PARTNERSHIPS, POWER AND EQUITY IN GLOBAL
            COMMODITY CHAINS:

POSITION PAPER ON COOPERATION BETWEEN COMPANIES AN...
TABLE OF CONTENTS


ACRONYMS AND ABBREVIATIONS ..............................................................................
ACRONYMS AND ABBREVIATIONS

            African Growth and Opportunity Act
AGOA
            Business-Interested NGO
BINGO
...
vi
EXECUTIVE SUMMARY
This research report is the initial outcome of cooperation between the Inter-Church
Organization for Dev...
The challenge of (strategic) partnerships for NGOs
In principle, companies and NGOs can adopt a range of different positio...
Relevant is for example mapping the number of stages in the production process and how
geographically dispersed the value ...
x
1    INTRODUCTION: A DYNAMIC BARGAINING SOCIETY
The challenge of solving economic, social and environmental problems in de...
1.2 Partnerships as a structural form of strategic stakeholder dialogue
This search for balance among stakeholder preferen...
approach to commodity chain analysis in order to identify the opportunities for an NGO such
as ICCO to capitalize on the i...
2    THE STRATEGIC STAKEHOLDER DIALOGUE: COMPANIES AND NGOS
Changing stakeholder relations means that issues of positionin...
usually at the instigation of some societal group based on doubts or concerns about e.g.
genetically modified foods. If a ...
this view do not always go hand in hand smoothly and pursuit of this joint objective (e.g.
through partnerships, see next ...
Reputation damage through poor CSR strategies can be high or low, depending on the nature
of the issue and the course of t...
groups. By contrast, Sea lions and Dolphins are more inclined towards co-operation. Sea lions
will accept sponsoring from ...
consultation, where animal liberation actions, sabotage and wreaking economic damage
    represent the primary components ...
quality labels and other regulations that are agreed to in the Marine Stewardship council
     have the objective of creat...
10. BONGOS (Business Oriented NGOs). Companies have helped to found a number of
    NGOs whose sole purpose is to represen...
Table 2.1 also depicts the results of own research conducted on the ‘intensity’ of specific
roles (van Tulder et al, 2004)...
different NGOs appears to be most effective in creating minimum conditions for stakeholder
dialogue. Thus organisations li...
14
     Table 2.2: Present (perceived) roles of co-financing Organizations vis-à-vis companies
Table 2.3: Anticipated Future Roles (2009) of leading Dutch Co-Financing Organisations




15
The future looks remarkably stable for the Dutch co-financing organisations (Table 2.3). All
organisations intend to conti...
activities across programs should be divested. Competitive position addresses the degree to
which the organization has a s...
on business development the two views are converging. However, it remains difficult to get
the two ‘worlds’ together. NGOs...
3    THE BUSINESS-NGO PARTNERSHIP REVEALED
Chapter two discussed the Business-NGO partnership as a type of strategic stake...
investment. They provide an alternative route toward sustainable growth on both a macro and
micro level. As will become ap...
3.2 NGO and company motivations for partnerships
According to Elkington and Fenell (2000), the motivations for NGO engagem...
•    Cross-fertilization of thinking
•    Greater efficiency in resource allocation
•    Desire to head off negative publi...
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Ecsad Icco Position Partnerships In Global Commodity Chains
Upcoming SlideShare
Loading in...5
×

Ecsad Icco Position Partnerships In Global Commodity Chains

3,427

Published on

ECSAD-ICCO. SWOT Analysis on Partnerships in Global Commodity Chains.Posted by Youmanitas Energy Farms Foundation.

Published in: Business
1 Comment
1 Like
Statistics
Notes
No Downloads
Views
Total Views
3,427
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
0
Comments
1
Likes
1
Embeds 0
No embeds

No notes for slide

Ecsad Icco Position Partnerships In Global Commodity Chains

  1. 1. PARTNERSHIPS, POWER AND EQUITY IN GLOBAL COMMODITY CHAINS: POSITION PAPER ON COOPERATION BETWEEN COMPANIES AND NGOS IN STIMULATING SUSTAINABLE DEVELOPMENT Written by Prof. dr. Rob van Tulder*, Dr. Alan Muller* and drs. Diederik de Boer** *SCOPE Expert Centre, Rotterdam School of Management **Maastricht School of Management of the Expert Centre for Sustainable Business and Development Cooperation (ECSAD), In cooperation with the Interchurch Organization for Development Cooperation (ICCO) December 2004
  2. 2. TABLE OF CONTENTS ACRONYMS AND ABBREVIATIONS .........................................................................................................V EXECUTIVE SUMMARY ..............................................................................................................................VII 1 INTRODUCTION: A DYNAMIC BARGAINING SOCIETY .......................................................1 1.1 STAKEHOLDER RELATIONS IN A BARGAINING SOCIETY..................................................................1 1.2 PARTNERSHIPS AS A STRUCTURAL FORM OF STRATEGIC STAKEHOLDER DIALOGUE..................2 1.3 THE POTENTIAL FOR PARTNERSHIPS FROM A COMMODITY CHAIN PERSPECTIVE........................2 1.4 STRUCTURE OF THE PAPER..................................................................................................................3 2 THE STRATEGIC STAKEHOLDER DIALOGUE: COMPANIES AND NGOS ...................4 2.1 COMPANY POSITIONING AS A STRATEGIC STAKEHOLDER..............................................................4 2.2 NGO POSITIONING AS A ST RATEGIC STAKEHOLDER.......................................................................7 2.3 THE CHALLENGE OF BALANCING MULTIPLE ROLES.......................................................................12 2.4 DUTCH CFO POSITIONING BASED ON SELF-PERCEPTION..............................................................13 2.5 NGO POSITIONING WITH RESPECT TO OTHER NGOS....................................................................16 2.6. CONCLUSIONS.....................................................................................................................................17 3 THE BUSINESS-NGO PARTNERSHIP REVEALED.................................................................. 19 3.1 THE CONCEPT AND MAIN THEMES OF PARTNERSHIPS...................................................................19 3.2 NGO AND COMPANY MOTIVATIONS FOR PARTNERSHIP S.............................................................21 3.3 TOWARDS A MODEL TO DISTINGUISH PARTNERSHIPS...................................................................23 3.4 AN INITIAL ASSESSMENT OF PARTNERSHIPS OF DUTCH CFOS....................................................25 3.5 RISKS OF PARTNERSHIPS...................................................................................................................28 3.6 CONCLUSION.......................................................................................................................................30 4 PARTNERSHIP POTENTIAL IN COMMODITY CHAINS...................................................... 33 4.1 THE ‘GLOBAL COMMODITY CHAIN’ APPROACH............................................................................33 4.2 CHAIN TYPES AND CHARACTERISTICS.............................................................................................34 4.3 COORDINATION, ‘CORE’ COMPANY POSITIONING AND CHAIN RELATIONS.................................35 4.4 THE POSSIBILITIES FOR INTERVENTION IN COMMODITY CHAINS.................................................38 4.5 RENT DISTRIBUTION, BARRIERS TO ENTRY AND FORWARD INTEGRATION.................................40 4.6 CONCLUSIONS: TOWARDS THE DEVELOP MENT OF SUSTAINABLE CHAINS.................................43 5 PARTNERSHIPS IN GLOBAL COMMODITY CHAINS: MISSING LINKS ..................... 45 APPENDIX: EXAMPLES OF EXIS TING PARTNERSHIP INITIATIVES .................................... 49 APPENDIX: POTENTIAL PARTNERS AND RELEVANT RESEARCH ORGANIZATIONS 52 REFERENCES ..................................................................................................................................................... 57 iii
  3. 3. ACRONYMS AND ABBREVIATIONS African Growth and Opportunity Act AGOA Business-Interested NGO BINGO Bilateral Investment Treaty BIT Business Oriented NGO BONGO Broker Oriented NGO BRONGO Common Agricultural Policy CAP Co-Financing Organization CFO Corporate Financial Performance CFR Corporate Social Responsibility CSR Direct Action oriented NGO DANGO Discussion Oriented NGO DONGO Degree of Vertical Integration DVI Everything But Arms agreement EBA European Commission EC Export-Led Growth ELG Export Processing Zone EPZ European Union EU Fair Economic Development FED Foreign Direct Investment FDI Free Trade Area FTA General Agreement on Tariffs and Trade GATT Global Commodity Chain GCC Generalized System of Preferences GSP Import Substitution Industrialization ISI Less Developed Country LDC Most Favored Nation MFN Multinational Enterprise MNE Non-Governmental Organization NGO Non-Tariff Barriers NTBs Own Brand Manufacturer OBM Official Development Aid ODA Own Design Manufacturer ODM Organization for Economic Cooperation and Development OECD Original Equipment Manufacturer OEM Papua New Guinea PNG Partnership Oriented NGO PONGO Purchasing Power Parity PPP Research and Development R&D Regional Integration Agreement RIA Southern African Development Community SADC Shareholding NGO SHANGO Strategic Stakeholder Oriented NGO STRANGO Supervisory NGO SUNGO United Nations Conference on Trade and Development UNCTAD Voluntary Export Restriction VER World Food Program WFP Watchdog Oriented NGO WONGO World Trade Organization WTO World Wildlife Fund WWF v
  4. 4. vi
  5. 5. EXECUTIVE SUMMARY This research report is the initial outcome of cooperation between the Inter-Church Organization for Development (ICCO) and the Expert Center for Sustainable Business and Development (ECSAD). The research involves linking a ‘partnership’ approach to analysis of ‘global commodity chains’ in order to identify the opportunities for an NGO such as ICCO to capitalize on the increasing acceptance of partnerships as a mechanism for development. The project’s origins can be found in the early efforts of ICCO to apply a mult- stakeholder approach and a value chain perspective to Fair Economic Development. By helping small-scale producers access international markets, they came into contact with several companies in the cotton, tropical fruit and forest product sector and through trial and error, developed a number of partnerships between NGOs, companies and producer organisations. This led to a realization that changes were needed in their way of thinking and working, redefining their roles in order to make it succesful. The aim of this research project with ECSAD is to gain insight in mechanisms for partnerships in which actors of the private-, non-profit- and sometimes public sector cooperate in the development of sustainable international commodity chains. This insight will be obtained by analyzing the currently used mechanisms for co-operation with a focus on actors in developing countries. In doing so the research aims to draw lessons on how partnerships can contribute to direct (economic) poverty alleviation. For ICCO, the research will allow lessons learned to ‘gel’ as well as provide a process evaluation from a neutral outsider, while at the same time helping ECSAD develop their knowledge and insight on partnerships as a vehicle for sustainable development. The increasing importance of partnerships It has become increasingly accepted that ‘partnerships’ between NGOs and companies can be a powerful tool for stimulating sustainable development. Partnerships are emerging in the context of changing