. (Banerjee, 2000)
Even though MNE are paying more attention to get on common grounds with external stakeholders
(Harrison & John, 1996) Indigenous communities are still undervalued relative to other stakeholders.
‘Yet, traditional models for examining business’ relationship with its stakeholders usually ignore or
minimize power dynamics.’ (Calvano, 2008) Therefore, applying Corporate Social Responsibility
(Further mentioned as CSR) as a measure for conflict resolution is a topic often researched in relation
organisational studies. The understanding of the influence of the MNE and their governance practices
on the MNE and indigenous conflict remains underdeveloped.
In short, conflicts between MNEs and Indigenous communities are mainly driven by the control over
natural resources, resource management and territory. (Bebbington, et al., 2008) These conflicts are
complex and tend to become violent and therefore stretch over time. This is a result of stakeholder
imbalance and unequal power distribution. Due to more media attention and global awareness of
human rights violations and raised ethical concerns about MNE business activities, Nongovernmental
Organisations (further mentioned as NGOs) start to get involved and activism starts to emerge. They
demand for MNEs to answer for the way they do business by incorporating CSR practices into their
business activities and governance practices. Research confirms the positive effect on a company’s
image, strengthen of its brand, and stock value. (Porter & Kramer, 2006). However, this research
focusses on how CSR incorporation into governance practices actually affects what it is meant to affect,
conflict dynamics. This is an important issue; however, little research has been conducted on the
extent to which these MNE governance practices affect the conflict dynamics, and more particularly
the degree of violence and the length of the conflict. By applying a quantitative approach, and by
exploring in-depth several cases, this study addresses the following research question:
To what extent the MNE governance practices affect conflict dynamics?
Due to the underdevelopment of the country (i.e., Nigeria and South Africa) the economic opportunity
that arises with the entrance of the MNE prevails the Indigenous community rights. (Foster, 2012) This
opportunism is fostered by state weakness and corporate mis-governance. (Ikelegbe, 2005) This makes
the National government involved in the conflict an actor in the contest over power and wealth. As
mentioned, this stakeholder power distribution and therefore conflict dynamics is also affected by the
third important stakeholder, the National government. The government effectiveness and the control
and conflicts within Africa and Latin-America, with a specific focus on Nigeria and South Africa. This
research addresses the following moderator effect:
To what extent the MNE governance practices affect conflict dynamics and to what extend this effect is moderated by government effectiveness and control of corruption?
This research is set up according to what Tashakkori and Teddlie (1998, p. 83)state as a qualitative
data collection and analysis on a relatively unexplored topic, using the results to design and perform a
quantitative pilot phase of the study. A pilot study can be defined as pre-testing or ‘trying out’ a new
quantitative research design to, in this case, the topic of MNE and Indigenous conflicts. (Baker, 1994,
pp. 182-3)For a sample of 71 cases from 10 countries, we analyse the following relationship between
several MNE governance practices (e.g., Global sustainability benchmarks: Dow Jones World
Sustainability Index & FTSE4Good Index, MNE memberships with organisations that regard Indigenous
policies, MNE policy towards Indigenous people) and conflict dynamics (i.e., degree of violence and
length of the conflict). The findings show a significant relationship between the number of MNE
Memberships with organisations that regard Indigenous policy and the length of the conflict, although
not the expected and hypothesised effect. However, no other significant relationships were found. No
moderation effect was found.
First, this paper contributes to the International Management literature by examining if MNE
governance practices that incorporate CSR policies have the perceived and desired effect on conflicts
between Indigenous communities and MNEs. This is the main theoretical gap that has been identified.
This gap is discussed in-depth in the literature review and theoretical framework. Secondly, this study
contributes methodologically, as a pilot quantitative study in the area of International management,
‘this study fulfils a range of important functions and can provide valuable insights for other
researchers.’ (Van Teijlingen & Hundley, 2001). At the same time, in practical terms, the current study
provides insight in the effects of CRS incorporated governance practices and suggests that NGOs and
This Research will be structured as follows: After this introduction a literature review follows which
results into the theoretical framework that states the research question and hypotheses. The next part
will be the data & method section which elaborates on the research design and variables. Next the
results follow who will be discussed in the discussion together with an elaborate chapter on the
limitations and future research perspectives. Lastly this research will end with a conclusion and a
2. Literature review
This literature review will elaborate on different aspects of the research question, To what
extent the MNE governance practices affect conflict dynamics, under the umbrella of the stakeholder
theory purposed by Mitchell et al (1997). The three main stakeholders involved in a conflict, the
Indigenous community, MNE, and the National government, and their power distribution will be
discussed from different angles with respect to their influencers, NGOs and the National government.
It will discuss MNE governance practices in general and how these are linked to conflict dynamics.
2.1 Indigenous communities
‘The United Nations estimates that there are between three-hundred-fifty and five-hundred
million Indigenous People worldwide, comprising over five-thousand distinct groups.’ (Whiteman &
Cooper, 2000) Identifying Indigenous people is subjective to the context as there are numerous
criteria. One way of identifying Indigenous people is according to three criteria; cultural distinctiveness,
dependence on immediate natural environment, and self-identification in terms of political and social
marginalisation. (International Labour Organization and African Commission on Human & Peoples’
Rights, 2009) In South Africa there are two parallel definitions, one that refers to all African ancestry
as Indigenous people, the other refers to them as a ‘non-dominant groups or prior descent with distinct
territorial and cultural identities’. (Hitchcock & Vinding, 2004)
2.1.1 Indigenous people in South Africa
‘South Africa is dealing with the legacy of the racist apartheid policy, under which all
Indigenous peoples of South Africa were oppressed and discriminated against.’ (Economic and Social
counsil, 2005) The, since 1994, democratic government of south Africa has made tremendous efforts
by promoting human rights, to overcome the damage the old regime has conflicted to the Indigenous
communities. The main indigenous ethnic groups in South Africa are the; San People, Nama
communities, the Griqua association, and the revivalist Khoisan. Although, the 1996 constitution
(Economic and Social counsil, 2005) The indigenous ethnic groups tend to live on the lower end of the
socio-economic scale do to loss of land, forcing them to distance from their cultural heritage and way
of living. Most ethnic groups are, since the apartheid, fighting for recognition of their identity as a
distinct Indigenous community. (Economic and Social counsil, 2005) South Africa has made big steps
towards the full recognition of Indigenous communities and their rights, but they are not there yet.
