How does the ownership structure and CSR initiatives of MNEs influence conflict situations within indigenous communities? : a quantitative analysis on the dynamics of conflict resolution

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How does the Ownership structure and CSR

initiatives of MNEs influence conflict situations within

indigenous communities?

A Quantitative Analysis on the Dynamics of Conflict Resolution

Master Thesis

Business Administration – International Management Name: Admir Skenderagic

Student Number: 11243414 Date: 27-01-2017

Thesis Supervisor: dr. Ilir Haxhi Second Reader: drs. Erik Dirksen

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2 Statement of Originality

I, Admir Skenderagic, have written this document and take full responsibility for its content. I hereby declare that the text and the work presented in this document are original and that no sources other than those mentioned in the text and its references have been used. The Faculty of Economics and Business is solely responsible for the

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Descriptive Statistics ... 40 Descriptive Statistics ... 40 Correlation analysis ... 41 Multi-collinearity analyses ... 44 Regression Analyses ... 45 Discussion ... 50 Findings ... 50 Theoretical implications... 52 Practical Implications ... 52 Limitations ... 53 Future research ... 54 Conclusion ... 56 Reference List ... 57 Appendix 1 ... 62

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Abstract

This study explores the dynamics during conflict resolution between MNEs, indigenous communities and NGOs. Despite the increasing awareness of the international environment towards the protection of rights of indigenous communities, there is limited quantitative research done that studies the influence of different MNE characteristics on conflict resolution.

For a sample of 580 cases located in over 35 countries in multiple continents, we analyze the impact of two MNE characteristics, ownership structure and CSR initiatives on conflict

resolution, which is measured in length of conflict and type of conflict. We argue that different ownership structures have a dissimilar influence on conflict resolution, and that this relationship is positively moderated by the role of NGOs. Also, CSR initiatives will be valued in greater detail in relation to conflict resolution as to investigate its relevance in this particular matter. We argue that the 2nd_{relationship will be positively moderated by MNE experience. In order to}

understand the core of these conflicts and start with effective conflict resolution, this research will deliver a cross-sectional quantitative research on the conflict resolution within indigenous communities.

Contrary to our predictions, the results show that both MNE characteristics do not influence the conflict resolution. Also, the moderating variables do not have a positive influence on the relationship. Our contribution is threefold: first, this research provides a comprehensive overview between MNE characteristics and conflict resolution. Second, we investigate the unknown moderating impact of NGOs on ownership structure. Finally, our findings provide valuable information for individuals that are interested in conflicts and conflict resolution.

Keywords: Indigenous communities; Multinational Enterprises (MNEs); sustainable focus; Non-governmental organizations (NGO); Corporate Social Responsibility (CSR); Dow Jones

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Introduction

‘’ The growing interdependence and interconnectedness of the modern world through increased flows of goods, services, capital, people and information. The process is driven by technological advances and reductions in the costs of international transactions, which spread technology and ideas, raise the share of trade in world production and increase the mobility of capital ’’

The UK department for international Development (DFID, 2000a) Globalization plays a significant role in business, culture, the environment, and international development. It appears that globalization presents contradictory outcomes (Woods, 1998). Important components of globalization are global market opportunities and so-called threats. These threats will be specified in this thesis. More precisely, the conflicts that arise between MNEs and indigenous communities will be closely looked at. When the interests of MNCs and communities collide in a particular geographic area, conﬂicts arise. Rather than being a discrete event, conﬂict is a dynamic process that unfolds over time (Pondy, 1967).

The true meaning of an indigenous community has been an ongoing debate among practitioners and scholars (Murphy and Arenas, 2011). The most widely used definition comes from a UN specialist named Jose R. Martinez Cobo (1982) and describes Indigenous communities as peoples and nations that have a historical continuity with pre-invasion and pre-colonial societies that developed on their territories. They also consider themselves distinct from other sectors of the societies now prevailing on those territories, or parts of them. Examples of indigenous communities are the Aboriginal in Australia, the Inuit in the United States and the Berbers in Libya (Sanders, Douglas, 1999). There are many countries worldwide struggling to find the right balance between indigenous communities and multinational companies that operate in lands of indigenous communities. These conflicts range from peaceful negotiations to extremely violent conflicts (Calvano, 2008). An example can be found in Australia where aboriginals face conflicts with international mining corporations. Here, the international corporations are active in rural areas traditionally used by aboriginals. The increased power of MNEs causes a complex situation in which indigenous communities are promised protection and wealth. On the other hand,

however, the local government is influenced by the increased power for MNEs in regard to national rules and policies that have a positive influence on their activities.

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6 This existing state of affairs, in which less land is endorsed to these communities and less

protection is given, may seem as a desperate situation for indigenous communities. However, international environmental importance has increased the importance of intangible assets for MNEs in which stakeholders have gained importance and therefore indigenous communities too (Porter and Kramer, 2006). This is one of the primary motives why MNEs take more

responsibility in respect to indigenous communities and maintain their activities in which they operate. In order to minimize conflicts, more negotiation power should be given to indigenous communities according to Waddock (2008). Conflicts between multinational corporations and local communities demand organizations to pay more attention to external stakeholders and to hold responsible for potential actions and consequences. Here the balance needs to be between managers, who must understand the causes of conflict with local communities, and communities that must understand which actions to undertake to challenge activities they deem harmful to their interests (Calvano, 2008). Moreover, the growing awareness of the international

environment regarding the human rights of indigenous peoples and their intense knowledge about the ecosystem gives these communities an increasing role in the discussion with MNEs about resource extraction (Lertzman, Vredenburg 2005).Yet, previous studies investigated these conflict cases, but most of them was done through a qualitative research design with a single-case perspective (Calvano, 2008; Kolk & Lenfant, 2010). These studies do provide useful information on a particular case, but neglect to transfer their findings across other conflict cases and thus neglect to provide international impact. This leaves an important gap in the literature. This study will attempt to explore whether there is a relationship between different MNE

characteristics that cause conflicts with indigenous communities worldwide. Thereby, this study will investigate an important possible relationship, which can be transferred across different geographical areas. As MNE characteristics is a broad concept, this study will emphasize on ownership structure and CSR initiatives. As a result, this research will be performed in a twofold to maintain a clear structure and deliver clear results. In order to test the relationship between these two MNE characteristics with conflict resolution, a cross-sectional quantitative study will be in conducted. Moreover, conflict resolution will be specified into type of conflict and length of conflict to provide richer results.

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7 Recent research confirms that MNEs can have a positive impact on conflict resolution.