relations in (inter)national stakeholder environments, between governments , businesses and civil society. Dynamics in this ‘triangle’ of relationships are currently subject to tremendous change. Foremost is the retreat of the state as the regulator of economic activity and markets, coupled with the encouragement of self-regulation among business as ‘the market’ is given more and more room as a managing force in shaping economic and social outcomes. At the same time we are witnessing the coming of age of civil society as an increasingly internationally organized stakeholder body trying to fill the void between government regulation and self-regulation, particularly in issues that span multiple regulatory environments. Momentum is therefore being created to explore structural cooperation between different kinds of stakeholders. Thus far experience has been gained on the interface between gove rnment and civil society, such as universities and hospitals; and in cooperation between business and government, such as public -private partnerships (PPPs) in e.g. infrastructure. More recently, the call for improved corporate social responsibility (CSR) among companies is inducing businesses to explore their social orientations, while the increased significance of market forces is driving civil society organizations like NGOs to reconsider their attitudes towards the market. Now, partnerships are receivin g new attention on the interface of business and civil society (profit and non-profit), precipitated by the growing complexity of increasingly internationally defined issues, changing stakeholder dynamics and recognition of convergent interests. Structural forms of strategic stakeholder dialogue are needed to channel that momentum towards the development of sustainable economies and societies. Strategic stakeholder dialogue between companies and NGOs means a shift from antagonistic relations (confrontation) to a more constructive approach involving e.g. structural commitment in the form of partnerships. The outcome matches efficiency considerations (‘doing things right’) with ethical ones (‘doing the right things’) in the form of ‘doing the right things right’. vii
  6. 6. The challenge of (strategic) partnerships for NGOs In principle, companies and NGOs can adopt a range of different positions in their relationship, and these positions will affect the chances afforded by partnerships. Companies, depending on their own CSR attitudes, may be proactive in their engagement of civil society and addressing relevant issues. Other firms, however, may be more reactive in their CSR strategies and as a result more difficult partners. At the same time, some firms may be interactively oriented, and thus geared towards constructive dialogue. For NGOs, the choice for a partnership-oriented strategy involves not only issues of positioning towards companies, but also positioning towards other NGOs and society. Is the partnership strategy attractive for a broader public and can this be translated into funding opportunities? Is a partnership strategy the best choice or are there more viable alternatives to reach the same goal? Moreover, a critical analysis of the NGO’s own capabilities is required, such as whether partnerships ‘fit’ the NGO’s strategic vision. Matching the company’s attitude towards societal issues with the NGO’s positioning defines the potential for structural cooperation. This study distinguishes between ten distinct roles that NGOs can adopt that vary in the level of (inter)dependence and whether the NGO’s attitude is confrontational or cooperative with regard to companies. One of these is the Partnership Oriented NGO (PONGO). Research has shown that the perception Dutch Co- Financing Organisations (CFOs), as an NGO subgroup, have of their own relative positioning is fairly similar. Distinctions remain in terms of e.g. focus or philosophy, but in terms of their attitudes towards dialogue with companies, Dutch CFOs are fairly monotone. Therefore the development of a sustainable partnership strategy requires a thorough evaluation of an NGO’s strategic orientation, and how an organization’s vision, knowledge and competences can create a fruitful basis for sustainable positioning. At the same time, matching the NGO’s positioning with the company’s attitude towards societal issues defines the potential for structural cooperation. Both conflicting and converging interests play an important role in the partnership debate. Although in an ideal world, converging interests are more important than conflicting interest, in practice both are equally important and thus the term ‘ critical cooperation’ is introduced. In addition to accounting for the multiplicity of roles and interests, the literature emphasizes that partnerships can be win-win if both parties demonstrate sufficient commitment, where communication lines are open, where linkages and synergies are exploited, where the relationship is given a formal status with a clear divisio n of responsibilities, and where both partners behave towards each other with integrity. The search from both sides is for the building blocks of cooperation and the strengths which will enable the NGO to be an equal partner in a market-driven environment. Partnerships can vary in intensity, or the level of cooperation, ranging from philanthropic to transactional to strategically integrated. Partnerships can also vary in scope , including a potentially larger number of stakeholders in both developed and developing countries. Additionally, a ‘PONGO’ can be divided into four sub-categories: the donor, the mediator, the capacity builder, and the technical expert. In practice, a PONGO can fulfill a combination of the above as well. If the best role for CFOs is one of a donor and mediation/ broker role and less one of a technical expert needs to be analysed further. Making partnerships strategic: the link to development and global commodity chains Little research has been done, however, on partnerships in the developing country context. Partnerships not only for mutual gain, but also for societal gain in the form of sustainable development, are new and subject to a whole slew of additional problems and risks. Analysis of the potential for and risks of partnerships in the developing country context can be analyzed from a commodity (value) chain perspective. The value chain perspective segments the production and delivery of goods to market into stages of added value and identifies the actors that play the key role at each stage. This perspective is not only useful for identifying growth perspectives in individual goods and commodities, but also for determining the potential for partnerships. viii
  7. 7. Relevant is for example mapping the number of stages in the production process and how geographically dispersed the value chain is. The more segmented and dispersed the chain, the more difficulties will be encountered trying to positively impact the chain. Another issue is identifying power concentrations in the value chain; i.e., which processes are controlled by the ‘core’ actors in the chain. Improving market access and creating potential for increased local value added for producers in developing countries will be difficult without involving highly internationalized core actors in global markets, particularly for a nationally organized NGO. Additionally, institutional issues and obstacles to growth can be identified such as declining world prices and terms of trade developments. Additionally, there is the challenge of defining and measuring ‘equity’ with respect to the distribution of wealth in the chain, necessary for setting the conditions and terms of partnerships for sustainable development. On that basis the potential for partnerships can be analyzed by engaging core actors in strategic stakeholder dialogues to assess dilemmas, establish interests and critical success factors, and to begin managing expectations on both sides. This will lead to a framework of analysis that integrates both the value chain and the partnership issues specific to actors at given stages in the chain, and links them to the potential role NGOs can play. Such a framework can then be compared to the capabilities of an NGO such as ICCO to identify the ‘strategic fit’ of such a partnership. ix
  8. 8. x
  9. 9. 1 INTRODUCTION: A DYNAMIC BARGAINING SOCIETY The challenge of solving economic, social and environmental problems in developing countries is tremendous. In addressing these problems, the relationships and interactions, interfaces and conflicts of various actors come into play. Within this dynamic and fluid environment, actors of all colors can be seen as stakeholders. At the level of (inter)national societies, stakeholder relationships are traditionally cast in the form of a triangle: market, state and civil society. The interactions between stakeholders from these ‘spheres’ shape the institutional environment and define the ‘rules of the game’. This refers in large part to the distribution of gains and costs in societies and economies. In a time when sustainability has emerged as one of the major issues facing societies and the world in general, the question of how this should be achieved remains highly debated. The path that is chosen will largely determine the outcome, and that path is determined by the exchanges and interactions between business- and societal stakeholders. In the not too distant past, those interactions were dominated by conflict, but recently proponents of a ‘dialogue’ between stakeholders have started to gain ground. The ‘stakeholder dialogue’ is a mechanism for mapping and linking potentially divergent interests, identifying opportunities and reducing risk. For the combination of sound business and socially responsible business to be sustainable in the long run, the dialogue must be strategic as well. Formulating strategy entails defining stakes and positions, and if these are perceived as sufficiently harmonious, dialogue becomes more firmly embedded, and can progress to the form of partnerships. 1.1 Stakeholder relations in a bargaining society In a bargaining society, stakeholders maintain a precarious balance. Some categories of stakeholder may be relatively strong or weak, and the balance established often has the flavor of a particular ‘industrialization’ model. The state in many Asian countries, for instance, is considered a relatively strong bargaining partner, while civil society remains less developed. In the US, receding government (until recently) meant that market and societal actors were relatively strong, and in Europe the three corners of the triangle have traditionally been in balance. Some of the tension between stakeholders exists on the basis of their different drivers (e.g. profit, non-profit, general welfare) and their reliance on different coordination mechanisms (regulation, competition, norms and values). Societies are becoming increasingly complex. Organizations can more and more often be identified as ‘hybrids’, whereby boundaries, drivers and coordination become blurred and even potentially conflicting. Much of this is related to the rise to prominence of the market, which refers to the increasing influence of market actors (companies) on government and society. It also refers, however, to the fact that governments and civil society actors such as NGOs are trying more to participate in productive economic activity, through public/private or profit/non-profit partnerships. This participation can both be aimed at sharing in the wealth generated by economic activity, but also as a means to exercise a control function on firms through participation. This can be the case with e.g. (partially) state-owned enterprises like the Dutch Railway (NS), which are subject to both profit considerations as well as the expectation that public transport is a public good (non-profit). Stakeholders, which could in the past be classified with relative ease as being either primary – involved directly in the value chain of productive economic activity, or secondary – such as governments or NGOs, are increasingly observing a convergence of interests and activities. This does not mean tensions are necessarily being erased. Conflicts continue to arise along the interfaces between these spheres. In our increasingly interconnected world, this not only raises the stakes, but also makes it more difficult to map out those conflicts, define positions and engage stakeholders in constructive dialogue. Partnerships offer a perspective for dealing with this new complexity on a structural basis. 1