Indigenous communities have the foundation right of land and with the assistance of NGOs they have
effectively used legislation for land restitution. (Hitchcock & Vinding, 2004) About ten thousand South
Africans speak one of the indigenous languages, therefore their children have difficulties in school
because of language barriers and cultural differences. However, it has been decided by national
legislation that the government has to ‘promote, and create conditions for, the development and use
of the Khoi, Nama and San languages’. (Hitchcock & Vinding, 2004) Slowly, Indigenous people get
elevated from their underprivileged position, with the help of the National government and NGOs their
rights are getting more established and acted upon.
2.1.2 Indigenous people in Nigeria
In Nigeria namely the Ogonis, the Ijaws, and the Nomadic Fulanis, are identified as Indigenous
people. (International Labour Organization and African Commission on Human & Peoples’ Rights,
2009) around four-hundred-thousand Ogonis live on around four-hundred square meters of land in
the Niger Delta of Nigeria. Their community is divided over four kingdoms and each kingdom speaks
their own language. Most live from agriculture and fishing but their livelihood is in danger since oil was
discovered in the area. (International Labour Organization and African Commission on Human &
Peoples’ Rights, 2009) Therefore, most oil and gas conflicts involve Ogoni people. The Fulanis are the
largest group of around five million people, which is nighty-five percent of the nomadic herders in
Nigeria. The Ijaws are the fourth largest ethnic group in Nigeria and are regarded as the oldest settlers.
‘Indigenous groups in Nigeria have the following human rights concerns: land and natural resource
economic and other aspects of cultural self-determination, and environmental degradation.’
(International Labour Organization and African Commission on Human & Peoples’ Rights, 2009)
Although, the law states that ‘self-identification must be regarded as a fundamental criterion for
determining an Indigenous people.’ (International Labour Organization and African Commission on
Human & Peoples’ Rights, 2009) The government still regards to ethnic groups rather than indigenous
groups. Many NGOs and civil society groups get involved in the self-identification process such as
‘Survival of Ogoni People (MOSOP), Social and Economic Rights Action Centre (SERAC), Economic
Rights Action Centre for Economic and Social Rights (CESR), and the Ijaw National Congress (INC).’
However, many Indigenous communities can be identified as such but do not have the voice to and
the means to fight for their rights.
Nigeria has been a democracy under a federal system of government, supervised by the military, since
1999. Corruption and self-interest of the government has been and still is a problem. Agreements such
as the Petroleum Acts of 1969 gives the National government control over the land and its natural
resources, undermines indigenous rights. Also the Ogoni people claim that the Nigerian state allows
oil companies to extract natural resources at the expense of the environment taking no International
best practices in account.
2.2 Conflict Dynamics
In most conflicts MNEs are involved who’s main business activity is concerned with resource
extraction such as in the oil & gas industry, mining, hydro-electric power generation, and agriculture.
(Whiteman, 2009) Mining refers to, for example the diamond and gold industry that is very developed
in South Africa. Therefore, most conflicts in states that are rich in natural resources are characterized
by violence to control those resources. (Reno, 2003, p. 45)According to Laplante and Spears (2008)
most criticism from communities is directed towards projects in the extractive industries as they are
disruptive to the environment, are complex and are often long. Some of these conflicts become violent
(Bebbington, et al., 2008) Especially in less developed countries it is seen that economic activities
prevail over Indigenous community rights. (Foster, 2012)This shows how the national government is
also an important stakeholder in the MNE and Indigenous community conflict. Often the national
government and the MNE show interdependent relationships, for example in Nigeria.
The most important economic driver of Nigeria is the oil and gas industry, providing for the total of
seventy percent of the government revenues. (Lawal, 2004) Oil has made Nigeria an international
trading partner, part of the international economic platform. The Niger Delta oil region is done with
the exploitation of their land and show resistance against the Nigerian state and the MNE oil
companies. (Ikelegbe, 2005) The central argument of the article states that; state weakness and
corporate mis-governance provides motivation and opportunity for violence, crime, arms proliferation,
opportunism, and escalation of struggles and conflicts. (Ikelegbe, 2005)
According to many studies ‘the incidence of primary commodity exports and specifically mineral
wealth in states has been found to be associated with conflict and the occurrence and duration of civil
wars.’ (Ikelegbe, 2005) ‘Oil and gas exploration, exploitation and associated transport installations
have been reported to have a variety of environmental, social and health impacts for Indigenous
communities across the world’. (Napolitano & Ryan, 2007, p. 6) This is related to the struggle between
different parties over the control of natural resources, which has led to increased appropriation and
privatisation through exclusive contracts with foreign firms, but also corruption, violence, and the
ignorance of indigenous rights. (Ikelegbe, 2005) This is underscored by the fact that the state is
involved as an actor in the contest over power and wealth. (Breytenbach, n.d.)