According to Hart and Moore (1990) ownership structure has direct influence on organizational decision making. A more recent study made by Panwar, Paul, Nybakk, Hansen & Thompson (2014) shows that there is a relationship between different types of ownership and the

involvement into conflicts with indigenous communities. More specifically, they found that publically traded companies have lower levels of responsibility towards conflict resolvable actions compared to private-owned companies. These results are also supported by Oh et al. (2011) in their study on ownership structure. This study shows that ownership structure has influence on the decision making process of an organization including conflict resolution in areas of indigenous communities worldwide. Frinkelstein (1992) supports the idea that ownership structure has impact on the decision making process of organizations. Another study indicates that ownership structure has influence on the way organizations behave towards indigenous communities (Chang and Martynov, 2011). These studies all support the idea that ownership structure has influence on conflict resolution. However, in which way these MNEs are organized and whether their ownership structure has influence on the conflict resolution remains unknown. Moreover, a study that investigates which ownership structure acts upon the rules remains unidentified. Hence, we will examine which ownership structure creates the least conflicts in indigenous communities. Therefore, the first research question in this current study is framed as followed:

RQ1a: To what degree does ownership structure influence resolution of conflicts within

indigenous communities?

MNEs are not the only organizations that expand due to globalization. NGOs are growing in volume and in importance. As a result, these organizations can influence the behavior of MNEs through various ways, such as pressure, negative statements and rules (Kolk & Lenfant, 2012). It is not uncommon for NGOs to play a mediating role in conflict situations between MNEs and Indigenous communities. A case study on mining activities in Peru by BHP Billiton also shows positive effects of NGO participation in conflict situations (Murphy & Arenas, 2011). Previous research investigated the role of NGOs in single cases, but its general influence on conflict resolution has not been investigated before (Khor, 2011; Jenkins & Yakovleva, 2006; Murphy & Arenas, 2011). Moreover, there are no other studies that examined the moderating role of NGOs

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8 on ownership structure. Both concepts are analyzed individually, yet no research is performed in which this relationship is examined. Several studies show how the role of the NGO affects the behavior of organizations by indicating which choices are acceptable and supported (Peng, 2002).This improves their position and their control towards MNEs. This study will address the unexplored moderating effect of NGO participation on the relationship between ownership structure and conflict resolution. Considering the relevance and increasing role of NGOs in today’s business environment, we address our second research question:

RQ1b: How does the role of NGOs uncover in the relation between MNEs ownership structure and the length of conflict?

The 2nd MNE characteristic that will be investigated in this research is; CSR initiatives. This MNE characteristic is a trending topic these days and also investigated by many other studies (Kolk & Lenfant, 2010; Calvano, 2008). All these studies confirm that CSR initiatives have a positive effect on conflict resolution. Crawley and Sinclair (2003) state that companies that emphasize more on CSR are more effective and tend to have less conflicts in conflict areas. Calvano (2008) suggest that MNEs should implement CSR initiatives into their organizational structure in order to minimize conflicts. Previous research claims that a strong sustainable focus can lead to mutual beneficial relationship and subsequently into lower levels of conflicts. The willingness to participate with indigenous communities is essential for the creation of sustainable relationships and subsequently in creating more successful business operations. (Alcantara & Nelles, 2013). However, there are also signals that companies are implementing CSR initiatives into their strategies with zero results Ite (2004). The results on this subject are broad and

conflicting. We will provide another look on CSR initiatives by making use of the Dow Jones Sustainability Index. This index is one of the first worldwide indexes that measures firm performance of global organizations including sustainable driven strategies (Sariannidis et al., 2009). Hence, by prolonging previous research, in this current study we explore from a neutral perspective the extent to which the MNE’s sustainable focus affects the conflict resolution between MNEs and Indigenous communities. Considering the relevance of sustainability in the MNE’s business development and activities, we introduce our 3rd research question:

RQ2a: To what degree does CSR initiatives influence resolution of conflicts within indigenous communities?

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9 Subsequently, MNE experience plays an important role in the conflict resolution between MNEs and indigenous communities. According to Caligiuri (2008) MNEs need to understand and accept the underlying values, norms and principals of the country in which they operate.

Experience plays a vital role in order to recognize and accept the cultural differences between the MNEs and indigenous communities. Lertzman and Vredenburg (2005) discuss in their article that MNEs need to build relationships that are guided by traditional authority, experience and learning. Castro & Nielsen (2001) introduce co-management in their article. This is a partnership between MNEs and other stakeholders and have as main goal to minimize conflicts. Hart & Sharma (2004) argue that MNEs that have an open attitude towards indigenous communities can benefit from local knowledge and minimize potential conflicts. Previous research has

acknowledged that experience is beneficial in a general. Hence, whether experience has impact on the relationship between CSR initiatives and conflict remains unanswered. Considering the relevance of MNE experience in conflict resolution, we address our final research question:

RQ2b: Which influence does MNE experience has on CSR policies in relation to the type of conflict?

To answer these formulated research questions, we conducted a quantitative analysis on 580 cases of conflict located in more than 35 countries across the whole world. The enclosure of a wide variety of MNEs from different countries, allows a better understanding of the influence that different ownership structures and CSR initiatives have on different indigenous

communities. Previous results are from qualitative origin and provide most of the time insight into one specific country or on a single industry. This research will include multiple countries and evaluate the indigenous community in a broader context, by addressing two independent MNE characteristics, one internal factor (MNE experience) and one external factor (role of NGO) that may influence conflict and conflict resolution.

This study contributes to the existing literature in three ways. First of all, previous studies tried to explore the dynamics of conflict resolution by investigating individual cases of conflicts. These studies do not provide relationships that are convertible across different geographical locations. This research uses a quantitative approach that gives a more comprehensive understanding of the relationships that influence conflict resolution in indigenous communities. Second, to our

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10 structure and conflict resolution. Moreover, no other research has investigated the moderating effect of NGOs on ownership structure. Finally, from a practical point of view the results of this research can help MNEs to get a better understanding about the factors that have influence on the type and length of conflicts in indigenous areas. A better understanding can lead to less conflicts or less violent conflicts. Moreover, this study shows the importance of collaboration between different parties.

This research is structured as followed: Chapter two provides a comprehensive literature review in which all the relevant factors of this research will be discussed. Chapter three presents the theoretical framework, and is followed by the data and method that are discussed in chapter four. Chapter five elaborates on the results, and is followed by the sixth chapter: the discussion of findings, limitations, and possible future research. Chapter seven covers the conclusion of this research.