  10. 10. 1.2 Partnerships as a structural form of strategic stakeholder dialogue This search for balance among stakeholder preferences is not only related to goal formulating - behaviour of individuals, it also relates to the process of goal seeking. There is an increasing - recognition that sustainable economic development and sustainable societies more generally are only attainable through the combined efforts of different stakeholders, as opposed to the zero-sum game of keeping one another in check. It seems that sustainable societies and sustainable economies can only be achieved through constructive long-term dialogue, known as strategic stakeholder dialogue (Cf. Van Tulder et al, 2004). The notion of ‘partnerships’ can in fact be seen as one form of strategic stakeholder dialogue, in which partners commit to long-term, structural interaction based on a shared vision of sustainability and the role of all partners in its achievement. Partnerships can exist in different forms: between public and private stakeholders, such as collaborative efforts between companies and governments to invest in infrastructure, but more and more often they are being formed between profit and non-profit organizations. This position paper focuses on the latter form of partnerships. There is, however, also a lack of clarity as to what exactly constitutes a partnership that distinguishes the relationship from other forms of stakeholder dialogue. Since the phenomenon of partnerships between profit and non-profit is relatively new and uncharted territory, organizations that engage in them embark on steep learning curves. One of the objectives of this position paper is to identify lessons learned in the literature and to map out some of the critical success factors, prerequisites, pitfalls and evaluation mechanisms as they are identified in the literature. 1.3 The potential for partnerships from a commodity chain perspective This research on partnerships is complemented with research on commodity chains, by which the same ‘globalizing’ forces that necessitate dialogue (and thus partnerships) are analyzed in terms of their impact on wealth creation and distribution, particularly for developing countries. Commodity chains and partnerships can also be linked through the stakeholder concept. While partnerships can be seen as a form (and as the result) of practical stakeholder dialogue between actors within societies, commodity chain analysis involves the relationships between stakeholders not so much within societies, but within value chains of productive activity. More often than not, these commodity chains also span multiple socie ties, reaching from the poorest countries in the world to the richest. As such the (international) commodity chain analysis adds context to the discussion on partnerships. Moreover, the traditional distinction between primary stakeholders (suppliers, customers, unions, financiers) and secondary stakeholders (governments, NGOs) is blurred as secondary stakeholders pursue the path of partnerships with commodity chain actors. If strategic stakeholder dialogue is likely to function as the path to sustainable business and sustainable societies, it also provides the path to sustainable development. Development theory these days still involves a perception that development must occur from the ground up; i.e., that it must be embedded in local structures, customs and institutions. At the same time, economic theory holds that specialization along lines of comparative advantage, accompanied by an institutional setting of free trade – the rising tide of which is expected to ‘lift all boats’ – is the key to growth and development. For developing countries, this continues to mean specialization in commodities and other relatively low value-added goods, and the continual struggle to increase value added and income levels in order to fuel growth. Yet the global economy is not a level playing field, and the issue of dependency and inequity is especially salient in relations between stakeholders in developed countries and stakeholders in less developed countries. Although these imbalances can apply to stakeholders both inside and outside commodity chains, it applies in particular to the relationships between developing country suppliers and developed country customers. International commodity chains tend to be ‘buyer-driven’ as opposed to ‘seller driven’ (Gereffi, 1994), indicating that bargaining power rests with developed country customers, by and large Western multinationals (MNEs). Partnerships between companies and NGOs in the developing country context are faced with issues of equity and power imbalances. This research project involves linking the partnership 2
  11. 11. approach to commodity chain analysis in order to identify the opportunities for an NGO such as ICCO to capitalize on the increasing acceptance of partnerships as a mechanism for development given their developing country focus. The aim of the research is to get insight in mechanisms for partnerships in which actors of the private-, non-profit- and sometimes public sector co-operate in the development of sustainable international commodity chains. This insight will be obtained by analysing the currently used mechanisms for co-operation with a focus on actors in developing countries. The perspective for this research is to draw lessons on how partnerships can contribute to direct (economic) poverty alleviation. 1.4 Structure of the paper The paper structure reflects the three topics introduced above in 1.1 through 1.3. The next chapter highlights the positioning strategies of both companies and NGOs under which partnerships can emerge and the motivations of both stakeholders to engage in partnerships. Chapter Three explores more directly the lessons learned from the literature, both theoretical and empirical, on the arguments for and against partnerships, the critical success factors and the potential pitfalls along the way for both NGOs and companies. Chapter Four introduces the global commodity chain perspective, highlighting the added value of a segmented yet holistic approach to commodity production and marketing in developing countries. At the same time a number of practical aspects are covered on how to quantify structural dependencies and inequality, how external stakeholders like NGOs can perform governance functions and how they can intervene in processes at individual stages in the chain. The final chapter (Five) brings the partnership literature and that on global commodity chains together to identify the lessons learned, complementary and conflicting aspects, and offers a suggestion as to the type of analytical framework that could be used to analyze partnership potentia l from a commodity chain perspective. 3
  12. 12. 2 THE STRATEGIC STAKEHOLDER DIALOGUE: COMPANIES AND NGOS Changing stakeholder relations means that issues of positioning and attitudes towards other stakeholders return to the fore. In this chapter insight will be given into the positioning possibilities for companies and NGOs in a way that defines the potential for strategic stakeholder dialogue and ultimately the chance of successful partnerships. Section 2.1 addresses the development of CSR and the positions companies can adopt towards societally relevant issues and societal actors. Section 2.2 explores the range of different roles NGOs can assume in their interaction with companies, and section 2.3 briefly discusses the complexity of fulfulling multiple roles. The next section (2.4) reviews recent research on the positioning strategies of a number of Dutch NGOs and in particular CFOs (co-financing organizations). Moving from the comparative backdrop of section 2.4, section 2.5 provides a tool for analyzing an NGO’s strategic positioning relative to that of other NGOs. Finally, in section 2.6 some conclusions are drawn regarding the potential for partnerships from a positioning point of view. 2.1 Company positioning as a strategic stakeholder Milton Friedman once said ‘the business of business is business’ (Friedman, 1962). In his view, a firm’s sole responsibility is to use its resources to generate sufficient profits while operating honestly and under free competition, and the firm is to be held accountable only by its shareholders. Although familiar, this neo-classical view actually runs counter to older perspectives in which firms took an active role in social issues. In the 19th century, large firms (as well as churches) began to provide certain goods to society that had a public and social function instead of simply a consumption function. Ford is an internationally recognized example of a firm that tried to provide its employees with all the services they needed (in part motivated by a desire to keep them maximally productive and to minimize labor unrest). In the Netherlands, for instance, companies like Philips and RDM engaged in social housing and Gist-Brocades built an entire neighborhood for its employees (Wennekes, 1993). In the 1990s corporate responsibility was given new meaning subsequent to the UN-initiated Bruntland Commision’s report on the environment and development (Bruntland, 1987). The Bruntland Commission defined sustainable business as that which would serve current generations without jeopardizing future generations’ chances to serve its own needs. Still ‘CSR’ represents a multi-faceted concept. CSR rests on two fundamental principles: the charity principle, and the steward principle. The charity principle is rooted in the notion that the priviledged in society should look out for the underpriveledged, while the steward principle is based on the trust and confidence that managers are given in society to take societal and stakeholder needs into consideration when business decisions are made (Frederic k et al., 1993: 35). Thus companies should not be concerned solely with profit; but with people and the planet as a whole as well. This then formed the basis for the concept of the ‘Triple P’ (profit, people and planet) (Kaptein and Wempe, 2002). As expectations placed on companies with regard to social and ecological policies increase, companies are put under pressure to develop initiatives of their own in this respect. Since the range of social and ecological issues of potential importance is so vast, companies are forced to develop overarching strategic visions of how to deal with such issues. But where does this responsibility end? At the borders of the firm, or are there firms with vital positions in the economy and in value chains, of whom some kind of ‘chain responsibility’ can be demanded? These ‘core’ economic actors ultimately bear the brunt of societal criticism for developments in the chain as a whole (e.g. Nike and the issue of child labor amongst its suppliers). These leading firms are therefore expected to manage these issues, and in so doing, deal with potential reputation problems. This can be seen in the ‘issues life cycle’ (Wartick and Wood, 1998; Van Tulder and Van der Zwart, 2003), which reflects the different stages an issue goes through and the way firms with a CSR strategy will deal with that issue (Figure 2.1). In the ‘birth’ stage, an issue arises, 4
