The role of national governance in conflict resolutions between MNEs and indigenous communities, and the moderating effect of income inequality and
corruption
MSc. in Business Administration International Management Track
June 29th, 2015
Student: Lizbeth Gutiérrez Saltijeral / Student’s Nº 10826149
University of Amsterdam, Faculty of Economics and Business Supervisor: Dr. Ilir Haxhi
University of Amsterdam, Amsterdam Business School Second reader: M.Sc. Francesca Ciulli
STATEMENT OF ORIGINALITY
This document is written by Lizbeth Gutiérrez Saltijeral who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
TABLE OF CONTENTS
ACKNOWLEDGEMENTS ... 3
ABSTRACT ... 4
1. INTRODUCTION ... 5
2. LITERATURE REVIEW ... 8
2.1 Indigenous peoples and their governance practices ... 15
2.2.Corporate Governance ... 16
2.3 Country governance and the role of institutions ... 18
2.4 Indigenous conflicts ... 20
2.5 Research gap and research question ... 22
3. THEORETICAL FRAMEWORK AND HYPOTHESES ... 23
3.1 Framework ... 30 4. METHODOLOGY ... 31 4.1 Data collection ... 31 4.2 Sample ... 32 4.3 Variables ... 33 4.3.1 Dependent variables ... 33 4.3.2 Independent variables ... 34 4.3.3 Moderating Variables ... 35 4.3.4 Control Variables... 37 4.4 Method ... 38
5. RESULTS AND ANALYSIS ... 40
5.1 Descriptive statistics ... 40
5.2 Multicollinearity tests ... 42
5.3 Correlation analysis ... 43
5.4 Regression analysis ... 49
6. DISCUSSION ... 53
6.1 Findings and Academic Relevance ... 53
6.2 Limitations and Future Research ... 57
7. CONCLUSION ... 59
LIST OF TABLES AND FIGURES
Figure 1 Conceptual framework 30
Table 1 Regression on degree of violence 40
Table 2 Regression on length of conflict 40
Table 3 Multicollinearity test for degree of violence 43 Table 4 Multicollinearity test for length of conflict 43
Table 5 Scale Means, SD's and Correlations 48
Table 6 Regression on degree of violence 51
Table 7 Regression on length of conflict 52
Appendix 1: Variables 62
Appendix 2: Overall correlation matrix 63
ACKNOWLEDGEMENTS
I would like to acknowledge the assistance of Dr. Ilir Haxhi, my thesis supervisor, for his guidance and support to overcome the obstacles we faced throughout this process.
I wish to thank my big family in Mexico, especially my mom, dad, Ingrid and Steffi; for always showing great interest on my personal and professional development and for their unconditional support to achieve my dreams. Without them I would not be here.
I would also like to thank my boyfriend, Ed, for always being there, for inspiring me and helping me find motivation when it seemed impossible to find.
I am also grateful with my very best friends Laima and Susann, who made the experience of doing a Master’s fun and unforgettable.
ABSTRACT
This study explores the dynamics during conflict resolution between national governments, MNEs and indigenous communities in Latin American and African countries. More specifically, we study the extent to which the quality of country governance affects the conflict resolutions. Acknowledging the multi-level nature of these governance practices in the decision making process, we propose a conceptual framework highlighting the central role of the regulatory quality and the government effectiveness in alleviating the degree of violence and the length of a conflict. Grounded in an empirical analysis, the framework explores how different levels on these two variables impact the degree of violence and the length of a conflict; as well as how different levels of income inequality and control of corruption moderate this impact. For this we analyze community-level, MNE-level and country-level factors that affect the conflict resolution for 71 conflict cases in Colombia, Ecuador, Guatemala, Mexico, Peru, Kenya, Nigeria, South Africa, Tanzania and Uganda. Our findings suggest that, indeed, there is a relationship between the quality of a country’s governance, and the intensity and the length of the conflicts between MNEs and indigenous people. These findings contribute to the international management field by identifying the main agents that play a role in a conflict between MNEs and indigenous communities, as well as the relationships between these agents and their impact in the conflict resolution. This will aid governments, MNEs and indigenous people develop more efficient mechanisms to alleviate conflict between them by emphasizing the influence that regulatory quality and government effectiveness have.
1. INTRODUCTION
According to the UN, there are approximately 400 million indigenous people spread across 70 countries worldwide. They represent about 6% of the world’s population and 90% of the cultural diversity. In addition, indigenous peoples hold 20% of the earth’s landmass that preserves 80% of the world’s biodiversity (Who Are Indigenous Peoples, n.d.). The richness of indigenous peoples regarding the natural resources they possess is an important reason why they have become the target of multinational enterprises’ (MNEs) interests.
In order to help nations and organizations avoid or decrease the number of conflicts between MNEs and indigenous governance practices, some international institutions like the United Nations with their Permanent Forum on Indigenous Issues (UNPFII) have developed a main concept of good governance that involves indigenous practices. Some recommendations by the UNPFII (2014) state that “good governance must be achieved at the international, national, regional and local levels and applies to governments as well as corporate organizations and other institutions, including the governments and institutions of indigenous peoples” (p. 6). These recommendations also establish a mutually reinforcing and interlinked set of principles on which good governance should be based: transparency; consensus-building; responsiveness; effectiveness and efficiency; accountability; equity and inclusiveness; participation; human rights; consultation and consent; and the rule of law.
Finally, good governance is about who has access to the decision-making process regarding to the resources that result in revenues to the people (UNPFII, 2014). Despite the efforts of many international organizations such as the UNPFII’s to establish a
common set of principles for good governance, there is still room for further understanding the extent to which national governance practices reinforce or hinder the conflict resolution between MNEs and indigenous people.
Several scholars have studied the relationship between MNEs’ corporate governance practices and different national contexts. However, little attention has been paid to indigenous governance and its implications for the MNEs choice of governance practices when entering indigenous communities. National governments, indigenous peoples and MNEs have to work together while discussing affairs that concern them in order to reach peaceful agreements that take each party’s concerns into account during the decision making process. By enabling mechanisms that facilitate consensus-building between the three groups one would expect that fewer conflicts would arise, or that the length and degree of violence of these conflicts would decrease. Regardless of what literature may suggest, considerable conflicts can still be seen in these countries with high degree of violence; and in many cases reaching an acceptable solution for all the party’s involved seems to be distant from the near future.