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Literature review

This chapter reviews the plethora of theoretical understandings of the concepts of indigenous communities, conflict resolution, ownership structure and CSR initiatives. To unpack it, we will first elucidate on how it is conceptualized. In addition, previous research on these topics will be elaborated in greater detail in order to provide a better understanding of these topics and how they relate to one another. This study will also include a review of two moderating variables, which are: the role of NGOs and MNE experience and how they relate to the others concepts. First of all, this chapter starts by introducing what indigenous communities are and why they are in the center of attention in this research. Secondly, I will address conflicts that occur when the interests of a MNE and an indigenous community controvert. The third section discusses MNE characteristics that could affect conflict resolution within indigenous communities. More specifically, we will look into the ownership structure of the company as well as the CSR initiatives and their influence towards communities. Finally, this chapter discusses how NGOs and MNE experience can influence MNEs behavior towards conflict resolution.

Indigenous people

“Indigenous communities, peoples and nations are those which, having a historical continuity with pre-invasion and pre-colonial societies that developed on their territories, consider

themselves distinct from other sectors of the societies now prevailing on those territories, or parts of them. They form at present non-dominant sectors of society and are determined to preserve, develop and transmit to future generations their ancestral territories, and their ethnic identity, as the basis of their continued existence as peoples, in accordance with their own cultural patterns, social institutions and legal system’’ (J. Cobo, the Special UN Rapporteur, 1982).

According to the UN, there are approximately more than 370 million indigenous people spread across 70 countries around the world. These local communities have unique traditions and possess cultural, social, economic and political characteristics that differ from the dominant societies in which they live. Considering the diversity of indigenous peoples, there is no official definition of “indigenous” nor is there a definition adopted by any UN-system body. Instead, the UN developed several characteristics that help to identify local communities, these are;

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12 1. Self- identification as indigenous peoples at the individual level and accepted by the

community as their member.

2. Historical continuity with pre-colonial and/or pre-settler societies 3. Strong link to territories and surrounding natural resources 4. Distinct social, economic or political systems

5. Distinct language, culture and beliefs 6. Form non-dominant groups of society

As is written in the report of UN in 2008, the world as such is obliged to protect indigenous communities and ensure their values, norms and rights (UN, 2008). This declaration sets the rules and regulations for governments as for MNEs how to cope with these communities. This means that the various states in which MNEs are involved play a significant role in the protection of the indigenous communities. According to Garvey and Newell (2005), the various states can safeguard indigenous communities by setting rules and regulations that prohibit MNEs to exploit these communities for financial welfare. The growing recognition of indigenous communities by governments, institutions and organizations enables the communities to abandon projects that contradict these human rights (O'Faircheallaigh 2013). This recognition by the international environment also plays an important factor in ratifying their role in protecting nature. The growing acknowledgement of the international environment regarding the human rights of indigenous peoples and their intense knowledge about the ecosystem gives these communities an increasing role in the discussion with MNEs about resource extraction (Lertzman, Vredenburg 2005). Indigenous people are not only dependent on their land for economic reasons. These societies also rely on land for social and cultural identity. These communities are taught by previous generations how to survive and do not have other knowledge that can help them survive when their land is taken from them. Destruction of their cultural and social needs plays an

important role during the onset of the conflict (Doh & Teegen, (2003). Previous research

confirms that indigenous people encounter cultural damage due to resource extraction companies (Bruijn & Whiteman, 2010). As a result, increased activism of indigenous peoples and more violent conflicts with MNEs arise (Fabig & Boele, 1999). Indigenous communities are combing

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13 forces to increase their control and the growing role of NGOs helps them get worldwide attention for their problems and their position during the negotiations with MNEs (Kapelus, 2002).

Conflict

The conflicts that occur when the interests of a MNE and an indigenous community controvert will be addressed in this research. Moreover, both the length of the conflict and the type of conflict will be tested. In addition, this research will elaborate on whether ownership structure and MNE experience have a direct impact on the conflicts between these two groups.

Furthermore, various stages of both variables will be tested to see whether the stages have different influences on the conflicts and conflict resolution.

Conflict situations in indigenous areas gained importance due to the NGOs, activists and community leaders that emphasized the importance of the rights that indigenous communities have and which were not followed by the large organizations in their activities (Calvano, 2008). Moreover, these organizations point out that the indigenous communities receive minimal benefits from these MNE activities and even obtain negative social and environmental returns (O’Faircheallaigh, 2013). As a consequence, these MNE activities result in actions that disable the indigenous communities to live their lives as they were used to before these developments. These changes lead to conflicts between the international organizations and the indigenous communities. The length and type of these conflicts will be elaborated on in greater detail in a later section as part of the research. Due to a change in perception from the international environment, MNEs are, for a large part, held responsible for their activities since they restrict indigenous communities to fulfill their needs, demands and the ability to live the way they lived before. These perceptional changes from the international environment resulted in new rules and regulations to protect the indigenous communities. Moreover, organizations are aware of the fact that CSR is an important topic that needs to be taken into account in their international activities and should therefore take a more ecological approach towards these communities in order to end or avoid conflict situations. However, in reality these conflicts result in a disadvantage for indigenous communities most of the time, since the MNEs have a more dominant role and the national governance is more in favor of the MNEs since these organizations have a large influence on the national GDP of the developing countries (Hart & Sharma, 2004).

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Conflict resolution

Conflict resolution refers to a process of resolving disagreement. It mainly aims at reuniting conflicting arguments in a manner that supports and protects the human rights of all parties concerned. The term conflict resolution is also known as dispute resolution or alternative dispute resolution. Other often-used terms for conflict resolution are negotiation, mediation, and

diplomacy (uslegal, 2016).

In order to understand how to resolve these conflicts it is of major importance to understand the roots of these conflicts and minimize these conflicts in the future. According to Kolk & Lendant (2010) CSR initiatives have a positive influence on conflict resolution. This should lead to more CSR activities among MNEs in order to prevent future conflicts (Calvano, 2008). The reasoning behind CSR relates to the theory that CSR involves organizational and social factors as well as responsibilities and actions towards shareholders and different stakeholders (Young and Thyll, 2014). These social factors have an increased importance due to external parties such as NGOs, media and international organizations (Porter & Kramer, 2006). There are multiple ways in which MNEs are involved with indigenous communities and attempt to cooperate with

indigenous peoples. The most common ways for MNEs to involve with the local communities is to invest in them, to set up a finance growth projects and provide employment to these

communities. According to Calvano (2008), these CSR projects are established to decrease the resistance of indigenous communities and maintain their operations in these areas. Moreover, due to a global shift in mindset towards the exhaustion of natural resources and indigenous societies these CSR projects are demanded from MNEs. According to Lertzman and Vredenburg (2005), a more sustainable relationship would be more valuable to both parties.