  13. 13. usually at the instigation of some societal group based on doubts or concerns about e.g. genetically modified foods. If a firm is able to anticipate an issue’s birth, it can be classified as highly proactive. As public attention intensifies in the ‘growth’ phase, the issue crystallises into a clearly defined set of arguments and is often triggered by a certain event, such as a protest or other manifestations that attract public attention. If the company waits to engage in this stage, it can be called ‘active’. Figure 2.1: Issue life cycle and CSR (a) (b) Public attention (c) Birth Growth Develop- Maturity Post- ment maturity Proactive Active Re-active Defensive: Firm crisis strategy management Source: Van Tulder and Van der Zwart, 2003 The controversy enters the development phase when prominent stakeholders begin to clamor for change in the company’s policies or strategy. An expectational gap has emerged where societal actors view of the problem and its solution begins to diverge fundamentally from the strategy thus far pursued by the company. Companies that wait until this moment to address the issue are following a ‘re-active’ CSR strategy. In the following period, ‘maturity’, public attention grows explosively and unrest among the general populace is noticeable. Companies that do not engage until an issue has reached the maturity stage will consider the issue to be a crisis and always approach it from a defensive point of view. At that point an issue can follow three different paths: an issue can ‘reincarnate’ (‘a’ in Figure 2.1) because its solution is instable or because new expectational gaps emerge; an issue can be in balance (‘b’) if the solution or policy changes are considered acceptable but not far-reaching; or (c) an issue can disappear, either through e.g. a loss of momentum, government regulation, or company self- regulation. Thus companies can be classified as following one of four strategies with respect to CSR based on the way they manage important issues (Figure 2.2). The inactive strategy reflects Friedman’s (1962) classic idea that profit is the sole priority of a firm. CSR in this view is the abbreviation of ‘corporate self responsibility’. This inside-in perspective emphasizes only ‘doing things right’ (efficiency) and avoids any fundamental ethical questions about what is being done. A related strategy is ‘reactive’, by which the firm’s focus is more outside-in and based on not making mistakes. CSR in this view is the abbreviation of ‘corporate social responsiveness’. An active strategy is perhaps the most ethical orientation and the purest form of responsible business. It involves ethically inspired entrepreneurs with a vision, with a strong inside-out orientation aimed at precipitating change. However, this strategy of ‘doing the right things’ (ethics) also has potential weakness, because it may go at the expense of doing them right. CSR in this view represents ‘corporate social responsibility’. A proactive – or even interactive – strategy, on the other hand, is based on the idea that efficiency and ethical behavior can be pursued jointly, and some argue will even lead to a win-win outcome (see Porter and Van der Linde, 1995). CSR in this view represents ‘corporate societal responsibility’. It requires a systematic involvement of stakeholders not only in the formulation of objectives but also in their implementation. Efficiency and ethics in 5
  14. 14. this view do not always go hand in hand smoothly and pursuit of this joint objective (e.g. through partnerships, see next chapter) continues to lead to fundamental tensions in strategy. ‘CSR’ in this perspective is not the ‘do-gooding’ to which so many business voices object; it is a broad, integrated, strategic view of business’s vital roles and responsibilities in every society and in the global environment’ (Wartick and Wood, 1999). CSR should be aimed at creating added social and ecological value for firms and society. It is to this fourth angle at CSR that this position paper in particular refers. But it is important to note that this perspective is not always accepted by business partners. In general Anglo- Saxon (core) firms are aimed at a more re-active stance towards CSR, European (core) firms tend to take a more interactive stance, whereas Asian (core) firms tend to adopt a more in- active stance towards CSR. The latter seems to apply also to many developing country firms: they actually tend to adopt a largely ‘in-active’ or ‘re-active’ stance towards CSR. None of the ‘showcase’ firms in CSR (defined as Corporate Social Responsibility and identified by the International Chambers of Commerce) is from a developing country. 1 ‘Good corporate citizenship’ for each of these categories of firms thus means something different. NGOs wanting to engage in partnerships with firms should therefore take into consideration the different ‘CSR cultures’ from which firms originate – even if they operate in the same global commodity chain. Figure 2.2: Four CSR strategies IN-ACTIVE RE-ACTIVE ACTIVE PRO/INTER-ACTIVE “Corporate Self “Corporate Social “Corporate Social “Corporate Societal Responsibility” Responsiveness” Responsibility Responsibility” Inside-in Outside-in Inside-out In/outside-in/out “doing things right” “don’t do things wrong’ ‘doing the right things’ “doing the right things right’ ‘just do it’ ‘just don’t do it’ ‘do it just’ ‘just do it just’ Efficiency Equity/Ethics Effectiveness ‘public relations’ ‘public affairs’; ‘corporate ‘strategic corporate ‘business of business is ‘community/investor/ communication’ ‘business communication’ business’ government relations’ ethics’ ‘strategic issues ‘entrepreneurship’ ‘issues management’ ‘philantropy’ management’ ‘corporate reputation’ ‘Corporate citizenship’ ‘strategic philantropy’ ‘responsible ‘strategic management’ entrepreneurship’ ‘leadership’ No organised interaction Stakeholder Debate Societal dialogue (Strategic) stakeholder other than via markets dialogue Profit maximisation Quarterly profits and Values (long-term Medium-term profitability market capitalisation profitability) and sustainability Source: Van Tulder and Van der Zwart, 2003; Van Tulder and Van der Zwart, forthcoming How firms deal with CSR is crucial for how they are seen by other stakeholders. The sum of the images that relevant stakeholders perceive and associate with the firm is defined as reputation (Van Riel, 1999). The foundations of reputation are honesty, credibility, reliability and responsibility (Fombrun and Gardberg, 2000). Reputation is the binding factor in relationships between firms and stakeholders that provides a basis for continuity and a reservoir of goodwill. It is not only a factor from an ethical, or a value-based point of view; a solid reputation is also e.g. a positive aspect of marketing or allows the firm to borrow money at lower rates. 1 The ICC Company Showcase in 2003 listed eighteen companies that are recognized as ‘cutting edge’ in the field of environmental and sustainable development: ABB, Fiat, Outokumpu, Tepco, Shell, Rio Tinto, Fortum, BP, Kesko, Corus (formerly Hoogovens), GlaxoSmithKline (formerly GlaxoWellcome), Unilever, UPM-Kymmene, Silja Line, Volkswagen, Akzo Nobel and DSM. Most of these firms come from Europe, only one from the US and Japan, none from developing countries. The change that NGOs can collaborate with ‘leading-edge’ companies as regards pro-active CSR therefore is biggest in Europe. It also contains the least ‘partnership’ dilemmas due to more ‘inducive’ CSR cultures in Europe as opposed to other regions and institutional contexts. 6
  15. 15. Reputation damage through poor CSR strategies can be high or low, depending on the nature of the issue and the course of the issue life cycle. This can be measured in terms of e.g. product boycots (e.g. calls not to buy gas at Shell), a decline in job applicants or a change in credit rating (Figure 2.3). The question is to what extent the firm engages in some level of self-regulation to correct for the damage done and rectify the situation. In cases where the stakes are low (low reputation damage) and the firm makes little attempt to noticeably close the expectation gap, the firm’s strategy is clearly one of inaction. As the stakes go higher, the firm may become more active, but primarily in a reactive (defensive) mode. At the opposite extreme is a firm proactively engaged in self-regulation. This situation has two variants, depending on the stakes: if reputation damage is low, the firm is likely to engage proactively in stakeholder dialogue. If the stakes are so high that the risk of compromising can undermine the company’s independence, the company may choose to follow its own course in order to maintain some level of control over the damage. In that case, interaction with other stakeholders (e.g. NGOs) may be one of conflict instead. Figure 2.3: Reputation management and Corporate Social Responsibility Reputation damage Low High Weak Inactive Reactive / Defensive Self-regulation Active Dialog Conflict Proactive / Interactive Strong Source: Van Tulder and Van der Zwart, 2003 Together these elements form an analytical framework for positioning the behavior and strategies of firms in their interactions with other stakeholders. These framework elements, however, only reflect the firm perspective: NGOs have their own ‘strategic repertoire’ when it comes to engaging other stakeholders, and companies in particular. 2.2 NGO positioning as a strategic stakeholder NGOs have shown in numerous cases that they can force companies to action through the power that NGOs wield over public opinion. But NGOs are not only the critical ‘watchdogs’ that often make the headlines. NGOs have stakes and weaknesses of their own, such as reputation issues and the dependency on external financing through private donors or governments, as is the case with co-financing organizations (CFOs) in the Netherlands. The function of NGOs is first and foremost to organise society and to create ‘club goods’, i.e., goods from which some members of society can be excluded (in contrast to public goods, which are by definition for all). Next to that, they operate at two interfaces: (a) between the state and civil society and (b) between the market and civil society. The first interface is the most traditional, reflecting the financial relationship between government and NGOs, which in such cases appeal to governments to obtain additional fundin g for projects they carry out on behalf of civil society. It is however especially the second interface (b) that is undergoing change. Since the early nineties, with the advent of the bargaining society, NGOs have been calling companies to account for their social responsibilities in a variety of ways. Many NGOs believe that companies, more so than government, are/should be able to address certain issues. According to Elkington and Fennell (1998), NGOs can assume four roles in this regard: (1) Sharks , (2) Orcas, (3) Sea Lions and (4) Dolphins. Sharks and Orcas are inclined towards polarisation and confrontation. They act more (Sharks) or less (Orcas) instinctively, strategically and in 7