Additionally, previous literature has failed to address the possible moderating effects of income inequality and corruption in the intensity and duration of conflicts. In response to this existing gap, the present study aims to analyze these effects. Hence, our research question is twofold:
(1) To what extent the quality of national governance affects conflict resolutions between MNEs and indigenous communities, and (2) what is the moderating effect of income inequality and corruption on this relationship?
MNEs and indigenous communities in Latin American and African countries. With this study we aim to assess the extent to which the quality of the national governance influences the conflict resolutions. Understanding the multilateral dynamic of these governance practices in the consensus-building process, we developed a conceptual framework emphasizing the role of the regulatory quality and the government effectiveness in alleviating the degree of violence and the length of a conflict. Based in an empirical analysis, the framework explores how different levels on these two variables impact the degree of violence and the length of a conflict; as well as how different levels of income inequality and control of corruption moderate this impact.
The research project pursues firstly to deepen the studies of the factors or conditions that endorse the rise of conflict between MNEs and indigenous people in Colombia, Ecuador, Guatemala, Mexico, Peru, Kenya, Nigeria, South Africa, Tanzania and Uganda. Secondly, to analyze the extent to which the country’s government is able to intervene effectively or provide mechanisms to reach consensus between the two groups. Using an Ordinary Least Squares (OLS) regression analysis, our findings suggest that the relationships we argue could exist. In other words, our results show the same direction of the relationships that we expected. However, we are prevented from drawing conclusions since our results were not statistically significant.
Our findings contribute to the international management field: firstly, by identifying the key actors in a conflict between MNEs and indigenous communities. Secondly, by analyzing the relationships between these actors. And thirdly, by exploring the influence of these key actors in the conflict resolution. In addition, this will have a practical contribution to the field, as the findings will aid governments, MNEs and
indigenous people to develop the appropriate programs and mechanisms to reduce the violence and duration of conflicts.
In the first section of the paper we describe briefly the concepts of indigenous peoples and their governance practices, later we explain the notions of corporate governance and government institutions, followed by an example of an indigenous conflict in Ecuador that illustrates the type of conflicts that are subject of this study. Second, we propose a theoretical framework and explain the research design. Subsequently, we present and analyze the empirical results of the study; which we discuss afterwards. Finally, we draw the main conclusions and contributions of the research paper to both practice and theory.
2. LITERATURE REVIEW
The frequency and severity of conflict together with increased global foreign direct investment in the past decades has raised interest for the international management field, deriving in a considerable amount of studies that examine the causes that drive conflicts between MNEs and indigenous peoples.
The conflicts analyzed in this study have as common denominator the dispute over natural resources and their exploitation such as oil, gas, minerals, land, forests, and the construction of dams for generating hydroelectric power.
In lieu to have a better understanding about the conflict dynamics, we group previous literature regarding this type of conflicts based on the perspective they take depending on the agent that takes main action during the conflict resolution.
protect the resources, manage and control individuals for the same purpose. The second approach considers MNEs governance as the main actor in charge of developing strategies that seek a responsible use and exploitation of resources. Lastly, the third perspective relies on the government ability and its institutions effectiveness to manage the resources and mediate the relationship between MNEs and indigenous people.
In this research we focus on the third perspective. Nonetheless, it is important to recognize the different roles that the three key agents play under each perspective in order to understand the extent to which each agent can maneuver in the multilateral relationship: Country governance (government institutions) – Corporate governance (MNE practices) – Indigenous governance (local communities’ practices).
The first perspective considers the role of the community as the main player during conflict resolution. Poor conservation outcomes caused by invasive MNEs’ strategies, persuaded policy makers and academics to rethink the role of community when aiming for the conservation of resources, as well as their conscious and responsible use (Agrawal & Gibson, 1999). This perspective holds that a community-based management is an effective way to preserve resources for reasons such as: the specific knowledge communities possess over the resources on dispute; the well-founded social structure they have that has allowed them to achieve an efficient resource management at a community-level throughout history; and the vast support they are able to pull from international agencies such as the USAID, World Bank, IDRC, CIDA, Worldwide Fund for Nature, Conservation International. NGOs’ attention to indigenous claims regarding natural resources and human rights violations helped raise aboriginal voices to reach international authorities (Borda, O. F. 1985).
Although this vision of community as the key actor for conservation and resource management can be easily generalized, it is important to acknowledge the interests and decision-making processes within and between communities, as well as their relationship with other social actors, in order to ensure that indigenous communities will indeed advocate for the resources’ conservation (Agrawal & Gibson, 1999).
Some scholars assume that environmental degradation mirrors a growing lack of synchrony between nature and communities; an implied solution for this is to rehabilitate community organizations such as Community-based Natural Resources Management organizations (CBNRM) (Leach, Mearns & Scoones, 1999). CBNRM lies on the recognition that local communities must have power to make decisions about the natural resources they possess in lieu to encourage sustainable development (Rozemeijer & Van der Jagt, 2000). Moreover, CBNRM is grounded on the assumption that indigenous communities have a greater interest in the conservation and protection of natural resources than centralized government or MNEs (Twyman, 2000).
This approach that holds that sustainable development should rely on local-level solutions resulting from community initiatives is supported by international agencies like United Nations Conference on Environment and Development (UNCED) (Ghai & Vivian, 2014). Even a few decades ago, environmental plans including the Desertification Convention, Agenda 21 and the 1992 Earth Summit, strongly advocated solutions with a combination of government decentralization and devolution to indigenous communities of responsibility for the natural resources they held as a community (Leach, Mearns & Scoones, 1999).
government’s ability to suppress destructive intrusion and support conservation programs is limited, therefore communities should be empowered to do so (Agrawal & Gibson, 1999).
The second perspective views MNEs governance practices as responsible to respond to conflict and manage relationships between governments and indigenous communities in lieu to reduce risks for the business and avoid having to exit the country; which in many cases can be even more costly than engaging in conflict-reduction activities (Oetzel, Getz & Ladek, 2007). This perspective argues that governments lack the capacity, the resources and sometimes even the willingness to control and/or resolve conflicts within their borders, this together with multilateral aid agencies’ reluctance to intervene, leave MNEs operating in those countries with no option than to respond to these conflicts in order to minimize their investment risk (Getz & Oetzel, 2009). The increasing recognition of the important role MNEs’ play during conflict resolution has raised managers’ interest on integrating sustainable activities to their operations. Ten years after the UNCED was held in 1992, the role of the private sector regarding sustainable development was emphasized at the UN World Summit on Sustainable Development (WSSD) in order to create a sustainable global society (Ingram et al., 2013).