MNEs should put more effort in understanding the needs and culture of the indigenous communities and adapt to their opponents. The adaptation into the local community and the acceptance of cultural diversity can contribute to the reduction of the length as type of violence in conflict situations (Bond, 2014).

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MNE characteristics

Corporate governance is the system of rules, practices and processes by which a company is directed and controlled (OECD, 1999). More specifically, it is the framework by which the various stakeholder interests are balanced, or, as the OECD states, "the relationships among the management, board of directors, directing shareholders, minority shareholders and other

stakeholders". MNE characteristics are an important part of the corporate governance of an MNE. In order to have a better and more thorough understanding of concepts that have influence on conflict resolution within indigenous communities, two MNE characteristics are selected.

First of all, the concept of ownership structure will be introduced followed by the concept of CSR initiatives.

Ownership structure

Previous research has found evidence that different types of ownership structures affect organizational decisions in different ways (Connelly et al. 2010). We offer a comprehensive description of how ownership structures, one of the core corporate governance mechanisms, affect conflict resolution within indigenous communities. In line with this research, evidence was found that differences in these mechanisms have different influences on a firm’s social

engagement (Barnea and Rubin 2010). Former studies focus mainly on organizational size (Patten, 1991) and industry type (Adamsetal, 1998) to test the relation of MNE characteristics with conflict resolution. However, no research has tested the relationship between ownership structure and conflict resolution yet. An analysis of the possible inﬂuence that different types of ownership structure have on conflict resolution will not only be insightful but may also lead to a new understanding on how to cooperate within specific situations. As stated by Hoskisson et al. (2002), different types of owners have their different preferences on strategic decisions. This could mean that different actions will be undertaken in comparable situations, and therefore be less beneficial for indigenous communities based on ownership type. In this study we will make a distinction between three different types of ownership, these are; private ownership, state ownership, and dispersed ownership.

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Private ownership

Ever since “The Modern Corporation and Private Property” by Berle and Means (1932), academic literature has recognized the assumed distinction in performance between publicly owned firms and privately owned firms to the property rights theory (Boardman and Vining, 1989). Property rights are the rights of individuals to the use of resources. Kang and Sørensen (1999) prolong this definition by including the rights to the benefits, use of and disposal of goods and assets to the owner of property rights. Business companies are defined as bundles of

contractual coalitions amongst the owners of rights to the use of resources, thereby

conceptualizing how organizational actors are able to influence organizational outcomes (Kang and Sørensen, 1999). The main line of reasoning behind the property rights theory is that ownership in public companies is nontransferable (Boardman and Vining, 1989; De Alessi, 1980; Ramaswamy, 2001).

Managers of public companies, therefore, are more likely to engage in biased decision making than managers of private owned companies, as the latter faces bearers more eager to monitor their decision making. This could result in the following implications: private owned companies are more likely to implement cost-reducing innovations; experience lower operation costs, greater variety of output; use less capital-intensive production techniques and incur lower production costs (De Alessi, 1983). The reasons for the existence of public sector enterprises are diverse, ranging from political ideology to the principle of saving jobs. The conclusions that follow from the property rights theory as outlined by De Alessi (1983) are in line with

conclusions resulting from studies on efficiency problems among privately owned companies. According to Jensen and Meckling (1976), the separation between ownership and management, i.e. the principal-agent relationship, can result in agency problems that weaken the performance of the company.

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State ownership

Companies in which the state is the sole owner or in which the state has a considerable

ownership stake are seen as state owned companies. Following La Porta et al. (1999), a company can be considered a state owned company when the state is the biggest shareholder and owns a minimum stake of 20% of the shares. As La Porta et al. (1999) and Faccio and Lang (2002) have mentioned, state ownership (in particular in bigger firms) can be found in several countries. The literature gives two understandings for the effects of state ownership on company value. One of the understanding is that state ownership has an adverse effect on corporate value and

performance because government intervention will slow down a company's corporate decision-making process in an increasingly competitive environment (Du and Boateng, 2015). Further arguments for the unfavorable role of the government are that investors may have little confidence in M&A due to the absence of managerial competence (Xiaoyue and Xiaodong, 2001).

Most research available on state ownership is about the differences between exclusively owned companies by the government and private firms. Little investigation has been done on the effect of the state as biggest shareholder. Dewenter and Maltesta (2001) study the difference between government-owned and privately owned companies and find that government-owned companies are significantly less profitable. These companies also tend to are more influential and are more labor concentrated compared to privately owned companies. Boardman and Vining (1989) mention that state-owned companies perform far worse than privately owned companies in terms of a long variety of performance indicators including efficiency. Thomsen and Pedersen (2003) investigate large European companies and find that ownership concentration has a significant negative effect on the value of a company when the largest owner is the state. It could therefore be concluded that the state could practice other political goals instead of only profit

maximization, which can harm company performance. Hence, we expect that the State as the largest shareholder has a negative impact on firm performance.

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Dispersed ownership

Dispersed Ownership is defined by having different shareholders and is characterized by strong securities markets, rigorous disclosure standards, and high market transparency, in which the market for corporate control establishes the ultimate disciplinary mechanism (Renneboog, 1996). Demsetz and Lehn (1985) debate that the more concentrated the ownership of a company is, the larger the benefits and costs for the largest owner are. They state that if a company has one owner, all costs and benefits are accepted by this owner and no externalities influence the owner’s decisions about joining to the responsibilities of ownership. On the other hand, dispersed ownership leads to a bigger deviation between costs and benefits for a typical owner because he is not alone. Consequently, as Demsetz and Lehn discuss, an owner in a company with dispersed ownership would ‘respond by neglecting some tasks of ownership’ (p. 1156). Therefore, in agreement with Demsetz and Lehn, the degree of shareholder concentration suggests a tradeoff between the risk to investors of concentrated investments (i.e. all costs are borne by the same owner) and the control potential of the firm. According to Renneboog (1996) dispersed ownership can then be seen as a method for risk reduction as investments can be diversified, but it reduces also the active involvement of the shareholders in the companies’ decision making processes.

