Theme 7: Partnership Approaches to Involving Business

[Peace Through Commerce]

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A discussion moderated by Dean Krehmeyer, Executive Director, Business Roundtable Institute for Corporate Ethics Visit Biographies for more about presenters

How can partnerships help business in contributing to peace and stability?
One of the often recommended approaches for fostering peace through commerce is a partnership model. Because businesses may not have the expertise or capabilities to know how best to engage in a geographic area, they team with those who can provide them with such insights.

Presentations:
Partnership Approaches to Advancing Business' Contribution to Peace - with NGOs and Employees
Watch the four videos and join the discussion with presenters below.

	Norman Bishara, Assistant Professor of Business Law & Business Ethics, and Cindy Schipani, Professor of Business Law, Ross School of Business, University of Michigan "Complementary Alternative Benefits to Promote Peace " (6:12)			Kimberly Eaason, Director of Strategic Relationships, TransFair USA "Fair Trade Certification: Good Practice for Business and Increased Prosperity for Developing Communities" (7:03)

	Virginia Haufler, Associate Professor of Government and Politics, University of Maryland "New Institutional Models: The Kimberly Process" (6:37)			Michelle Westermann-Behaylo, Doctoral Candidate, George Washington University "Institutionalizing Peace Through Commerce: The Partnership Dimension" (3:06)

Resources

• Innovations in the Institutional Environment: The Kimberly Process Certification Scheme, Virginia Haufler
• Complementary Alternative Benefits to Promote Peace, Norman Bishara and Cindy Schipani
• Institutionalizing Peace Through Commerce: South African and Sudan Divestments, Michelle Westermann-Behaylo

Discussion: How can partnerships help business in contributing to peace and stability?

1. For the business partnership models presented, what are the unique strengths? Are these models replicable, and what are the hurdles to replicating?
2. Where should the discussion of business partnership models be initiated – is this primarily a management-led issue or a board/governance-led issue? Who could most make positive action happen?
3. Does the partnerships described in the presentations reduce risk? Create value? How would a newly hired MBA-graduate who has participated throughout the “Business Fights Poverty” eConference make the pitch for their company to “get on board”?

[Marilyn Ong Siew Ai]

Jeong Cho, Katie, Bianca & David

The tourism industry is definately the best industry for partnerships! From the customer to the product, so many people are involved and who may benefit. And its MOST HEARTENING to hear of inter-governmental partnerships in this industry, especially governments who have had difficult diplomatic relationships. The example given by Jeong Cho is just incredible!

At the next level i.e. partnerships between multinationals and communities in the tourism industry in my part of the world however, I would like to share a not so encouraging picture. Since I work as the middle person between community and multinational travel agents, I have discovered in negotiating rates for board, lodging and activities that the business relationship to be PRIMARILY EXPLOITATIVE. For example, for a cultural performance the travel agents pay a small fixed sum irrespective of the number of tourists. As a result of this I have seen many communities go in and then out, of the tourism business. They eventually return to their cash crop livelihood which pays them more. The multinationals on the other hand, earn enormous profits! I argue with these businesses that they need to see their business in the long term and that to be sustainble they need to make the community their partners by paying a percentage. But I see many of them turn away and go to other destinations where the indigenous communities are not wise to their ways yet. I gather these multinationals will continue doing this until they have exhausted their use of the communities and then go to another Asian country. I was informed by one European multinational that it expected the ethnic tourism trade in N. W. Borneo to last for just another 20 years! This is definately not a business partnership approach that will spread wealth and peace across the world.

[Marilyn Ong Siew Ai]

MY SUMMARY TO DISCUSSION: How can partnerships help business in contributing to peace and stability?

1. For the business partnership models presented, what are the unique strengths? Are these models replicable, and what are the hurdles to replicating?

Business partnership models arising between:-

(1) governments and governments;

(2) governments and multinational businesses;

(3) multinational businesses and local business enterprises;

(4) multinational businesses and communities;

(5) multinational businesses, local businesses and communities; and

(6) multinational businesses (eg. ExxonMobil, Rio Tinto), public or private enterprises and communities and international NGOs (e.g. London Mining Network (LMN) - an alliance of human rights, development and environmental groups that pledge to expose the key role of companies listed on the London Stock Exchange, London-based funders and the British Government in the promotion of unacceptable mining projects).

