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Why and how might firms respond strategically to violent conflict?

Abstract

The aim of this study is to investigate factors – specifically stakeholder pressures – that may affect the likelihood that firms will respond to violent conflict. Survey and archival data on respondents from 471 multinational and local firms operating in 80 countries were used to explore these issues. Key findings include: (1) local stakeholder pressure is associated with the likelihood that firms will respond directly to violent conflict, collaborating with other organizations or working alone when doing so; and (2) international stakeholder pressure is associated with the likelihood that firms will respond indirectly to violent conflict, collaborating with other organizations or working alone.

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Notes

  1. Of course it may also be that managers are increasingly aware of the role that businesses play in the wider society, and more motivated to make a positive impact on the communities and nation-states in which they operate. We thank one of our anonymous reviewers for this insight.

  2. The example of Protina is from the UNGC 2009 series, “Case Studies in Business Responses to Violent Conflict”. Dissemination of findings has begun; publication is in progress.

  3. Exactly how firms can best avoid complicity in abuses – for example, whether it is better to withdraw from the country or continue operations – is still a subject of debate. We thank one of our anonymous reviewers for raising this issue.

  4. When asked about the likelihood that their company would be negatively affected by violent conflict, respondents indicated that they would be moderately or very likely to experience (or require): (a) increased insurance costs (53.4%); (b) increased security (55.7%); (c) disruptions to their supply chains (49.4%); and (d) reductions in firm output (47.3%). In another question, respondents replied that their firm was at a moderate to very high risk of: (a) [an] attack on communities surrounding the company (23%); (b) direct attacks on [the] company's premises (16.4%); (c) physical attacks on employees (21.9%); (d) kidnapping of employees (19%); and (e) unintentional damage to company premises when the company was not the target (21.8%).

  5. We thank one of our anonymous reviewers for this insight.

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Acknowledgements

We would like to thank Melissa Powell and Da Woon Chung from the United Nations Global Compact, and Canan Gündüz from mediatEUr (formerly from International Alert), for their valuable and productive partnership, without which this paper would not have been possible. We also want to acknowledge three reviewers for their valuable comments on our paper, and Parthiban David for helpful comments and suggestions on an earlier version of this manuscript.

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Correspondence to Jennifer Oetzel.

Additional information

Accepted by Ishtiaq Mahmood, Area Editor, 11 September 2011. This paper has been with the authors for two revisions.

Appendices

APPENDIX A

Scales for Dependent Variables

Scale measuring direct and indirect strategic responses

Think about the conflict-prone countries where you operate. How likely is your company to engage in any of the following activities in those countries?

  1. 1)

    Lobby the government to actively resolve the conflict.

  2. 2)

    Speak out publicly against violence and/or its causes.

  3. 3)

    Mediate interactions between parties to the conflict.

  4. 4)

    Organize negotiations among the conflict parties.

  5. 5)

    Conform to relevant global multilateral agreements.

  6. 6)

    Cut ties with actors involved in human rights violations.

  7. 7)

    Adopt human resource policies that avoid aggravating social and ethnic tensions in the society.

  8. 8)

    Verify that the participants in our supply chain have not contributed to the conflict.

  9. 9)

    Adopt industry codes of conduct for operating in conflict areas.

  10. 10)

    Donate resources to respond to local humanitarian crises.

  11. 11)

    Provide human rights training to private security guards.

(Items 6 and 11 were dropped from the scale, since they did not load onto the constructs of interest.)

The reliability (Cronbach's α) for the resulting nine-item scale assessing likelihood of working directly or indirectly to respond to violent conflict was 0.86.

Scale measuring collaborative or unilateral action

Please indicate your level of agreement with the following statements: “My company is likely to work in the following ways to address violent conflict …”

  1. 1)

    Work independently of other organizations to respond to conflict.

  2. 2)

    My company would be unlikely to work with another company.

  3. 3)

    My company would be unlikely to work with a non-government organization.

  4. 4)

    Develop response strategy without consulting with others outside the firm.

  5. 5)

    My company would be unlikely to work with multilateral organizations.

  6. 6)

    Independently determine our firm's response objectives.

  7. 7)

    Participate in industry association activities.

  8. 8)

    Cooperate with NGOs.

  9. 9)

    Work with the national government.

  10. 10)

    Work with a multinational company.

  11. 11)

    Collaborate with a local company in the host country.

  12. 12)

    Cooperate with other organizations in planning a response strategy.

(Item 6 was dropped from the scale since it did not load onto the construct of interest.)