CSR initiatives

“Corporate Social Responsibility (CSR) is defined as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (European Commission, 2011, p. 3)

CSR is a concept that organizations include in their overall firm performances. It relates to the integration of social and environmental factors in their business operations. Moreover, it involves more stakeholders in the decision making process than the shareholders alone (Aguinis and Glavas, 2013). Porter and Kramer (2006) discuss four motives for organizations to contain CSR policies. The first motive surrounds moral obligation, as organizations have the duty to behave in the right manner and to do the right thing. The second motive is sustainability, which explains the importance of future generations and the need for organizations to take into account next

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19 generations. The third motive is based on the authorization to operate, which reflects the rules and regulations that are demanded by governments, international institutions, and other stakeholders. The fourth motive is based on the organizational reputation, meaning that

organizations that do not hold CSR policies in their organizational objectives can be harmed by bad reputation. Parkinson (1995) remarks that organizations that have a focus on maximizing profits should consider other stakeholders for the long term existence of the organization. Crawley and Sinclair (2003) state that companies that emphasize CSR are more effective and tend to have fewer conflicts in their operational areas. On the other hand, according to Sawyer and Gomez (2013) and Calvano (2008) these CSR initiatives are implemented by major organizations in order to neutralize communities that are against the operational activities of organizations. Ite (2004) states that CSR initiatives that are undertaken by organizations such as Shell do not have the preferred effects on the welfare of indigenous communities as on conflict resolution. Also, the economic benefits that MNEs convey to developing countries overshadow the environmental and social concerns (Ikelegbe, 2005; Ite, 2004). Hence, there is a clear difference between CSR policies that are implemented as a tool to pretend environmental and societal engagements or as an important part of the organizational strategy that is willing to take part in the local communities (Crawley & Sinclair, 2003). Acuña (2015) emphasizes the

importance of MNEs to recognize, understand and value the beliefs and customs of indigenous communities, rather than applying the commanded national and international policies. The willingness to participate with indigenous communities is pivotal to the creation of sustainable relationships and subsequently in creating more successful business operations (Alcantara & Nelles, 2013).

The important role that MNEs play during these negotiations is recognized by the international audience. The growing power that MNEs gained over the years gave them an additional function, namely to safeguard the ecosystem and indigenous communities that live in these environments. As a result, organizations started to integrate sustainable strategies to their international

operations. For the purpose of this study, we have considered MNEs membership in the Dow Jones Sustainability Index (DJSI) to investigate the firm’s sustainability focus. This index is one of the first worldwide indexes that measures firm performance of global organizations including sustainable driven strategies (Sariannidis et al., 2009). This index consists out of five

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20 benchmarks. These are: the global, the U.S., the North American, the Eurozone, and the

European. Moreover, this index consists out of three dimensions: social, economic and environmental. These dimensions are all measured based on different criteria: 1) Social, 2) Environmental and 3) Economical. The social dimension is measured by analyzing the social reporting, human resource management and corporate citizenship. The environmental dimension is analyzed by environmental reports, industrial requirements and all-round environmental performance. The economical dimension is analyzed by this index through the evaluation of a firm’s corporate governance, compliance, codes of conduct and corruption (Sariannidis et al., 2009). As we have established the relevance of the DJSI, we will now consider the impact that this index can have on international organizations. MNEs are aware of the fact that CSR

initiatives are important to have in their organizational structure. Previous research confirms that the attendance of organizations on the DJSI leads to better financial results and that the presence on these sustainability indices results in a better overall performance (López et al., 2007). Other studies infer that the attendance on these sustainability indices could lead to positive stock market reactions and that absence could lead to losses (Robinson, Kleffner & Bertels, 2011). Therefore, the attendance on these sustainability indices increased importance among MNEs since it leads to profit maximization as positive environmental developments in the areas that they are active in (Gibson, 2006).

Internal and External factors

In this section, we will elaborate in greater detail two moderating variables that will be examined based on their impact on conflict resolution. We selected 1 internal factor, MNE experience and 1 external factor, the role of NGO. We purposefully selected one internal and one external factor in order to have a broader perspective on this topic. These two variables are selected since previous research detailed these variables as the ones that are related most to the core concepts mentioned in the previous sections.

NGO Participation/Role

According to The World Bank, NGOs are non-Governmental organizations that pursue activities to relieve conflicts, promote the interests of the poor, protect the environment, make basic social services available and affordable and/or undertake community development (OED, 2002).The

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21 term NGO was established by the United Nations and refers to various pressure groups and international organizations with an official status (Willetts, 2000). The organization refers to all the activities in which neither state nor institutions are involved. The activities of NGOs started in the 1990s and are justified as an alternative development paradigm. The primary reason for the establishment of NGOs was the inability of institutions to address a host underdevelopment issues (Zaidi, 1999: 259). These developments made the term 'NGO' a fashionable concept and resulted in a clear distinction between voluntary and non-profit organizations from private and/or business sector institutions. Local communities have the tendency to contact NGOs since their voices are more likely to be heard (Newell, 2005). The actions of NGOs vary between wide ranges of activities. These actions include engaging in advocacy and lobbying, leading boycotts, initiating lawsuits, protest activities and publicizing cases (Winston, 2002).

All NGOs possess certain basic characteristics according to Willets (2002), despite the lack of general consensus. These characteristics are:

1. being independent from the direct control of any government 2. not acting as a political party

3. not-profit-making and

4. not as a criminal group or mafia organizations.

According to Alan Fowler (1991: 880) NGOs have a number of comparative advantages over governmental institutions in addressing the needs of the poor. These advantages enable NGOs to promote popular participation needed to eliminate exclusion and inequalities; reach out to the poor and the vulnerable and develop community-based institutions capable of handling conflict matters. Therefore, we could conceptualize NGOs as (usually formal) institutions and networks that are not under governmental control and undertake community development, provide social services, advocate against human rights abuses in order to create a coherent, equitable and responsible civil society.

NGOs are active in many segments but mostly active in developing countries as the need for these organizations is higher in these areas. Consequently, they have a valuable relationship with indigenous communities. This experience provides them with valuable information regarding the

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22 local market, local government and communities living in these areas Oetzel & Doh (2009). As a result, MNEs cooperate more often with NGOs in these situations in order to overcome liability of foreignness and to minimize conflicts Oetzel & Doh (2009). When the collaboration with the MNE is not working, NGOs have the ability to pressure MNEs due to an increased

organizational capacity. This can lead to direct actions against the production facilities as well as through indirect regulations (Kapelus, 2002). An example can be found in the article of Khor (2011) where the influence of NGOs was investigated on the palm-oil industry in Indonesia and Malaysia. Here, the collaboration between indigenous communities and MNEs flourished over the years as a result of NGO involvement. More specifically, Khor (2011) shows that MNEs adjust their operations after being pressured by NGO activities. Even negative expressions by the NGOs can lead to direct and indirect damages of the MNEs. Another important aspect is the validity of NGOs, as they are seen as trusted and reliable organizations by the international audience (Brown and Kaleagaonkar, 2002). This increases their strong position during

negotiations with MNEs. A close cooperation between MNEs and NGOs would therefore lead to the principal of least resistance.

