Corporate Actors in Global Governance: Business As Usual or New Deal? 9781626378230

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Corporate Actors in Global Governance: Business As Usual or New Deal?
 9781626378230

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Corporate Actors in Global Governance B

Advances in International Political Economy Series Editors

Alan W. Cafruny and Herman M. Schwartz

International Advisory Board

Mark Beeson University of Western Australia

Heiki Patomaki University of Helsinki

Claire Cutler University of Victoria

David Rapkin University of Nebraska

Jacqui Best University of Ottawa

Bob Denemark University of Delaware Robert Jessop Lancaster University Chris May Lancaster University Jim Mittelman American University

Johnna Montgomerie University of Manchester

Henk Overbeek Free University of Amsterdam

Nicola Phillips University of Sheffield

Magnus Ryner Kings College, University of London

Leonard Seabrooke Copenhagen Business School Leila Simona Talani Kings College, University of London

Diana Tussie Facultad Latinoamericana de Ciencias Sociales, Buenos Aires Linda Weiss University of Sydney

Corporate Actors in Global Governance Business as Usual or New Deal? edited by

Matthias Hofferberth

b o u l d e r l o n d o n

Published in the United States of America in 2019 by Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301 www.rienner.com

and in the United Kingdom by Lynne Rienner Publishers, Inc. Gray’s Inn House, 127 Clerkenwell Road, London EC1 5DB © 2019 by Lynne Rienner Publishers, Inc. All rights reserved Library of Congress Cataloging-in-Publication Data A Cataloging-in-Publication record for this book is available from the Library of Congress.

ISBN 978-1-62637-803-2

British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library.

Printed and bound in the United States of America

The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1992.

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Contents

Foreword, Virginia Haufler

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1 Corporate Actors in Global Governance Matthias Hofferberth

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Part 1 Business as Usual?

2 From Global to Local: Ford and Volkswagen’s Management-Labor Relations in South Africa John Mikler and Madison Cartwright

3 Promoting Human Rights Responsibilities: The Experience in Ghana’s Gold Mining Industry Uwafiokun Idemudia and Cynthia Kwakyewah

4 Multistakeholder Partnerships: Community Development in the Extractive Sector Hevina S. Dashwood 5 A Three-Way Relationship: Labor, Multinationals, and Local Suppliers Nicole Helmerich

6 The Corporate Supply Chain as Global Governance Christopher May

27 51 75 103 127

Part 2 Dealing with Crises

7 Shaping Conflict: Corporate Actors in Community Engagement Tricia D. Olsen v

151

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Contents

8 Securing Value over the Long Term? ExxonMobil and the Aceh Crisis Matthias Hofferberth

9 Managing “Undesirable and Disruptive” Events: Private Security Companies in Complex Environments Rebecca DeWinter-Schmitt

173 197

Part 3 Conclusion

10 The Changing Power of the Twenty-First-Century Corporation Jeffrey Harrod

225

References The Contributors Index About the Book

249 279 281 288

Foreword

In 2018, Larry Fink, head of the BlackRock investment firm, startled everyone by telling clients, “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate” (Fink 2018). This was a far cry from the usual investor demand for CEOs to produce quarterly profits for shareholders without regard to other values. But it fits within the larger evolution of social expectations for corporations and within a broader discussion of how firms are governed globally. This book enriches that broader discussion and provides insight into corporations and their response to a changing normative environment. I first started examining the role of corporations in world affairs at a time when international relations scholars were just beginning to include international political economy as an important perspective. Nonstate actors appeared as significant actors only in a few analyses, and the majority of scholarship downplayed their power and influence. The field of international relations was defined by its systemic perspective and rooted in a state-centric worldview. Corporations played a role primarily as a collective entity (“capital” or “foreign investment”) or as instruments of hegemonic power. My own contributions to scholarship began with research on industry self-regulation, private authority, and corporate social responsibility as responses to social and political risks. I was inspired by the long history of collective standard setting by firms, reinforced by new demands for companies to adopt social and environmental responsibilities. The book before you contributes to emerging scholarship on global governance and nonstate actors, which is shifting attention away from states as the only important global vii

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Foreword

actors. This new literature examines the myriad ways in which nonstate actors—including corporations themselves—contribute to the norms, rules, and institutions that govern global firms and their international supply chains. It has never been more important for us to pursue a research agenda devoted to understanding firms and their influence, both globally and in local communities. There are now well over 60,000 parent companies in the world and hundreds of thousands of subsidiaries. According to the United Nations Conference on Trade and Development (UNCTAD), these firms have become increasingly internationalized as measured by their assets, sales, and employees outside their home countries (UNCTAD 2017). In many sectors, the concentration of industry means that only a handful of major firms dominate. In the food sector, for instance, six firms control three-quarters of the global seed and agricultural chemical market, and only four control over twothirds of the trade in commodity grains (Howard 2016). Large and small firms around the globe are linked to each other through extensive transnational supply chains that often hide the sources of materials and the processes and people involved in production. These developments have reshaped markets and politics and compel us to ask questions about the impact this has on our lives and values. In this edited volume, Matthias Hofferberth collects in one place some of the latest research on corporations and global governance. The authors include some of the most prominent experts on the politics of global corporations, along with a stellar group of emerging scholars who have deservedly become recognized for their work. The volume presents deeply researched case studies that explore how global governance “touches down” in local communities in both developing and developed countries. The authors critically explore the conditions under which individual firms choose whether or not to adopt new responsibilities as a response to the changing normative environment. Many of the chapters look at specific corporations—their internal dynamics, their agency and motivations, how they interpret the environment and respond to different types of risk—and draw comparisons across firms and issue areas. They explore both corporate power and its constraints within particular local contexts, in which other actors—workers, activists, local governments—may be empowered. This book provides us with insight into the complexities of global corporations as both global and local actors, as organizations, and as governors. —Virginia Haufler

1 Corporate Actors in Global Governance Matthias Hofferberth

Much has been written about the increased relevance and influence, as well as the presumably changing role, of corporate actors in global governance in recent years (Mikler 2018; May 2015; Flohr et al. 2010; Ougaard and Leander 2010). Unlike any other group of actors in world politics, multinational enterprises (MNEs), it is argued, have benefited from the political, social, and economic changes commonly summarized under globalization.1 As a consequence and by virtue of their organization, resources, and assets, these “new leviathans” assumedly no longer participate in but rather dominate the global economy (Harrod 2006; Chandler and Mazlish 2005; Korten 1995). At the same time, it is argued that these giant enterprises today operate in changing normative environments and face new social expectations. In many instances, they have indeed come under pressure to step in to fill regulatory governance gaps created by the very same processes that provided them with economic opportunities in the first place (Detomasi 2007, 322–328; Prakash 2002). Overall, due to their increased power and their new responsibilities in and beyond multistakeholder initiatives and (self-)regulation arrangements, corporate actors are “no longer seen as operating outside of the rules of international relations; now they are seen as forming an integral part of global society” (de Jonge 2017, 9). In sum, MNEs have been conceptually framed as “global governors” and, as such, are now solidly established as research objects and discussed as governance actors in the twin subfields of international relations (IR) and international political economy (IPE) (Dashwood 2012; Avant et al. 2010; Levy and Prakash 2003; Haufler 2001).

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While framing MNEs as global governors provides a strong intellectual rationale for engaging with them, it also implies certain assumptions. For one, studying MNEs this way not only recognizes their increased economic relevance but also contends that they have already transitioned into new roles or at least will do so eventually (Scherer and Palazzo 2011; Levy and Kaplan 2008). By discussing the political consequences of corporate activities in terms of governance outcomes and expecting new corporate responsibilities to emerge on a global scale, global governance rather quickly, and potentially prematurely, established the case that MNEs indeed take the broader impact of their actions into consideration and assume responsibilities. Echoing the hopes and excitement of global governance practitioners, MNEs in IR and IPE thus follow certain behavioral scripts as research tends to disregard the choices these actors have and the fact that their agency is potentially more open-ended and less determinate than the dominant narrative suggests. Moving beyond this tautological reasoning—studying MNEs as global governors because they assume more responsibilities while arguing that they assume more responsibilities because they have become global governors—is the main objective of this volume. Against this background, the authors of the chapters that follow contend that, while the conceptual framing of MNEs as global governors has created a new research agenda for IR and IPE, we still need to better understand the contentious role(s) of corporate actors in global governance in empirical terms. No doubt, with Eden’s (1991) early call in mind, research on MNEs has advanced significantly. In particular, shifting from aggregated foreign direct investment to actually studying corporate contributions in global governance has provided many important new insights (K. Wolf 2008). At the same time, as with any research agenda, certain shortcomings remain. In order to contribute to ongoing discussion on those, the volume explicitly focuses on corporate agency. The rationale behind this is simple: if MNEs are to be framed as “global governors,” one needs to at least consider the timing, places, divergent modes and expressions, and normative and institutional dynamics and foundations of their activities. Thus, while we agree with the empirical observation that more MNEs participate in governance arrangements such as the UN Global Compact, we contend that the precise nature of such corporate engagements in governance will remain indeterminate until further unpacked in detailed, empirical reconstruction. This is particularly true if one challenges the idea that corporate actors easily transition into new roles and contends, as the contributors to this volume do, that “multinationals, however powerful, are often ill-equipped to understand or shape the social environment in

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which they operate, and that the tools they use are too blunt for the task at hand” (Litvin 2003, 225). In other words, being skeptical of an easy transition of MNEs into global governors and in order to more carefully unpack their role(s) in global governance, we shift attention from governance outcomes (i.e., provision or nonprovision of public goods) to corporate agency (i.e., how and why multinational enterprises act the way they do). Rather than being the explanans for global governance, we consider corporate actors as the explanandum within global governance. Instead of charging MNEs with a priori assumptions such as corporate rationality and strategic profit maximization, the volume emphasizes social contexts, corporate structures, histories, and cultures. Against those, MNEs actively negotiate their roles and responsibilities in global governance as they make sense of new expectations and changing environments (Hofferberth 2017; Geppert and Dörrenbächer 2014; Kristensen and Zeitlin 2005). Stressing the complex and rather idiosyncratic nature of corporate agency, the volume posits that corporate actors are best studied in individual case studies. Bringing together different accounts of different enterprises in different situations to consider different dimensions and different layers of their agency thus helps us reconstruct actual corporate realities to assess the nature of their engagements and their role(s) in global governance. I have outlined the major thrust and motivation of this volume in a deliberately provocative and admittedly oversimplifying fashion; therefore, a few words are in order to explain why the framework of global governance is still appropriate and useful when studying MNEs, even and maybe especially in light of its recently proclaimed crises and the socalled return of geopolitics (Mead 2014; Hale et al. 2013). Obviously, considering recent developments in world politics, one can see renewed emphasis on national sovereignty and borders, as well as more confrontational politics between states that use their power resources to achieve their aims at the expense of other states’ interests.2 Consequently, various policy fields such as climate governance have been reframed as conflictual, zero-sum exchanges. However, the fact that global governance is criticized both by advocates trying to raise its profile and restate its overall potential (Hale and Held 2018; Coen and Pegram 2015; Zürn 2018; Weiss 2013) and by those who outright deny such potential (Terhalle 2015; Mead 2014; Sterling-Folker 2005) already indicates its relevance and the need to continuously engage with the framework. In other words, precisely because it experiences crises, global governance’s true potential to continue to evolve and prevent its further decline through relegitimization will be tested in the years to come (Zürn 2018).

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More importantly for the subject matter at hand, it should be noted that the proclaimed death of global governance is predominantly framed in state terms (Mittelman 2013). As such, the arguments oftentimes remain at this level of analysis and do not probe into consequences for corporate actors. If anything, one could argue that the increased integration of these actors over the last twenty years has created a sphere of global governance beyond the reach of nation-states (Bartley 2018; Green 2014). More specifically, if states decide to provide governance of public health, education, human rights, and the environment in less cooperative forms, MNEs arguably will become even more involved, as, for example, is already occurring in the human rights field, where we can see multiple corporate initiatives responding to less guidance provided by the Donald Trump administration (Ganesan 2018).3 If anything, we contend for now that the diagnosed crisis of global governance further promotes the belief that MNEs should embrace responsibilities and play a leading role. Put bluntly, the return of geopolitics will not end corporate involvement in global governance; nor will it put an end to the notion that soft law initiatives promoting corporate social responsibility are the preferred route to hard law. In other words, discussing the role(s) corporate actors play (and should play) in global governance, together with a focus on the actual nature of their engagements and their motivations, is now more important than ever. To sustain this argument, spell out its details, and provide a theoretical framework for the edited volume, this introduction first outlines why and how corporate actors have been discovered and framed within global governance. I then argue that two rather problematic images of corporate agency in particular inform the discourse. Interestingly, despite framing MNEs in rather abstract theoretical terms, neither is reflected, let alone justified, in its ontological commitments. Arguing that both actor images advance substantive assumptions about the nature of corporate actors, the third section advances the case that corporate agency matters and thus provides an important lens to study MNEs in global governance. More specifically, the volume argues that research on corporate agency needs to consider its social and creative nature and should be advanced in a reconstructive and open-minded fashion. Against these ontological and methodological reflections, while pluralistic in their respective approaches and accounts, the final section outlines the individual contributions to the volume, which collectively contend that corporate agency is best studied in case studies concerned with enterprises as actors in their own right. In this framing, the case studies reflect and discuss the range of perceptions, experiences, and practices corporate actors engaged in global governance express and the ambiguity and contentious roles that follow from this.

Matthias Hofferberth

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Discovering and Framing Corporate Actors in Global Governance

Undoubtedly, MNEs have become a major subject of public and academic interest. Somewhat less obviously, IR and IPE discovered and framed MNEs as global governors. Assuming states to be either unable or unwilling to provide governance in a globalized world by themselves, both textbook accounts and advanced research suggest that corporate actors, among other nonstate actors, contribute to and engage in different stages and activities of providing rules and order in world politics today (Karns et al. 2015; Avant et al. 2010; Barnett and Sikkink 2008). In other words, MNEs and intellectual engagement with them have been closely linked to the mantra and spirit of global governance, which reads that “globalized world politics unfolds among a multiplicity of actors and plays out through multiple processes across multiple scales of aggregation” (Bially Mattern and Zarakol 2016, 643). Given the notoriously vague nature of the concept to begin with, its potentially limiting bias on outcome, structure, and order, and its normativefunctionalist bias (Hofferberth 2015), the strong connection between global governance and MNEs is arguably far from obvious. Thus, a short intellectual history of how IR and IPE engaged with MNEs is in order to understand the reasons behind and implications of discovering and framing corporate actors as global governors.4 Despite the current stronghold of global governance on the study of MNEs, corporate actors were initially discovered as research objects in IR and IPE long before global governance began its victory march through the subfields. After their early “academic branding” in other disciplines throughout the 1960s and 1970s (Dunning 1971; Vernon 1971; Lilienthal 1960), IR and IPE first considered MNEs as actors in transnational relations (Keohane and Nye 1973). Among others, Huntington (1973), Wells (1973), and Gilpin (1975), albeit in different ways with different conclusions, drew from this framework as they engaged with corporate actors. Despite being included, though, corporate actors did not receive any special theoretical treatment in this broader agenda. As such, while being “all the rage and attract[ing] considerable scholarly attention” during the 1970s (Ruggie 2004, 500), the research agenda did not prosper in the long run, arguably because it remained too broad and did not provide enough specifics to study the rather different actors involved in transnational relations.5 For the intellectual history of MNEs in IR and IPE, it is thus fair to say that instead of advancing companyspecific research, work on MNEs during the early stage remained generic and focused on the macro level (Strange 1993; Eden 1991).