Since the emergence of oil production in 1958 in the Niger Delta in Nigeria, the power struggle for the
control over these resources began and Indigenous communities have been struggling since. Around
1990 the indigenous youth started to rebel against the government and the big oil corporations.
(Ikelegbe, 2005) This resulted into more extensive actions such as; occupation, abduction of MNE staff,
emerged, which was answered by the Indigenous communities with more violence to gain autonomy,
resource control and greater oil based benefits. (Ikelegbe, 2005) Over the years MNE and community
relations have improved and communities now often benefit from payments and settlements.
However, this is still not enough according to Indigenous communities and NGOs who started to get
more involved over time. Indigenous people seek justice, they perceive the natural resource
development as unjust, ‘despite the proliferation of corporate codes and social responsibility.’
(Whiteman, 2009) Also the various stakeholder relations programs seem to do nothing for the increase
of justice for the communities. (Whiteman, 2009)
2.3 The Stakeholder Power distribution
Even though MNE are paying more attention to get on common grounds with external
stakeholders (Harrison & John, 1996) Indigenous communities are still undervalued relative to other
stakeholders. However, conflicts are costly and time consuming and when played out in the media it
can cause reputational damage. The following court case of ‘Wiwa et al v. Royal Dutch Petroleum et
al.’ is a good example of how the unequal power distribution causes conflicts and how this can lead to
costly, time consuming activities for the MNE and damage to their reputation.
‘Royal Dutch Shell began using land in the Ogoni area of Nigeria for oil production in 1958. Pollution resulting from the oil production has contaminated the local water supply and agricultural land. Also, Royal Dutch/Shell for decades worked with the Nigerian military regime to suppress any and all demonstrations that were carried out in opposition to the oil company's activities. The oil company and its Nigerian subsidiary provided monetary and logistical support to the Nigerian police and bribed witnesses to produce false testimonies. In 1995, the company and its subsidiary colluded with the Nigerian government to bring about the arrest and execution of the Ogoni 9, who were a group of activists that were hanged on November 10, 1995 after a "trial" before a special military tribunal based on fabricated charges.’ (Center for Constitutional Rights, 2012)
Traditional theories on stakeholder relevance tend to neglect the interests of local communities.
(Banerjee, 2000) The stakeholder salience model shown in figure 2.1 (Mitchell, et al., 1997) is a good
model to understand how MNEs balance the competing interests of internal and external groups.
According to this model, the accumulation of three characteristics – power, legitimacy and urgency –
implies the influence on the corporate decision making process a stakeholder group has. The first
characteristic is power, which might be hard to define but is very easy to recognize, ‘It is the ability of
those who possess power to bring about the outcomes they desire' (Mitchell, et al., 1997). The second
characteristic is legitimacy, Weber's (1947) proposal states that legitimacy and power are distinct
attributes that can combine to create authority. Power and legitimacy are viewed as independent
variables in the relationship between manager and stakeholder, to capture the dynamic of this
relationship the last characteristic of urgency is added. Urgency can only exist when two conditions
are met; 1) when the relationship is of a time-sensitive nature 2) when the relationship is critical to the
stakeholder. (Mitchell, et al., 1997)
When applying this model on the conflict between MNEs and Indigenous communities, the MNE holds
the majority of power and managers have not perceived the community claims as legitimate, even
though there is a sense of urgency. (Calvano, 2008) This would place the Indigenous community in the
model above as a Demanding stakeholder. The Demanding stakeholder is the kind of stakeholder that
managers see as: ‘irksome but not dangerous, bothersome but not warranting more than passing
management attention.’ (Mitchell, et al., 1997) The urgency is trifling, without power and legitimacy.
Therefore, Indigenous communities stay in a salient state. NGOs who get involved in the conflict are
often a Definitive stakeholder if they poses the power and influence needed to change MNE policy
which depends on the NGO’s network, resources, and size. NGOs always seem to have legitimacy, if
stated by Langtry (1994) as; the firm is significantly responsible for their well-being or for those who
the NGO represents, and a moral or legal claim is hold against them. Also Urgency is acquired as the
relationship is of a time-sensitive nature and he relationship is critical to the NGO. This implies that if
no power is hold, the NGO becomes a dependant stakeholder. The third important stakeholder in MNE
and Indigenous conflicts is the National government. The national government often has the power
and the legitimacy but not the urgency. Their power increases when corruption is present, which
makes them a Dominant stakeholder. In the case of ‘Wiwa et al v. Royal Dutch Petroleum et al.’ the
salient state of Indigenous communities is enhanced by the corrupt government in Nigeria which
allows, in this case Royal Dutch Shell, to bribe the military so they will act in their advantage. This way
of doing business thrives in a liberal political climate where, as Friedman (1970) states ‘there is one,
and only one social responsibility of business: to use its resources and engage in activities designed to
increase its profits so long as it stays within the rules of the game.’