MNE Experience

MNE experience plays an important role in the conflict resolution between MNEs and

indigenous communities. According to Bartlett and Ghosal (1989) there are three approaches in which MNEs need to manage pressures from globalization and localization with product

markets. These are on global, international, and multi-domestic level. MNEs encounter similar trade-offs with products that derive from regions where indigenous communities are settled. MNEs have the tendency to adapt a traditional view on CSR initiatives that is used in all countries in which these corporations operate. However, a more dynamic multi-level approach seems to work on corporate level where CSR initiatives are adjusted to reflect on local needs. The involvement of home, host and global organizations result in an interaction that includes different needs of all the stakeholders. An example can be found by a research conducted by Web (2012) who investigates Canadian mining companies in Guatemala. Here, the home country factors play a crucial role in pressuring the MNE to respond to local situations in host countries, as do international networks and global norms stated in international instruments. Moreover,

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23 non-state actors such as NGOs and transnational advocacy networks can play an important role on organizations to act in conformity with the regulations and in the conflict resolution with indigenous communities (Keck and Sikkink, 1998).

According to Caligiuri (2000) MNEs need to understand and accept the underlying values, norms, and principals of the country in which they operate. Experience plays a vital role in order to recognize and accept the cultural differences between the MNEs and indigenous communities. Lertzman and Vredenburg (2005) discuss that MNEs need to build relationships that are guided by traditional authority, experience, and learning. In addition, MNEs that are able to place aside their commons beliefs and norms, can benefit from indigenous knowledge and add value to their international operations (Hart & Sharma, 2004). According to Castro & Nielsen (2001), co-management can be defined as a collaboration between MNEs, indigenous communities and other stakeholders in order to prevent conflicts or offer a way to deal with conflicts. Morris et al. (1998) mentions that differences in language can lead to miscommunication and eventually lead to conflicts with indigenous communities. In order to overcome these misunderstandings and cultural differences, social learning could be a possible outcome. According to Schusler, Decker & Pfeffer (2003), building long term relationships, sharing knowledge and experience are the basis for an efficient partnership. Berkes (2009) emphasizes the importance of social learning in relation to managing conflict resolution. Moreover, in his article he states that the development of a conflict is expected to be influenced by the MNEs capability to engage in a mutual problem solving process (Berkes, 2009). The relationship between the collaboration on home, host and global level with CSR initiatives will be explained in greater detail in the theoretical framework.

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24

Theoretical Framework

The resource extraction industry has been characterized by conflicts. These conflicts arise in many cases due to a continuous search for more resources by MNEs. As a result indigenous people feel threatened by the international organizations and can act out. Conflict causation is primarily a result of different interests between indigenous communities and MNEs in regard to natural resources, territory and welfare (Bebbington, et al., 2008). An example can be found in the Peru, where MNEs form a serious threat to the Machiguenga communities in Peru (Bruijn & Whiteman, 2010). These conflicts are intricate and involve more stakeholders. As a result, they become very complex during the years and can even convert into violent conflicts. Despite the fact that these conflicts are an ongoing process since the beginning of the 19th_{century, not}

enough attention has been paid to the actual dynamics of the problem (Calvano, 2008). Several studies tried to analyze the dynamics of conflict resolution within indigenous communities as Lin and Chang (2011) in Taiwan, Crawley and Sinclair (2003) in Australia and Lerzman and

Vredenburg (2005) in Canada. Although these studies are very helpful in creating a broader sense of the characteristics influencing conflict resolution, they neglect to establish relationships that are transferable across different geographical areas. Therefore, a quantitative design is suitable to help clarify these relationships and to give a broader idea about the dynamics of conflict resolution.

Previous studies show how MNEs can have a positive impact on conflict resolution. However, in which way these MNEs are organized and whether CSR initiatives taken by the MNEs have influence on the conflict resolution remains unknown. Therefore, this study will evaluate the conflict resolution in indigenous communities from a MNE perspective. Hence, this study argues that there are two independent factors influencing the process of conflict resolution: ownership structure and CSR initiatives. Conflict resolution is measured in both length as well as severity of conflict, because conflicts can differ in their duration as well as in their degree of violence. (Oetzel et. al., 2007).

First of all, as stated by Hoskisson et al. (2002), different types of owners have their different preferences on strategic decisions. This could mean that different actions will be undertaken in comparable situations, and therefore be less beneficial for indigenous communities based on type

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25 of ownership. In this study we make a distinction between three different types of ownership: private ownership, state ownership and dispersed ownership. A more recent study made by Panwar, Paul, Nybakk, Hansen & Thompson (2014) shows that there also exists a relation between different types of ownership and the engagement into conflict resolvable actions. More precisely, they found that publically traded companies have lower levels of correctness towards conflict resolvable actions compared to private-owned companies.

Moreover, this study addresses the moderating influence of NGO participation on the

relationship between ownership structure and conflict resolution. Several studies have examined the influence of sustainable focus with NGO participation on conflict resolution, but no study has ever examined the relationship between ownership structure and role of NGO together with conflict resolution. In addition, NGOs are able to influence the public opinion and influence MNEs’ strategies (Dahan et. al., 2010; Peterson, 1992). This should make NGOs very effective in the process of conflict resolution. NGOs can share their knowledge with MNEs, which can help them become more supportable and create a relationship build on trust with Indigenous communities. Thus, we believe that the NGO can have an important role between ownership structure and conflict resolution.

The second part of this theoretical framework consists out of the relationship between CSR initiatives and conflict resolution. This relationship will be moderated by MNE experience.

Several studies investigate the dynamics of conflict resolution from a CSR perspective (Kolk & Lenfant, 2010; Jamhali & Mirshak, 2009, Calvano, 2008). These studies all highlight the positive influence of CSR on conflict resolution. The model of enduring ethical engagement is the basis for peace between these MNEs and indigenous communities. A MNE with a strong

environmental and socially-sustainable focus will try to protect and maintain the ecological and social environment the communities depend. Therefore communities will be less triggered to start and maintain a conflict (Bedrich, Janousková & Hák, 2011, Lehntonen, 2004, Lertzman, 1999). As a result, we argue that sustainable focus will positively influence the process of conflict resolution.

Moreover, this study addresses the moderating influence of MNE experience on the relationship between ownership structure and conflict resolution. Previous research has investigated the

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26 influence of sustainable focus on conflict resolution, but no study has ever examined the

relationship between ownership structure and MNE experience together with conflict resolution. Besides, as stated by Caligiuri (2000), MNEs need to understand and accept the underlying values, norms and principals of the country in which they operate to minimize conflicts.