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What these approaches provided, though, was an intellectual foundation that practitioners interested in MNEs could draw from in order to make sense of developments throughout the 1980s and 1990s. With globalization accelerating, both the total number of enterprises operating across borders and their foreign direct investment increased significantly during this period (Held et al. 1999, 236–282). At the same time, expressed in discussions on corporate social responsibility and global governance in the United Nations and beyond, new ideas emerged about whether and how these actors should be regulated (Sagafi-nejad 2008). These ideas were most explicitly expressed in, among other documents, the Commission on Global Governance Report (1995), which argued that “there is no alternative to working together and using collective power to create a better world,” with governance having to be provided by “individuals and institutions, public and private, manag[ing] their common affairs [in] a continuing process,” which “at the global level . . . must now be understood as also involving non-governmental organizations (NGOs), citizens’ movements, multinational corporations, and the global capital market.” With the creation of the UN Global Compact four years later and the parallel emergence of other multistakeholder initiatives locally and globally, such ideas took hold as MNEs were seen and treated more and more as subjects of regulation rather than as objects thereof. In other words, nothing short of a paradigm shift was set in motion, at the end of which MNEs were considered as global governors rather than as the targets of global governance (Kell 2005; Ruggie 2000). Arguably, IR and IPE research on MNEs connected to and (maybe too) quickly reaffirmed these shifting normative views of the role of corporate actors. Just like the practitioners, scholars turned to corporate actors in order to “reconstitute the global public domain” (Ruggie 2004). Based on observations, whether anecdotal or empirically elaborated, scholars argued that MNEs “have started to engage in activities that have traditionally been regarded as actual government activities” (Scherer and Palazzo 2011, 899). As such, their alleged potential to close governance gaps was emphasized as MNEs became framed as global governors. In fact, corporate actors since the mid-2000s have been featured as showcase examples of how provisions of governance in a globalized world have changed to now include new actors studied in new theoretical frameworks (K. Wolf 2008; Kobrin 2008; Detomasi 2007; Matten and Crane 2005). According to the prevalent narrative, MNEs today are involved in the provision of collective goods, and the distinction between private and public becomes increasingly blurred. Whether through self-regulatory initiatives or in multistakeholder partnerships, it is argued, MNEs as global governors are no longer confined to economic responsibilities but play (or at least should

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play) a more engaged role in and vis-à-vis society (Scherer and Palazzo 2011; Holzer 2010). As Ruggie (2004, 501) already foresaw, “it was but a short analytical step to conclude that [MNEs] had come to play a role in global governance.” This role, despite some reservation, is framed as one of deep corporate engagement, which, given appropriate arrangements, supposedly features the potential to overall improve global governance. Obviously, this volume connects to these works and shares some of their assumptions. For example, all contributors agree that MNEs indeed have become more engaged in world politics and thereby have become part of the global governance fabric. However, the precise nature of their engagements and the roles MNEs play within, in our readings, remain rather unclear, and the transition of corporate actors into global governors is far from complete (Levy and Kaplan 2008). We further argue that the structural focus inherent in global governance does not help to elucidate either. Rather than considering corporate agency per se, MNEs, for the most part, are considered and assessed in their interaction with state and other private actors in terms of whether or not they provide governance. In other words, as global governors, MNEs are only considered to the extent that they participate in governance arrangements but are not considered as actors in their own right (Deitelhoff and Wolf 2010, 5). As such, corporate involvement in global governance is discussed in detail; yet we know little about the dynamics that constitute these actors in the first place, how they sustain their agency in light of changing normative expectations, and under which cognitive frameworks they choose to engage in or refrain from global governance. To paraphrase (Woll 2010, 138), MNEs are “used to do the explaining” but are not considered as actors which “need to be explained” themselves. In order to sustain this claim, the next section outlines the two main actor images which inform the study of MNEs as global governors and argues that neither sufficiently conceptualizes corporate agency in active and probing terms.6 Corporate Actor Images in Global Governance and Beyond

So far it has been argued that global governance and its consideration of nonstate actors provide not only a strong and compelling rationale to study MNEs but also a structural and hence limited framework to do so. As such, while being “notable for both its conceptual novelty and practical importance,” framing MNEs in global governance has also “hamstrung” research on these actors (Whelan 2012, 709). Inherently, global governance is interested in the structure and provision of public goods.

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As much a practitioner’s discourse as a theoretical paradigm, global governance is outcome biased and essentially based on functionalist assumptions (Hofferberth 2015, 607–614). This implies consequences for how we conceptualize MNEs in global governance. Overall, while “factors of production, type of industry, legal form or size [are] features usually used to distinguish corporations” (Flohr et al. 2010, 33), there seems to be limited commitment to further engage with and unpack individual MNEs. Rather, we assume that MNEs, framed as a coherent group of nonstate global governors different from NGOs, represent a more or less monolithic block of similar entities committed to the same set of goals and objectives. As such, while black-boxing their histories, corporate governance structures and cultures, and local contexts and practices, we tend to engage with MNEs by relying on and thereby reproducing certain assumptions about corporate agency without reflecting, let alone justifying, them (Amoore 2006). Arguably, given their abstract nature and the lack of immediate access, such abstractions are needed to advance research on MNEs. However, if empirical investigation directed by such assumptions no longer reflects them as such, they become reified, and further applications only tautologically restate their validity throughout the research process (Friedrichs and Kratochwil 2009, 714–725).7 In other words, serving as “intellectual shortcuts,” assumptions about corporate agency matter, and we condense them into actor images to capture “the nature of the firm” (Coase 1937). We then conveniently use these assumptions about corporate dispositions and motivations to explain why MNEs engage in global governance as well as how to design these arrangements without considering that different enterprises might act differently, as has been repeatedly argued by economic sociology (Beckert 2003), organization studies (Soule 2012; Kristensen and Zeitlin 2005), and even institutional approaches in management studies (Geppert and Dörrenbächer 2014; Kostova et al. 2008). Compared to these fields, IR and IPE’s research on MNEs and their framing of corporate actors as global governors seem to rely more heavily on underlying assumptions drawn from images based on conventional wisdom rather than systematic research. In addition, reified as truisms and taken for granted as vernacular research reinforces them, these assumptions and images remain implicit: “A lot has been said about the multinational firm and its role in the global economy. . . . [D]ifferent views [in these discussions] mirror different theoretical assumptions of the multinational firm as an organization and of its relationships with the surrounding society. Often, these assumptions are implicit rather than explicit. But they are always there, somewhere” (Forsgreen 2008, vii). Somewhat simplifying the discourse, I argue in the

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following that two competing actor images of MNEs in particular have manifested in IR and IPE over time, leaving us with two narratives to frame corporate engagement in global governance (Flohr et al. 2010, 164–166). As will be shown, both reflect diverging theoretical assumptions and normative commitments as well as different hopes and fears associated with the integration of MNEs into global governance. On the one hand, echoing decades of research in business and management schools, corporate rationality and profit maximization are taken for granted, leaving global governance with the challenge—if not, according to some, at the impasse—of facilitating corporate participation beyond cheap talk (Haufler 2001; Korten 1995). On the other hand, emphasizing more emphatically the potential for change and the normative pressures corporate actors face, business ethics and constructivists have argued that there are reasons beyond the business case to engage in global governance and commit to corporate social responsibility (Holzer 2010; Kollman 2008). Simply put, both images represent and provide proxies for corporate agency that allow us to study these actors without further engaging in theories of action—arguably something that many scholars interested in MNEs for good reasons cannot or simply want not to engage in. At the same time, any research depends on motivational and agential assumptions, which is why both images are introduced in the following sections in more detail to be then critically discussed, following Sally’s (1995, 2) argument that both share in common “at worst a disregard, and at best a glaring underemphasis, of the individual firm” and its agency. The Rationalist Image: The Businessman Whose Master Plan Controls the World

Already captured in the popular culture reference,8 the rationalist image of corporate agency resonates with conventional wisdom about these actors and has an intuitive appeal (Amoore 2006). According to such, multinational enterprises represent large entities defined by the permanent competition they find themselves in. The corporate world they operate in is one defined by “pathological pursuit of profit and power” as enterprises try to best each other (Bakan 2004). Speaking in conceptual terms, a broad range of “underlying presuppositions about rationality, goal-directed action, and the determinant nature of market processes [on MNEs]” inform the study of MNEs in this image (Morgan 2001, 8). Enterprises that do not act strategically and compete relentlessly, so the argument continues, will go out of business. Further expanding on the rational agenda, due to constant pressure, corporate actors in fact have to be extraordinarily cunning and ruthless, using their influence to

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lobby (or bring down, if need be) governments and avoid regulation in order to maintain their enormous profit margins. Fueled by periodic corporate scandals, “stories of coups, assassination, and adventure” easily outshine in public perception those instances in which “multinationals have exercised their power in unplanned, unsophisticated or self-defeating ways,” leaving us with an image of enterprises in control and strategically manipulating politics to their advantage (Litvin 2003, xii). Because of its narrative power, such an image of corporate agency informed the academic discussion of MNEs from its early beginning and eventually became solidified knowledge. Prevalent in particular in economic studies (Kroszner and Putterman 2009), the notion was soon argued across disciplines that MNEs, as collectives being less fallible to misjudgment and miscalculation, would in fact represent the quintessential homo oeconomicus (Williamson 1985). IR and IPE related to this image, and global governance further reified it by categorically distinguishing between civil society on the one hand and corporate actors on the other: while both are lumped together under the “nonstate” label, the former “are primarily motivated by promoting a perceived ‘common good,’” while MNEs “are primarily motivated by instrumental goals” (Risse 2002, 256).9 This essential distinction informs the discourse on MNEs, which, as global governors, play a different role than other actors and thus are unique in many ways: “Unlike states and civil society actors, firms are not committed to the public good but the pursuit of private interests. Their business is to maximize profits, not social welfare” (Börzel 2013, 5). Originating in conventional wisdom and economic reasoning, the logic of profit maximization thus became the sine qua non disposition to define corporate actors. In other words, enterprises are those actors that exercise “profit-maximizing behavior,” and “no amount of good will or leadership can change this logic” (Auld 2008, 426). Against this assumption, any meaningful corporate involvement in global governance has to create enough incentives to get MNEs on board or will remain limited in its impact. Furthermore, in addition to defining the goal of corporate action, the image also essentializes its mode. Assuming an individualist ontology, MNEs are stripped of their sociality and rationally choose strategies to realize their predefined interests. In other words, MNEs know not only what they want (i.e., profit) but also how to realize it (i.e., by acting rationally). Put bluntly, we take corporate rationality for granted as we equate corporate action with rational action. MNEs accordingly are determined to always choose strategies to achieve optimal consequences and internalize this behavior to the point that it defines their nature. While sometimes “bounded” in their rationality as they fail to compute relevant information due to misperception, the rational image nevertheless sug-

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gests that we can best think of corporate agency as following a behavioral script in which social context does not matter. Interestingly enough, the assumptive nature of this “as if” logic underlying the rationalist image has been recognized and acknowledged by Milton Friedman (1953, 21) himself: “Under a wide range of circumstances, individual firms behave as if they were seeking rationally to maximize their expected returns . . . and had full knowledge of the data needed to succeed in this attempt.”10 The purpose of this critical reconstruction to reveal the hold the rationalist image has on thinking about and studying MNEs is not to deny the fact that the notion of making profit matters for actual corporate action or to argue that MNEs do not try hard to act rationally. However, the reification of profit as the single and assumedly clear and obvious objective of corporate agency, discussed exclusively within the paradigm of rational action, appears problematic. As a matter of theoretical necessity, the individual enterprise in this image does not only represent a “single body with preferences, capabilities [and] choices” (Amoore 2006, 48). Also, the preferences, capabilities, and choices of this black box are defined in static terms advanced by a coherent, willful actor. Separated from their social context, predefined in their interests, and unable to reflect or change their behavior, “corporations are often theorized in a simple way: they are the ultimate rational actors, driven by profit alone[, and w]hile this certainly is not entirely wrong, it misses the complexity of motivations driving corporate actors today, their varied organizational forms, the ways in which they act collectively, and the manner in which they define and redefine their interests” (Haufler 2010, 106). To further problematize this image, the precise meaning of profit and corporate rationality advanced within and, more importantly, their immediate implications for corporate action remain ambivalent and undertheorized. As such, it does not provide enough direction for corporate practices. More specifically, from an enterprise’s perspective, the urge to rationally pursue profit, sedimented and internalized as it may be, is of limited value when encountering novel situations and crises. In other words, rational profit maximization might be the end game of corporate agency, but it does not suffice as an objective and mode of action for how to get there. While vital to the enterprise, it remains abstract at the same time and hence ultimately unassertive in outlining specific action. Put differently, the “default script” enterprises operate with has to be adapted in specific situations by actualizing it and ascribing it with meaning (Woll 2008). As Sabel and Zeitlin (1997, 15) put it, without further specification, profit and its rational maximization remain “only loosely defined at any given moment and [thus are] constantly being redefined.” Such processes of defining and redefining, however, cannot

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be captured within an actor image that begins and ends with strong, substantial assumptions about the very nature of corporate actors. Not further engaging with corporate motivation other than defining it in rational terms, explanations drawn from this image can be developed to cover all sorts of corporate behavior. Whether it is entering a market or not, whether it is responding to social expectations or not, whether it is engaging in global governance or not, “in retrospect, it is always possible to reconstruct the economic rationality that firms were apparently pursuing” (Woll 2008, 4). No matter which strategies were realized, corporate action thus can be rationalized post hoc simply because it is assumed that corporate action is rational action. This “rearview” perspective inherent in rational choice obviously creates ambivalence if not tautologies (Wendt 2001). Ultimately, the notion of rational profit maximization does not suffice either for an enterprise to purposely choose between different alternatives and act in light of uncertain and indeterminate situations or for the social scientist to explain such action (Zeitlin 2007; Beckert 2003). Picked up in global governance discussions, the rationalist image as the “traditional portrayal of the enterprise as an ordered, autonomous and ultimately rational economic subject that operates according to a central logic and manifests predictable dynamics” (O’Neill and Graham-Gibson 1999, 12) implies certain reservations about MNEs and remains somewhat pessimistic about the chances for them to become changed and chastened global governors. As rational organizations operating beyond social contexts, MNEs cannot be trusted in their cheap talk as they will utilize any governance gaps to their advantage at any point in time. Thus, their integration into global governance, at least in voluntary commitments, will always run the risk of having limited impact as it does not reflect actual change or a willingness to embrace broader social responsibilities, at least not in any meaningful or sustainable way (Berliner and Prakash 2015). Coming in from a different (meta)theoretical perspective and arguably expressing more hope and optimism, business ethics and constructivists have advanced their own alternative actor image intended to counter and overcome some of these reservations. The Normative-Constructivist Image: Doing Good While Doing Well

Following larger trends and theoretical shifts in the fields of IR and IPE in a somewhat delayed fashion (Amin and Palan 2001; Checkel 1998), scholars interested in MNEs began to apply constructivist concepts such as norms and the logic of appropriateness to their research subjects only about a decade ago. Arguably, due to the strong influence and presence