I would like to focus on partnership model (6) as I see it as having the most potential to succeed in dealing with conflict. The unique strength of partnership model (6) is that it empowers external stakeholders (e.g. a community) who are otherwise powerless, through publicizing business irresponsibility thereby swaying public opinion, especially of investors and potential investors. Thus when a multinational is threatened by devestment, etc., it shall be persuaded to exercise business responsibility.


2. Where should the discussion of business partnership models be initiated – is this primarily a management-led issue or a board/governance-led issue? Who could most make positive action happen?

In my considered opinion, the question “Where should the discussion of business partnership model be initiated?” is primarily a Board/governance-led issue. Corporate law lays down clearly the fiduciary duties of directors to the company and its shareholders. Any business partnership that purports to extend duties beyond the company and its shareholders (internal and external) to stakeholders, must necessarily come from the Board. Management can be a pull factor to persuade the Board on the impact of stakeholders (internal and external) on long-term shareholder value and on business sustainability. Positive management action is then possible through engaging in stakeholder management.


3. Does the partnerships described in the presentations reduce risk? Create value? How would a newly hired MBA-graduate who has participated throughout the “Business Fights Poverty” eConference make the pitch for their company to “get on board”?
In the context of this econference “Peace through Commerce”, partnerships are intended to REDUCE RISK OF CONFLICT but whether they do or not depends ultimately on whether businesses embrace such risk as risk to shareholder value and business sustainability since their first corporate duty is to shareholders and not stakeholders.

It is possible to argue that reducing risk of conflict through external stakeholder management creates long-term shareholder value and business sustainability. This attempt at stakeholder management was illustrated by Rio Tinto Response to Business & HR Resource Centre at :

http://www.business-humanrights.org/Documents/Rio-Tinto-response-6-...

A newly hired MBA-grad who has participated throughout the “Business Fights Poverty” eConference should make the pitch for their company to “get on board” by stressing on : the fact that peace is inextricably linked to long-term shareholder value and business sustainability. The risk of conflict obliges multinational businesses to become good corporate citizens through responsible business and a commitment to peace through commerce. The lesson of ExxonMobil in Acheh, Indonesia is aptly illustrative of this. Please refer to :-

http://news.bbc.co.uk/2/hi/asia-pacific/1401733.stm

FINALLY, I would like to express my appreciation to the Moderator and Presenters in the conduct of this discussion as well as to my fellow participants for sharing their views and experience. SELAMAT TINGGAL (goodbye in Malaysian language)! If you wish to explore research collaboration, possible investment in a community based tourism model, etc. please contact me at [e-mail]. :-)

[Virginia Haufler]

Thank you for your thoughtful response to this line of thinking. It is clear you are genuinely engaged in considering the value of partnerships, and how to pursue them.

I'd like to point out that there are different types of partnerships, and two of them stand out. First, we can look at the tourism example as an industry that has a direct stake in peace. The non-profit group Vision of Humanity and its Global Peace Index have focused attention on the sectors that would most benefit from peace--the "peace industries," and therefore would be a good place to start in developing partnerships: tourism, retail, financial services, and commercial aviation. Second, we can look at sectors that have been directly implicated in causing or facilitating conflict, whether intentionally or not: oil and gas, mining and minerals, timber and cocoa, and the financial services that support them. These also should be encouraged to participate in partnerships, but of a different sort than the ones in the peace industry.

This has been a very interesting discussion, and the participants contributed thoughtful, valuable comments. I look forward to the next thematic discussion in this conference.

[Marilyn Ong Siew Ai]

Thank YOU, Virginia, for the interesting perspectives.

[Dean Krehmeyer]

To all discussion participants and readers - Thank you for your participation and your thoughts & comments on this interesting discussion. I also want to especially thank all of the presenters for their valuable work on these topics and for sharing it with us. I look forward to continuing the dialogue and collaboration (or "partnership" if you will) on both this thread and the remaining themes of the conference.

Thanks again-
Dean