Since the 1990s Activist organizations and NGOs have grown more aggressive and effective in bringing
public pressures to bear on corporations, which caught most corporations by surprise. Over the years
the external stakeholders started to hold companies accountable for social issues and highlight large
financial risks for any firm whose conduct is deemed unacceptable. (Porter & Kramer, 2006) The first
concerned with the ways in which an organization exceeds the minimum obligations to stakeholders
specified through regulation and corporate governance.’ However, multiple institutions define
Corporate Social Responsibility in different ways. The European Commission (2011) states that CSR is
a concept whereby companies integrate social and environmental concerns in their business
operations and in their interaction with their stakeholders on a voluntary basis and in a context specific
way. The Australia Standards Association is developing a standard for Corporate Social Responsibility
and defines CSR as a mechanism to voluntarily integrate social and environmental concerns into their
operations and their interactions with their stakeholders, which are over and above the entities’ legal
responsibilities. (Standards Australia, 2015) All of these definitions have in some prevailing
justifications for CSR in common; Companies have a duty to be good citizens and to do the right thing,
a moral obligation so to speak, and they have the responsibility of environmental and community
stewardship. (Porter & Kramer, 2006) Next to these moral obligations there is also the fear of
reputational damage, therefore CSR can be used to improve a company’s image, strengthen its brand,
enliven morale, and raise stock value. (Porter & Kramer, 2006) Lastly, every company needs tacit or
explicit permission from governments, communities, and other stakeholders, to do business. It is
important to keep stakeholders satisfied. (Porter & Kramer, 2006)
Friedman (1970) argues that a business cannot have social responsibilities towards their external
stakeholders as they can only do well in CSR at their own expense, and a business has the ultimate goal
to make profit. This is more in line with the shareholder model which has a focus on the common
interest of wealth maximization between management and stockholder, assuming that there are
diverging interests between stockholders and management. (Letza, et al., 2004) Therefore he sees CSR
as the responsibility of the government only. Other critics talk about the self-interest assumption,
which assumes that CSR leads to a free rider scenario where corporations only take the social
responsible course if this is in line with their profitability objectives. (Regan & Allen, 1998) The
following example shows the free rider effect in the form of ‘corporate philanthropy to buy-off or
mean money or materials in exchange for support of the community. The amounts, although
significant for the communities, are a mere pittance for the MNE. Most Indigenous people have never
had any form of education, they are often illiterate, and therefore not always in the position to oversee
the long term consequences of the decisions of the MNE or of their own when they except the
buy-off. So presenting money to the community seems as a social responsible action, but in fact it might
be only done for the self-interest of the MNE than from a moral obligation.
Most developed countries have implemented regulations that mandate social responsibility reporting,
as well as ethical, social, and environmental risks should be listed in the annual report. This approach
is needed to integrate social considerations more effectively into core business and strategy. (Porter
& Kramer, 2006) Structured rules are needed to discourage the self-interest assumption, however the
effect of those CSR corporate governance practices is hard to measure. The effectiveness of rules and
regulations mandated by governments, but also global sustainability benchmarks such as the DJWSI
and the FTSE4God Index are still under debate.
2.4 MNE Corporate governance practices
‘Corporate governance can be defined broadly as the study of power and influence over
decision making within the corporation’ (Aguilera & Jackson, 2010, p. 487). According to Aoki (2000),
corporate governance concerns ‘the structure of rights and responsibilities among the parties with a
stake in the firm’. So corporate governance is about the control, power and influence within the
corporation and how this is structured and divided over the different firm stakeholders. Two basic
corporate governance models can be distinguished. The shareholder model which has a focus on the
common interest of wealth maximization between management and stockholder, assuming that there
are diverging interests between stockholders and management. (Letza, et al., 2004) While the
stakeholder model lies focus on responsibilities within the corporation rather than solely focussing on
profit maximization. While shareholders of corporations still value profit maximization, the rise of
financial results, as explained above. As the influence and size of firms grow they are expected to be
more than contributors to the global economy, they are expected to balance people, planet and profit
and manage the interests of multiple stakeholders. (Jamali, et al., 2008)
To create “fairness” and balance out the amount of influence between those different stakeholders,
corporate governance practices are used. The Importance of Corporate Governance lies in the quest
of refining laws, regulations and contracts that govern the company’s operations. (Page, 2005)
‘Governance thus sets the tone for the organisation, defining how power is exerted and how decisions
are reached.’ (Jamali, et al., 2008) The board of directors is perhaps still the most central internal
governance mechanism (Daily, et al., 2003) and one of the corporate governance practices most often
mentioned in the literature. Whereas some governance practices are more informal, the board of
directors is the formal governing body of every cooperation. (Freeman & Evans, 1990) The directors of
the board are responsible for the budget, for developing strategies and also for corporate political
activities necessary for carful execution of firm activities. (Ozer, 2010) Other mechanisms to exert
control are for example regulations such as; company law, Incentive systems (pay) and stakeholder
pressure such as: credit monitoring, auditors, analysts, and competition. ‘Corporate Governance is not
entirely effective without a sustainable CSR drive because a company has to respond to the needs of
its various stakeholders in order to be profitable and create value for its shareholders/owners.’ (Jamali,
et al., 2008) How CSR is incorporated with governance practices has, among others, been researched
by Kolk (2008). He focuses specifically on Fortune Global 250 companies and the inclusion of
governance items in their sustainability reports. For example; bringing a separate sustainability
department into existence, having a code of conduct, and having a person or body finally responsible
for sustainable issues. (Kolk, 2008) This research together with, for example the word count of specific
“green” and “social” key-words within the annual report, can provide quantifiable information. Some
companies implement more concrete governance practices such as an external advisory council or a
However, times have changed and companies are put more and more under pressure by the society
and NGOs to change their formal ways of governance and change their perspective on doing business.