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of the rational image outlined above, “theorists and political scientists in general have been reluctant to apply the idea of socialization [as well as other constructivist ideas] to market actors” (Kollman 2008, 416). 11 However, more recently, there has been a broader commitment to constructivist and nonrationalist frameworks when studying corporate actors. These new contributions, either self-labeled or otherwise depicted as such, include, among others, in chronological order, Conzelmann and Wolf (2007), Cutler (2008), Kollman (2008), Brown et al. (2010), Flohr et al. (2010), Gillies (2010), Hofferberth et al. (2011), and Dashwood (2012). While they use different tools and advance different arguments, these authors seem to share a collective interest in engaging with business ethics and studying MNEs’ social and normative environments, their reputations, and their motivations. Taken together, we can derive from these contributions a normative-constructivist actor image of MNEs that needs to be unpacked as well. At the most general level, this actor image advances a framework that situates the enterprise in a social context. Within this context, notions of appropriate and inappropriate corporate actions exist and are shared among different actors. These expectations manifest in social norms, which, so the argument goes, matter for MNEs as well. As such, “starting from the assumption that norm-related policies and activities of corporations are not solely and continuously profit driven but may also be based on and triggered by beliefs, values, and ideas,” different motivations and alternative explanations for corporate engagement in global governance have been advanced (Flohr et al. 2010, 165). Following constructivist reasoning, normative expectations can become part of the identity of any particular MNE. As such, the business case advanced in the rational actor image is supplemented by a broader “public case” (Wolf and Schwindenhammer 2011). Against this background, corporate interests are imaged to emerge and, even more importantly, potentially change in social interaction. Corporate action is thus at least equally motivated by the desire to be socially appreciated as it is by economic pressures (Woll 2008). While agreeing with the notion that “firms should be treated as analytically distinct from states and other types of non-state actors,” constructivist MNE research thus also argues that “distinctions that rely on defining away their social nature are unhelpful and inaccurate” (Kollman 2008, 416). In this perspective, corporate social responsibility has been conceptualized as a norm bundle that constitutes a new “global public domain” in which MNEs (have to) assume new roles and responsibilities (Ruggie 2004; Hofferberth et al. 2011). Over time, as these norms are spelled out in more detail in multistakeholder initiatives, they eventually become habitualized within a new corporate culture of responsibility and moral

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accountability (Holzer 2010). As a consequence, MNEs supposedly leave behind the “purely instrumental view of corporate politics” and willingly assume a new role in global governance “to fill the regulatory vacuum that has emerged as a result of the process of globalization” (Scherer and Palazzo 2011, 900). In fact, against the background of being socialized by strong norms in their home countries, it has been argued, MNEs “export” such behavior to other countries and thereby engage in corporate norm entrepreneurship (Flohr et al. 2010, 165–166). Overall, the assumption seems to be that MNEs can be a positive change in global governance and, leaving economic constraints behind, play not only an active but also a constructive role in the regulation of global markets. While certainly offering a stimulating alternative to rationalist research, the alternative image can be equally criticized. First, resonating with normative commitments of business ethics, it remains unclear how much of this logic is based on actual empirical research (meaning MNEs do behave this way) rather than value-motivated assumptions (meaning MNEs should behave this way). In other words, normativeconstructivist research seems to advance a descriptive and a normative take on MNEs at the same time, conflating responsibilities and obligations of “what companies should be doing [with] what they are in fact doing” (Dashwood 2004, 191). As such, it remains unclear whether companies have been or will be moralized (Holzer 2010) or whether a political conception of corporate social responsibility (CSR) different from an instrumental approach has emerged or will emerge (Scherer and Palazzo 2011). In the end, ambivalences remain as research oscillates back and forth between empirically describing and normatively prescribing corporate action: “We suggest that, in order to respond to the globalization phenomenon and the emerging post-national constellation, it is necessary to acknowledge a new political role of business that goes beyond mere compliance with legal standards and conformity with moral rules” (Scherer and Palazzo 2011, 906).12 Second, from a perspective that takes corporate agency seriously, such research seems to be structurally overdetermined in two ways. On the one hand, it seems to overemphasize the potential impact of globalization on global governance. Envisioning more active, engaged roles of MNEs as the single possible consequence of such development, at least, seems overly optimistic and potentially ignorant of other alternative outcomes, such as less corporate involvement (Whelan 2012, 712–716). On the other hand, it suggests that shared values and expectations of MNEs and their behavior exist in absolute terms and that these actors do not contest or negotiate them. Not considering potential disjunctures between expectations and the actions that respond to them, this down-

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play of corporate agency, despite operating in normative structures of unclear expectations, makes MNEs appear as “norm dopes” (Hofferberth and Weber 2015; Sending 2002). Taken together, one can easily imagine different courses of corporate action in global governance. More specifically, challenge to any particular involvement could come both from MNEs themselves and from civil society lobbying against their influence (Zeitlin 2007, 135). Third and finally, despite advancing strong normative claims in terms of the outcome, the normative-constructivist actor image remains suspiciously “agnostic and/or uncertain as to the motivations or interests that drive [multinational corporation] decision making” (Whelan 2012, 717). Following the larger social-constructivist via media argument, at times convenient the image brings rational assumptions back into the mix and thus conflates the two ideal-type logics of action. Matten and Crane (2005, 173), for example, argue that corporate actors assume broader responsibilities under a “wide range of motivations . . . from altruism to enlightened self-interest or plain self-interest.” As such, we find the same open-endedness and potential danger of post hoc theorizing that we recognized in rationalist approaches resonating in the normative-constructivist image as well. While the impetus to capture variation in corporate agency is well taken, the “anything goes” approach of trying to reconcile both images ultimately shows that we need better ways of studying corporate agency rather than assuming their motivation one way or another (Hofferberth 2017). Despite its focus on corporate roles and responsibilities in changing normative environments, the constructivist-normative actor image thus ironically suffers from the same limitations as its rationalist counterpart. Equally charged with theoretical assumptions, this actor image also leans toward structure rather than agency, subsumes empirical idiosyncrasies in larger, abstract conclusions, and theorizes them post hoc. Emphasizing the normative over the rational dimension, research based on this image arrives at more optimistic conclusions about MNE involvement in global governance. Such involvement represents more than cheap talk since it carries the potential to redefine corporate interests and identities. Conflating empirical descriptions with normative prescriptions, however, the likelihood of MNEs assuming new roles in global governance as well as the precise conditions thereof remain unclear. As such, while enriching the discussion and presenting an alternative to rationalist accounts, constructivist contributions, due to similar structural commitments and conceptual limitations, in the end also do not focus on the ambivalences and challenges of corporate agency in global governance. While their involvement in global governance is discussed in greater detail by

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considering normative environments, we still only have a limited understanding of what constitutes MNEs and their agency in the first place and how they sustain their agency in light of changing expectations (Deitelhoff and Wolf 2010). Taking Agency Seriously: Implications for Studying MNEs

Insofar as global governance and changing normative expectations toward MNEs expressed within raise “very basic question[s] about the social definition of a corporation” (Kobrin 2008, 267), not engaging with corporate agency beyond either the rational or the constructivist image marks a lacuna within global governance research on MNEs. In other words, while recognizing that market and nonmarket environments have changed, corporate agency in global governance is downplayed and MNEs framed either as “rational market actors” or “good corporate citizens” (Flohr et al. 2010, 244–246). Instead of conceptualizing corporate agency in an open-minded fashion, we thus charge it based on theoretical a priori commitments about the assumed nature of corporate actors. Against this background, contributions in this volume share a commitment to unpacking these commitments. We contend that simply being a multinational enterprise does not determine a particular course of action. Consequentially, corporate agency is no longer perceived as “simply making a different selection from a reservoir of situation components that are either already defined or have no need of definition” but rather as attempts at “defining that which is as yet undefined” (Joas 1996, 133). Such a framework of corporate agency is not new but draws from different inspirations. More specifically, similar claims on corporate agency and the need to disaggregate them have been advanced in economic sociology (Heidenreich 2012; Beckert 2003), international business and management studies (Geppert and Dörrenbächer 2014; Kostova et al. 2008), business ethics (Fontrodona and Sison 2006), organization studies (Soule 2012; Kristensen and Zeitlin 2005), and geography (O’Neill and GrahamGibson 1999; Schoenberger 1997). Furthermore, while not spelled out in detail yet, conceptualizing MNEs as social and dynamic organizations embedded in ever-changing normative environments is not a novel approach even in IR and IPE: “Multinational enterprises are viewed no longer simply as instrumentalist advantage-maximizing institutions, but as complex organizations which exceed their goals and functions, but in non-utilitarian ways. Their language, their scripts, their histories, their technostructures and artefacts matter; analysis of which reveals them to

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be trapped in their own evolutionary logic but also constantly at work to renew themselves” (Palan 2000, 15).13 This volume connects to this existing research and explicitly applies it to studying MNEs in global governance. It does so since the focus on corporate agency in changing normative environments indeed can provide a more accentuated and differentiated picture of these actors and their role in global governance. More specifically, different forms of corporate engagement and experiences in global governance can be reconstructed. In order to unpack these and corporate agency within, thinking of the latter as both social and creative rather than rationally or normatively determined is important. Both dimensions are needed in order for MNEs to maintain their agency in times of change and for the scholar to analyze it beyond the a priori assumptions. Given the complex and challenging situations MNEs find themselves in, in addition to the diverse normative expectations they face originating from cross-border activities in different social and cultural contexts, neither their actions nor the consequences thereof are obvious. To maintain their ability to act, MNEs thus have to interpret and connect to social expectations and shared understandings. As such, we imagine corporate agency to reside in “the interpretive processes whereby choices are imagined, evaluated, and contingently reconstructed . . . in ongoing dialogue with unfolding situations” (Emirbayer and Mische 1998, 966). Just as Granovetter (1985, 487) argued more than thirty years ago, acting in changing situations is only possible because of the social embeddedness of action: “Actors do not behave or decide as atoms outside a social context, nor do they adhere slavishly to a script written for them by the particular intersection of social categories that they happen to occupy. Their attempts at purposive action are instead embedded in concrete, ongoing systems of social relations.” Arguably, social embeddedness is even more relevant to MNEs, which, due to their cross-border operations, have to reconcile very diverse sets of expectations from different stakeholders. Facing these pressures, MNEs respond to particular social expectations in their actions while disregarding others. In addition, enterprises obviously also advance their own expectations and meanings, which might or might not relate to those of others (Hofferberth 2017; Geppert 2003). Given that MNEs, just as any other actor, “must engage in a process of creating some level of a shared understanding of what constitutes the rule system” (Kostova et al. 2008, 1002), there is a creative dimension in corporate agency as well, implying that these actors constantly reinvent themselves in and through their actions. Creativity in this context should not be confused with extraordinary artistic or interpretive skills. Rather, it captures the inventiveness necessary to relate to, make sense of, and choose

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between different or create new meanings in any given situation.14 As such, with corporate action playing out against indeterminate social situations, MNEs depend on “interpretative acts by which [they] construct perceptions of rationality intersubjectively in the action process itself” as they continuously make sense of situations in which they discover their interests and opportunities while their action unfolds (Beckert 2003, 770). Against these theoretical commitments, studying corporate agency in methodological terms is best advanced through the consideration of single enterprises. Instead of reducing complexity and aiming for generalization, such an approach reconstructs corporate idiosyncrasies and the uniqueness of different contexts and expectations. In other words, this volume proposes to study MNEs in global governance by putting the focus on the first and not the latter. Discussed in enterprise-centered case studies, corporate agency is reconstructed through the actions these actors perform as well as by assessing the cognitive and normative frames in which they act. Bringing together different accounts of different enterprises in different situations to consider different dimensions and different layers of corporate agency and thus echoing the call for on-the-ground research on corporate actors (Hönke 2013), the individual chapters in this volume together provide a more detailed account of MNEs in global governance. These and other contributions, as well as the structure of the volume and its individual chapters, are discussed in the final section. Contributions and Structure of This Volume

Assuming that there is more ambiguity to be uncovered, this volume, in its modest take, reflects actor assumptions and conceptualizations when framing and studying MNEs in global governance. In its more ambitious take, it goes beyond notions of corporate rationality and business ethics since both leave little space for corporate agency to play out in novel ways. Neither, arguably, provides conceptual ground to grasp what constitutes and motivates these actors and their actions in light of large-scale yet indeterminate change. By engaging with corporate agency in a more open fashion, this edited volume intends “to address systematically the social determinants of organizational structures, the political nature of decisionmaking, the irrationality of organizations, and the social construction of markets” (Morgan 2001, 9). We hope to achieve this by focusing on individual enterprises in specific contexts, reconstructing how they make sense of situations, whom they interact with, how they respond to social expectations and changing normative contexts, and how they overall define their role in this. The two major contributions of the volume are thus to unpack and to problematize MNEs in global governance.

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In terms of unpacking, the volume shares the major assumption of global governance that the public and the private indeed blur due to the emergence of new actors and their involvement in governance (K. D. Wolf 2008). However, for the actors themselves this can be a disruptive experience. Hence, we caution against prematurely framing enterprises as fully integrated global governors, meaningfully contributing to the provision of regulation and order. Sure enough, we witness increased crossborder MNE activities and arguably a declining capacity of nation-states to regulate these activities as well. Also, we see increased scrutiny as civil society articulates new expectations of MNEs. And finally, because of these two developments, “stronger connections of the corporation with those ongoing public discourses . . . and a more intensive engagement in transnational processes of policymaking and the creation of global governance institutions” have emerged (Scherer and Palazzo 2011, 910). Obviously, these developments challenge MNEs since business as usual seems no longer feasible. At the same time, however, these individual puzzle pieces do not automatically and across the board translate into changed corporate roles and the comprehensive acceptance of new responsibilities on behalf of MNEs. In other words, the observation that more enterprises engage in social activities that do not generate immediate profit does not tell us anything about the motivations and assumptions under which these activities are carried out and whether they are sustained in the long run. To determine whether we can reasonably expect meaningful and sustained changes in corporate behavior for the future (as constructivists argue) or whether these activities are limited to cheap talk (as rationalists argue), one has to consider corporate agency itself and not just its outcome. At the very least, that way we can reconstruct struggles, contradictions, and ambiguities as MNEs engage in global governance. The reservations about corporate actors expressed here should not be read as an outright rejection of the inclusion of MNEs in global governance and their potential to contribute in meaningful ways. Rather, as corporate agency plays out creatively in social situations, the roles and responsibilities of corporate actors remain to be determined. Put differently, while one should not assume the ease of transitioning into new roles, one should also not assume the impossibility thereof. Ultimately, the roles and responsibilities MNEs assume depend on how such notions and expectations are advanced, interpreted, negotiated, and translated in and through social and creative corporate action. Even though MNEs “may be the only institution capable of effectively addressing some of the [most pressing global issues]” (Smith et al. 2010, 1; original emphasis), whether they actually do so or not can only be assessed through their agency. Convincingly argued by Geppert and Dörrenbächer (2014) and Whelan (2012), enterprises themselves, in

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interaction with other relevant actors, determine whether and how new corporate responsibilities emerge. Put bluntly, while they are asked to assume responsibilities to close global governance gaps, it remains to be seen whether and how MNEs answer this call, and research should consider the diverse answers expressed by corporate actors themselves. Against this background, following Ruggie (2018), one can easily problematize the very idea that corporate actors can easily be integrated into global governance. This is, however, not a regulatory question of the respective impact of voluntary CSR versus mandatory initiatives imposing legally binding obligations. Rather, the conceptual lacuna of not taking the notion of corporate agency seriously seems to suggest more broadly that current answers, no matter which direction they take, on how MNEs are integrated into global governance remain limited by default. As such, our approach should be understood as a commitment to a more nuanced and critical public discourse on how to govern and regulate MNEs. In other words, considering the creative and social nature of corporate agency presents an alternative not only for how to study MNEs in global governance but also ultimately for how to govern them. Shedding the cynicism of post hoc theorizing in rationalist approaches as well as the optimism and normative commitments expressed in constructivist approaches, a critical reconstruction of corporate agency in global governance could open the discussion on its future and thereby makes it harder for MNEs to advance their stories and influence the outcome of the discourse as they have done in the past (Berliner and Prakash 2015; Kinderman 2012). More specifically, if corporate engagements in global governance remain episodic or carried out in frameworks that do not reflect sustained change of foundational beliefs and assumptions on behalf of MNEs, the “debate about the range of strategic choices” on how to integrate and regulate corporate actors in global governance should indeed remain open and include, depending on situation and context, integration as well as authoritative regulation (Zeitlin 2007, 135). The individual chapters in this volume connect to these conceptual and normative commitments in different ways. Overall, the case studies include individual corporate experiences of and responses to global governance. Within their own contexts, all case studies perceive MNEs as actively engaged in the interpretation and reconciliation of political and social expectations. As such, their transitions into becoming global governors follow different trajectories, and the scale and implications thereof differ. In terms of the structure of the volume, the chapters are organized by the degree to which the transitions play out against long-term change or immediate crisis. While some chapters have both in mind, the former is mostly characterized by situations in which corporate actors relate to