  16. 16. groups. By contrast, Sea lions and Dolphins are more inclined towards co-operation. Sea lions will accept sponsoring from companies (and tend not to criticise the hand that feeds them too much), while dolphins realize that companies can create important preconditions to achieve desired change but prefer to retain their independence in the process. Both confrontation and co-operation can be adequate strategies. Many NGOs start out as sharks: with direct action, debate and as much independence from companies as possible. According to a recent report by SustainAbility and the United Nations (2003), the categories of Orcas and Dolphins have gained in importance and appeal. Five strategies can be distinguished by means of which NGOs intervene in companies and markets so as to make their influence felt (see Box). Anti-business campaigns: effective in raising public consciousness around an issue and q catalysing pressure on companies. Tend to be only effective against well-known branded companies on black-and-white issues. Market intelligence: still largely focussing on individual companies, a growing trend q involves building market intelligence on companies and facilitating pressure from employees, customers, suppliers, investors, boards etc. for improvements in performance on key issues. Business engagement: engaging businesses in partnerships aimed at collaboratively q addressing key issues. Intelligent markets: Potentially the most powerful way to intervene in markets is to try q and do so at the level of the market – rather than with individual or groups of businesses. A small number of NGOs are attempting to do this by actively working to ‘reframe’ markets to reward positive behaviour and penalise negative behaviour. Market disruptions: come in the form of regulatory interventions or shifting liability q regimes, which trigger upward shifts in markets towards higher levels of sustainability. One can identify the development of a shift towards NGO partnerships with companies (the ‘business engagement’ role). Also notable is that a parallel exists between the emerging trend towards partnerships and the fact that national and international NGOs are increasingly confronted with demands of accountability and transparency. NGOs are being called upon to adopt codes of conduct. To meet these new demands, NGOs need to be managed in an increasingly professional manner. There is, however, a richer palette of NGO strategies than the inventory above suggests. A broad range of new roles are currently unfolding, especially in the area of multi and strategic stakeholder dialogues and project partnerships that move beyond a form of ‘business engagement’. Roles such as broker, mediator and/or supervisor are appearing (see also Elkington and Fenell, 2000) which up until now have hardly been discussed in academic literature. Moreover, it is often assumed that NGOs can fulfill only one role and/or that they migrate from one role to another. In practice, the situation seems much more nuanced. NGOs adopt multiple roles, both consecutively in a single process as well as simultaneously in different settings through which at one moment they seek to start a debate and the other they seek to start a dialogue. The following ten roles can be distinguished at the interface between companies (market) and NGOs (civil society) 2 : 1. DANGOS (Direct Action oriented NGOs): hard-core action groups, such as the Animal Liberation Front, the former Rote Armee Fraction or even al-Qaeda, employ anonymous cells to carry out (illegal) campaigns. They are oriented towards direct action without 2 With the exception of Bingos and Bongos, the acronyms for the respective NGO roles have been invented by one of us. Inspired by the proliferation of NGO acronyms we could not resist the temptation to put our acronym oar in. Eveline van Mil is gratefully aknowledged for her input on fine- tuning this model. 8
  17. 17. consultation, where animal liberation actions, sabotage and wreaking economic damage represent the primary components of their campaign repertoire. 2. WONGOS (Watchdog Oriented NGOs): NGOs that operate as ‘agitator’ or ‘conscience’ include organisations such as ATAC, Greenpeace, McSpotlight, Friends of the Earth, Clean Clothes Campaign and Amnesty International. They intend to remain as independent as possible and actually seek confrontation and debate in order to draw attention to issues in as stark manner as possible. They are strongly media oriented and make use of ‘blaming and shaming’ campaigns to highlight corporate responsibilities and inconsistencies. 3. BRONGOS (Broker Oriented NGOs). New NGOs are increasingly being founded that can meet companies’ demand for a ‘mediator’ or ‘broker’ in the face of societal conflicts. The degree of independence of this NGO role is generally less than that of the supervisor (Sungos). Generally, it is not a permanent organisation either. For each conflict, a new organisational form or ‘arbitrator’ can take shape. The parties to the conflict can delegate a representative to the institution that is to be formed. Usually, the parties agree beforehand that they would accept the ruling of the mediator. Sometimes this role is started up by the government so as to create a more permanent forum – a ‘third party’. The Environment Council (EC) is an example. All relevant sectors, NGOs, governments authorities and civil society are represented in the ‘council’. The EC describes its role as that of ‘honest broker’, ‘consensus builder’ and an ‘unbiased’, ‘unprejudiced third party’. Contributions of members in the form of donations, memberships and such are accepted on the condition that the donor accepts the independence of the EC. As the role of broker/mediator becomes more permanent and members represent the primary stakeholders, one can increasingly speak of a strategic stakeholder dialogue. 4. DONGOS (Discussion and Dialogue Oriented NGOs). NGOs that enter into discussion and dialogue with companies do not only focus on the moral superiority of their position, they also take an interest in the opinion and position of companies. In their interaction with companies they try to understand the position of companies and vice versa. It is a question of mutual enlightenment without direct focus on resolving specific issues. The organisations remain relatively independent of each other. This applies to Co-financing and voluntary organisations across the world. The Dutch Medecins sans Frontières and French Terre des Hommes have their own responsibilities – essentially not (yet) focused on co-operating with companies – but reject conflict and confrontation with companies as means to draw attention to an issue. 5. SUNGOS (Supervisory NGOs). Companies, societal groupings and governments are increasingly seeking to identify organisations that can oversee compliance with codes of conduct, reporting requirements and/or quality labels that have been agreed on. As the role of civil society representatives (amongst others) in these initiatives becomes more prominent, the likelihood increases that supervision on compliance is placed in the hands of Foundations or Independent/Autonomous Governing Bodies which are financed by the participating organisations or government. Examples are the Global Reporting Initiative, various quality label organisations, but also the National Contact Points, which are a professional institute in all OECD countries that is intended to oversee compliance with the OECD Guidelines for Multinational Companies. 6. STRANGOS (Strategic Stakeholder Oriented NGOs). As the interaction between NGOs and companies has more and more bearing upon strategic issues – the exact outcome of which cannot be predicted – mutual dependence in realising shared objectives also increases. The participants acknowledge a shared responsibility for the end result and work towards it in alliance with companies. The Forest Stewardship Council seems to be one of the first initiatives towards genuine strategic stakeholder dialogue. The covenants, 9
  18. 18. quality labels and other regulations that are agreed to in the Marine Stewardship council have the objective of creating a common ‘public good’ (sustainable fisheries). The objectives will most likely have to be adjusted continuously and in close consultation with a large number of strategic stakeholders (Strangos). 7. SHANGOS (Shareholding NGOs). NGOs that manage investment portfolios aim to secure good shareholder value for their supporters, i.e. relatively small individual investors. As such, they can largely be described as single-issue NGOs. An important part of their strategy is the coordination and representation at shareholders’ meetings of large groups of small shareholders. An increasing number of NGOs are springing up whose focus is especially on smaller shareholders interested in making sustainable investments. Since the mid nineties, NGOs such as Greenpeace have also tried to exert influence on company policies through the acquisition of shares. Since the block of shares is never big enough to buy real influence via voting rights, these NGOs attend shareholders’ meetings in the capacity of ‘agitator’. As such, the role of the Shango is similar to that of the Wongo. This form of campaigning requires that NGOs buy shares, which puts them at risk of becoming dependent on stock market sentiments. For this reason, NGOs such as Greenpeace usually dispose of their ‘right to vote’ after the shareholders’ meeting which means that one is not paid out dividends. The role of ‘agitator’, after all, does not sit well with gaining financi lly from the company whose operating procedures one has a denounced. 8. BINGOS (Business Interested NGOs). An increasing number of, not profit- but social accountability oriented, NGOs seek to present themselves as alternative to companies on their own market. In this way, the Fair Trade organization (integrated into the European Fair Trade Association) supplies products to many European countries while an organisation such as Max Havelaar manages the quality labels and marketing. Automobilist associations are also active in this area. Dutch, German and English NGOs sometimes try to compete in their own markets by setting up their own filling stations and online travel agencies. Automobilist NGOs are united in an international organisation for tourist and automobilist associations. The USA has an automobilist federation which provides the same services in each state it is represented. Trade unions across the world are moving in the direction of ’service’ organisations. They offer services to members such as insurance and training which is direct competition for private insurance companies, pension funds and such. These NGOs aim to raise company awareness of their responsibilities, but they also try – by modifying market conditions – to offer consumers a socially responsible or more favourable alternative. The dilemma these NGOs face, however, is that the effectiveness of their strategy depends on the market- related success their products. 9. PONGOS (Partnership Oriented NGOs) often focus on one specific project which in practice is realised in collaboration with companies. The World Wildlife Fund financed a number of its conservation projects with the assistance of companies. To a certain extent this amounts to a form of corporate sponsoring of NGO projects. ‘Business-community involvement’ projects are also characterised by different forms of partnership between local communities and participating companies (see also Chapter 3). In the past, such initiatives were largely viewed as a form of philanthropy, but companies are increasingly adopting a strategic approach to these types of activities. At the very least then, one can speak of ‘strategic philanthropy’, but increasingly also of partnership. By starting a specific project with a company, however, an NGO does adopt a position of relative dependence in relation to the company, but that applies both ways. The partnership approach is more results-oriented and focuses on concrete (partial) solutions. Consequently, partnerships are often more viable if relatively simple and practical single - issues are at stake which may very well form a part of more complex, multidimensional issues. 10