Partly, due to some mayor scandals in various industries, the other stakeholders have gained
importance. Accountability is seen in the perspective of international codes such as those of The
Organisation for Economic Co-operation and Development with a mission statement that says to
‘promote policies that will improve the economic and social well-being of people around the world.’ (
Organisation for Economic Co-operation and Development, 2015) And also the International Corporate
Governance Network whose mission is ‘to inspire and promote effective standards of corporate
governance to advance efficient markets and economies world-wide.’ (International Corporate
Governance Network, 2015) These drivers of change, work together with large NGOs to force
corporations to think about the way they do business and force them to adapt and comply to new
regulations. So the traditional approach to accountability has changed, due to conflicts, incidents and
events that caught the attention of the public. Companies now use sustainable reporting voluntarily
to give account of the ‘societal and environmental implications of doing business to external
stakeholders.’ (Kolk, 2008) This has broadened including also the social and financial aspects, the
People, Planet, Profit approach. ‘This report is perceived as fulfilling a role in how companies account
for their CSR.’ (Kolk, 2008) This concept embodies the economic, legal, ethical and philanthropic
responsibilities towards their stakeholders in particular and the society in general. (Carroll, 1999)
So, managers are ‘stewards’ who must balance the interests of different groups for the good of the
firm ‘as a whole’. (Jamali, et al., 2008) The stakeholder theory emphasises sharing in control, especially
when risk cannot be dealt with by contract. When responsibility is shared, the control needs to be
shared as well so every stakeholder has an equal amount of influence on the outcome and feels
responsible. The literature suggests by incorporating CSR in the governance practices of the MNE,
power over the different stakeholders gets distributed more equally. This research extends the focus
in MNE governance practices actually has a positive influence on the power balance between the MNEs
and its various stakeholders.
2.5 The National government as a moderator
According to Mitchell et al. (1997) a party to a relationship has power but only to ‘the extent
it has or can gain access to coercive, utilitarian, or normative means, to impose its will in the
relationship.’ Therefore influence is related to having, or having access to certain resources. Having
power is related to certain rights and laws. Being able to exert influence and power depends on the
legal and political structure of the country and is effected by the level of corruption. ‘Poorly equipped
schools, counterfeit medicine and elections decided by money are just some of the consequences of
public sector corruption. Bribes and backroom deals don’t just steal resources from the most
vulnerable – they undermine justice and economic development, and destroy public trust in
government and leaders.’ (Transparency International, 2015)
The Participation model of Grant & Keohane (2005) discusses how governments can distribute power.
This model refers to the optimal political state of a country where the power distribution is in balance,
the Democracy. First of all, individuals need to be free to make their own decisions, which is the first
fundamental principle. The second fundamental principle of the model is that people, and their
interests should be treated equally. The Legitimacy depends on full participation, so ‘public power is
legitimate only to the extent that decisions serve the interests of the people as a whole’ (Grant &
Keohane, 2005) According to these principles the ones who have power ought to be accountable and
have the responsibility towards the ones effected by their decisions. In a democracy those
fundamental principles are institutionalised, however in Africa and Latin-Amerika most of the
countries have not institutionalised these principles or systems often due to corruption and other
disruptive events and mechanisms. Therefore the power distribution is out of balance.
In Nigeria, as well as in South Africa, power and influence are mainly distributed by corruption, shown
Group, 2014). This creates an opportunity for MNEs to acquire more power and ignore Indigenous
community’s interests as shown in the example below:
‘The court ruled in favour of the Bonny community of the Niger Delta, River state Nigeria, against Royal Dutch Shell. Shell was ordered to give back the land which they illegally received an ownership certificate, handed to them by the state government. The Bonny people and Elders filed suit against Shell of ‘secretly obtaining a certificate of occupancy on the property from the Rivers state government. They argued that under the July 1958 agreement between the two parties, Shell was only a tenant on the land while the Bonny people remained the landlord.’’ (Rowell, 2008)
Due to poverty and low development, MNEs are often wanted for job opportunities and for building
infrastructure, which creates mutual dependencies. A clear example of those mutual dependencies is
shown in the role Shell has in Nigeria. As ‘carriers of democratic values’ multinational companies like
Shell often take on the role of governments in these regions. Shell on its own generates seventy-five
percent of the Nigerian government’s revenues and nearly thirty-five percent of the country’s GNP.
This almost reverses the roles as the national government benefits greatly from the oil industry in this
case, and the MNE almost functions as a government. These kind of twisted and unequal power
relations cause national governments to be ‘more tightly connected to the needs and interests of
corporations and less so to the public interest’ (Bakan, 2004, p. 154) Combined with the high level of
corruption and poor government effectiveness, the Indigenous community rights gain less attention.
The governance practices of the MNE are mostly influenced by the pressure of external stakeholders,
such as investors, NGOs, Indigenous communities and the consumer preference. Due to pressure from
investors, MNEs list themselves in global sustainability benchmarks such as the DJWSI and the
FTSE4Good Index. NGOs, Indigenous communities and consumers have pressured MNEs to
incorporate CSR into their business activities by creating stated policies on Indigenous people. As the
literature states, also the National government has influence on the MNE and how they conduct their
corruption control. The same amount of influence is exerted on the Indigenous community. Therefore,
the government, government effectiveness and control of corruption, will act as a moderator in this
3. Theoretical framework
Conflicts between MNEs and Indigenous communities are mainly driven by the control over
natural resources, resource management and territory. (Bebbington, et al., 2008) These conflicts are
complex and tend to become violent and therefore stretch over time. This is a result of stakeholder
imbalance and unequal power distribution. The stakeholder salience model by Mitchell et al (1997)
explains the power distribution between the three main stakeholders (i.e., MNE, Indigenous
community, and the National government) discussed in this research. Due to the underdevelopment
of the country (i.e., Nigeria and South Africa) the economic opportunity that arises with the entrance
of the MNE prevails the Indigenous community rights. (Foster, 2012) This opportunism is fostered by
state weakness and corporate mis-governance. (Ikelegbe, 2005) This makes the National government
involved in the conflict an actor in the contest over power and wealth. (Breytenbach, n.d.) Due to more
media attention and global awareness of human rights violations and raised ethical concerns about
MNE business activities, NGO start to get involved and activism starts to emerge. They demand for
MNEs to answer for the way they do business by incorporating CSR practices into their business
activities and governance practices. The MNEs incorporates CSR practices into their governance
practices by getting listed global sustainable benchmarks such as the DJWSI and the FTSE4Good Index,
by writing a code of conduct and state specific policies of interaction with Indigenous communities,
but also by associating with and acquire memberships with organisations that are concerned with
Indigenous policies such as NGOs. Research confirms the positive effect of incorporating CSR practices
into their governance practices on a company’s image, strengthen of its brand, and stock value. (Porter
& Kramer, 2006). However, this research focusses on how CSR incorporation into governance practices
actually affects what it is meant to affect, conflict dynamics. This research therefore addresses the gap
that aims to investigate the actual effect of CSR on the conflict stakeholders, in this case the Indigenous
community. By applying a quantitative approach, and by exploring in-depth several cases, this study
addresses the following research question: To what extent the MNE governance practices affect
Contrary to previous research, by taking a quantitative, this study has been set up as a pilot study to
explore the relationship between several MNE governance practices (i.e., global sustainability
benchmarks: Dow Jones World Sustainability & FTSE4Good Indices, MNE memberships with
organisations that regard Indigenous policies, and MNE policy towards Indigenous people) and conflict
dynamics (i.e., degree of violence and length of the conflict). The conceptual model of this research is
illustrated in figure 3.1.