Experience plays a vital role in order to recognize and accept the cultural differences between the MNEs and indigenous communities. Lertzman and Vredenburg (2005) argue in their article that MNEs need to build relationships that are guided by traditional authority, experience and

learning. In addition, MNEs that are able to put aside their commons beliefs and norms, can benefit from indigenous knowledge and add value to their international operations (Hart & Sharma, 2004). Thus, we argue that MNE experience will have a positive influence the relationship between CSR initiatives and conflict resolution.

Overall, this study will include several perspectives regarding MNEs and indigenous community conflict. Not only will the influence of ownership structure and CSR initiatives be evaluated, but the impact that the moderating variables have on these separate relationships will also be looked at. This study helps to create a more comprehensive picture of the relationships influencing conflict resolution. Both mechanisms and their influence on conflict resolution will be discussed in further detail in the upcoming section.

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Hypothesis

The first part of this theoretical framework is based on the relationship between Ownership structure and conflict resolution. In this part conflict resolution will be measured based on the length of conflict. Moreover, the moderating variable, role of NGO will be introduced to this relationship based on theoretical implications.

Hypothesis 1 – Ownership structure

Previous research has shown how and in which way the institutional environment influences the behavior of organizations in areas of indigenous communities. Nevertheless, the ownership structure of an organization has also great influence on how a MNE behaves and formulates their policies. According to Hart and Moore (1990) different types of ownership have direct influence on organizational decision making, motivation and power, since this influences internal as external stakeholders. A more recent study made by Panwar, Paul, Nybakk, Hansen &

Thompson (2014) shows that there even exists a relation between different types of ownership and the engagement into conflict resolvable actions. More specifically, they found that publically traded companies have lower levels of correctness towards conflict resolvable actions compared to private-owned companies. These results are also supported by the Oh et al. (2011) in their study on ownership structure. This study indicates that the ownership structure has influence on the whole decision making process of the organization including conflict resolution in areas of indigenous communities worldwide.

Frinkelstein (1992) advocates the impact of different ownerships structures on the decision making process of organizations. In his study he mentions that a CEO is regularly the most powerful person in the organization. However, in some ownership structures such as in a dispersed ownership where many shareholders hold a piece of the pie, this is not always

applicable. In this case besides the CEO of the company, the other board members are of similar importance. Besides, in a state ownership, the board group consists also out of a few state agents that fulfill the needs of the state. Therefore, it is concluded that the CEO together with the other

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28 board members have the most influence in an organization and subsequently the way how they want to present themselves towards other stakeholders which include indigenous communities. In addition, the differences in social and environmental engagement of different ownership structures can be explained through different shareholder interests. According to Holderness and Sheehan (1988), state ownership has a strong tendency not only to focus on the financial

performance, but also in the social and environmental strategies and activities of those organizations. Private ownership has interest in the long-term existence of the firm as

maintaining their own reputation which is strongly linked with the organization (Anderson et al, 2003). Organizations with a dispersed ownership are also interested in ethical and responsible behavior of the company since these organizations are regulated by independent directors, whose are especially attentive in showing compliance with regulations since their image and reputation are strongly linked to the ethical and responsible behavior of the organization (Zahra and

Stanton, 1988). Even though, the desire of the various ownership structures is in large parts the same, the question that remains unanswered is, whether the motivation and desired results have comparable outcomes when investigating conflict resolution within indigenous communities based on different ownership structures. As is mentioned above, besides the agreed rules and regulations by the government and international institutions towards institutional communities, reputations remains an important factor in the whole decision-making process. This having said, this research makes the assumption that different ownership types experience reputational damage to a higher degree than other ownership structures. Therefore, the expected influence of the MNEs ownership structure leads to the following hypothesis:

H1: To what extend does the ownership structure of MNEs influences the length of conflicts within indigenous communities?

Moderator 1: NGOs Role

Due to increased media attention and global awareness of human rights violations and upturned ethical concerns about MNE business activities, NGOs started to involve and engage with the operational activities of MNEs. MNEs are required to answer for the way they do business by incorporating CSR practices into their business activities. This quantitative research will analyze whether NGOs activity has influence as a moderating variable on ownership structure in regard

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29 to conflict resolution. Doh and Guay (2006) state that the rising influence of NGOs is one of the most significant developments in international business over the past 20 years and NGO

engagement has been responsible for major changes in indigenous communities. More

specifically, the role of the NGOs moved to the front of discussions on MNEs behavior, using their status as stakeholder to create changes in local markets (Guay, Doh, & Sinclair, 2004). Moreover, stakeholders are able issue the problems that indigenous communities face due to the business activities of the MNEs. By communicating an ethical claim, stakeholders create

attention to this causal relation. For example, an environmental NGO can establish a causal connection between the emissions of the MNEs activities and environmental pollution. Hence, the NGO can put pressure on the MNEs activities to the MNE to reduce emissions (Pater & van Lierop, 2006). This indicates the growing role of NGOs in conflict that arise due to business activities in indigenous areas. This influence can be exercised through several forms: public publications, consultations with managers and shareholder proposals (Guay et al., 2004). Related literature suggest that MNEs have the tendency to change their strategies and policies where social and political pressure is related to NGOs or NGO networks (Lozano and Albareda, 2009). According to Van Huijstee and Glasbergen (2010) a similar view is presented by explaining that the number of collaborations between MNEs and NGOs regarding CSR initiatives has

exponentially increased in the contemporary business climate. Due to fear for reputational damage and the increased role of NGOs, MNEs accepted the social responsibility that comes with the international activities in developing countries. This contains also improvements in CSR policies (formal documents), practices (informal routines), and structures (staff positions and branches) within MNE subsidiaries under the influence of the NGO. Even though, previous research confirms the growing importance of NGOs and their significant influence on conflict resolution within indigenous communities, the effect on different ownership structures remains unanswered. This research will conduct an analyses to test the effect that NGOs have on various ownership structures in regard to conflict resolution.

H2: To which degree does the role of NGOs has positive influence on the relation between

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The 2nd_{part of this theoretical framework is based on the relationship that CSR initiatives}

have with conflict resolution. In this part conflict resolution will be measured based on type of conflicts. Moreover, the moderating variable, MNE experience will be introduced to this relationship based on theoretical implications.

Hypothesis 2 – CSR initiatives

The resource extraction industry is known as one of the industries that has the most impact on the ecological environment. This ecological environment is directly related to indigenous communities, as these communities are dependent on their environment economic, social and cultural reasons (Weaver, 2001; Whiteman & Mamem, 2002). These activities lead to direct confrontations between MNEs and Indigenous communities and cause conflicts

(O’Faircheallaigh, 2013). Hence, it is more than reasonable to assume that CSR initiatives could play an important role in this relationship between MNEs and Indigenous peoples in regard to conflict resolution. International organizations that implement CSR initiatives within their corporate structure will try to come up with solutions and more willing to contribute in decreasing the environmental pollution and collaborate with indigenous communities to minimize conflicts (Lertzman, 1999).