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other actors in institutionalized settings and over a longer time frame. As such, the enterprises studies do not face immediate pressure to respond to expectations as they reflect and define their agency. In other words, established protocols exist and corporate actors have choices to engage in discussion with others or not (Geppert 2003). Agency in crisis, on the other hand, is characterized by a certain sense of urgency, and the pressure to respond might appear to be larger. This can be caused by conflict, either locally where the enterprise operates or globally through “buycotts” and campaigns that scrutinize business practices. In other words, a crisis is defined by strongly contested expectations of how MNEs should act, which can lead to dissent or violence as enterprises are directly attacked, either literally or figuratively (Hofferberth 2017).15 Focusing more on long-term developments, the first set of chapters considers corporate agency as it responds to its normative and social context in institutionalized ways for the automobile industry (John Mikler and Madison Cartwright), for the extractive industry (Uwafiokun Idemudia and Cynthia Kwakyewah, Hevina S. Dashwood), and for the garment industry (Nicole Helmerich), as well as across the board for different industries and their supply chains (Christopher May). More specifically, Mikler and Cartwright argue in their chapter that Ford and Volkswagen in South Africa have become agents of institutional hybridization. While they retain interests and modes of organizing management-labor relations defined in terms of their home states, they are equally impacted by arrangements they find in their host states and thus have to proactively adapt. Idemudia and Kwakyewah in the next chapter discuss the evolution of business and human rights regulation through the experiences of Ghana’s gold mining industry. Reconstructing in particular the experience of Golden Star Resources and its host communities in Dumasi, the authors stress corporate responsibilities the extractive industry faces when governance otherwise remains limited. Dashwood in her chapter considers the potential role of multistakeholder partnerships in overcoming some of the limitations inherent in individual companies’ CSR. Through an analysis of Rio Tinto Alcan’s partnership with World University Service of Canada and the local government in the BibianiAnhwiaso-Bekwai District of Ghana, she argues that community development initiatives undertaken through such partnerships have a better chance of addressing long-term development needs of the communities, while also improving community relations for the company in the long run. Emphasizing the polycentric nature of agency in the setting and implementation of transnational labor standards in the garment industry, Helmerich in her chapter argues that corporate agency and the agency of workers, while relying on different power resources, constitute each

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other relationally. Advanced as an ethnographic study, the chapter reconstructs the contestations and ambiguities of such a relational process. Finally, in his chapter, May reconstructs how MNEs not only manage but govern supply chains as they interact with different institutions and suppliers within. This focus allows him to assess different ways in which MNEs qua institutions of global governance construct their supply chains and whether these individual constructions can be used to develop general depictions of this space of governance. Moving on to contexts in which corporate agency unfolds in more immediate situations of crises, the second set of chapters looks at extractive enterprises (Tricia D. Olsen, Matthias Hofferberth) and private security companies (Rebecca DeWinter-Schmitt). Looking at Freeport McMoRan and Southern Copper, Olsen in her chapter discusses how corporate agency in community engagement shaped and was shaped by conflicts in Peru. Seeing variation in local conflict dynamics, the chapter argues that business responds to global and national pressures in local ways, which is why we need in-depth studies to determine how seemingly similar conflicts play out very differently. Hofferberth, in the next chapter, discusses the operations and actions of ExxonMobil in Indonesia in light of the Acehnese conflict in around 2000. More specifically, it focuses on how the enterprise struggled to make sense of and respond to this crisis. Against the findings that ExxonMobil reproduces an exclusively economic understanding of its own role in said conflict, the chapter overall cautions us to remain skeptical about the transition of MNEs into global governors. Finally, DeWinter-Schmitt, in the last chapter, frames private security companies as agents in global governance of private security operations. Framing negative human rights impacts as “undesirable and disruptive events,” the chapter reconstructs how corporate agency, despite being indeterminate and subject to ongoing corporate identity formation, succeeded in advancing its stories, rhetorics, and metaphors and thereby not only weathered its legitimacy crisis but also determined the discourse and political outcomes in soft regulation. Taken together, through their collective emphasis on corporate agency, the case studies capture the dynamics that follow from MNEs’ being “local players in global games” and reconstruct different contexts of engaging MNEs in global governance (Kristensen and Zeitlin 2005). They do so in somewhat different ways, though. While some chapters focus more on the respective enterprises themselves, others relate their case studies to broader multistakeholder contexts. Moreover, the contributors explain corporate agency in different ways as they draw on different aspects, such as corporate governance, culture, and history. Jeffrey Harrod, in his conclusion, relates the different chapters and, against

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their insights, conceptualizes MNEs as organizations of governance, both powerful and deeply political yet ultimately indeterminate in their very actions and responsibilities. Given the normative issues that arise from this, the volume thus hopes to speak to the issue of how to better regulate enterprises in global governance. As ambiguities in corporate agency remain and corporate commitment in global governance at least in some instances appears more sporadic and nonsustainable than meaningful, our discussions, for the time being, should remain open, both conceptually and in terms of regulation and policy recommendations. Notes

1. Following Dunning’s (1971, 16) seminal definition, the volume defines a multinational enterprise as “an enterprise which owns or controls producing facilities (i.e., factories, mines, oil, refineries, distribution outlets, offices, etc.) in more than one country.” While this definition is widely accepted, various terms exist to identify the phenomenon. I use the term “enterprise” since “all multinationals are enterprises but not all are incorporated” (Eden 1991, 219). The addition of “multinational” is intended to indicate that the operations of these enterprises cross but do not transcend state borders as corporate activities still take place within local, nationally defined contexts (Kristensen and Zeitlin 2005). Another important distinction in this discussion and reflected by the choice of speaking of multinational enterprises is to differentiate between an MNE as an “economic organization that is able to act under unity of command across its entire sphere of operations, and the separate legal entities within the multinational corporate group” (Ruggie 2018, 329, original emphasis). 2. Among others, President Trump himself recently advocated a new sovereigntism in his UN speech when he pitched “independence and cooperation over global governance, control, and domination” as if these were mutually exclusive perspectives. “Full Text: Trump’s 2018 UN Speech Transcript,” POLITICO, September 25, 2018, https://www.politico.com/story/2018/09/25/trump-un-speech-2018-full-text -transcript-840043. 3. Another instance showing corporate involvement in global governance and a new leadership role for business—whether truly as beneficial as he paints it or not—came from then UN secretary-general Ban Ki-Moon at the Business and Climate Summit in 2015 when he stated, “Business leaders are now in the vanguard of the movement to take climate action.” “Business Leaders Call for Pledges and Plans to Reach Long-Term Carbon Target,” Climate Policy Observer, May 28, 2015, http://climateobserver.org/business-leaders-call-for-pledges-and-plans-to-reach -long-term-carbon-target. 4. Criticism on global governance due to its conceptual ambiguity is not new but rather as old as the framework itself and obviously is not limited to discussions on whether MNEs should be studied in such a framework (Latham 1999; Finkelstein 1995). Interestingly enough, though, none of this prevented global governance from obtaining its “near-celebrity status” in the discipline and from conventionally framing MNEs as global governors (Barnett and Duvall 2005a, 1). For this volume, we contend that global governance is constituted through activities by one or multiple actors aiming to provide collective regulation and public goods. For MNEs, this includes self-regulation and regulation along the supply chain (May, this volume), as well as multistakeholder initiatives, industry-wide regulation, and overall any kind of engagement with stakeholders that establishes MNEs as “political actors.”

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5. Barnett and Sikkink (2008, 71) frame the initial engagement with MNEs in transnationalism a little more skeptically as they argue that the “particular research agenda did not prosper in the short term, with the exception of some increased attention to transnational corporations in world politics.” 6. I use the image of images to indicate that while no individual research explicitly draws from and thus directly reproduces them, collectively they nevertheless serve as background and inform our work. 7. In a more explicit tone, and by no means limited to the study of MNEs, Friedrichs and Kratochwil (2009, 710) state, “Everybody knows, but nobody recognizes openly, that no one actually follows the stylized steps of hypothesis formulation, testing and so on. Popperian fantasies about ingenious conjectures and inexorable refutations continue to hold sway despite the much more prosaic way most scholars grope around in the formulation of their theories, and the much less rigorous way they assess the value of their hypotheses.” 8. The section title popular culture reference is drawn from a Bad Religion song. However, despite his master plan, the lyrics continue, even the businessman cannot see “his species’ slow decay.” 9. It should be noted that Risse (2002, 256) qualifies his distinction by stressing that these actors only primarily pursue their respective motivations, adding, “It is useful to think of this distinction as a continuum rather than sharply divided classes of actors.” 10. Writing almost twenty years later but still drawing from the same “as if” logic, Raymond Vernon emphasized the same behavioral assumption toward MNEs. However, at the same time, he foresaw criticism from disciplines less focused on simplifying reality: “Economists, as a rule, have no trouble with . . . abstractions; the idea of the firm, singlemindedly devoted to maximizing profits, fits neatly into the framework of economic theory. Practically everyone else, however, will recognize that an institution as complex and diverse as a multinational enterprise cannot be said to have a clear, unambiguous will” (Vernon 1971, 6). 11. Kollman (2008, 397) outlines the need for a new research agenda more broadly by arguing that “despite growing acceptance of the constructivist claim that norms play an important role in international life and an increased interest in private authority among international relations (IR) scholars, surprisingly little research in the field has explored the extent or mechanisms by which norms influence the behavior of firms.” 12. The quote can be considered open-ended since it remains unclear whether the acknowledgment has to come from enterprises and their managers, from scholars studying MNEs, or from both at the same time. Also, note once more the teleological determinism and the assumed “there-is-no-alternative-logic” as globalization and the alleged decline of nation-state governance that comes with it assumingly not only necessitate a new role and responsibilities for MNEs but also leave these actors with no other choice but to accept these responsibilities. For a critical discussion on political CSR challenging the notion that there is no alternative to it, see Whelan (2012). 13. Others who have advanced similar ideas and argued for the need to disaggregate MNEs in the field of IR and IPE include, among others, Avant (2016), Haufler (2010), Cutler (2008), Woll (2008), and Amoore (2006). 14. One should add, in the words of Kostova et al. (2008, 1001), that such activities include MNEs’ “manipulate[ing], negotiat[ing], and partially construct[ing] their institutional environments” mostly because they are “fragmented, ill-defined, and constantly evolving” by default. 15. For the broader distinction between routine and crisis and the theoretical origin in pragmatist and interactionist thinking, see Strauss (1993, 191–245) and his argument that both contribute to the “continual permutation of action.”

2 From Global to Local: Ford and Volkswagen’s Management-Labor Relations in South Africa John Mikler and Madison Cartwright

Global corporations are not as global as is often held to be the case. The largest among them are based in a small number of industrialized states and primarily invest and operate in and between these same states. Although it would be wrong to characterize relations between these states as akin to a closed system, the data shows corporations from them have tended to become global by investing in each other’s territories, thereby further entrenching their geographical as well as market concentration. To a significant degree, global corporations remain national and regional in their interests and orientations, even as they become more global in their operations. What happens when they invest in developing states? We argue that economically powerful states’1 global corporations effectively “colonize” the markets of weaker states and also are in a position to attempt to institutionally colonize their production relations (Wilks 2013). In the first section, the case is made for why, in theory, global corporations should prefer to maintain the institutional relations present in their headquarters as they invest abroad. The states where global corporations are headquartered and from which they invest in others are institutionally constructed in different ways. Therefore, it is not oxymoronic to speak of global corporations’ nationalities. Authors such as Jones (2006, 22) note that despite pronouncements of the stateless corporation operating in global markets, the reality is that a corporation’s nationality is rarely ambiguous and that “it usually has a major influence on corporate strategy.” As such, the comparative capitalism literature, especially Hall and Soskice’s (2001b) firm-centered Varieties of Capitalism (VOC) approach, is used to illustrate why global corporations potentially perceive their interests and relations with other actors in differing ways depending on 27

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their nationalities. Given that this is the case, rather than abandoning operational systems, relations, and perspectives on their interests as they invest abroad, it stands to reason that they should attempt to maintain these. In the second section, we demonstrate that corporations do indeed try to maintain their institutional arrangements in their international operations. We do so via a case study of the management-labor relations of Volkswagen and Ford. Volkswagen is a German firm that remains largely embedded in the German and European market. Meanwhile, Ford is an American firm largely embedded in the US market. Applying the VOC approach, we first illustrate how these two firms approach management-labor relations at home in different ways. This is shown through a content analysis of company documents and an evaluation of official company programs. In the third section, we examine the operations of Volkswagen and Ford in a common foreign market: South Africa. South Africa has itself not converged on a set of liberal, let alone neoliberal, policies under the pressures of globalization. Instead, it has its own institutional environment, which follows neither the German nor the American model. While this has created difficulties for both Volkswagen and Ford, they have sought to retain their respective approaches to management-labor relations. Volkswagen has pursued codetermination, despite the significant threats posed by low trust and militant unions. Ford, on the other hand, has retained its strict managerial style despite the more corporatist institutional arrangements it has found in South Africa. Using insights from the comparative capitalism literature, an analysis of South Africa’s political economy, and a content analysis of these corporations’ reporting, we demonstrate that rather than abandoning the management-labor relations strategies of their home states, these corporations have instead sought to retain them. We conclude that both firms have attempted to reproduce their home states’ institutions in their South African operations. From a corporate perspective, their manufacturing operations in South Africa thus represent a case of proactive rather than passive institutional path dependence. From a South African perspective, the management-labor relations they have sought to establish reflect a process of attempted neocolonization as much as globalization. Varieties of Capitalism, Varieties of Corporate Motivations

Despite over sixty years of a global trade and investment regime predicated on free and integrated markets, on the basis of what Wade (2010) calls the “globalization consensus,” economically powerful states still

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account for 80 percent of world output, 70 percent of international trade, and up to 90 percent of foreign direct investment (FDI) (Chang 2008). However, it is increasingly recognized that it is more accurate to say that the corporations from these states do so. The FT Global 5002 are responsible for at least 80 percent of the world’s stock of FDI, around 70 percent of world trade, and 30 percent of the world’s GDP (Mikler 2018; Rugman 2000; Bryant and Bailey 1997). That the data between states and these major global corporations coincide is not a coincidence. This is because the latter are not placeless entities. The headquarters of the world’s largest corporations reflect the centers of global economic power, hence the close correlation between the national economic and corporate data. In fact, just ten states are the headquarters for 84 percent of them. In order, they are the United States, China, Japan, the United Kingdom, France, Canada, Germany, India, Switzerland, and Sweden, but US corporations dominate the list, accounting for 42 percent (Financial Times 2015). Global corporations’ geographical concentration is matched by their market concentration. According to Nolan et al. (2002), by the end of the twentieth century no more than five global corporations controlled each of the world’s major industries, with around a third of these having one corporation accounting for more than 40 percent of global sales. As Crouch (2011, 49) observes, there has been a “corporate takeover of the market” by these enormous entities that do not so much compete in markets as control them. The result is that the visible hand of the state has been replaced not by the invisible hand of Adam Smith’s market forces but by a visible handful of corporations from a handful of states. Furthermore, the data indicate that this trend has become more entrenched over time. In fact, 81 percent of the US$8.1 trillion in mergers and acquisition (M&A) purchases from 1990 to 2013 were carried out by corporations from developed states. Over the same period, 84 percent of M&A sales were also carried out by corporations from these states. As such, corporations from the world’s economically dominant states have been buying each other, further concentrating not just power in the industries they dominate but also the geographical basis for doing so (UNCTAD 2014). While each of the states from which the world’s major global corporations hail represents a distinct case, they can be placed into categories for comparative analysis. Out of the considerable comparative capitalism literature focused on varieties of welfare states (Esping-Andersen 1990; Goodin et al. 1999), varieties of business systems (Schmidt 2002; Doremus et al. 1999; Whitley 1999), and historical institutionalist analyses of different states’ economic development trajectories (Dore et al. 1999) came Hall and Soskice’s (2001b) VOC approach. It represented a bold attempt to synthesize the key insights of the wealth of related literature, with the aim of achieving three key, interlocking goals: first, to locate