  19. 19. 10. BONGOS (Business Oriented NGOs). Companies have helped to found a number of NGOs whose sole purpose is to represent their interests. That is not to say that these organisations also fulfil the function of one-sided representatives. In practice, many Bongos provide a discussion platform for several societal groupings. The studies that are conducted – sometimes by independent researchers - can serve as input for all sorts of other forms of dialogue and debate. The principal problem of Bongos, however, remains their credibility. Bongos that represent the interests of a given sector are at risk of representing the ‘lowest common denominator’, just like official trade organisations and chambers of commerce. This was precisely the reason why some (large) companies elected to create new NGOs which could elevate the debate on a given issue to a higher plane. An example is the World Business Council for Sustainable Development (WBCSD) and some of its satellite organisations like the Foundation for Business and Society (that has come up with a global corporate governance benchmark). Another is the European Roundtable of industrialists (ERT) which played an important role in the formation of the European Union – an important public good for all Europeans – but which at the same time constantly calls suspicion on itself due to the fact that it only represents the interests of a limited number of industrial firms. The ten NGO roles discussed above signify an increasing degree of NGO interdependence with companies. Table 2.1 maps this. As NGOs operate more independently, their campaigns become less predictable for companies. Such campaigns are also almost always geared towards protest, debate and polarisation. In such campaigns, NGOs chiefly adopt a single - issue approach and focus almost exclusively on exposing the problems. If NGOs are more solution and product oriented, and seek to operate as company representative (Bongo) or endeavour to carry out a joint project with companies (Pongo), there is a great likelihood that they will focus on relatively simple (single) issues. Along with this, their dependence on and predictability for companies will also increase. It is only when NGOs seek a ‘mutually’ dependent relation with companies that it is possible to carry out a more multi-dimensional approach in practice, by means of which problems and solutions can be linked with each other. Table 2.1: A range of NGO positioning towards companies STRANGO BRONGO SHANGO WONGO DO NGO B I NGO BONGO DANGO PONGO SUNGO Role intensity among Dutch NGOs: n.a. 54% 88% 23% 13% 13% 9% 7% 38% 2% Independent Mutually interdependent Dependent “Sharks” “Orcas” “Dolphins” “Sea Lions” Protest oriented; polarization Process oriented; integration Product oriented; realization Single-issue approach; focus on Multi-dimensional approach; focus Single-issue approach; focus problems on problems and solutions particularly on (partial) solutions Unpredictable Interactive Predictable Risks: oversimplification / Risks: weak compromise; co- Risks: complicity; excuse for exaggeration of the issue; optation; vision too long term; seeking structural solutions; ‘iconification’; backlash; shirking groupthink; lowest common window dressing responsibility denominator / multiplier 11
  20. 20. Table 2.1 also depicts the results of own research conducted on the ‘intensity’ of specific roles (van Tulder et al, 2004). In a study of 60 large internationally oriented Dutch NGOs conducted in 2003, we investigated the role(s) these NGOs were occupying at the time. One fifth of the NGOs assume just a single role. More than 40% assume more than two roles. Among the roles assumed, the centre o gravity clearly lies with the more protest oriented f roles (Wongos and Dongos). The partnership NGO (Pongo), however, is on the rise. The relative importance of Dangos as non-governmental organisational form is more difficult to establish due to the illic it nature of these groups’ activities. These campaigns, however, have increased in significance – specifically in the form of terrorist attacks, but less so in the form of animal liberation actions. 2.3 The challenge of balancing multiple roles Covey and Brown (2001) emphasize that both conflicting and converging interests are a factor in partnerships. In the ideal world, the converging interest is more important than the conflicting interest, but in practice both are equally significant. In this case Covey and Brown introduce the term ‘critical cooperation’, by which multiple roles are assumed and balanced in such a way that partnerships can be developed further. NGOs are increasingly struggling with question of the degree to which their current roles are effective in achieving the objectives from which they derive their right to exist. NGOs that prefer direct action roles (Dangos), for example, run the risk of launching arbitrary campaigns lacking in strategy, where idealism degenerates into anarchy and viole nce and companies’ reactions harden to such an extent that the NGO loses the sympathy of the broader public. The ‘agitator’ (Wongos) strategy often leads to oversimplification and exaggeration of the issue. In this approach, only the large companies are confronted, sometimes with the opposite effect in the event that these companies are in fact leaders in their attempt to conduct business in a socially responsible manner. As such, they are ‘punished’ for their transparency and good intentions because the NGOs in question lack more subtle and/or sophisticated instruments to influence and interact with companies. In the case of NGOs as ‘discussion partner’ (Dongos) – the mild form of dialogue – the risk arises of simplification on the part of NGOs, and of a ‘divide and rule’ policy on the part of companies. At the other extreme of the scale (especially in regard to Pongos and Bongos), it is not entirely inconceivable for NGOs who collaborate with companies to serve as some sort of excuse for these companies not to make a sufficient effort to find strategic and truly structural solutions for the problem at hand. The function that the co-operation between the parties acquires then becomes one of mere window dressing. At the centre of the strategic spectrum of NGO roles, the mutual dependencies with their greater potential for a process oriented multidimensional approach, also carry the necessary risks. The NGO that operates as competitor on a market (Bingos) makes the effectiveness of its activities dependent on the success of the market. Not only is there the risk of market failure, but particularly in an oligopolistic market the scope of such an NGO is strongly influenced by precisely those other market players that the NGO attempts to influence by entering the market. A comparable problem presents itself when an NGO acquires shares in a company in order to influence it (Shangos). While participation can be bought, it often transpires that the shareholders’ meeting is not necessarily the place where participation actually has an impact. An adverse by-product is that one becomes partly responsible for company policy – even if one votes against it – and that part of the NGO’s capital becomes dependent on stock market sentiments. Moreover, in practice it appears that N GOs who exercise their influence on stock markets to prevent large investors – such as pension funds – from investing in certain ‘dubious’ companies, can achieve exactly the opposite effect. When critical shareholders carry out the threat to sell their shares, they can be replaced by less critical/exclusively profit oriented shareholders. NGOs that position themselves as supervisor or ‘mediator’ (Bongo) run the risk of losing the ability to advance their own ideas and interests as a result of exclusive preoccupation with mediating others’ interests. Accordingly, NGOs fulfill a broad range of roles that can be effective, but also involve significant risks. In practice, a balancing of different (complementary) roles among among 12
  21. 21. different NGOs appears to be most effective in creating minimum conditions for stakeholder dialogue. Thus organisations like the World Wildlife Fund can more readily forge partnerships with companies given that the more radical alternative, Greenpeace, holds less appeal for companies. Due to a lack of financial means and professionalism many NGOs in the past have elected to assume a single role. This is currently undergoing change. NGOs are reconsidering the effectiveness of their actions and a move towards adopting of a multitude of roles can be discerned. This, however, generates internal management and co-ordination difficulties as well as external identity and legitimacy problems. Members and donors are not always able to identify with the different roles NGOs assume. Companies also sometimes have problems appreciating that an NGO can be a discussion partner and simultaneously approach the media to publicly criticize the company in connection with a different, or the even the same issue that’s being discussed. 2.4 Dutch CFO positioning based on self-perception Tables 2.2 and 2.3 use the same framework of ten NGO roles to identify the various roles actually taken in by leading Dutch Co-financing organisations. The data collection is based on semi-structured interviews with the representative persons of each organisation in the November-December 2003 period. Ten organisations were approached and analyzed: Oikos, Wemos, Plan Nederland, Simavi, Terre des Homes, Hivos, Icco, Novib, Solidaridad and Cordaid. These organisations arguably represent the leading Dutch organisations in the present and future field of development cooperation. The interviews were aimed at establishing the self-acclaimed (perceived) roles of these NGOs at the moment (Table 2.2) and their anticipated roles five to seven years from now (Table 2.3). The results generate a number of observations: • None of the organisations can be positioned at the extremes of the scale: neither only protest oriented nor only business interests oriented. • All five of the main CFOs (Hivos, Icco, Novib, Cordaid, Solidaridad) opt at present for a variety of roles at two sides of the continuum. First, they combine watchdog and discussion partner roles (Dongo, Wongo) in their ambition to critically follow companies in their involvement in development. Second, all have recently developed a ‘partnership’ (Pongo) ambition. Some NGOs perceive this as a role that could be positioned relatively close to their other more traditional roles, but Table 2.1 shows that this ambition really represents a considerable ‘leap’ from past practices. The dilemmas and role conflicts associated to the partnership roles seem to be ill understood. • Some organisations are aware that it can be difficult to combine for instance a ‘watchdog’ role with that of a ‘partnership’ role in practice. Only Hivos, Icco and Solidaridad aim at various ‘bridging’ roles that might overcome the inherent role conflicts related to combining extremist positions along the continuum. Hivos aims at a supervisory role towards companies (Sungo), whereas Icco sees a role for itself as broker (Brongo). Brokers and supervisors are distinctive roles, but not in the perception of the people interviewed. Solidaridad tries to use its position as shareholder to influence company strategies. • The smallest organisations (Wemos and Oikos) have chosen for a specialisation strategy aimed at one role towards companies. But rather than a distant watchdog role they opt for a more discussion orientation (Dongo). None of the smaller organisations (Oikos and Wemos, Plan, Simavi, Terre des Hommes) have adopted more than two roles, which are also aimed at partnerships towards firms: either only as discussion partner (primarily the two smallest organisations) or also as a project partner. 13
  22. 22. 14 Table 2.2: Present (perceived) roles of co-financing Organizations vis-à-vis companies
  23. 23. Table 2.3: Anticipated Future Roles (2009) of leading Dutch Co-Financing Organisations 15