For this purpose, several tools have been developed to guide firms in adopting environmental and social sustainable focus practices. One example of these tools is the concept of Corporate Social Responsibility (CSR), which integrates values, environmental and social concerns in their operations, as well as in their relationships with their stakeholders (OECD, 2001). CSR is considered a “Triple-Bottom-Line-
Approach” since it provides guidance for companies to achieve a balance between economic, environmental and social needs (López, Garcia & Rodriguez, 2007).
In addition to these advantages, MNEs have rising interest in adopting socially responsible behaviors as they are considered to be a good strategy that should result in better corporate management and therefore performance (López et al., 2007). Managers and scholars are increasingly recognizing that adopting strategies related to sustainable development, such as CSR practices have a positive impact on the firm’s reputation, financial performance, management quality and productivity, talent retention, brand image and access to capital (Sariannidis, Koskosas, Kartalis & Konteos, 2009). In aiming to enhance shareholders investments MNEs’ executives endeavor activities that reinforce the firm’s commitment to sustainable development. A popular way to do so is by joining highly regarded Socially Responsible Investing (SRI) indexes such as: Dow Jones Sustainability Index World 2014 (DJSI), KLD Broad Market Social Index, FTSE4GOOD, Domini 400 Social Index, Natur-Aktien-Index (NAI) and GreenTec Climate 30 (Sariannidis et al., 2009).
For the purpose of this study, we considered MNEs’ membership in the DJSI in order to analyze the firms’ sustainability focus, as they are the first global indexes tracking the financial performance of worldwide leading companies with sustainable-driven strategies (Sariannidis et al., 2009). The DJSI comprise five benchmarks; the global, the Eurozone, the European, the North American and the U.S. (Sariannidis et al., 2009). As mentioned before, the DJSI addresses three dimensions of the firm: economic, environmental, social.
governance; codes of conduct, compliance, corruption and bribery; crisis and risk management; and specific criteria based on the industry they operate. To examine a firm’s environmental dimension the DJSI evaluates its environmental reporting; environmental performance (eco-efficiency); and industry specific criteria. To address the third dimension, the DJSI analyzes the firm’s talent attraction and retention; human capital development; corporate citizenship/philanthropy; labor practice indicators; social reporting; and industry specific criteria (Sariannidis et al., 2009).
Companies and investors acknowledge that investing in accordance with sustainable principles, as those comprised in the concept of CSR and the evaluation criteria of the DJSI, leads to good economic and financial performance, thus creating long-term value (López et al., 2007). Moreover, previous empirical studies support the conclusion that firms listed on the DJSI perform better than firms only listed in the Dow Jones Global Index (DJGI), which leaves out the firms sustainability focus; and that these differences are related to CSR practices (López et al., 2007). Additionally, other studies provide evidence that there is a sustained positive stock market reaction when firms join the DJSI, and that there is a temporary although not sustained loss of their stock market value when they are removed from the index (Robinson, Kleffner & Bertels, 2011). For these reasons, MNEs have increasing interest not only in maximizing profits but also in making a positive overall contribution towards the sustainability of the environment and the communities where they operate (Gibson, 2006).
The third perspective considers country’s government as the main actor responsible of setting the rules to which individuals and enterprises have to comply. Governments set
these rules through institutions that structure social, economic and political interactions (North, 1991).
However, whether the effects of good quality of governance practices are indeed as important as the international administration community assumes, is still under debate (Holmberg, Rothstein & Nasiritousi, 2009). On one hand, some studies (e.g. López, 2004) show that high quality of government leads to greater income inequality; while other studies (e.g. Gupta et al., 1998) show the opposite, high quality of government resulted in smaller income inequality.
Although the role of national governance in solving conflicts has been subject of a large extent of studies, there is still a broad gap between what the literature has developed and contributed to the academic field, and the actual governance practices. Dukes (1996) succeeds in recognizing this issue. He notices that although an extensive field studying governments’ interventions in conflicts already exists, and which includes a broad set of practices; the practice field is still at a developing stage (Dukes, 1996). As a result, the potential challenges that national governance may face during the development process offers new possibilities for future research (Dukes, 1996). Therefore, we seek to deepen the current understanding of the national governance role during conflict resolution, in the context of confrontations between organizations and indigenous people.
By reviewing these three perspectives, one can notice an overlap of activities; which give place to multilateral collaboration, but who is the main responsible for handling this relationship, is still under debate. However, this paper argues that governments remain as the key actors in managing conflicts between MNEs and indigenous communities.
2.1 Indigenous peoples and their governance practices
Considering the diversity of indigenous peoples, an official definition of indigenous, or also called aboriginal peoples, has not been adopted. Nevertheless, the UNPFII and the International Labour Organization (ILO) have set some characteristics that mostly define them, such as: they descend from pre-colonial inhabitants in their region; they have a close tie with their land in economic and cultural practices; they self-identify as indigenous peoples at the individual level and are accepted by their communities as members; they have distinct language, culture, and beliefs; and they are resolved to maintain and reproduce their ancestral environments and systems as distinctive peoples and communities (UNPFII, 2006).
However, in the last decades as a slow advancement toward a greater recognition of indigenous peoples has taken place, so has a shift toward self-identification as the general form to identify members of aboriginal groups. In some cases, these changes in the criterion to identify indigenous peoples has led to measurable shifts in the estimated numbers of aboriginal peoples. For example, in Peru, when language is selected as the main identifier, around one-quarter of the population is considered aboriginal. In Guatemala, on the other hand, when self-identification is chosen as the key identifier, some changes in the estimated indigenous population are noticed; during the war these numbers were lower than after the Peace Accords in 1996; meaning that the number of people willing to self-identify as indigenous peoples increased (Layton & Patrinos, 2006). These shifts make it harder to accurately estimate the number of members in a specific indigenous group, something important to consider in this kind of studies.