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firms centrally in the study of states’ capitalism; second, to establish a framework for analysis that explicitly recognizes the persistence of diversity in global capitalism rather than convergence on a single inevitable, or even “ideal,” model; and third, to use this framework to “open up new research agendas on an unusually broad set of topics, ranging from issues of innovation, vocational training, and corporate strategy to those associated with legal systems, the development of social policy, and the stance nations take in international negotiations” (Hall and Soskice 2001a, 2). With these goals in mind, the VOC approach places capitalist states on a spectrum that includes liberal market economies (LMEs) at one end and coordinated market economies (CMEs) on the other in order to consider the relationship that corporations as the “crucial actors in a capitalist economy” have with the states in whose institutions they are embedded (Hall and Soskice 2001a, 6). The VOC approach has not been without criticism (Hancké 2009), particularly that it is increasingly out of date in a more economically globalized world where corporations are multinational in their operations. However, an extensive, more recent literature demonstrates institutional inertia, or path-dependent evolutionary change, rather than the abandonment of distinct national capitalist types (Hall and Gingerich 2009; Hall and Thelen 2009; Kang and Moon 2012; Walter and Zhang 2012; Nölke 2014; Mikler 2018). Furthermore, we agree with authors such as Geppert and Dörrenbächer (2011) that as firms have “gravitated” toward organizational and operational forms that are institutionally supported in their home states, it seems illogical that they would proactively seek to abandon these for different or multiple forms in the countries in which they invest. We demonstrate this below. We also apply the VOC approach because of its firm-centricity and the utility of its categories. It is heuristically useful for conceptualizing corporations as economic actors with preferences and behavior heavily influenced by their home states’ institutional environment. The extent to which this is a factor in determining their behavior in states other than those in which they are headquartered— in this case in developing and therefore weaker states, such as South Africa—has important implications for how their influence can be resisted or modified. Broadly speaking, LMEs favor economic coordination via market competition, whereas CMEs exhibit greater nonmarket cooperative relationships in coordinating economic activities, with the state playing a greater role in this.3 The VOC approach applies these two categories on the basis that an economy that is more liberal or coordinated in one sense tends to be more so in others and that such institutional complementarities are mutually reinforcing (Hall and Gingerich 2009; Amable 2000). This is why states cannot only be considered as discrete cases but catego-

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rized according to their VOC. It is also why, once they gravitate toward one institutional category, they are resistant to change to another. This is true in respect of areas such as corporate governance, vocational training and education, interfirm relations, and management-labor relations. Management-Labor Relations

Our focus here is on management-labor relations. LME-based corporations tend to be best characterized by their status as legal entities, places where one works for the moment, where hiring and firing workers occurs in response to changed market (i.e., profitability) conditions, and where management is empowered and expected to do this. There is also a large gap between managers’ and workers’ rewards that reflects the power dynamics of top management and the board exerting control over the firm. The relations this produces between management and employees tend to be adversarial, given that shorter job tenures and casualization of the workforce are the kinds of outcomes produced as corporations pressure the state for labor market deregulation in embracing economic gains and minimizing losses. By comparison, managementlabor cooperation and collaboration are more the norm for CME-based corporations from Germany and Japan. As Dore (2000b, 106) puts it, “They remain economies in which the stock market plays a much less central role, and the state a larger one; in which the financial sector is less dominant; and manufacturing industry correspondingly more important; in which engineers tend to have the edge over accountants; and the doctrine of the supremacy of shareholder value is still a much weaker element in determining company goals.” In the case of Germany, this leads to a “structural bias towards consensus decision making” (Hall and Soskice 2001a, 24) that reflects a greater stakeholder as opposed to shareholder basis for capitalist relations of production. Longer-term, cooperative product development and productivity growth are emphasized to the extent that cooperation and consensus-building are legislated (Dore 2000a, 182). The German Codetermination Act of 1976 mandates that all companies of more than 2,000 employees must have supervisory boards with employee as well as shareholder representation on them. The result is that 48 percent of the seats on the supervisory boards of the one hundred largest German industrial corporations are held by union or employee representatives (Pauly and Reich 1997, 12). All companies with more than five employees must also have a works council through which managers are reminded on a daily basis about group morale and opinions about productivity and specific issues in the workplace.

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For German corporations, “it is not so much convention as law . . . which governs the owner/manager/worker relationship” (Streeck 1997), but for Japanese corporations it is more a matter of culture (see also Fioretos 2001). There is still almost no external market for executives in Japan, or at least it is a very small one and largely the preserve of foreign firms operating there. The norm is “internal labor markets characterized by long-term/lifelong employment” (Walter and Zhang 2012, 17), so Japanese CEOs tend to be appointed from within their firms. In contrast to the US LME model, where firms hire and fire employees in the face of economic pressures that threaten the share price, at least in the sense of who determines its destiny, nobody really owns a Japanese firm but the firm itself. By way of illustration, Dore (1997, 20) notes that a US company chairman is likely to address a meeting of shareholders by talking about “your firm,” whereas a Japanese company chairman will talk about “our firm.” Traditionally, workers and management share a relationship akin, in his view, to that of “a soldier’s sense of regimental loyalty,” with a firm’s top management closer to the status of “elders” than “agents of shareholder principals” (Dore 2000b, 107). In economic downturns, the “sense of responsibility for managing difficult processes of restructuring within tight traditional constraints is palpable” (Pauly and Reich 1997, 11), with the shedding of labor a last rather than a first resort (see also Dore 2000b, 24–26). Firms’ different perspectives produce implications for key management objectives. In LMEs, corporate leaders focus on making profits and delivering these to shareholders via dividends in the short term. In CMEs, they have greater concern for the long-term prosperity of the firm and their reputation within it. It would, of course, be wrong to characterize the leaders of LME-based firms as driven solely by profit and shareholder value maximization; yet it has been observed that this is their key motivator to the extent that it is their “dominant touchstone objective” (Dore 2000b, 103), to the point that share price has become “an obsession” (Jacoby 2005, 2). And the differing motivations produced by German and Japanese capitalism in particular, by way of contrast to that of the United States, have been borne out in many studies. For example, in their survey of 15,000 managers from European, American, and Asian companies, Hampden-Turner and Trompenaars (1993, 32) found that 74 percent of US managers saw a company as a system designed to perform functions and tasks efficiently, versus 41 and 29 percent of German and Japanese managers, respectively. Similarly, while 40 percent of US managers saw the prime goal of a company as making profits, only 24 and 8 percent of German and Japanese managers agreed with this. Instead, they stressed the well-being of a wide range of stakeholders whose needs and concerns must be attended to for corporate success in the longer term.

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Foreign Investment

But Hampden-Turner and Trompenaars’s (1993) study was made twenty-five years ago, when corporate supply chains were less global than they are today. If corporations are initially creations of and embedded in their home state’s VOC, it logically follows that as their operations become more global, they become disembedded. In other words, foreign investment and a liberal economically interconnected (i.e., globalized) world should undermine the coherence of the VOC approach’s categories and indeed the whole rationale for a comparative national focus. Furthermore, the market imperatives of a global economy driven by market actors responding to market forces that are no longer territorially bound should produce convergence on the LME model. However, because they are more makers of market forces than responders to them and more nationally or regionally than globally focused, it is not obvious that corporations should intrinsically prefer one set of national institutional arrangements over another. If the VOC approach “take[s] the nation state seriously as a locus of economic regulation” (Howell 2003, 110), it follows that so too must the global corporations that are based in and that invest in and operate from a given nation-state. This being the case, there is evidence that national institutions, once embedded, tend to endure despite global interconnectedness. The role played by global corporations in this regard depends on whether or not they seek to wield their power to sustain the economic model in which they were originally institutionally embedded. It stands to reason that they should. If over time “firms will gravitate towards the mode of coordination for which there is institutional support” (Hall and Soskice 2001a, 8–9), then having gravitated they will be most suited to operating in a manner commensurate with their home states’ national institutions. If they are accustomed to market freedoms and an arm’slength relationship with the state that characterizes the LME model, they will seek to maintain it and bring pressure to bear on other states to adopt it as they go global. Corporations accustomed to the support and greater state coordination that characterizes the nonmarket relations of the CME model will likewise seek opportunities for similar relations wherever they operate (Geppert and Dörrenbächer 2011). Seen in this light, the preponderance of US-based firms on lists of the world’s largest global corporations, as well as their historical and increasing dominance of international trade and investment flows, is another possible reason why neoliberalism was seen as “the model” for global capitalism for thirty years. This neoliberal dominance was not because of the prosperity the model brings but because of the political power of the interests and actors that imposed it on others. It might also be argued

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that LME-based corporations are more likely to attempt to impose their form of capitalism globally as “best practice” given they face pressure from their shareholders to deliver value wherever they operate. By comparison, those from CMEs may be more inclined to share their decisionmaking with a range of other stakeholders, including the governments of states in which they operate. Being accustomed to a more relational form of capitalism in their home states, theirs by definition is not a global but an inter- and intranational model. In theory, global corporations possess the ability and flexibility to absorb and gain new knowledge in any national context in which they operate (Kogut 2005; Levitt 1983). They can change and adapt according to their circumstances to “translate the relationship of globalization and regionalization into an organisational challenge” (Heidenreich 2012, 557). However, if the reality is that global corporations “are produced through an intricate process of embedding in which the cognitive, cultural, social, political and economic characteristics of the national home base play a dominant part” (Dicken 2010, 122), then in addition to being accustomed to a certain way of operating, they face substantial costs in shifting to alternative organizational forms or adopting multiple forms as they operate in multiple jurisdictions. Because each is produced by its home state’s VOC, where possible they choose not to do so (Whitley 2009). Critics of globalization may find M. Wolf’s (2004, 191) statement that “multinational corporations would not dare operate plants in very different ways in different countries” challenging, to say the least. Yet, in institutional terms, the statement may ring true, because in addition to being global, corporations remain very much nationally and regionally embedded. If “the national embeddedness of companies contributes to the reduction of uncertainties and to the solution of organisational coordination problems,” then there is little incentive for global corporations to spend time and resources to “fix” what they may not regard as “broken” (Heidenreich 2012, 567). Despite investing in multiple jurisdictions, corporations therefore display a range of national and regional identities rather than a singular global one. Studies such as Kahancová (2007) demonstrate the existence of corporate organizational inertia, as routines that have supported growth and legitimacy in corporations’ home states are retained where possible when they invest in others. Rather than some disembodied, transnational form of capitalism being spread by corporations, because they are adapted to particular and differentiated VOCs, they have an incentive to “export” these to the states in which they invest. Indeed, their ability to do so may be critical to sustaining competitiveness in institutional contexts with which they are initially unfamiliar (Kelly and Amburgey 1991; Miller and Chen 1994; Xia et al. 2009). This means that the states where they invest

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may find themselves having to adjust to the practices of global corporations more than these corporations feel the necessity to adapt to their new national circumstances. The result is that states with economies highly penetrated by corporations of other nationalities are likely to find themselves pressured to conform to modes of behavior that these corporations are familiar with “at home.” Therefore, while it may be claimed that because of globalization national variations must break down, it is equally possible to argue that globalization has permitted an institutional “battle” on the global stage that was once confined to national borders and is mediated by global corporations of different nationalities. Case Study: The Automotive Industry

The concentration in corporate operations evident in general is also evident in respect of the automotive industry specifically. It is a mature manufacturing industry that has consolidated ownership and control in a small number of large global corporations. The top ten automotive manufacturers in 2014 accounted for 71 percent of global motor vehicle production and are based in the United States, Japan, South Korea, and Europe. The top three alone—Toyota, Volkswagen, and General Motors—accounted for 33 percent (OICA 2014). This handful of global corporations controls an industry that accounts for 4 to 8 percent of GDP and 2 to 4 percent of the labor force in Organisation for Economic Co-operation and Development countries. The industry’s importance is then further magnified in particular states and regions. In the United States, car manufacturing employs 14 million people either directly or indirectly in component supply and related industries; it contributes 6 percent to private-sector GDP and as much as 20 percent in some regions. In the European Union, the car industry accounts for 9 percent of manufacturing value added and directly or indirectly employs over 12 million people. In Japan, 7.1 million people are employed by the industry directly or indirectly, and it accounts for 11 percent of total manufacturing output (UNEP and ACEA 2002; UNEP 2002). Its importance in developing states is also important, as its major firms have outsourced and off-shored their operations from the industrialized states where they are headquartered. The result is that while it may seem that we live in a postindustrial, “gig” economy world, the reality for developing states is exactly the opposite as they seek to attract the foreign direct investment being offered by global corporations whose operations were once more firmly anchored in their home states. Therefore, the automotive industry is ideal for illustrating how corporations bring their home state institutions with them when investing

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abroad, especially in developing states. We consider two auto manufacturers, Germany’s Volkswagen and the United States’ Ford, and their management-labor relations in South Africa. South Africa was chosen because it is a developing country and therefore might be presumed to be in a “weaker” position vis-à-vis such global corporations, and both Ford and Volkswagen have operations there. Under the VOC approach, Germany and the United States are archetypes for the CME and LME institutional forms of firm operations, including in management-labor relations. Therefore, it should be expected that Volkswagen and Ford will diverge in how they approach relations with their workers. This makes the two firms suitable for comparison. Our study is temporally bounded, examining the immediate aftermath of the global financial crisis. By 2010 most economies (including Germany and the United States) were no longer in recession and had returned to growth. However, the recovery was weak: the unemployment rate in the United States was 9.6 percent, while the unemployment rate in the European Union (where the majority of Volkswagen’s sales occur) was 9.72 percent (World Bank 2018). Global corporations were also under enormous pressure to minimize costs, and at this time both Ford and Volkswagen were among the most “transnational” firms in the world, ranking fifty-third and seventy-first, respectively, in the United Nations Conference on Trade and Development’s transnationality index (TNI).4 Ford also ranked eleventh out of the eighteen US companies listed in the top one hundred, while Volkswagen ranked fourth out of the thirteen Germany companies (UNCTAD 2010). This makes them ideal subjects for a case study seeking to underscore the resilience of their home states’ institutions at a time of postcrisis recovery. In 2009, Volkswagen and Ford also ranked third and fourth, respectively, in production among all auto manufacturers (OICA 2010). Despite the fact that the German market only represents 14 percent of Volkswagen’s sales, it accounts for 29 percent of its production and 42 percent of its total workforce. Regionally, 71 percent of Volkswagen’s employees were located in Europe in 2010 (Volkswagen 2011b). In the same year Ford employed 28 percent of the production workforce in the United States and 37 percent regionally in North America (Ford 2011e). Meanwhile, Volkswagen derived 46 percent of its sales from Europe (including Germany), and Ford derived 44 percent of its sales from North America (including US sales) in 2010 (Volkswagen 2010b). Both therefore generate just under half their total sales from their immediate regional markets. This shows that the firms remain considerably anchored in their home markets despite both being among the most transnational corporations in the world. Rather than indicating that their TNI inaccurately represents

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their transnationality, this instead indicates that even the most transnational firms are, in fact, not that transnational in all respects. Again, this has implications for the resilience of their home states’ institutions even as their operations become more multinational. Volkswagen’s and Ford’s Management-Labor Relations at Home