Nevertheless, there is a limited debate linking the MNEs and their CSR initiatives while there is a broad agreement that MNEs should act in a responsible way in regard to environmental and social issues (Polonsky & Jevons, 2009). There are more than one reasons this issue has not been investigated in a broader sense. The primary reason was the absence of valuable data providing relevant information regarding CSR initiatives of MNEs in developed countries. The other reason follows the first, meaning that the collection of data in more than one place is difficult, expensive and time consuming. Even though in-depth information about these various cases was missing, the need to respond to certain CSR issues was driven by corporate ideology or by stakeholder obligations which mainly excited due to a shift in thinking by various stakeholders, such as NGOs, Governments, Inhabitants and other organizations (Polonsky & Jevons, 2009). According to O'Shaughnessy, Gedajlovic, & Reinmoeller (2007) the primary goal of MNEs is to maximize shareholder wealth. However, a variety of other stakeholders demand a more active role in regard to CSR initiatives and therefore require from MNEs to carry out investments with various stakeholders in regard to resources and processes (Gifford et al., 2010 and Udayasankar, 2008). From a MNE point of view, CSR initiatives started taking shape through the global

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31 change in mindset regarding the social responsibilities and environmental concerns towards the local economies in which MNEs operate (Luo, 2006). His explanation infers that MNEs have ethical responsibilities when performing worldwide business that safeguards the welfare of society as the environment. This having said, this research makes the assumption that the shift in global mindset towards indigenous communities increased CSR initiatives within large MNEs and therefore have a positive effect on the conflict resolution with the communities. This leads to the following Hypothesis:

H3: To which degree do CSR initiatives have positive influence on the length of conflict within indigenous communities?

Moderator 2: MNE experience

The second moderator in this research that will be used is MNE experience. As mentioned in the literature part of this research, the understanding how MNEs respond to twin pressures of

globalization and localization by adapting CSR methods that apply at a global level and to their subsidiaries in various different environment, with particular attention being paid to the role of home, host and international factors in shaping the CSR approaches of MNEs will be tested. It might be assumed that CSR initiatives are created by a decision-making framework developed at the home country and implemented uniformly at all operations around the world. As is described in the article of Helin and Sandstrom (2010), a traditional view of international organizations where the code of ethics are pushed down from the top management to the subsidiaries despite the potential differences in norms and values. Subsidiaries in developing countries often require different codes of ethics compared to subsidiaries in developed countries.

The involvement of indigenous communities within these areas play a noteworthy role in this different approach in developing countries. Hereby, MNE experience on different levels implicates and require an interaction between the host country environment, home country and global factors to stimulate the CSR initiatives that can also act as learning curves for the MNEs global CSR approach. MNE experience on home, host and global level create positive

developments that add value to the global CSR approach as to the local pressures. An example, could be seen in the Canadian mining company Goldcorp, where the home-host-global

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32 experience played a pivotal role in changing the human rights policy and corporate responsibility approach, which then became the basis for Goldcorp corporate level human rights policy and corporate responsibility approaches, and other activities (Webb, 2012).

CSR initiatives of MNEs will be tested for their significance on conflict resolution and MNE experience will be used as the moderator to test whether there is a relationship between CSR initiatives and MNE experience in regard to conflict resolution. This second assumption will focus on the type of conflict in order to test whether there exists a relation between CSR initiatives and conflict resolution and if this relationship is positively influenced by MNE experience. Therefore, the following hypotheses will be formulated and tested for significance: H4: To which degree does MNE experience has positive influence on CSR initiatives in

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Conceptual Framework

The conceptual framework that is used in this research is visible in the figure 1. All of the

discussed hypotheses in the theoretical part will be presented in this framework in addition to the visualization of the relationship between the different variables. The expected relationship between the two MNE characteristics (Ownership structure and CSR initiatives) with conflict resolution is projected in a model. Moreover, the expected relation between the two moderators is also present in the model which therefore consists out of total of four hypotheses. Finally, this study evaluates the relationships on country, firm, and community level. These are displayed in the conceptual model as; Political stability (country level), Policy towards Indigenous

communities (firm level) and cultural isolation (community level). Figure 1.

Role of NGO’s

Ownership

Structure

CSR Initiatives

MNE Experience

Type of Conflict

Length of Conflict

MNE Characteristics

Conflict

H2 H1 H3 H4 Control Variables - Political Stability - Policy Towards IC - Cultural Isolation

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Data and Methods

This study will make use of a cross-sectional research design in which the relationship between two MNE characteristics will be elaborated in greater detail. This leaves other variables to be tested in greater detail in future research. The relationship between ownership structure and conflict resolution will be investigated with NGO participation as a moderating variable. Moreover, the CSR initiatives will be examined in relation to conflict resolution with MNE experience as a moderating variable. In doing so, we hope to add more content to the relationship between MNE characteristics and conflict resolution in regard to indigenous communities. The dataset from this research is created from real-life cases from three different continents, which are Latin America, Africa, and Australia. The case selection and data cleaning is

conducted through a group process over multiple years, in which participants revised 116 cases each. This results in a total of 580 reviewed cases in more than 35 countries. The cases were selected based on significant proof of conflict between MNE and indigenous communities. Moreover, the MNEs that are used in this data set are all coming from the resource extraction industry, which contains oil and gas, mining and renewable energy. Data collection was

improved by the following databases: EJOLT, InterContinental cry, Business & Human Rights Resource Center, Mine watch, American University of Washington Database. Secondary data was used for additional information on the used cases. The most common used secondary data was; World Bank and environmental justice Atlas. After collecting the data, the coding was done by using a coding manual, which contained all relevant variables that the different group

members were willing to use in their data analyses.

Dependent variables

This research will use conflict as the dependent variable. This variable is most important since this variable displays the main problem in this research. There are two dependent variables used in this research. The type of conflict as the length of conflict will be investigated in order to have a better understanding of the root of the problem. The type of conflict will be

measured based on a scale between 1 and 7, in which 1 reflects peaceful negotiations and 7 reflects high-level violence. This scale is based on the article of Calvano (2008) that ranges conflicts into boxes of low to high violence conflicts.

How does the ownership structure and CSR initiatives of MNEs influence conflict situations within indigenous communities? : a quantitative analysis on the dynamics of conflict resolution