H1
H2
H2
H3
Figure 3.1 Conceptual framework
3.1 Hypothesis 1
‘Nongovernmental organisations (NGOs) have emerged as a powerful force on the
government and business landscape.’ (Schepers, 2006) Research in the International Business field has
described NGOs as ‘a third key set of players in value creation and governance around the world.’
(Teegen, et al., 2004) The United Nations (UN) has over two-thousand-five-hundred NGOs as
registered advisors. NGOs are advising several governments and businesses on forming policies and
several social and environmental issues. They are the voice of the society and advocate critical advice
on policy making. (Schepers, 2006) NGOs empower and assist local communities in efforts to increase
government services or form cooperatives against MNEs. They are seen as the intermediate between
the individual or communities and the government and MNEs. NGOs exist in so called ‘networks’. (Keck
& Sikkink, 1998) Within these networks, NGOs link with other NGOs through mutual agreements or M: Government effectiveness
& Control of Corruption
IV: MNE Memberships DV: Length of conflict
DV: Degree of violence
IV: MNE Stated Policy IV: FTSE4Good Index IV: DJWSI 2014
through memberships in third parties. The model distinguishes between two types of NGO networks,
the NNGO (North NGO) and the SNGO (South NGO). The NNGO is from a wealthier democratic society
and therefore has money and power. They associate with organisations such as the United Nations
and the World Trade Organisation. They acquire information from the SNGOs to pressure MNEs by
influencing shareholders and consumers in developed countries, and through this process change MNE
policy. The SNGO is from a low developed country, has little influence over the government, and often
has to deal with corruption. They depend on likeminded NNGOs for money and influence to change
government and MNE policy. (Schepers, 2006)
As the NGO is merely the advisor, they push the MNE towards creating ideal policy that deals with
Indigenous people as the NGO envisioned. However, Husted and de Jesus Salazar (2006) suggested
that ‘there is an optimal level of strategic CSR’ When the difference between social benefits and social
costs is maximized, and the amount of social good at the least social cost is realised. Therefore, they
believe MNEs only regard to CSR as a form of portfolio management. This topic is very much debated
in the light of prioritizing goals, environment over human rights for example. (Schepers, 2006) ‘So the
quest is than to search for an optimal portfolio.’ (Schepers, 2006) Keck and Sikkink (1998) identified
four political tactics used to influence MNE policy making; ‘information politics (unbiased scientific
report), symbolic politics (transforms an event into a symbol of ideals), leverage politics (using
governments to act), and accountability politics (hold MNEs accountable for promises and stated
policy).’ (Keck & Sikkink, 1998) By using media as a pressure tool, information is transformed into
power. The MNE is threatened by reputational damage, sales losses, and potential stock loses,
therefore the cost-benefit analysis will be made and new CSR policies might be adopted. An example
of this process is Nestlé in South Africa who was ‘pressured into altering its marketing of infant formula
in Africa through worldwide consumer boycotts organized by NNGOs’. (Sethi, 1994) MNEs have
initiated multiple CSR activities to repair damage they have done to either environment or human
This research addresses MNE memberships as the number of total memberships with organisations
that associate with Indigenous policy. These organisations or NGOs advocate Indigenous rights and
influence policy making within the MNE. They empower the Indigenous community by arguing their
rights and also by arguing on their side in MNE Indigenous conflicts. Therefore the length of the conflict
is shorter as the conflict is dealt with as NGOs add urgency and legitimacy to the stakeholder role of
the Indigenous community, therefore the conflict is addressed instead of neglected and ignored.
Therefore, we predict/hypothesize that:
H1: The more memberships the MNE has with organisations that associate with Indigenous policies, the shorter the length of conflict with the indigenous community.
3.2 Hypothesis 2
Several studies focus on how CSR should improve the position and the amount of influence Indigenous
communities have in a conflict situation. CSR is however a difficult mechanism to apply as it is based
on voluntary actions. Therefore, most developed governments have implemented rules that mandate
CSR incorporation, which is needed to integrate social considerations more effectively into core
business and strategy. (Porter & Kramer, 2006) It could be argued that formally committing to certain
CSR activities leads to more socially responsible behaviour, in the light of motivation theory. (O'Neil &
Drillings, 1994) The motivation or goal setting theory explains that the more conscious a person, or in
this case the MNE, is of the goal the more committed they become to achieving the goal and the more
likely they will succeed. (O'Neil & Drillings, 1994) A research on the commitment and loyalty difference
between a formal/written contract and an informal/handshake contract endorses this statement, and
shows that a written contract leads to higher commitment. (Frankel, et al., 1996) Therefore, when an
organisation formally commits to a specific CSR code of conduct regarding Indigenous people the
organisation is more likely to act on them.