The existing literature has studied different organizational practices in indigenous communities throughout the world. In his paper, Doxtater (2011) studied the indigenous governance of a North American Mohawk community called ‘Kanata’, located in Canada. He focused on analyzing how the decision making process was carried out and how did members of the community participate. He noticed an indigenous governance model where male ‘chiefs’ performed a judiciary role and a strong influence that indigenous mothers (matrilineal descent) had on it. Doxtater (2011) describes the indigenous mothers as “an ‘executive’ branch (of authority) that includes aides, counselors, mediators, health specialists, or any skill or duty used to manage the affairs of the nation” (p. 390). Later, Doxtater (2011) identified another group that represents the rights and freedom of the people. He states that building consensus between the judiciary, executive and representative domains is fundamental to prevail their communities (Doxtater, 2011). These ways of building consensus between the three parties, i.e. the indigenous community, the local government and the firm, are precisely the subject of the present study. The easiness with which these groups coexist and participate in the decision making processes regarding common matters, will serve as an indicator of an effective government mechanism that can be reflected in stable institutions or a prevailing rule of law. Distressful conviviality, on the other hand will indicate the opposite, i.e. government inability to conciliate the MNE and the indigenous group on dispute.
2.2.Corporate Governance
perspectives on which it is studied, including economics, law, management, political science, sociology and culture. From an economic approach Zingales (1998) defines corporate governance as “the set of constraints that shape the ex post bargaining over the quasi-rents generated in the course of a relationship” (p. 496). A legal perspective characterizes corporate governance more extensively to comprise factors that go beyond private contractual agreements. From this perspective Blair (1995) refers to corporate governance as “the whole set of legal, cultural and institutional arrangements that determine what publicly traded corporations can do, who controls them, how control is exercised, and how the risk and returns from the activities they undertake is allocated” (p.3). Whereas a sociological view allows an even broader perspective of the organization, which mostly focuses on the authority and power relationships in which firms are embedded. In his article, Davis (2005) defines corporate governance as “the structures, processes, and institutions within and around organizations that allocate power and resource control among participants” (p. 143).
For the purpose of this study, a cross-national comparative corporate governance perspective will be taken in order to allow an analysis across the Latin American and African countries before mentioned. Aguilera and Jackson (2010) define comparative corporate governance as “the study of relationships between parties with a stake in the firm and how their influence on strategic corporate decision making is shaped by institutions in different countries” (p. 491). A comparative approach to study corporate governance means that the diversity across countries must be taken into account. Moreover, a comparative analysis pursues to assess corporate governance in relation to its national institutional context, considering the respective capital market, labor market,
legal system, political system and so on (Aguilera & Jackson, 2010).
2.3 Country governance and the role of institutions
Kaufmann et al., (1999) define governance as: “the traditions and institutions by which authority in a country is exercised. This includes (1) the process by which governments are selected, monitored and replaced, (2) the capacity of the government to effectively formulate and implement sound policies, and (3) the respect of citizens and the state for the institutions that govern economic and social interactions among them.” (Kaufmann et al., 1999, p. 1). They constructed two measures of governance to address these three areas, which resulted in six dimensions of governance: (1) The process by which governments are selected, monitored and replaced. To study this side of governance, Kaufmann et al. (1991) developed the dimensions of Voice and Accountability; and Political stability and absence of violence/terrorism. (2) The capacity of the government to effectively formulate and implement sound policies. To assess this side, they used the dimensions of Government effectiveness and Regulatory quality; which were both relevant for this study to analyze the government’s efficacy in solving conflicts between MNEs and indigenous people. (3) The respect of citizens and the state for the institutions that govern economic and social interactions among them. This side is examined with the dimensions of Rule of Law and Control of corruption. The later was used in this research to analyze the influence of corruption or lack of it, in the duration of conflicts.
The definition provided by Kaufmann et al., (1991) is useful to illustrate the two arguments of this study: the first is that the government quality, measured with the variables of regulatory quality and government effectiveness, is an important determinant of the length and the degree of violence in a conflict. The second is that the level of
control of corruption and the level of income inequality of a country affect these relationships.
In studying more specifically the role of institutions, Hodgson (2006) defines them as the most important structure in the social sphere, the systems of entrenched and prevailing social norms that shape human interactions. He states that usually institutions allow an organized thought, expectation and operation by providing a framework and coherence to social interactions; they can both restrain and facilitate behavior (Hodgson, 2006).
Institutions are the laws that mandate social order, and if societies are to stay or become civilized, the ability of coexisting must increase at the same pace as the equality of conditions (Huntington, 1965). Yet, the political participation is advancing at a faster ratio than the ability of men to coexist, and just as Huntington (1965) argues “rapid modernization, in brief, produces not political development, but political decay” (p. 386).
There are different types of institutions such as family, religion, education, research and government, among others. This paper focuses on the latter and their role on solving conflicts between MNEs and indigenous people under their jurisdiction. The aim is to determine the degree to what government institutions are capable to control and manage disputes between the two groups subject of the study; and the scope that their rules and laws cover during the decision making process.
In his article, Hinkley (2002) emphasizes how many social ailments initiated by business organizations derive directly from corporate law, and states that law, as we see it today, actually discourages senior managers and business organizations from being socially responsible. Thus, further research is needed to understand the influence that
governments can have through institutions to reach consensus between the parties, and avoid being bystanders of frequent conflicts in their countries calling for international authorities and organizations to set “the rules of the game”.
2.4 Indigenous conflicts
Even though indigenous communities are diverse not only among countries but also within, the different aspirations and claims they have converge in a common request for the preservation of their culture and heritage closely tied to their land. To support this, several international organizations, including NGOs keep joining efforts in order to enforce domestic and international laws that recognize indigenous peoples rights and claims. These organizations foster to protect their human rights, their cultural diversity and their threatened heritage like their language, their traditions and their land (Wiessner, 2011).
However, several conflicts threatening indigenous communities still happen not only in Latin America and Africa but worldwide. In some cases even foreign aid programs targeting indigenous peoples may actually obstruct the self-determination that they seek to encourage. In her article Finley‐Brook (2011) exposes how “agencies and business partners, who had limited knowledge of local cultures and institutions, created externally defined rules that instigated resource conflicts and undermined the authority of customary leaders without resolving poverty or uneven development” (p. 334).
To illustrate all these kind of factors involved in a conflict and its resolution process between national governments, MNEs and indigenous people; the struggles of the Shuar People of the Independent Federation of Ecuador (FIPSE) can serve as an example.
FIPSE is a political organization that represents the interests of its more than 7,000 indigenous members, fostering to protect their rights while interacting with external bodies, such as governments, MNEs and NGOs.