  24. 24. The future looks remarkably stable for the Dutch co-financing organisations (Table 2.3). All organisations intend to continue and deepen their present roles, without adding really new roles to their repertoire. The noticeable exception is Novib which intends to expand its roles into the ‘interdependent’ area of brokership and strategic stakeholder dialogues (Brongos and Strangos) with companies. Novib, therefore, will face the greatest challenge of internal role conflicts in its relationships with companies, which might explain why it has been the first to adopt a (rather defensive) code of conduct for dealing with companies. ICCO, Novib and Solidaridad therefore are faced with the biggest challenges of competing roles: all three have chosen to position themselves not only at the extremes of the continuum, but also in between. On the other hand all three organisation thus can learn from their activities, because the activities in the middle of the continuum provide important ‘learning’ experience for the partnerships with varying intensities at the other extremes of the continuum. Following this continuum the co-financing NGOs with ‘unique selling points’ (USP) in comparison to their peer organisations in the nearby future are Hivos (Supervisor), Novib (strategic stakeholder) and Solidaridad (Shareholder). Whether this represents a ‘strength’ or a ‘weakness’ depends on a number of contingent factors such as the attitude of firms and the government towards these roles, and the ability of these organisations to use the input from these activities in their other activities; otherwise, USPs are ‘stand-alone’ operations, with no bearing on the overall effectiveness of the organisation. 2.5 NGO positioning with respect to other NGOs As Tables 2.2 and 2.3 suggest, NGO positioning strategies also entail a certain degree of competition with other NGOs. This can be understood as competition for limited resources (donations, subsidies, grants) but also the ‘brand recognition’ that comes with a level of dominance in a high-profile niche. Traditionally, NGOs have not been thought of as organizations that need to be competitively oriented. Unlike for-profit businesses, many nonprofit organizations operate in a non-market, or grants, economy - one in which services may not be commercially viable. At the same time, many NGOs are sole providers of their (niche) good, and so there is neither a choice for the ‘client’, nor for the donor. Consequently, nonprofit organizations have not necessarily had an incentive to question the status quo, to assess whether client needs were being met, or to examine the cost-effectiveness or quality of available services. The ‘competitive environment’ has changed, however. Funders and clients are beginning to demand more accountability, sole -sourced nonprofits are finding that their very success is encouraging others to enter the field and compete for grants, and grant money and contributions are getting harder to come by, even as need and demand increase. This last trend - increasing demand for a smaller pool of resources, requires NGOs to rethink how they do business, to compete where appropriate, to avoid duplicating existing comparable services, and to increase collaboration, when possible. Often positioning strategies with respect to other NGOs are analyzed using the MacMillan Matrix (Arsenault, 1998). The MacMillan Matrix is a valuable tool that was specifically designed to help nonprofits assess their programs in that light. The matrix is based on the assumption that duplication of existing comparable services (unnecessary competition) among nonprofit organizations can fragment the limited resources available, leaving all providers too weak to increase the quality and cost-effectiveness of client services. The matrix also assumes that trying to be all things to all people can result in mediocre or low-quality service; instead, nonprofits should focus on delivering higher-quality service in a more focused (and perhaps limited) way. The matrix is based on four concepts: alignment with the mission statement, competitive position, program attractiveness and alternative coverage. First of all, activities should be aligned with the NGO’s Mission Statement. This can be seen as e.g. congruence with the purpose and mission of the organization, ability to draw on existing skills in the organization and ability to share resources and coordinate activities with programs. Services or programs that are not in alignment with the organizational mission, unable to draw on existing organizational skills or knowledge, unable to share resources, and/or unable to coordinate 16
  25. 25. activities across programs should be divested. Competitive position addresses the degree to which the organization has a stronger capability and potential to fund the program and serve the client base than the competitive agencies. This can be based on e.g.: good location and logistical delivery system; large reservoir of client, community, or support group loyalty; past success securing funding; superior track record (or image) of service delivery; large existing market share; rapid growth; superior skill at advocacy; superior technical skills; superior organizational skills; and superior local contacts. Program attractiveness is the complexity associated with managing a program. Programs that have low client resistance, a growing client base, volunteer appeal, easy exit barriers, and stable financial resources are considered simple or ‘easy to administer’. Alternative coverage is the number of other organizations attempting to deliver or succeeding in delivering a similar program in the same region to similar constituents. The MacMillan Matrix combines these four dimensions into ten cells in which to place overall strategy or individual campaigns. Each cell is assigned a strategy that directs the future of the program (s) listed in the cell (Figure 2.4). After each program is assessed in relation to the above four criteria, each is placed in the MacMillan matrix, as follows. For example, a program that is a good fit, is deemed attractive and strong competitively, but for which there is a high alternative coverage would be assigned to Cell No. 1, Aggressive Competition. At the other end if a program is difficult to fund and the NGO is the only supplier – the clients’ ‘last, best hope’ – this situation is called ‘soul of the Agency’. Management must find ways to use the programs in other cells to develop, piggyback, subsidize, leverage, promote, or otherwise support the programs in this category. For NGOs wishing to pursue partnership strategies, it is important to analyze that approach in the context of these ten cells. It should also be noted that there is a relationship between the issues raised by the MacMillan Matrix and partnerships, particularly in terms of the NGO’s bargaining power in dealing with potential partners. Figure 2.4: The MacMillan Matrix High program attractiveness (easy to Low program attractiveness (hard to attract resources for support) attract resources for support) Alternate coverage Alternate coverage High Low High Low Strong 1. Aggressive 2. Aggressive 5. Reinforce best 6. ‘Soul of the competitive competition growth competitor or agency’ position find partner GOOD FIT with mission statement Weak 3. Aggressive 4. Invest, find 7. Find partner or 8. Find partner or competitive divestment partner or divest divest divest position POOR FIT 9. Aggressive divestment 10. Orderly divestment with mission statement Source: Arsenault, 1998 2.6. Conclusions This chapter gave an expose on the stakeholder dialogue analysed from a business and NGO perspective. For companies, CSR is a way of addressing social issues in society and in developing countries. NGOs are addressing social issues more from a development point of view and are therefore in principle focusing on a broader spectrum. In partnerships focusing 17
  26. 26. on business development the two views are converging. However, it remains difficult to get the two ‘worlds’ together. NGOs specialized in business partnerships then clearly have an advantage, as they understand better the ‘language’ of the business. In Section 2.3, it became apparent that NGOs fulfill more than the traditional watchdog function. The most important role fulfilled by a NGO for this paper is the Partnerships Oriented NGO (PONGO). NGOs adopting this role are focusing on collaboration with a business on one specific project. The focus of a PONGO may vary and will be analysed further in chapter 3. If we analyse the NGO-business partnership roles of the CFO’s at the moment based on the Mac-Millan Matrix it is i portant to note that if NGOs will be engaged in business-NGO m partnership their mission statement and strategy need to be adjusted accordingly. Which of the CFO’s have done this successfully is difficult to say, however. Taking the case of ICCO, whose competitive position might be strong in the Netherlands, it is probably difficult to attract financing for these kind of programs. Analysing this further, the quest for finding partners (such as product groups) in order to become more successful is very realistic, and could be pursued further. An important question remains what is the dominant role and focus of a partnership NGO at the moment, and what should it ideally be at the future? Are other stakeholders, such as product groups, governments and branch organizations or other businesses, more natural partners in business partnerships and are NGOs, and especially Northern CFOs, nothing more and nothing less then facilitators in this process? Chapter 3 will provide a first overview of business-NGO partnerships and the roles NGOs play within these partnerships. 18
  27. 27. 3 THE BUSINESS-NGO PARTNERSHIP REVEALED Chapter two discussed the Business-NGO partnership as a type of strategic stakeholder dialogue that brings views of businesses with a proactive CSR strategy and the Partnership NGO together. Forms of Business-NGO partnerships differ in many ways, depending on the inputs of companies and NGOs. Companies are often bringing in money, technology, organizational skills and the skill to work towards short-term goals. Typical examples of NGO inputs are focusing on: issues, flexibility, the capacity for “mobilization” and the credibility with respect to sustainability. They often have different objectives as well. Companies usually strive for an increase in efficiency and profitability; NGOs generally protect a public interest (Kanter, 1999). In this section we will explain the different roles companies and Partnership NGOs (PONGOs) can play in a Business-NGO partnership. Based on these inputs a model will be developed which distinguishes between different forms of partnerships. Furthermore we will give an initial assessment of partnerships of Dutch CFOs and discuss some risks inherent to partnerships in general. The chapter begins with two paragraphs that explain the concept and main themes of partnerships and discuss what motivates companies and NGOs to establish them. 3.1 The concept and main themes of partnerships One of the main reasons for the rising popularity of partnerships is the expansion of the market and concentration of the state, which resulted in an enormous increase in the number of NGOs. Both the increasing influence of the market, which started during the eras of Thatcher and Reagan, and the subsequent increase of the number of NGOs makes cooperation in partnerships more likely (Wadell, 1997). A number of factors also helped to link market and societal stakeholders closer together, such as technology (Sagawa and Segal, 2000), increasing interdependence, stakeholder emancipation and expertise, and increased complexity of the problems addressed (Van Tulder et al., 2004). Although the more confrontational forms of relationship between NGOs and companies are still much in evidence, there has been a shift towards more collaborative types of stakeholder relationships. As a result of the increasing intervention of NGOs in