The most well-known global sustainability benchmarks are the Dow Jones World Sustainability Index
subject to various ethical criteria. Research on the DJWSI show that being listed leads to a favourable
risk/return profile for investors. ‘In the long-term sustainability companies deliver more predictable
results. Therefore, investors will seek out leading sustainability companies for above average growth
on which they can rely.’ (Knoepfel, 2001) Some research expresses some criticism on the way of
measurement and checklists used for as well as the DJWSI as the FTSE4Good Index. ‘Measuring and
publicizing social performance is a potentially powerful way to influence corporate behaviour,
assuming that the ratings are consistently measured and accurately reflect corporate social impact.
Chatterji and Levine (2006) criticize the method of measurement used as the DJWSI has a strong focus
on economic performance and the FTSE4Good Index does not measuring economic performance.
Therefore, they might show different results in sustainability benchmarking. It has been argued by
numerous researches if these indices have the capacity to change corporate behaviour. Friedman and
Miles (2001) foresee a major improvement in CSR reporting. They predict that the FTSE4GoodIndex,
who was established in 2001, will be a catalyst for change and will pressurise companies to conform
to social responsible norms. A later study by Collison et al (2009) found a small agreement from the
respondents that ‘the FTSE4Good Index had led to some operational change’.
For this research the DJWSI and the FTSE4Good Index are coded as dummy variables where 0 mean
the MNE is not listed and 1 means the MNE is listed. It is expected that if an MNE is listed in the DJWSI
or in the FTSE4Good Index, their behaviour towards Indigenous people will be different, in a sense that
their rights are taken more into account and they are treated with respect to human rights. So, a
positive significant effect is expected and the conflict will be less violent. Therefore, we
predict/hypothesize that:
H2: Listing of the MNE in a CSR Global sustainable benchmark leads to a lower degree of violence with the indigenous community.
3.3 Hypothesis 3
Two corporate governance models often discussed in the literature are the shareholder model
and the stakeholder model. The shareholder model has a focus on the common interest of wealth
maximization between management and stockholder, assuming that there are diverging interests
between stockholders and management. (Letza, et al., 2004) However, the stakeholder salience model
by Mitchell et al (1997) suggest how to interact with all the different stakeholder and stretches the
responsibilities the MNE has towards their stakeholders beside profit maximization as suggested by
the shareholder model. Due to rising social activism, NGOs, and new societal expectations,
corporations are forced to examine other goals besides financial results. The stakeholder model is
therefore an often discussed model or tool to balance people, planet and profit by managing the
interests of multiple stakeholders. (Jamali, et al., 2008)
Not solely NGOs and activists are urging MNEs to adopt more CSR business practices, also shareholders
have taken a discourse from the traditional shareholder approach. A new investment approach, Social
Responsible Investment (SRI), emerged and uses both financial and non-financial criteria to asses asset
purchase. (Guay, et al., 2004) SRI funds are growing rapidly and gain popularity globally. As discussed
by Guay et al (2004) SRI influences the corporate governance practices of MNEs and the policies they
adopt. It aims at maximizing profits by incorporating CSR practices into business activities, which can
be seen as an incorporation of both the shareholder and stakeholder theory approach. Through stated
policy and incorporated CSR practices Indigenous communities can be empowered as their rights are
accounted for in approaching business activities. In line with the stakeholder approach, this topic is
discussed by Crawley and Sinclair (2003) who researched the influence of the stated policy of
Australian mining companies and the effect on interaction with Indigenous communities. An effect of
positive change and increased ethical behaviour was found, however under the condition that the
intention of the mining company was to share power with the Indigenous community. Additional they
found that companies who exceeded the “basic requirements” (Crawley & Sinclair, 2003, p. 364) were
Indigenous communities, use humane and non-violent resources to resolve a conflict. Especially when
communities are involved in the process the conflict could be resolved in a collaborate way.
This research addresses MNE stated policy towards Indigenous communities into three categories. The
first category states that the MNE has no policy towards Indigenous communities. This implies there is
no mention of Indigenous communities in their annual reports, no separate section that addresses CSR
practices concerning Indigenous communities, and no mention of Indigenous communities on the MNE
website. The second category states that the MNE only mentions vague statements about interacting
with Indigenous communities or only mention certain CSR practices involving local communities in the
area without a specific reference to Indigenous communities. An example of a vague statement is how
Mineral Commodities Ltd. Addresses CSR and governance practices on their website; ‘Mineral
Commodities Ltd. strives to be a responsible corporate citizen… and is committed to conduct business
within the spirit and letter of the laws of all jurisdictions we operate in.’ (Mineral Commodities Ltd.,
2015) The last category states strong policy which means that the MNE acknowledges Indigenous rights
through actively getting involved in empowering and livelihood improving projects or clearly state how
they tend to meet Indigenous needs and rights as a stakeholder. As the Indigenous community is an
important stakeholder in the MNE Indigenous conflict, a strong MNE stated policy towards Indigenous
communities would empower the communities. This empowerment influences the conflict dynamics,
therefore, the degree of violence will be lower as the Indigenous communities are treated according
to the MNE stated policy, with regard to their rights and with respect for their needs. Therefore, we
predict/hypothesize that:
H3: The stronger the MNE stated policies towards Indigenous communities, the lower the degree of violence with the indigenous community.