In 1998, the Ecuadorian government hired Arco, an American company, to exploit oil in 200,000 hectares in the Southern Amazon, including specially the ancestral FIPSE territory. The agreement was negotiated and celebrated without the knowledge of FIPSE Shuar people. When the news spread, FIPSE held an Assembly and resolved to refuse any individual negotiation between Arco and the FIPSE communities, without the Assembly’s approval. Nonetheless, Arco ignored their decision and offered small amount of money to some of the FIPSE’s families without discussing it with the leaders of the organization.
As a result, FIPSE presented a constitutional appeal for Legal Protection against Arco. The judge decided that the company could not do any agreements with community members without prior consent by its Assembly. Later on, Arco not only appealed the decision but also disobeyed the Court’s decision, by inviting another FIPSE community to sign another arrangement but this time the invitation was ignored. Subsequently, the Court rejected Arco’s appeal and backed the decision in favor of FIPSE.
In 1999, FIPSE asked some national institutions to support them to present a claim against Ecuador before the International Labor Organization (ILO). Two years later, the ILO issued a set of recommendations to the Ecuadorian government that fostered to guarantee the rights of the Shuar People and other Amazonian organizations. However, these conflicts persist and Shuar people continue struggling to keep their land and defend their rights against the corporation’s interests (Figueroa & Márques, n.d.).
Unfortunately, many indigenous communities face the same kind of hassles where their internal structures and institutions are often overlooked by the MNEs entering their communities and even by their national governments. Therefore, efforts are still needed to continue working on mechanisms that facilitate consensus between the three groups, or in other words, mechanisms that align their governance practices. The current study will address this subject, which will contribute to the international management field by identifying the factors involved in conflicts between MNEs and indigenous people, taking into account the role of government institutions.
2.5 Research gap and research question
As mentioned before, governments, MNEs and indigenous peoples have to work together in solving conflicts in order to reach peaceful accords that balance each group interests.
Little attention has been paid to which agents take part in this consensus-building process, and the role that government institutions play in shaping the interactions between MNEs and indigenous people. Moreover, the existing literature has not considered the possible moderating effects of income inequality and corruption in the alleviation of the intensity and the duration of conflicts. Therefore, to address this gap we intend to answer our research question, which is twofold:
(1) To what extent the quality of national governance affects conflict resolutions between MNEs and indigenous communities, and (2) what is the moderating effect of income inequality and corruption on this relationship?
By analyzing several cases that share the same characteristics described in the methodology section, a common set of factors was identified in order to examine their relationship with the conflict resolution.
3. THEORETICAL FRAMEWORK AND HYPOTHESES
The current study theorizes that country factors influence the conflict resolution between MNEs and indigenous people. We focus on the dynamics explore the dynamics during conflict resolution between national governments, MNEs and indigenous communities in Latin American and African countries. The expected outcome of this study is to increase our understanding on the effects that the quality of national governance has on conflicts resolutions. Additionally, by providing a framework, we aim to simplify the understanding of the complex multilateral relationships. Simultaneously, we expect that this framework, based in an empirical analysis, enable us to distinguish the central role of national governance in alleviating the confrontations and the duration of conflicts. And finally, with this framework we also intend to explore the possible moderating effects of different levels of income inequality and corruption, in the national governance attempts to effectively solve conflicts.
To understand this dynamic, a sample of 71 conflict cases between MNEs and indigenous peoples in Colombia, Ecuador, Guatemala, Mexico, Peru, Kenya, Nigeria, South Africa, Tanzania and Uganda; will be analyzed. This dataset was collected from the World Bank, the UN, local governments, and third parties databases such as non-governmental organizations (NGOs) and independent research groups. The same parameters and quantitative methods were used to process each country and each case’s information in order to allow a cross-national analysis.
To address different aspects of national governance, Kaufmann et al., (2011) developed six dimensions that together form the Worldwide Governance Indicators
(WGI). We focus on two of these dimensions, the regulatory quality and the government effectiveness. These measures of governance are obtained from data based on perceptions. The sources of these data include surveys of firms and households, NGOs, public sector organizations, commercial business information providers, and some multilateral organizations (Kaufmann et al., 2011).
The fourth section of this study will describe further the coding procedure and the measurement of the variables used in this study. To assess the research question of the study: To what extent the regulatory quality and the government effectiveness influence the degree of violence, as well as the length of a conflict between MNEs and indigenous peoples? And, how are these relationships affected by the level of income inequality and control of corruption?
In recent years a number of studies have attempted to find whether there is evidence that the changes in policies had significant impacts on the reduction of violence (e.g., Baker & McPhedran, 2015; Costello, 2013; Makarios & Pratt, 2012). While some studies focusing on the impact of changes in Australian laws found evidence of an impact (Baker & McPhedran, 2007), others found little or no evidence of it (e.g., Lee & Suardi, 2010; McPhedran & Baker, 2012).
With the aim to explore the extent to which good governance, or regulatory quality can prevent violent episodes to happen, Ríos (2012) studied how government structure encouraged criminal violence for the specific case of Mexico and its’ drug war. She found that criminal groups were more likely to use violence when political institutions were decentralized, as violent criminal groups were less likely to be punished
(Ríos, 2012). Ríos (2012) argues that this happened because with different levels of control, decentralized governments “fail to act cohesively as a single decision-making body, corruption agreements with one government inhibit law enforcement operations conducted by another.” (p.iii). Therefore we recon that Ríos (2012) studied decentralization as a term related to lower quality of rules and policies, as well as to less control of corruption.
Therefore, we argue that the higher ability of the government to formulate and implement rules; the more capable it will be to prevent or alleviate the violence in conflicts arising between different parties. As previous papers have shown (Ríos, 2012), when individuals and organizations lack of trust in the government’s coercive power and therefore, the government’s ability to punish, the propensity of individuals and organizations to make use of violence will increase. Kaufmann (2011) addresses this government’s ability to formulate and implement regulations with the term of regulatory quality. Thus, we present the following hypothesis:
H1: There is a negative relationship between the country’s regulatory quality and the degree of violence of a conflict.
A meta-analysis conducted by Makarios and Pratt (2012) illustrates the negative relationship between good governance and the levels of violence for the case of the U.S. In the early 1990’s violent crimes reached alarming levels that increased the concern of lawmakers, agencies and communities. In response, public policies specifically targeted the reduction of gun violence with interventions ranging from medical campaigns, to anti crime laws’ reinforcement and comprehensive community-oriented programs. However, evidence about the effectiveness of these policy efforts is either overlooked by policy
makers or remains unknown (Makarios & Pratt, 2012). With the intent to quantitatively determine what had worked in reducing gun violence in the U.S., Makarios and Pratt (2012) conducted this empirical analysis and found that extensive community-based law enforcement initiatives were actually the best strategy to reduce gun violence.