To illustrate their differing management-labor relations, a content analysis was conducted on company reports relating to Ford’s and Volkswagen’s labor relations from 2010. These are their codes of conduct and selected parts of their annual reports. Neither of these documents was considered in its entirety; we looked at just the specific sections relating to employees and labor relations. Company-created documents are useful because they represent “the culmination of the efforts of teams of professionals tasked with presenting information that casts their firms in the best possible light” (Mikler 2007, 75). Coding of such documents reveals firms’ understanding of how their management-labor relations should be “best” presented, and because considerable effort goes into publishing such written reports, they present what each company believes to be its key messages. Therefore, from their reports an insight into corporate attitudes and strategic preferences may be inferred, which reflects the spectrum of more liberal to more coordinated national institutional tendencies described in the VOC literature, described above. To accomplish this, the company documents were coded according a schedule, which consists of two primary codes: Codetermination and Market Forces. Codetermination consists of codes relating to ensuring Quality, Supporting Workers, Coordination with Workers, Training, and the importance of both external and internal Rules, Laws, and Regulations. Market Forces consists of codes relating to Industrial Action, Productivity, Shareholders, Business Performance, and external Market Conditions. Despite Ford’s being embedded in an LME, practically all its hourly employees in the United States are represented by a union (Ford 2010, 178). This is an unusually high rate given that, according to the US Bureau of Labor Statistics (BLS 2011), despite durable goods manufacturing being among the most unionized industrial sectors in the country, it has just an 11 percent unionization rate, compared to less than 7 percent of the general private-sector workforce. Both are lower than Germany’s at 18 percent (Lawrence 2000). It is probably not surprising, then, that Volkswagen made by far the most references to Codetermination, having a 74 percent share of the total for such references, while Ford had a 78 percent share of Market Forces codes (Volkswagen 2010b, 2010d; Ford 2007a,

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2010). While Ford included Codetermination codes due to its unionized workforce and thus its references to collective bargaining and relations with the union, Ford was still very much framed around market concerns, such as what competitors are doing, the impact of labor costs on the bottom line, and flexibility. For example, “in March 2009, Ford-UAW membership ratified modifications to the existing collective bargaining agreement that significantly improved our competitiveness, saving us up to $500 million annually and bringing us near to competitive labor cost parity with the U.S. operations of foreign-owned automakers. The operational changes affected wage and benefit provisions, productivity, job security programs, and capacity actions, allowing us to increase manufacturing efficiency and flexibility” (Ford 2010, 178). By contrast, Volkswagen primarily focused on training and employee knowledge, career pathways, and employee-development programs. It also made repeated references to the link between training, employee expertise, and the manufacturing processes that embody the “Volkswagen Way.” For example, We create an environment which provides personal and professional prospects for our employees, in which exceptional performance and results can be achieved and which promotes employability of our employees. We invest in the skills and competence of our employees. At the same time, we expect that each of our employees will maintain high personal standards for themselves, their performance, and their health; and that they actively participate in their own ongoing professional development. We are committed to working with employee representatives in candor and trust, to conducting a constructive and co-operative dialogue, and to striving for a just balance of interests. (Volkswagen 2010d, 8)

Table 2.1 summarizes the results of the Codetermination codes. Volkswagen had higher instances of every category of Codetermination, especially Training, which Ford had no references to. Training included discussion of education, recruiting quality employees, and an emphasis on the expertise of floor-level employees. Other clearly dominant fields for Volkswagen included Quality (100 percent share) and Supporting Workers (88 percent share). Quality included all references to the importance in maintaining product quality via healthy labor relations, an innovative workforce, and the standardization of labor process. Meanwhile, Supporting Workers refers to discussion of employee satisfaction, personal development, and job security. Both companies were more evenly matched on Coordination with Workers and Rules, Laws, and Regulations, although Volkswagen still had more on both (a 61 and 56 percent share, respectively). The former refers to dialogue and employee representation, unions and collective bargaining, employee autonomy, mutual interest and obligations, relationship building and trust, and the value of workers to overall business success. However, of

From Global to Local

Table 2.1 Codetermination Codes

Quality Supporting Workers Coordination with Workers Training Rules, Laws, and Regulations Total

Volkswagen Number (% of total) 7 (100) 15 (88) 23 (61) 26 (100) 18 (56) 89 (74)

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Ford Number (% of total)

Sources: Volkswagen (2010b, 2010d); Ford (2007a, 2010).

0 (0) 2 (12) 15 (39) 0 (0) 14 (44) 31 (26)

Ford’s fifteen Coordination with Workers codes, nine were references to the American United Automobile Workers (UAW) union and the Canadian Auto Workers union, with whom the company has negotiated collective bargaining arrangements. Ford’s codes often coincided with discussion of competitiveness, flexibility, and costs. Table 2.2 summarizes the results of the Market Forces codes. Seven of Ford’s ten Market Conditions references were directed toward competitiveness and/or competitors, and all but two of these occurred alongside discussion of unions and collective bargaining. Additionally, all three Productivity references occurred in the same context. Meanwhile, Volkswagen had one reference in Productivity and none for Market Conditions. The highest code for Volkswagen under Market Forces was Business Performance. This refers to sales, profits and growth, risk management, and the costs and financial obligations of human resources. Once again, four of Ford’s seven references to Business Performance were in relation to the financial costs of labor as per the negotiations with the unions. Notably, Ford made the sole reference to industrial action, which occurred alongside the discussion of the negotiated collective agreement with the UAW union. The above coding is reinforced by and reflected in the actual processes and programs that exist within the respective companies. For example, Volkswagen sources many of its employees when they are undergoing vocational training and then directs them to departments suited to their acquired skills and knowledge. During this time, it provides programs for the personal development of talented individuals, including the international employment exchange program Wanderjahre and the StartUp Direct training program, which gives university students employment and additional training seminars over the course of two years, designed to give them a head start in the company. The company also runs an AutoUni in conjunction with six universities. Its purpose is to “ensure the transfer of academic knowledge within the group, thereby increasing

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Table 2.2 Market Forces Codes

Industrial Action Productivity Shareholders Business Performance Market Conditions Total

Volkswagen Number (% of total)

Ford Number (% of total)

0 (0%) 0 (0%) 1 (100%) 4 (36%) 1 (9%) 6 (22%)

1 (100%) 3 (100%) 0 (0%) 7 (64%) 10 (91%) 21 (78%)

Sources: Volkswagen (2010b, 2010d); Ford (2007a, 2010).

Volkswagen’s capacity for innovation,” and it supervises 309 doctoral students (Volkswagen 2010b, 195). It is noteworthy that these programs are directed at employees just at the beginning stages of their careers in the company and are therefore made on the assumption that the employees will remain with the company for a long time. Volkswagen also runs continuous training programs for its employees throughout their time with the company. In 2010, 51,500 employees received additional training through 8,896 seminars in areas such as factory automation, robotics, and application engineering/management (Volkswagen 2010b, 195). Volkswagen’s supervisory board is also consistent with the CME model. As mentioned above, many of the codetermination processes in Germany are mandated by law and thus apply to Volkswagen. Its supervisory board includes the minister for economic affairs, labor, and transport for the federal state of Lower Saxony (a major shareholder in the company); the minister-president of the federal state of Lower Saxony; the chair of the Volkswagen Commercial Vehicle Works Council; the first chair of the IG Metall union; and a representative elected at the company’s annual general meeting (Volkswagen 2010b, 19). The role of the supervisory board is to support the board of management by providing “advice on issues relating to the management of the company, in compliance with the legal requirements and the German Corporate Governance Code,” in addition to consulting on “all decisions of fundamental importance for the Group, as well as discussing current strategic issues with the Board of Management at regular intervals” (Volkswagen 2010b, 16). Volkswagen’s supervisory board thus includes representatives from labor and the state as well as business. It is therefore an example of the sort of coordination expected under the CME model. Ford also provides training for its employees; however, this was mentioned nowhere in its annual report. It does make mention of this on its corporate website, where the company notes that it provides “web-based

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and classroom training, special projects and task forces, as well as mentoring and coaching” for its employees (Ford 2011d). However, there is also an expectation that employees will “invest in their own professional development by developing an Individual Development Plan . . . to help them meet current and future goals while maximizing performance in their current assignments” (Ford 2011d; emphasis added). Individual development plans are a form of self-monitoring whereby employees set out professional goals and track their progress in consultation with their supervisors. There is therefore a strong individual focus within the training programs, which exists alongside managerial oversight. Other programs, such as the internal colleges and the Global Executive Leadership Program, cater to executive- and management-level positions, not shopfloor-level employees. Overall, Ford proclaims that its human resources strategy, including all its training programs, must align with its ONE Ford objectives, which consider improvement of technical skills an “expected behavior” of the employees themselves rather than a responsibility or strategy of Ford (Ford 2011c). Therefore, Ford’s training programs take less of a codetermination approach and focus more on the individualism and managerial-centric characteristics of the LME model. The above analysis illustrates that Ford and Volkswagen have different approaches to management-labor relations, reflecting different points on the VOC spectrum of their home states. In particular, Volkswagen showed a much higher tendency to mention training as an important labor strategy, while Ford was more likely to mention market concerns such as competition when discussing its labor relations. That is, the two firms are institutionally distinct. While the differing attitudes were reflected in coding results, practical applications of these were also evident in the actual processes and programs of the firms. The following analysis extends this to the operations of these firms in South Africa. However, there are several potential approaches a firm may take when operating in a foreign economy, and this depends on the prevailing local conditions. Thus, for the purposes of studying how Ford’s and Volkswagen’s behavior in South Africa may or may not be changed by South Africa’s domestic institutions, it must first be established what those institutions are. Management-Labor Relations in South Africa

South Africa has a large and powerful union movement supported by a number of institutional arrangements. The Congress of South African Trade Unions (COSATU) “stands out within the broader African context as a particularly strong and historically successful labor federation” (Hurt 2014, 96). COSATU is the largest labor federation in South Africa, which

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has a unionization rate of 30 percent (S. Collins 2004, 11). It has been influential in shaping South Africa’s trade policy, advocating for engagement with the international economy in a strategic fashion, including using industry policy and social spending to mitigate liberalization’s impact on the economy (Hurt 2014, 97). In the automotive industry, approximately 80 percent of the workforce is organized under the National Union of Metalworkers of South Africa (NUMSA), with an additional 10 percent belonging to other unions (Hirschsohn et al. 2000, 60; S. Collins 2004, 6). The high levels of unionization are in part a result of a favorable legislative environment. Between 1994 and 1999, three pro-labor acts were passed to strengthen the positions of workers in wage negotiations and improve employment security (Aron et al. 2009, 16–17). Additionally, labor has been successful in mitigating employee hostility to centralized bargaining; has secured the constitutional right to strike, including political and sympathy strikes; and has witnessed the South African Supreme Court rule lockouts unconstitutional (Lawrence 2000, 121–125). South Africa’s workforce is therefore highly unionized, and its unions wield considerable clout in their own right, in addition to being heavily embedded with the ruling party, the African National Congress. Scholars such as Hirschsohn et al. (2000) have argued that COSATU and its affiliates capitalized on their growing strength relative to the then weakening South African state during the 1980s to early 1990s by implementing corporatist structures. These have benefited labor while developing consensus-based industrial policy via coordination between business, organized labor, and government. Another major corporatistlike concession won by the union movement is the Workplace Forum, the “functional equivalent of German works councils” (Lawrence 2000, 121). It would therefore appear that the union movement and the state in South Africa have implemented codetermination institutional arrangements that are on the CME end of the VOC spectrum, both at the industry and shop-floor level. Because of its considerable size and significance, NUMSA was one of the first unions to become actively engaged in policymaking at the industry level (Hirschsohn et al. 2000, 57). For example, in 1989 NUMSA effectively used “its shop floor militancy and organizational strength” (Hirschsohn et al. 2000, 64) to coerce several of the large automotive manufacturers into establishing a National Bargaining Forum (NBF). The NBF is a bargaining council, an organization through which collective bargaining in South Africa generally takes place. Bargaining councils include representatives from both business and labor and in this sense are strongly reminiscent of the corporatist structures of coordination by institutionalized interest groups described as part of CMEs’ approach to management-labor relations. NUMSA represents labor, while seven of

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South Africa’s largest automotive manufacturers (including Volkswagen and Ford) are represented by the Automobile Manufacturers Employers Organization. Meanwhile, the automotive manufacturers and their component suppliers are also represented by the National Association of Automobile Manufacturers of South Africa and the National Association of Automotive Component and Allied Manufacturers. These organizations operate outside the context of collective bargaining (Hirschsohn et al. 2000, 60). Therefore, the interests of management and labor are both represented by national organizations recognized by and integrated with the state, which is, again, congruent with the CME model. However, what is not congruent with the CME model is the “shopfloor militancy” unions have used to establish these structures in South Africa. While unions have developed a notable presence in the South African economy, cooperative interaction has not materialized, and unions and business have adversarial relations. Many of those in the union movement have been shaped by the tumultuous clashes and militant unionism of the apartheid era, and this has informed their interactions with management (Bolsmann 2010, 527–530; S. Collins 2004, 36– 37; McCallum 2011, 12). This legacy has been hard to shake, and “even those unionists who have accepted the need for class compromise may have felt themselves discursively trapped by this history” (Nattrass 2014, 69). Despite the existence of bargaining councils and other corporatist structures, South Africa has therefore struggled to follow a true CME codetermination model, as unions remain suspicious of management, and there is pervasive distrust between labor and management. Thus, in attempting to apply a VOC lens to South Africa, Nattrass (2014) has noted it has a hybrid system. In some respects, such as its high levels of market capitalization, the economy more closely resembles an LME. However in labor-relations there have been clear attempts to build CME-type structures. This has created contradictions. The failure of the National Economic and Development Council, a consultative body established to address the postapartheid economic transition, is an example of this. It was bypassed by the government when it was pursuing neoliberal reforms, including labor market deregulation. The response by COSATU saw the government back down on the labor reforms and “effectively cede” the Ministry of Labor to COSATU (Nattrass 2014, 66). In the aftermath a divide has emerged in the government bureaucracies between the neoliberal-leaning National Treasury and the union-dominated labor department, resulting in “an uncoordinated set of economic and labor-market policies inimical to employment growth” (Nattrass 2014, 67). South Africa is not converging on one of the capitalist typologies over the other but is rather creating its own institutional hybridity somewhere on the spectrum between the two.

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Volkswagen in South Africa

As part of its obligations under the International Labor Organization’s (ILO) Global Compact, Volkswagen (2010c, 3) has implemented a Global Labor Charter that embodies a “special culture of codetermination.” The charter sets out minimum standards for the entire company, mandating that all facilities have some form of employee representation. The charter was the result of a dialogue between the board of management and employee representatives, including the International Metalworkers’ Federation (Volkswagen 2010c). In its 2010 progress report on the Global Compact, Volkswagen (2010c, 4) declared that it is “committed to working with employee representatives in candor and trust [and] to conducting a constructive and co-operative dialogue.” In a reflection of its desire to implement collaborative practices in all its operations worldwide, codetermination was introduced in Volkswagen’s Uitenhage factory in South Africa as early as 1979, when it introduced full-time shop stewards. Today, these shop stewards sit on the Joint Union-Management Executive Committee alongside senior management, and together they consider strategic issues of importance to the company. In this way the committee bears some resemblance, albeit in a much more limited form, to the German supervisory boards (Masondo 2010, 43–44). The company has therefore attempted to integrate its culture of codetermination into its South African operations. Volkswagen sources many of its parts for its South African factory from firms in the Nelson Mandela Bay Logistics Park (NMBLP). This R600 million park was developed in partnership between Volkswagen and the provincial government and primarily serves the needs of the Uitenhage factory (Kernohan 2009). The independent suppliers located in the NMBLP are obviously not covered by the company’s Global Labor Charter with respect to employee representation and other codetermination arrangements. Nevertheless, Volkswagen conducts strict controls and assessments of its suppliers, which encourage codetermination arrangements and emplace accountability mechanisms to ensure worker rights. In 2007, the company initiated a Better Health and Safety for Suppliers project with the ILO and the German Corporation for Technical Cooperation. The project was overseen by a committee that also included, once again, the International Metalworkers’ Federation (Kristjansdottir 2007, 7–8). The project audited suppliers in order to assess their performance of employee health and safety. The goal, however, was not to police and punish but rather to cooperate with the suppliers and support them to increase their performance (Volkswagen 2010a, 27). Volkswagen has therefore not only taken an active interest in its suppliers’ labor relations but also sought to guide them where possible.