3.4 The National government as a moderator
National governments all over the world lack in institutional checks and balances to constrain
to come to mutual beneficial agreements, especially when it comes to conflict situations. Due to
politics there is potential coercion which effects the balance of power. (Grant & Keohane, 2005) The
problem lies with the absence of ‘an effective constitutional system that constrains power in an
institutionalized way.’ (Grant & Keohane, 2005) Even minimal constraints seem absent in domestic
governments, which gives powerful actors such as MNEs a change to wield power or even abuse their
power for their own good.
If both government effectiveness and control of corruption are high, conflicts between Indigenous
communities and MNEs would be resolved through the Institutions of the National government, as
power and justice will be granted to those who rightfully deserve it. However, if both of them are low,
the conflict cannot be fairly treated in court and will be resolved in a different matter, assumable by
force from both parties. When power is "the probability that one actor within a social relationship
would be in a position to carry out his own will despite resistance." (Weber, 1947) A corrupt system
will provide individuals or even whole political parties with power they do not necessarily deserve or
are granted by the society. This can cause conflicts to get “resolved” outside the rule of law and beyond
any ethical considerations. Boundaries disappear as extensive power creates the opportunity to carry
out its will by force. Corruption and poor government effectiveness fosters this effect which again is
fostered by mutual dependencies between corporations and national governments. These kind of
twisted and unequal power relations cause national governments to be ‘more tightly connected to the
needs and interests of corporations and less so to the public interest’ (Bakan, 2004, p. 154) This effects
not only the power distribution between al the conflict stakeholders but undermines the
empowerment of the Indigenous community. This can escalate into more violent conflicts that will
stretch over time, due to lack of interference and complexity.
The two moderating variables (i.e., Government effectiveness and control of corruption) were coded
from the World Governance Indicators (WGI). These were coded as ordinal variables with six
the degree of violence as well as the length of the conflict, as low government effectiveness and control
of corruption leads to a higher degree of violence and an increased length of conflict. The literature
has led to the following moderator effects of Government effectiveness and Control of corruption on
4. Data & Method
4.1 Sample & Data collection
Pilot studies are often based on a small sample size (Van Teijlingen & Hundley, 2001). The
sample consist out of seventy-one case studies on conflicts between Indigenous communities and
MNEs in ten countries (i.e., South Africa, Nigeria, Ecuador, Colombia, Mexico, Guatemala, Peru, Kenya,
Uganda, and Tanzania). No particular time frame has been chosen as it difficult to determine when a
case fits a certain time frame as it may have started in 1968 but is still ongoing, or because the start of
a conflict is uncertain. A conflict is classified as "any relationship between opposing forces whether
marked by violence or not" (Castro & Nielsen, 2001). For this study the opposing forces are the
Indigenous community and the MNE. Generally, the cases are established by third parties to the
Indigenous community and MNE conflict such as NGOs, law firms and other groups that advocate
indigenous sovereignty. The sample is selected by availability. Those Indigenous communities who
were unable to draw the attention from NGOs and media to their conflicts with MNEs were excluded
from this study as no information on these conflicts can be found. This limits the sample to those
conflicts that get international attention. As a quantitative approach to this subject has never been
done before, creating a database was challenging and asked for a pioneering approach where
availability, besides quality of the data, was of primary importance. High quality data/cases are
characterized by the amount of detail and the reliability of the source.
The data was obtained from several resources, such as newspaper articles, UN reports, specialised
websites on indigenous conflicts, court websites and NGOs or governmental websites. Information on
the relationship between Indigenous communities and the state was found at indigenous rights
organisations or from ethnographic descriptions of communities.
4.2 Data assessment
All cases are analysed and coded into a set of variables. The variables and coding manual were
for his future research on this topic. Due to the collaboration with other master students who work on
the same topic but code conflicts from different countries, forty-five variables were coded. For this
study, only a few of those were used as shown in Table 4.1 below.
With the research question in mind, to investigate a possible relationship between MNE governance
practices and the effect on conflict dynamics, conflict dynamics will be the dependant variable (DV).
The Independent variables (IV) are the different MNE governance practices. The moderator is the
National government who exerts power on both the MNE and the Indigenous communities.
Relation Name of variable Coded Type of variable
De p en d a n t Va ri ab le (DV ) – C o n fl ic t Dyna m ic s
Length of conflict Coded as: ‘number of months’ Scale
Degree of violence 1: ‘Low level of violence involving; Legal system, Road block, and Occupation of any property’ 2: ‘Medium level of violence involving; Destruction, Damage, Injuries, and Kidnapping’
3: ‘High level of violence involving: Torture and Death’ Ordinal In d ep en d en t Va ri ab les (IV) – MN E g o ve rn a n ce p ra cti ce s
MNE stated policy towards Indigenous communities
1: ‘No mention of community consent or no mention of specific policy’
2: ‘Vague statements like “supports consultation”, but with no explicit mention of consent’
3: ‘Strong statements like “support prior and informed consent”’
Ordinal
MNE memberships Coded as: ‘number of MNE memberships in organisations who associated with indigenous policies’
Scale
FTSE4Good Index 2013
1: ‘yes’ 0: ‘no’ Nominal
DJWSI 2014 1: ‘yes’ 0: ‘no’ Nominal
Mo d er a to r (M) Government effectiveness
Worldwide Governance Indicators (WGI) 2013 in categories:
1: 0-10% 4: 50-75% 2: 10-25% 5: 75-90% 3: 25-50% 6: 90-100%