The 2000 UN Millennium Declaration identifies good governance as a prerequisite for countries to pursue economic development and reduce poverty (United Nations, 2000, para. 3). As mentioned in the literature review section, discussions about whether the effects of good governance are as important as the international administration community presumes are still far from reaching consensus (Holmberg et al., 2009). The complexity of the concept of quality of governance, or good governance, and its relationship with economic and social development is still subject of debate (Holmberg et al., 2009). Some scholars (e.g., López, 2004) argue that high quality of government is related to greater income inequality; while others (e.g., Gupta et al., 2002) state the opposite, high quality of government resulted in smaller income inequality. Li, Squire and Zou (1998) found that democracy, which is frequently related to good governance (Berg-Schlosser, 2004), is positively related to higher incomes for poor and rich, and to decreases in inequality. Chong & Gradstein (2004) also found that democracy is negatively correlated to increases in the Gini coefficient, thus supporting Li’s et al. (1998) conclusion that democracy, which is related to good governance practices is positively related to equality.
Thus, this study argues that a country’s regulatory quality, also referred to as good governance, will have a negative relationship with the degree of violence in a
conflict, relationship that will be affected by the level of inequality. In other words, the level of inequality will moderate the negative relationship between regulatory quality and degree of violence. For this reason, we would expect that good regulatory quality moderated with lower levels of inequality would result in a lower degree of violence in a conflict. Or taking a negative perspective, we would expect that the government’s lack of ability to formulate and implement regulations or “lack of good governance”, moderated with high levels of inequality, will result in highly violent conflicts. Hence, our Hypothesis 2 is:
H2: A country’s level of inequality will positively moderate the relationship between its regulatory quality and the degree of violence in conflicts.
To illustrate this hypothesis and in support of our argument, Sambanis (2004) provides an extreme perspective of the strong relationship between the wealth of a country and the probability of it suffering from violent acts such as civil war. He states that a country with a GDP per capita of US$250 has a 15% chance of witnessing conflict in the upcoming five years, while a country with five times the GDP per capita has less than 4% chances.
Another study about Mexico’s drug war analyzed local databases for a period of 20 years that included over 2,000 Mexican municipalities to examine the effect that changing inequality had on crime rates, before and during the drug war (Enamorado, López-Calva, Rodríguez-Castelán & Winkler, 2014). The study found evidence that rising inequality was linked with increases in violence; they argue that the reason for this is that inequality and poverty are more likely to cause social tension that results in increases in violence (Enamorado, et al., 2014). Additionally, their study (2014) support
the conclusions provided by Ríos (2012), from a cost-benefit perspective, the payoffs from crime are greater in more unequal societies, while the chances of being caught or the costs of having to bribe the police are lower (Enamorado, et al., 2014).
Furthermore, to analyze conflicts it is imperative to acknowledge the strategic interactions that lead up to their beginning, duration and resolution (Cunningham, Gleditsch & Salehyan, 2009). Previous studies (e.g., Sambanis, 2004) argue that violence in a country is inefficient since it is costly, and thus reduces the rents available to the state. Moreover, Sambanis (2004) recognizes that even when parties reach a mutually agreeable solution, it may not be credible to implement it due to skepticism on the government’s ability to enforce the parties. As a result, the members participating in a conflict, and even the government, may find incentives to continue fighting (Sambanis, 2004), which prolongs the duration of conflicts. Kaufmann et al., (2011) refer to this credibility on the government’s quality of: regulations, implementations, civil service and public service; with the term of government effectiveness.
Hence, we argue that the higher credibility the individuals and organizations have on the government’s ability to formulate good quality regulations and implement them (governance effectiveness), the shorter the duration of conflicts will be. Since the parties trust that the agreement reached will be legitimate, and thus they have no incentives to keep battling. Therefore we formulate Hypothesis 3 as follows:
H3: There is a negative relationship between the government effectiveness and the length of a conflict
Considering a sample of 53 African countries they found empirical evidence that supports that weaknesses of institutions in implementing laws and policies actually delay conflict resolutions (Owoye & Bissessar, 2012). They argue that in countries where government lacks the ability to implement rules and monitor institutions, corrupt behaviors are hard to be imputable or accountable to the responsible individuals, which frequently creates incentives and interests on prolonging conflicts (Owoye & Bissessar, 2012).
Several scholars acknowledge that high levels of corruption are an antithesis to good governance, although the latter comprises more attributes that solely the absence of corruption (Holmberg, 2009). Deininger and Mpuga (2005) found that citizens in countries that made corruption behaviors more accountable and easy to report, are significantly less likely to pay bribes, to perceive greater advancement in health and education, and to be more satisfied with public services. Therefore, Holmberg (2009) recognizes that citizen empowerment is crucial to create effective institutions.
Subsequently, we argue that an effective government, i.e., a government that is perceived as credible to formulate and implement good quality regulations; will be more capable to intervene in conflicts and reach agreements faster than countries with low government effectiveness levels. And, that this relationship will be negatively moderated by the control of corruption that exists in a country. Thus, our Hypothesis 4 is:
H4: The level of control of corruption will negatively moderate the relationship between the government effectiveness and the length of a conflict
As countries recognize the reinforcing effect that control of corruption has on government effectiveness and vice versa, their attempts to fight corruption have increased giving place to the creation of anti-corruption bodies and programs that aim to investigate
and prevent corruption (Kaufmann, 1997). The case of Costa Rica reinforced the country’s commitment to reduce corruption when in 2009, the former president Rafael Calderon was sentenced to five years in prison after being convicted of corruption during his term from 1990 to 1994. Similarly, Eliseo Vargas, the head of the social security program during Calderon's term, also received the same sentence (Villanueva, 2009).
3.1 Framework
To illustrate the relationships stated in the hypotheses above, we propose the conceptual framework shown in Figure 1:
4. METHODOLOGY
The following section provides an overview of the empirical method used in this study. The collection of the data and the selected variables are exposed. Subsequently, the proposed framework is presented and explained.
4.1 Data collection
To analyze the research question of the extent to which the regulatory quality and the government effectiveness influence the degree of violence and the length of a conflict between MNEs and indigenous people, as well as the effect that the levels of income inequality and control of corruption have on these relationships; we collected 36 variables per case in lieu to have a broad understanding of the three players in each conflict. The collected variables can be seen in Appendix 1.