market relationships, companies have moved from “a trust me” to “a show me”, to “a join me” stage (see figure 3.1). In the shifting balance between companies and NGOs, the relationship in the 1970s-80s was one of ‘trust me’, by which companies expected society and government to have faith in a company’s ability to self-regulate. In the 1990s, the balance of power shifted towards civil society, which challenged companies to ‘show me’ their societal involvement. In recent years, that conflict has gravitated towards an equilibrium, with stakeholders of both types inviting the other to ‘join me’ in a communal push towards sustainability (Van Tulder et al., 2004). Thus relations between NGOs and companies approach a degree of equilibrium and a higher level of trust. In the past, companies engaging NGOs tried primarily to do so through philanthropy, although there was great uncertainty as to the proper mode (Porter and Kramer, 2002). A new line of thinking emerged by which companies would not merely donate money, but rather attempt to ‘create value’ (Porter and Kramer, 1999). The creation of value, however, is an ambiguous term; moreover, it does not address the distribution of the rents that accumulate from that value. In order to address partnerships more, the term partnership itself needs to be analysed further. A partnership is (broadening the definition taken from the Canadian Council for Public - Private Partnerships) defined as “a cooperative venture between organizations representing business, government and civil society, built on the expertise of each partner, that best meets clearly defined societal needs through the appropriate allocation of resources, risks and rewards”. Partnerships in the context of CSR and the projects that emerge as a result are becoming indispensable in addition to traditional development aid and private sector 19
  28. 28. investment. They provide an alternative route toward sustainable growth on both a macro and micro level. As will become apparent below, however, partnerships addressed in the literature focus by far primarily only partnerships between business and NGOs and exclude partnerships including government actors, product-groups or other stakeholders. From a holistic, multi-stakeholder point of view, additional stakeholders will be relevant and thus require further study and the development of expanded analytical frameworks. Figure 3.1: Shifting relationships between NGOs and companies Initiative to NGOs ‘Trust me’ ‘Join me’ Trust Dependency equilibrium equilibrium ‘Show me’ Initiative to companies companies Openness Source: Van Tulder et al., 2004 In general businesses are getting involved through CSR in development issues, while development NGOs are working traditionally in this sector often bottom-up. Just through the CSR approach of businesses and the partnership approach of NGOs the two sides are focusing then both on development issues. But what are the main themes of Business - NGO partnerships? According to Waddell (1997), four topics in business - NGO partnerships with respect to development cooperation can be provided: • Development of the (local) economy (for example the ICCO- Reef Partnership program in Cameroon); • Protection of the environment (for example Care and Weyerhaeuser Company focusing on sustainable forest-management programs) • Protection and improvement of human rights and labour laws (for example most CFO business development programs must adhere to universal human rights and labour laws) • Development of education, health and other public services (For example the sponsoring by Starbucks of an education project of Care in Burundi) Sustainability is a good summary of the four themes, which represent the areas in which the CFOs in The Netherlands are focusing at. Bullet four used to get the main share of the funds. However, business – NGO partnerships are focusing on bullet one: development of the local economy. Also bullet 2 and 3 are of importance for business – NGO partnerships. All business partnerships should pay attention to basic environmental laws, human rights, labour laws and standards. It remains to be seen, if in line with a shift in theme attention, also a shift in fund allocation towards local economic development becomes common amongst the NGO community. However, the establishment of NGO – business partnerships helps clearly in giving gradually more priority to local economic development. But, what are the motivations for business – NGO partnerships? This will be the focus of the next paragraph. 20
  29. 29. 3.2 NGO and company motivations for partnerships According to Elkington and Fenell (2000), the motivations for NGO engagement with business are the following and are applied and explained via the ICCO case below: • Growing interest in markets • Disenchantment with government as provider of solutions • Need for more resources • Credibility of business with the government • Cross-fertilization of thinking • Access to supply chains • Greater leverage. But why have we not seen a growing interest of the NGOs in looking for alleys to be engaged in NGO-Business partnerships? The differences in organisational cultures probably form the biggest obstacle and as such also the biggest challenge. If the list of Elkington and Fenell were applied to ICCO, the main driver for ICCO would be the “greater leverage”. This would be derived from ICCO’s mission statement, ICCO’s structure, strategy and activities. According to ICCO, their main focus as a development NGO is on poverty alleviation and on civil society building in developing countries. In order to assist the vulnerable population in developing countries three themes have been selected: • Democratisation and peace building • Fair Economic Development FED • Access to basic services In line with the second theme: Fair Economic Development, ICCO recognises four important trends: • Globalisation • Supply Chain Responsibility and CSR • Market-oriented thinking in the development sector • More economic development attention in the ‘south’ In order to alleviate poverty and to generate income for producers and labourers all four trends above could be of importance. Globalisation, because in or der to create a leverage and develop sustainable economic development, regional markets and ‘global’ issues such as quality restrictions have a direct impact on developing countries and as such need support. Supply chain analyses can be used to identify and understand the various supply chains and in this way more effective and efficient FED projects can be developed. The trend towards sustainable entrepreneurship strengthens the possible interventions even more. The Market- oriented thinking in developing countries is dealing with the fact that till recently market thinking was hardly tackled by the NGO sector in the South. In line with this, economic development in the South becomes an important element of focus for the Northern NGOs. The next step to establish partnerships with businesses is then a natural and logical step. Partnerships can form a mechanism by which the income of producers and workers can be increased. As such, the intrinsic motivation for ICCO stems then from the extra leverage this will afford the NGO to help increase income for the poor. The other ‘drivers’ of Elkington and Fennell are important but not as relevant; for example ‘access to more resources’ does not play a role within ICCO yet. According to Wheeler and Sillanpaa, (1997) stakeholder management is increasingly a key factor for improving business performance and maximizing stakeholder loyalty. In order to understand the motivation of the corporations better the next list for business engagement with NGOs of Elkinton and Fennell (2000) give a more expanded overview: • Consumer expectations • NGO credibility with public • Need for an external challenge 21
  30. 30. • Cross-fertilization of thinking • Greater efficiency in resource allocation • Desire to head off negative public confrontation and protect image • Desire to engage stakeholder Explaining the first bullet above it can be said that more and more consumers of today are expecting that businesses are responsible, i.e. social, environmental, financial and societal friendly businesses. All commercial banks in the Netherlands offer responsible investment products, i.e. investment in businesses who are having a positive attitude towards responsible entrepreneurship and/ or are not involved in negative social, environmental or societal issues such as violation of human rights pollution, investment in the defence industry, etc. Being engaged in a partnership with an NGO, the second point of Elkinton and Fennell, gives credibility with the public and has a positive effect on the image of the business involved as well. In certain cases it can also be used to head off negative public confrontation and to address the attention to a positive issue, such as the partnership with an NGO. Such a partnership brings in different views from NGO contact persons that can be of interest for the business. NGOs are a stakeholder and as such it is always interesting and valuable to understand the way of thinking of such a stakeholder. A partnership provides then a clear institutional way to establish this. In addition, NGOs could provide valuable information, being one of the stakeholders, on how to allocate resources. NGOs might point earlier at weak points which need more resources than was planned and other areas could be covered by the NGO such as for example the understanding of the regional partners and stakeholders. A last important issue of the list above is the desire for an external challenge. To be engaged in a partnership with a NGO is for many businesses something completely new and breaks the day-to-day routine. In addition, many employees from multinationals are more and more expecting that their employers focus not only on “making money” but also on being ‘responsible entrepreneurs’. A partnership with an NGO fits seamless in this picture. To be still attractive for young employees this could be another motivation for businesses to be involved in partnerships with NGOs (see also the list of benefits of Kanter below). International firms in developing countries are more and more convinced that it is in their own interest to contribute positively to the environment in which they are located, although there are differences according to firms’ home region. This contributes to the sustainable development of people and the region, which reduces the chance of conflicts and opens potential new markets for the company itself. But firms do not have the knowledge of what local people in the region drive, need and think about the firm being there as an actor. So they enter into partnerships with NGOs, who have a great expertise on this area (Bais, 2004). To make the picture complete, if a partnership is finally established the business can benefit in the following ways, which is in line with the motivations explained above (Kanter, 1999; Drucker, 1989; Porter, 2000): • The know-how it generates; • The intrinsic motivation of its workers • Better PR for the business • Economic profitability (expert centre, 2004) • Mission driven: Making decisions based on mission rather than money; • Stakeholder approach: To be responsive to stakeholders: employees, board members, clients and communities; • Contribution to sustainable development of the region in developing countries, which prevents conflicts and opens new potential markets (K. Bais, 2004). The benefits for a corporation to become engaged in a partnership with NGOs are overwhelming. However, the actual number of business development partnerships remains still limited. The above-mentioned issues can provide direction and support also for NGOs in developing future partnerships. By understanding the agenda of the partner future business – 22

×