The reliability (Cronbach's α) for the resulting 11-item scale assessing likelihood of working unilaterally or collaboration was 0.74.

APPENDIX B

Measures Derived From Factor-Based Scales

Indirect and collaborative response

  1. 1)

    Conform to relevant global multilateral agreements.

  2. 2)

    Adopt human resource policies that avoid aggravating social and ethnic tensions in the society.

  3. 3)

    Verify that the participants in our supply chain have not contributed to the conflict.

  4. 4)

    Adopt industry codes of conduct for operating in conflict areas.

  5. 5)

    Donate resources to respond to local humanitarian crises.

  6. 6)

    Participate in industry association activities.

  7. 7)

    Cooperate with NGOs.

  8. 8)

    Work with the national government.

  9. 9)

    Work with a multinational company.

  10. 10)

    Collaborate with a local company in the host country.

  11. 11)

    Cooperate with other organizations in planning a response strategy.

The reliability (Cronbach's α) for the resulting 11-item measure was 0.82.

Indirect and unilateral response

  1. 1)

    Conform to relevant global multilateral agreements.

  2. 2)

    Adopt human resource policies that avoid aggravating social and ethnic tensions in the society.

  3. 3)

    Verify that the participants in our supply chain have not contributed to the conflict.

  4. 4)

    Adopt industry codes of conduct for operating in conflict areas.

  5. 5)

    Donate resources to respond to local humanitarian crises.

  6. 6)

    Work independently of other organizations to respond to conflict.

  7. 7)

    My company would be unlikely to work with another company.

  8. 8)

    My company would be unlikely to work with a NGO.

  9. 9)

    Develop response strategy without consulting with others outside the firm.

  10. 10)

    My company would be unlikely to work with multilateral organizations.

The reliability (Cronbach's α) for the resulting ten-item measure was 0.78.

Direct and collaborative response

  1. 1)

    Lobby the government to actively resolve the conflict.

  2. 2)

    Speak out publicly against violence and/or its causes.

  3. 3)

    Mediate interactions between parties to the conflict.

  4. 4)

    Organize negotiations among the conflict parties.

  5. 5)

    Participate in industry association activities.

  6. 6)

    Cooperate with NGOs.

  7. 7)

    Work with the national government.

  8. 8)

    Work with a multinational company.

  9. 9)

    Collaborate with a local company in the host country.

  10. 10)

    Cooperate with other organizations in planning a response strategy.

The reliability (Cronbach's α) for the resulting ten-item measure was 0.81.

Direct and unilateral response

  1. 1)

    Lobby the government to actively resolve the conflict.

  2. 2)

    Speak out publicly against violence and/or its causes.

  3. 3)

    Mediate interactions between parties to the conflict.

  4. 4)

    Organize negotiations among the conflict parties.

  5. 5)

    Work independently of other organizations to respond to conflict.

  6. 6)

    My company would be unlikely to work with another company.

  7. 7)

    My company would be unlikely to work with a NGO.

  8. 8)

    Develop response strategy without consulting with others outside the firm.

  9. 9)

    My company would be unlikely to work with multilateral organizations.

The reliability (Cronbach's α for the resulting nine-item measure was 0.61.

APPENDIX C

Scales for Independent Variables

Scale for local stakeholders

To what degree have you been pressured by the following stakeholders to respond to violent conflict in any of the countries where you have operations? For this set of responses, consider national sources of pressure (pressure from within the country):

  1. 1)

    local consumers;

  2. 2)

    local employees;

  3. 3)

    local community leaders;

  4. 4)

    local NGOs;

  5. 5)

    national government; and

  6. 6)

    local media.

The reliability (Cronbach's α) for the resulting six-item measure was 0.93.

Scale for international stakeholders

Factor analysis revealed that six items should be retained.

To what degree have you been pressured by the following stakeholders to respond to violent conflict in any of the countries where you have operations? For this set of responses, consider international sources of pressure (pressure from outside the country):

  1. 1)

    the government of your company's headquarters;

  2. 2)

    international NGOs;

  3. 3)

    shareholders;

  4. 4)

    international media;

  5. 5)

    consumers from your company's home country; and

  6. 6)

    multilateral organizations.

The reliability (Cronbach's α) for the six-item measure was 0.94.

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Oetzel, J., Getz, K. Why and how might firms respond strategically to violent conflict?. J Int Bus Stud 43, 166–186 (2012). https://doi.org/10.1057/jibs.2011.50

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Keywords

  • primary data source
  • survey method
  • multiple regression analysis
  • nonmarket strategy
  • political strategies
  • business and society