This information was obtained from several secondary resources. Most data was obtained via the World Bank, Inter-American Commission on Human Rights (IACHR), United Nations, Environmental Justice Atlas, local government records, NGOs such as Amnesty International and Amazon Watch; and research groups such as environmentalists and religious groups.
The sample consisted of 71 cases of conflicts taking place from the years 2000 to 2015 in the Latin American and African countries of: Colombia, Ecuador, Guatemala, Mexico, Peru, Kenya, Nigeria, South Africa, Tanzania and Uganda. The conflicts analyzed included MNEs and indigenous communities facing peaceful or violent confrontations from either side. These conflicts mostly arose due to MNEs taking advantage of local people by trying to exploit natural resources like oil, gas, water, wood and minerals located in their community’s land.
4.2 Sample
The self-constructed dataset was collected in collaboration with other two students who extended the scope of analysis of the dataset, using the same variables but focusing on different relationships and effects between them. The research design selected for this study was cross-sectional, since the quantitative data was collected for a specific period of time; this is frequently termed as ‘snapshot’ (Saunders & Lewis, 2012).
The criteria to select each case were the time frame of the conflict, then an analysis of whether the MNE and indigenous people were directly involved in a confrontation against each other, and later examine the drivers of these conflicts, which were all rooted on gaining control over natural resources. After selecting several cases that met these criteria, it was imperative to collect information for the different levels of analysis in this paper: country-level, MNE-level, community-level. The following paragraphs provide a brief overview of the variables collected. However, these are further explained in the respective subsections.
To perform the first level of analysis, the country-level, it was necessary to collect the WGI of: Regulatory Quality, Government Effectiveness and Control of Corruption, for the year 2013 for each country: Colombia, Ecuador, Guatemala, Mexico, Peru, Kenya, Nigeria, South Africa, Tanzania and Uganda. Additionally, the Gini index was included to measure the level of inequality between countries. It is important to mention that this index was coded for the years of 2010, 2011 or 2012, due to unavailable data for the same year for all countries.
To do the MNE-level of analysis, first the MNEs involved in the conflict had to be identified in order to retrieve specific information about their sustainability focus; the DJSI-World 2014 was used to measure this. The MNEs subject of this study, were operating mostly in the mining, oil and gas, hydroelectric power, or agriculture industry. These firms were headquartered in different countries in the world, ranging from Australia to Canada, India, The Netherlands, USA, among others.
To analyze the Community-level, the size of the population of the communities affected in a conflict was collected. And finally, to analyze the conflict as a whole, the variables of degree of violence and the length of the conflict were coded in order to allow an overview of the dynamics between government, MNEs and indigenous communities.
4.3 Variables
4.3.1 Dependent variables Degree of violence
The first dependent variable corresponding to the hypotheses H1 and H2 is the degree of violence. This variable was retrieved from documented records of each case, found mainly in NGOs websites and independent research groups’ papers. This was an ordinal variable since it was coded with three categories according to the intensity of the confrontations: (1) low, (2) medium and (3) high. A low degree of violence encompassed actions such as: recurring to legal systems, setting up roadblocks, and/or taking up property from any of the parties. A medium degree included responses like: destructing and/or damaging property, causing injures and/or kidnapping members from either side.
The highest degree comprised actions such as: torturing and/or killing people that belonged to the community or the MNE.
Length
The second dependent variable of this study is length of the conflicts, which corresponds to H3 and H4. The length was a scale variable coded as the number of months that a conflict lasted. Taking the month when it began to the last month it lasted. However, since several cases were still ongoing during the collection of the data, the length of these cases was coded considering June of 2015 as their final date. This variable was collected via local government records and NGOs reports.
4.3.2 Independent variables Regulatory Quality
The first independent variable is regulatory quality that is one of the six dimensions of governance measured by the WGI. This independent variable corresponds to H1 and H2, and was coded using six categories according to the percentage range that each country scored: (1) 0-10%, (2) 10-25%, (3) 25-50%, (4) 50-75%, (5) 75-90% and (6) 90-100%. However, in order to analyze this variable, it was treated as a continuous instead of an ordinal variable. According to Rhemtulla, Brosseau-Liard and Savalej (2012), a categorical variable can be treated as continuous when it has at least five or more categories. In their study, Rhemtulla et al. (2012) found that the bias caused for using categorical variables as continuous becomes smaller as the number of categories becomes larger, due to the variables approaching continuity.
This variable was retrieved from the World Bank database. The WGI are a result of an extended research project that aims to develop cross-country indicators of governance; they take into account several hundred variables from 31 different sources, that measure governance perceptions collected via survey respondents, public organizations, NGOs, and private organizations worldwide (Kaufmann et al., 2011). Kaufmann et al. (2011) describe regulatory quality as the dimension of the WGI that captures the perceptions regarding the ability of the government to formulate and implement regulations that allow and encourage the development of the private sector.
Government Effectiveness
The second independent variable is government effectiveness that is also one of the dimensions of governance measured by the WGI. This variable corresponds to H3 and H4, and it was treated the same way as the regulatory quality, that is as a continuous variable. The dimension of government effectiveness captures the perceptions of the quality of the civil service, the quality of public services, as well as the level of independence from political pressures, the quality of the regulations and their implementation, and the credibility of the government’s engagement to stand by those regulations (Kaufmann et al., 2011).
4.3.3 Moderating Variables Level of inequality
This study argues that the level of inequality of a country moderates the relationship between the regulatory quality and the degree of violence of a conflict. To measure this
variable we chose the Gini coefficient as it is widely used in official sources based on primary data, in addition that studies comprising several measures of inequality concluded that aggregated results (of the Gini coefficient) were similar for different measures of inequality (Deininger & Squire, 1996). The Gini index is based on the “Lorenz curve”, which plots the share of income received against the share of population, and it ranges from 0 to 100, where 0 represents perfect equality and 100 perfect inequality (Deininger & Squire, 1996). This coefficient was retrieved from the World Bank database for the year of 2013 for all the countries subject of this study.
Control of corruption
To address the third area of the definition of good governance provided by Kaufmann et al. (1999) i.e. “The respect of citizens and the state for the institutions that govern economic and social interactions among them” (p.1), Kaufmann et al. (1999) used the dimension of control of corruption as the dimension that captures the perceptions related to the extent to which public authorities exercise power for personal gain, including either minor or grand forms of corruption, as well as the government independence from elite and private interests. This variable was also retrieved from the World Bank database. The two moderating variables to be analyzed are the level of inequality and control of corruption in each country. To explain the relationship between the variables stated below, the following model is proposed:
𝑉 = 𝜃(−𝛽) (1) 𝐿 = −𝛾(−𝛼) (2)
In the above formula (1), V denotes the degree of violence of a conflict, which is a function of the 𝜃 score of inequality times the negative 𝛽 level of the regulatory quality that will result in a negative value for the degree of violence in a conflict. The 𝛽 level of regulatory quality had to be negative in order to indicate that a lower value for this variable is desired in order to be consistent with the statements in H1 and H2.
Equivalently, formula (2) suggests that the length of the conflict (L) is a function of the 𝛾𝑡ℎ level of control of corruption and the 𝛼𝑡ℎ level of the government effectiveness. The subtraction symbols had to be included to be able to state that a negative value of the 𝛾𝑡ℎ level of control of corruption times a negative value of the government effectiveness will result in a positive value for the length, which corresponds with the statements in H3 and H4.
4.3.4 Control Variables
The control variables chosen to evaluate the effects of the regulatory quality on the degree of violence, as well as the moderating influence of the level of inequality were the size of the population of the communities participating in a conflict, as well as the MNEs’ membership in the DJSI. Accordingly, the same control variables were chosen to examine the effects of the government effectiveness on the length of a conflict, and the moderating effect of control of corruption.
To code the variable of DJSI, we investigated each MNEs’ website, and we assigned: 0 = “when the MNE was not listed in the DJSI-World 2014”, and 1= “when the MNE was listed in the DJSI-World 2014”.
Additionally, we assumed that the size of the population is a community factor that may influence the duration of conflicts, therefore we used it as a control variable for this study.
4.4 Method
The proposed hypotheses were tested using a linear regression. A regression is used when one or more independent variables are hypothesized to affect one dependent variable; it finds the best fitting straight line through a set of points that represent the observations. Equation (1) shows the linear regression model, where Y stands for the dependent variable, degree of violence or length of conflict, and α represents the intercept. The coefficient β represents the slope of the straight line that allows to relate the dependent variable and the independent variable. The slope determines the number of units by which the dependent variable (Y) would increase if the independent variable (X) would be increased by one unit. The 𝛿 measures the control variables (𝛿), and the ε represents the error, which considers the difference between the observed and the predicted value (Field, 2009).
Yi = α + β*Xi + 𝛾𝛿i + εi (1)
An estimated method for linear regression is the ordinary least squares (OLS). This method is used to calculate unknown parameters in a linear regression model, with the intent to minimize the differences between the observations collected in an arbitrary dataset and the predicted values by the linear approximation of the data. Thus, the smaller the differences between the observed and the predicted values, the better the model will be to predict responses (Field, 2009). The OLS method adds up the differences of all the
observations (𝑛) that are 71 cases. This difference represents the distance from one point that is an observation (Yi), to the predicted value (Ŷi) that is on the regression line. In order to restrict the outcome to only positive distances, these values had to be squared. The OLS regression is expressed in equation (2):
∑𝑛𝑖=1(Yi − Ŷi) 2 (2)
A hierarchical OLS regression was needed to test the hypotheses exposed in the framework (see figure 1). For this purpose, the stated assumptions were met, and the respective blocks corresponding to each dependent variable were built in a hierarchical way, as shown in tables 1 and 2.
The block to test H1 and H2 comprised three models. The first model consisted of the two control variables, DJSI and population; the second model included the independent variable of regulatory quality; and the third model incorporated the moderating effect that was a new variable formed by the independent variable times the moderator, in this case regulatory quality times level of inequality.
Similarly, a second block was built to test H3 and H4. The first model consisted of the two control variables, DJSI and population; the second model added the independent variable of government effectiveness; and the third model included the moderator effect, which again, consisted of a new variable formed by government effectiveness times control of corruption.
Subsequently, we analyzed the coefficient of determination (R2) to assess the
our dataset. This coefficient represents the percentage of variance in the outcome that is explained by the model. R2 ranges from 0 to 1, the closer this coefficient is to 1 the better
will be the accuracy of the regression models.
Table 1 Regression on degree of violence
Dependent variable Degree of violence Model 1 Model 2 Model 3
Control variable DJSI X X X
Population X X X
Independent variable Regulatory Quality X X
Moderator Regulatory quality*Inequality X
Table 2 Regression on length of conflict
Dependent variable Length of conflict Model 1 Model 2 Model 3
Control variable DJSI X X X
Population X X X
Independent variable Government Effectiveness X X
Moderator Gov. Effectiv * Control of Corr. X
5. RESULTS AND ANALYSIS
This section reports on the results of the study and comprises descriptive statistics of the overall dataset, multicollinearity tests, correlation analysis and the regression models to test the hypotheses.
5.1 Descriptive statistics
The self-constructed dataset comprised 71 cases: Colombia (8), Ecuador (6), Guatemala (6), Mexico (4), Peru (3), Kenya (14), Nigeria (15), South Africa (4), Tanzania (6) and
Uganda (5). The MNEs involved in these cases were publicly traded (37), state-owned (13) and privately-owned companies (21). Additionally, 43 of these companies were listed on the DJSI, while the other 28 were not. These companies were operating mostly in the mining, oil and gas, hydroelectric power, or agriculture industry.
Additionally, regarding the regulatory quality variable, 46 (64.8%) cases in our dataset were located in the second category of this indicator that is between 25 and 50%. Which, means that almost 65% of the cases in our dataset regarded their national governments with a score between 25 to 50%; score that reflects that these governments mostly lack of ability to formulate and implement regulations that encourage the development of the country. We obtained a similar distribution when analyzing the variable of government effectiveness. This variable comprised 40 (56.3%) cases with a government effectiveness index between 25 and 50%. This means that more than half of the cases comprised in our dataset, ranked the quality of public services, the level of independence from political pressures, the quality of the regulations and their implementation, and the credibility of the government’s engagement to stand by those regulations; with a score between 25 and 50%; which denotes a poor government effectiveness.
To finish, we also observed that on average there are almost 2 (1.92) NGOs involved in conflicts between MNEs and indigenous people; which possibly reflect the previously mentioned lack of ability and effectiveness of governments to mediate conflicts between MNEs and indigenous people. Thus, these entities can be forced to call external actors to receive support in solving conflicts.