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In 2005, eight of Volkswagen’s suppliers in South Africa were audited. Initially, they performed poorly compared to those in Brazil and Mexico. The South African suppliers averaged a “poor” rating of just 54 percent, while Brazil and Mexico averaged “good” scores of 70 and 80 percent, respectively (Kristjansdottir 2007, 13–15). However, by the follow-up visit later that year, all but one of the suppliers had “made significant progress towards the formulation of a comprehensive policy based on social dialogue through the involvement of workers and management” (Kristjansdottir 2007, 14; emphasis added). In 2006, Volkswagen established the pilot phase of a prevention system in cooperation with South Africa’s Department of Labor in order to continue the progress with its suppliers (Kristjansdottir 2007, 14). It therefore appears Volkswagen has also influenced some of its suppliers, such as those in the NMBLP, to not only improve their performance on health and safety but also engage in a codetermination-like “social dialogue” between employees and managers. Volkswagen’s commitment to the education and training of its employees is also prevalent in South Africa (Volkswagen 2011a). Volkswagen’s training initiatives include the Volkswagen Dealer Academy, which focuses on sales skills for its network of retailers and is run in collaboration with the Department of Labor. The company also has a working partnership with the Nelson Mandela Metropolitan University, which aims to “provide engineering students with research capacity and to help them identify applications for new technologies in component and vehicle manufacturing processes” (Volkswagen 2011a). The company also runs the Volkswagen Learning Academy, available to local suppliers and businesses as well as company employees, out of its Uitenhage factory. In four years the company invested R400 million in the academies, which are able to grant nationally recognized qualifications (Volkswagen 2011a). Such commitment to education and training is congruent with the CME approach, but in general Volkswagen has had trouble pursuing its codetermination strategies. Despite the company’s attempts at cooperative relationships, many of NUMSA’s members have “viewed this consensual approach with deep suspicion and regarded it as selling out to employers” (Masondo 2010, 60). While Volkswagen has been pursuing codetermination, many of the union’s militant members favor adversarial interaction with management (Masondo 2010, 61). This is not surprising as many employers in South Africa fail to give full information to employees during negotiations and often negotiate in bad faith (Masondo 2010, 64). Combined with historical factors, namely the legacy of the apartheid-era shop floor battles, the result is a different culture in the South African labor movement from that found in Germany. As one South African shop steward describes it, “There is also the co-determination agenda. Unfortunately this is done with the blessing of our sister union in Germany—IG

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Metall. They forget that we come from a different school of thought” (Blouw 2002; emphasis added). Similarly, after a strike in September 2010 due to the breakdown in negotiations with employers, NUMSA released a statement declaring, “We are compelled to take the battle to the streets. . . . Ours will neither be a picnic nor a fan [sic] park but a metalworkers’ militant action until our demands are met” (Ngobese 2010). In general, Volkswagen has had trouble “selling” the values of the codetermination system it tried to introduce to its South African operations. The Workplace Forums in particular were seen by the employees as a form of co-option (Bolsmann 2010, 526). Volkswagen has therefore attempted to introduce codetermination and CME-style labor relations but has faced opposition from militant unions favoring a more adversarial system. In fact, in one infamous case in 2000, Volkswagen dismissed over 1,380 employees at the Uitenhage factory after a prolonged industrial dispute (Bolsmann 2010, 530). The root cause of the dispute is widely considered to be the militant South African trade union movement. But it continues to attempt to implement codetermination labor relations in its South African operations, including encouraging similar arrangements for its suppliers. It has pursued the latter goal through initiatives run in conjunction with the South African government, while oversight and influence have been made simpler by locating many suppliers close to the Uitenhage plant. It has also shown a preference for engaging with the government cooperatively in pursuit of commercial strategies. Overall, the company continues to exhibit a commitment to the CME model, rather than attempting to discard it, despite local conditions underpinned by militant unionism that seem at odds with it. Ford in South Africa

All of Ford’s hourly staff are covered by the NBF’s three-year collective agreements (Ford 2007b). While there is limited scope within the NBF agreement for plant-level negotiations, by and large Ford has the exact same working conditions, benefits, overtime arrangements, and so forth, across its two main factories in South Africa located in Struandale and Silverton. These are, in turn, broadly the same as those found at Volkswagen, General Motors, Mercedes-Benz, BMW, Nissan, and Toyota plants. Furthermore, the NBF states in its objectives that “the Parties record that co-operative and co-determined relations between labor and management at all levels are essential for the success of the industry and the welfare of its workers” (NBF 2010, 7; emphasis added). This sort of industry-wide bargaining is antithetical to LME-style management-labor relations. It is also specifically unusual for Ford, despite the high unionization rates among its American workforce. This is because in the United States bar-

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gaining occurs between Ford management and the UAW only, and thus the conditions set out in Ford’s agreements with its workforce are different from those negotiated by other car manufactures with the same union (Ford 2011a, 32). The result is that no standard agreement applies across the whole industry. Additionally, Ford (2011a, 32) conducts local plantlevel negotiations on issues such as “layoff and recall procedures, deviations from the national guidelines for overtime assignments, promotional procedures and the rules for changing shift assignments,” while “local negotiations also cover a wide range of additional, purely local issues.” It is therefore apparent that Ford’s negotiations in South Africa occur on a much more centralized basis than they do in the United States. The South African agreement itself includes a number of provisions that are at odds with an LME institutional model. For example, the implementation and provisioning of the agreement is the responsibility of a management committee, which comprises two industry representatives and two union representatives, including the national automobile coordinator of NUMSA and the chairperson of the NUMSA National Shop Steward Council (NBF 2010, 15). This gives labor representatives a degree of executive influence over the handling of the firm’s managementlabor relations. The agreement also includes a wage structure that dictates how employees are to be paid relative to each other, which is based on just seven skill levels that apply across the entire industry (NBF 2010, 48). By comparison, in the United States Ford’s pay structure is much more hierarchical as it applies to twenty-two skilled classifications, in addition to its unskilled classifications and its entry-level and ongoing classifications (UAW 2007, 19). It is thus apparent that the conditions of the NBF are less flexible than those of Ford’s agreements in the United States. Nevertheless, in South Africa Ford has attempted to continue a strict management style, which is consistent with a strong emphasis on managerial autonomy in the LME model. In response to the global financial crisis in 2008, Ford retrenched 800 workers across all its operations, 220 of whom were from the Struandale plant; Volkswagen laid off 400 workers over the same period, indicating a greater effort to retain employees (Solidarity 2009, 6). NUMSA was dissatisfied with Ford’s performance during retrenchment negotiations, with the company unilaterally announcing the layoffs while talks were still underway (Hlangani 2008). Ford also responded to the crisis by cutting working hours, which resulted in an eleven-day strike at the Silverton factory in February 2010 (Business Day 2010). All of this is indicative of adversarial relations on behalf of both Ford and the unions. Like Volkswagen, Ford provides education and training programs. As with Volkswagen, some of these are focused on the community (Ford 2011b). Other programs that focus on employees include in-house

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courses, e-learning, external training courses, and overseas developmental assignments (Ford 2011c). However, these differ from Volkswagen’s in three key ways. First, they are not coordinated with the government or local universities and are instead provided autonomously. Second, they are not on the scale of those pursued by Volkswagen, which are coordinated with state and tertiary partners. Third, Ford (2011a) considers training and development to be the responsibility of employees, noting, “Working with your supervisor, you may take advantage of opportunities—by way of coaching, mentoring, regular feedback sessions and accepting different assignments.” The onus is therefore on employees to elect to apply themselves for further training. Furthermore, as is again the case with Ford’s operations in the United States, this takes place with oversight from supervisors. Therefore, Ford’s training is conducted in a manner that is both congruent with the LME approach and consistent with its behavior in the United States, as discussed above. In a similar manner to Volkswagen, Ford has a “Code of Basic Working Conditions” that applies to all its facilities within its international network. But it is important to note that the assessments it conducts as a result do not involve any actual physical inspection of any factories. Instead, surveys are sent to the management at each facility for them to complete. Apart from these assessments, factory managers are expected to complete regular health and safety reviews, as well as other general assessments of workplace conditions. In a similar manner, while the company provides a local “hotline” where complaints can be made, worker representatives play a very minimal role by contrast with Volkswagen’s Better Health and Safety for Suppliers project. Overall, a 2007 report concluded, “Based on its history of knowledge and compliance with local legislation, collective bargaining agreements and Ford Motor Company global policies, it is evident that [Ford South Africa] can comply with the Code of Basic Working Conditions. Robust corrective action processes are in place to monitor compliance and provide remediation” (Ford 2007b, 4). Ford therefore has much fewer safeguards in place than Volkswagen to ensure that workers’ rights are respected at its factories, and those that do exist are largely the prerogative of management. Because of the prevalence of unions in South Africa, organizations such as the NBF have gone some way in ensuring that workers’ rights are indeed respected, but there is a clear difference between the ways that the two firms seek to ensure accountability to and respect for their international workforces. Ford has been forced to concede to several policies that are antithetical to an LME institutional approach, specifically industrywide bargaining. This indicates that firms can change their operations, despite resisting doing so. Ford has also been able to retain several of its own processes, such as a “top-down” management style and placing the

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responsibility for training on employees. Furthermore, it has retained an adversarial approach to its unions, as indicated by actions such as unilaterally making decisions while supposedly in consultation with NUMSA. Lastly, it has limited safeguards in place to protect workers, outside those that exist because of the institutional environment in South Africa due to high unionization rates. Indeed, Ford considered the mere presence of collective bargaining to be a reason to assume that working conditions in South Africa were up to standard, as indicated above. It has therefore showed much less involvement in monitoring management-labor relations. Overall, Ford has adapted to certain local conditions while maintaining a general LME approach and embracing those aspects of the South African management-labor relations environment best suited to such an approach. Conclusion

There are limitations to viewing global corporations purely through the lens of global capitalism. It is not inevitable that the LME model must be the default position for the global economy; constructing such an outcome is more accurately something of an ideological crusade or requires purposive political actors, including global corporations. In this respect, Harrod (2006, 34) stresses that “the international or global power of the corporation is more a function of the power it has achieved within powerful headquarter states.” Therefore, “to focus on the study of the global activities of the corporation means to study the point of entry rather than the source of its power and activity.” Capitalism is global, and global corporations are the actors that help make it so, but the sources of their power are the home bases from which they wield it. Not only do they potentially colonize other states’ markets; they also seek to colonize other states’ institutions. This is illustrated in the case of Volkswagen and Ford in South Africa. These firms have different management-labor relations strategies. Using a coding analysis, this chapter illustrates how these strategies reflect the VOC model of their home states. In their home operations, Volkswagen and Ford adhere to the expectations of the CME and LME systems, respectively. However, this was also extended to their operations in foreign markets, as the case study illustrates. While both have had to adapt to South Africa’s unique institutional environment, they have also sought to bring their institutions with them. This represents a case of proactive rather than passive institutional path dependence. Rather than corporations’ finding themselves freed from the “shackles” of their home states’ institutions, and rather than a convergence on liberal policies and a “race to the bottom” as states compete to bid down social protections to serve the interests of highly mobile capital, the results are more complex.

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This chapter opens with the suggestion that, from a South African perspective, the management-labor relations that corporations like Ford and Volkswagen have sought to establish reflect a process of attempted neocolonization as much as globalization. Yet, it is also the case that from a corporate perspective, Ford and Volkswagen have found themselves organizationally colonized by South Africa’s militant unionism and hybrid institutional structures that limit their ability not to drive a race to the bottom but to colonize South African management-labor relations to the extent they would prefer. They have had to institutionally hybridize the management-labor relations they are accustomed to at “home,” even as they have attempted to re-create them where they have located their operations in South Africa. Globalization has been characterized as “what states make of it” (Clark 1999, 55), but based on our analysis, in the context of the broader data on the market and geographical concentration of global corporations such as those in the automotive industry, it seems more accurate to say that globalization is what a handful of powerful states and their global corporations make of it. The relationship between them is important for understanding the political basis, and bases, from which they mutually derive their power. This implies that despite a liberalizing agenda underpinning globalization and global corporations acting as agents of it, it does not follow that capitalism as practiced within national boundaries resembles a liberal, let alone neoliberal, “institutional monoculture” (Watson 2003, 227). Instead, differing institutional contexts that were once contained within state borders are now projected across them to compete on the world stage between states via global corporations. Therefore, it is simplistic to assume that the states in which they invest are institutionally redundant. Our analysis suggests that the interplay between the differing institutional contexts of global corporations’ home states and the ones in which they invest results in a process of institutional hybridization, rather than a global institutional context. Notes 1. Those with the largest economies, which dominate trade and investment flows, and where the world’s major corporations are headquartered. 2. This list is compiled on the basis of the companies’ stock market capitalization. 3. Readers not familiar with the VOC approach’s categories could consult Hall and Soskice (2001a) for a more in-depth explanation. 4. UNCTAD’s transnationality index is a simple average of foreign sales as a percentage of total sales, foreign assets as a percentage of total assets, and foreign employment as a percentage of total employment.

3 Promoting Human Rights Responsibilities: The Experience in Ghana’s Gold Mining Industry Uwafiokun Idemudia and Cynthia Kwakyewah

Traditionally, business and human rights were treated as two distinct entities, partly because states were considered the main violators and protectors of human rights (Obara 2017). Thus, the discussion of the human rights responsibilities of companies tended to focus on the indirect legal responsibilities of business. However, changing global geopolitics that has, on one hand, restricted the social control states exercise over businesses and, on the other hand, increased the sphere of influence of large corporations has pushed the debate to consider the direct human rights obligations of multinationals (Cragg et al. 2011). This is partly because businesses are often implicated in cases of human rights abuses and are now seen as nonstate actors that can potentially address the governance gap that arose from the processes of globalization. At the international level, diplomats, policymakers, business strategists, and social activists are increasingly recognizing the need for mechanisms to pursue remedies for victims of corporaterelated human rights abuses, especially for transnational claims that cannot or will not be processed by local legal institutions. At the national level, we are witnessing varying degrees of effort among states to implement the 2011 UN Guiding Principles on Business and Human Rights (GPs), with a number of states having yet to produce a national action plan and commence the implementation process (J. Ford 2015). Central to these processes in the business and human rights arena is the concern for greater corporate accountability. According to Utting (2008), corporate accountability focuses on issues of power and advocates for the need to countervail the interests of large corporations. He notes that corporate accountability emphasizes 51

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questions of corporate obligations, the role of public policy and law, the enforcement of penalties in cases of corporate misdemeanors, the right of victims to seek redress, and imbalances in power relations. Similarly, Garvey and Newell (2005) link accountability to the concepts of answerability—that is, an obligation to provide an account of one’s action and inaction—and enforceability, which refers to a mechanism for ensuring obligations are met and sanctions are imposed in the case of noncompliance (Newell 2008; Garvey and Newell 2005). Since the late 1990s, several civil society groups have been at the forefront of drawing attention to issues of corporate misconduct with the goal of holding businesses accountable for their actions (Egbon et al. 2017; Cragg et al. 2011). With most of the allegations of human rights violations made against companies in the extractive sector, it is not surprising that the industry has faced tremendous public scrutiny and critique (Obara 2017). Indeed, it was scandals like Shell’s complicity in the arbitrary execution of Ken Saro-Wiwa and eight other Ogonis by the Nigerian government in November 1995 that partly catalyzed calls for change in corporate human rights obligations and gave rise to the emergence of several voluntary codes of conduct among key transnational businesses and industry associations (see Chapter 1, this volume; see also Cragg et al. 2011; Idemudia and Ite 2006). The call to regulate business in relation to human rights obligations was partially answered when the UN Guiding Principles on Business and Human Rights were endorsed in 2011. Although the adoption of the GPs marked an important point in the business and human rights debate, the extent to which the “Protect, Respect, and Remedy” (PRR) Framework has translated into a better human rights outcome on a community level is still not clear (Kwakyewah and Idemudia 2017). Indeed, Obara (2017) points out that while writers have been articulating their various opinions as to why corporations should respect human rights, far less has been written about what companies do in practice. Similarly, Giuliani et al. (2016) have argued that within the literature of business and human rights, developing countries are still an underexplored terrain. Consequently, they have called for research that can provide more insight into the human rights conduct of multinationals operating in these areas. Of interest is the question whether multinationals adopt corporate social responsibility (CSR) and other international initiatives for symbolic purposes or use these initiatives to conduct ethical business in line with human rights principles (Giuliani 2016; Marquis and Qian 2013; Meyer and Rowan 1977). Against this background, this chapter uses the Canadian mining company Golden Star Resources (GSR) and its host communities in Dumasi as a case study to address the following related objectives:

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1. To empirically study the extent to which companies’ adoption of the GPs shape their human rights practices on the ground 2. To critically examine the challenges and opportunities of implementing the GPs in a developing-country context 3. To consider the theoretical and practical implications of the findings for business and human rights in developing countries Business and Human Rights: History, Debates, and Trends

Few would deny that transnational corporations (TNCs) constitute powerful actors in the global economy with the capacity to create employment, generate wealth, and contribute to poverty alleviation (Ruggie 2008). Yet, as Denis Arnold (2010) observed, TNCs are also known to commit human rights infringements, such as paying low wages to workers, providing inhumane working conditions, contributing to environmental degradation, and disregarding the rights of their host communities. These cases of corporate human rights abuses have been publicized in the media through the advocacy work of NGOs and activists (Muchlinski 2001). Companies in the oil, gas, and mining industries (i.e., extractive industries) have been reported to be the most complicit in business-related human rights violations, followed by the food and beverage industry, apparel and footwear industry, and information technology industry (D. Arnold 2010; B. Freeman et al. 2001). While egregious corporate misconduct is not new, the context in which these corporate human rights violations are being debated has evolved. According to Ochoa (2009), the field of business and human rights can be categorized into three eras: the era of impunity, the era of civil society and self-regulation, and the era of the clamor for law and legal institutions. As with many categorizations in the social sciences, there are often limitations since they can oversimplify complex realworld phenomena. Accordingly, Ochoa’s interpretation of the history of business and human rights should not be read as a strictly linear progression. Rather, the three eras should be viewed as nonlinear and having geographic variations. This is because these eras consist of a series of dynamic and overlapping events that occur in different cultural, social, and political settings. By way of example, Ghana may simultaneously be in the era of civil society and self-regulation as well as in the era of legal institutions. While the country has some legal provisions (see Table 3.1) and institutions like the Commission on Human Rights and Administrative Justice, civil society organizations are avidly engaged in activism given that corporate misconduct continues to happen.

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Table 3.1 Laws, Policies, and Global Standards Governing the Human Rights Responsibilities of Businesses in Ghana’s Mining Industry Law, Policy, or Global Standard

Constitution of the Republic of Ghana: Chapter Five, Article 12(1) Minerals and Mining Act, 2006 (703): section 72–75 (surface right and compensation) Guidelines for Corporate Social Responsibility in Mining Communities Voluntary Principles on Security and Human Rights (Work Plan for Ghana) Minerals and Mining Policy of Ghana

National Corporate Social Responsibility Policy

Source: Authors’ compilation.

Launched In 1992

Initiated By

Government of Ghana

2006

Government of Ghana

2012

Minerals Commission

2014 2016

2016

Ministry of Land and Natural Resources Ministry of Land and Natural Resources Ministry of Trade and Industry

Starting with the era of impunity, Ochoa (2009) pointed out that businesses committed human rights violations in different jurisdictions, causing much harm to several individuals and communities across the globe. Even though these victims of corporate human rights abuses documented their experiences, no institution was willing to consider their businessrelated rights claims. In fact, the first attempt to create a global norm that would assign social and environmental responsibilities to transnational enterprises specifically was in 1970 with the Draft United Nations Code of Conduct for Transnational Corporations (Hurtado 2011). Given that the negotiations turned out to be extremely contentious, the attempt ultimately failed. What followed was the era of the demand for corporate accountability, led by civil society organizations that built up immense pressure and demanded laws that would make corporations liable for their misdemeanors. Conventionally, states were the primary institutions to develop and enact laws, but unfortunately states either ignored or were unable to meet these demands. Instead, response to such organized civil society efforts came in the form of increased corporate self-regulation and the initiation of global dialogues on business and human rights facilitated by international financial organizations and the United Nations. One such notable effort came from the International Labor Organization, the Organization for Economic Cooperation and Development, and the United Nations in the form of the UN Norms on the Responsibilities of Transna-

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tional Corporations and Other Business Enterprises with Respect to Human Rights. Hillemanns (2003) explained that the report drafted by the UN Subcommission for the Promotion and Protection of Human Rights in 2003 was an attempt to make businesses amenable to international law; that is, the report called for a radical rethinking of how responsibilities for protecting and promoting human rights are allocated. The report was naturally met with fierce resistance by members of the business community. Although they did not gain immense support, the norms gave reason to believe that the era of civil society and self-regulation could potentially lay the foundation for the emergence of strong regulatory instruments. These efforts led to the 2005 UN appointment of special representative John Ruggie, who produced one of the most significant works within the discourse of business and human rights (Ochoa 2009). This marked the beginning of the era of law and legal institutions. Although this era has not generated concrete legal instruments yet, Ramasastry (2015) maintains that the discussion within the business and human rights domain is now concentrated on advocating for one binding law to hold corporations accountable. In part, this era emerged out of the need for greater clarity and consensus on the substantive legal obligations directly applicable to businesses and/or the state with jurisdiction over them (J. Ford 2015). For instance, Brenkert (2016) explained that our understanding of what constitute human rights and what human rights responsibilities corporations have varies significantly among businesses and business ethicists. In fact, McBeth and Joseph (2005) conducted a study with seventeen multinational companies and discovered that even though human rights are regarded as relevant, many of these human rights–related issues were not necessarily classified as such but were rather seen as belonging to CSR. During the early days of business and human rights literature, legal scholars were fundamentally interested in determining whether the private sector, which has been enjoying the protection of certain human rights, should also be given human rights responsibilities or duties (Cragg et al. 2011). Some business ethics scholars argued that multinationals have direct human rights responsibilities on contractualist grounds (Donaldson 1991; Cragg 2000) and on the basis of an agent-based conception of human rights (D. Arnold 2010). Others advocated for the use of human rights as potentially enforceable norms for business behavior (Kobrin 2009). In contrast, Strudler (2008) problematizes the usefulness of corporate human rights obligations, especially in non-Western contexts. Nonetheless, while the business and human rights debate has moved on from asking theoretical and normative questions (i.e., why businesses should have human rights responsibilities) to focusing on more practical issues (i.e., how businesses can contribute to the promotion and protection

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of human rights) (Obara 2017), the nature and the scope of the human rights responsibilities of businesses remain contested (Brenkert 2016). Ruggie (2008) asserted that social expectation or social license to operate should form the basis for outlining the exact scope of corporate human rights responsibility. This is because it is a minimum requirement and companies cannot compensate for human rights abuses by simply “doing good” elsewhere. Beyond respecting human rights, which is a negative moral duty to do no harm, companies are encouraged to proactively take positive steps toward the promotion of human rights. This is because companies can impact almost all human rights areas. Thus, companies must uphold the full range of internationally recognized human rights and pay particular attention to vulnerable groups such as indigenous people, women, minorities, children, persons with disability, and migrant workers and families (United Nations 2011). In this regard, the concept of a “sphere of influence” (Ruggie 2008) remains a helpful construct for companies in considering the impact of their business activities on their employees, host communities, supply chains, consumers, and other stakeholders. The adoption and promotion of Ruggie’s framework seemed to have facilitated a shift from pursuing legally binding instruments for regulating the human rights obligations of businesses toward an emphasis on self-regulation. Ruggie himself precluded the possibility of drafting a multilateral treaty as a viable solution for effective and legitimate remedies for business-related human rights abuses (J. Ford 2015). However, this did not put an end to the debate about the need for a treaty.1 In fact, by mid-2013 it became increasingly evident that treaty proponents never abandoned the idea and were willing to revive the discussions about the need for a legal document for regulating multinationals’ relationship to human rights obligations. To put it differently, “from this perspective, GPs [guiding principles] were seen by these actors as a parallel development and are not a substitute for moving towards a treaty” (J. Ford 2015, 3). In contrast, opponents of the treaty path argued that a legally binding agreement would not necessarily result in greater protection of human rights. At any rate, while there is no consensus between proponents of voluntary industry schemes and international legal instruments, it is clear that “soft norms” are presently being privileged (J. Ford 2015). However, some have also suggested that global “soft” laws can eventually lay the foundation for the possible transition to hard laws (Newell 2000). In any case, Ruggie’s framework has made a considerable contribution to the discussions about the human rights responsibilities of transnational corporations operating in areas where conflicts, weak institutions, and governance gaps are prevalent (Cragg et al. 2011).

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Ghana’s Gold Mining Sector: Policy and Regulatory Environment

Gold mining in Ghana has a long history that dates to the fifteenth century and plays an important role in the national economy (Ghana Minerals Commission 2014). Aryee (2001) estimated that gold accounts for 38 percent of total merchandise and 95 percent of total mineral export. According to the Ghana Minerals Commission (2014), gold has made up 90 percent of all mineral revenue over the past two decades. There are two types of gold mining in Ghana: small-scale and largescale. Within the small-scale mining sector is a practice known as galamsey, which refers to individuals who make a living through illegal mining activities (i.e., gathering minerals at or just below the soil surface without possessing the necessary license). Despite being illegal, galamsey is said to dominate the small-scale gold mining sector, with an estimated 60,000 people involved in these practices (Aubynn 2009). On the other hand, large-scale mining operations are predominantly undertaken by foreign multinationals with access to more resources, greater capacity, heavier equipment, and up-to-date technology, and this sector employs approximately 20,000 Ghanaians. While fewer people are employed in the large-scale mining sector, it contributes about 45 percent of the country’s foreign currency, making the sector crucial to the Ghanaian economy. However, the distribution of mining benefits is disproportionate. Due to the low level of education and skills of residents in the smaller towns and rural areas where mines tend to be located, their labor is not particularly sought after (Akabzaa and Darimani 2001). Consequently, Aubynn (2009) has argued that large-scale mining does not significantly contribute to promoting local economies. As part of the nationalization process after Ghana’s independence in 1957, most of the mines came to be state owned and eventually became globally uncompetitive. During this period (1960 to 1985), the mining industry faced production, technological, and financial challenges, resulting in decreasing output (Akabzaa and Darimani 2001; Aryee 2001; Dumett 1998). Budget deficits, expansionary monetary and fiscal policies, and excessive borrowing meant that there were clear indicators of deteriorating economic conditions by the early 1980s (Government of Ghana 1984). Consequently, Ghana turned to the World Bank and International Monetary Fund for financial assistance. During the 1980s and 1990s, Ghana adopted the Structural Adjustment Program (SAP) to supposedly promote socioeconomic development. Like other countries in the Global South, Ghana was expected to implement certain economic and social policies to qualify for funding and debt relief from these lending

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agencies. Ghana was forced to devaluate its currency, adopt a flexible exchange rate, reduce public services and government spending (especially on education, health, and welfare), eliminate trade barriers, privatize public enterprises, and stimulate economic growth through export (Aubynn 2009; Aryee 2001; Government of Ghana 1984; Brohman 1996; Portes 2000; Konadu-Agyemang 2000). While the benefits and drawbacks of SAPs have been widely debated (see Osabu-Kle 2000 versus Prempeh 2001), there is no doubt that the mining industry witnessed immense growth between 1983 and 1998, particularly with rising export earnings from gold and diamonds. In 1986, the government of Ghana created the Minerals Commission to provide a stable policy environment for mining. In addition, it enacted its first mining-specific legislation, called PNDC Law 153. To further encourage foreign direct investment through the provision of financial incentives, the Ghanaian government revised the mining code of the Minerals and Mining Act (Act 703) in 2006 with technical assistance from the World Bank (Rutherford and Ofori-Mensah 2011). The establishment of a regulatory institution and the introduction of a new legal framework created an enabling environment for large-scale mining as they offered foreign transnational corporations general tax allowances, exemption from customs duties, a rebate on royalties, and fewer foreign ownership restrictions (Akabzaa and Darimani 2001; Aryee 2001; Aubynn 1997; Sweeting and Clark 2000; Ghana Minerals Commission 2014). Ultimately, these factors made Ghana an attractive destination for many foreign mining companies seeking lucrative business opportunities in a politically stable environment. Not surprisingly, the increase in foreign direct investment in Ghana’s mining sector had various implications for different stakeholders. For mining communities, the increased presence of foreign multinationals has given rise to human rights violations, environmental degradation, and loss of traditional sources of livelihood, among other impacts (Garvin et al. 2009). For the government, the conditions of global neoliberal restructuring transformed its role from regulator to quasi-facilitator of resource extraction (Idemudia 2017). However, due to increased incidences of corporate misdemeanors in mining communities, the Ghanaian government has adopted various policies/guidelines and global norms as a way of governing the human rights conduct of mining multinationals (see Table 3.1). Of significance here (see Table 3.1) is the Minerals and Mining Act of 2006. This is because the valuation of land and crops has remained a source of tension and disagreement between mining companies and local communities. As such the Ghanaian government has sought to address this tension via sections 72 to 75 of the Minerals and Mining Act. In part, the valuation of land and crops is complex because the land owner-

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ship and tenure system in Ghana is based on the principles and practice of communal ownership. Land is predominately owned by clans, extended family, and communities that entrust it to traditional authorities for management (Yeboah and Shaw 2013). Hence, the Western notion of individual land ownership is not prevalent in the Ghanaian context. According to customary land law, landowners are entitled to exercise surface rights and must be compensated by the holder of mineral rights for the disturbance of their surface rights (see Minerals and Mining Act). Even though Ghana’s mining law sets out how land disputes and compensation are to be handled, the issue of adequate compensation for the loss of land, earnings, and expected income remains a major human rights concern for local communities. For instance, farmers who are dislocated by a mining project and consequently have to completely restart their lives expect to be compensated for the loss of income from foregone crop yields (Dashwood and Puplampu 2010). One challenge is that negotiations relating to “deprivation of use” compensation and compensation for matured, high-yielded trees initially occur without the government’s involvement. However, when a farmer and a mining company cannot reach a mutually beneficial agreement and have exhausted all options, then the Land Valuation Board steps in as the last resort. Ruggie’s Framework and the Voluntary Principles Within the Ghanaian Context

In 2014, the government of Ghana joined the Voluntary Principles (VPs) Initiative to “affirm its commitment to protect, respect and remedy human rights as outlined in the UN Guidelines on Business and Human Rights and in accordance with the Constitution of the Republic of Ghana” (Government of Ghana 2014, 3). Notably, Ghana is the only African country to have signed on to the VPs. In addition, while Ghana has not officially drafted a national action plan on business and human rights based on the GPs, the United Nations Human Rights Office of the High Commissioner (n.d.) noted that Ghana is one of the states in which either the National Human Rights Institution or civil society has commenced the process of developing a national plan. Consequently, the VPs and GPs are the two global norms that seem to be shaping how mining companies seek to meet their human rights obligations within local communities. Developed in 2000, the VPs are industry-specific human rights principles for extractive sector companies (ESCs). B. Freeman et al. (2001) and Pitts (2011) explain that companies’ determination to protect their assets (i.e., facilities, equipment, etc.) and the controversial interaction

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between security forces (i.e., police, military, private security personnel) and local communities were among the drivers for the drafting of the VPs. As with other global standards, the development of the VPs was in part sparked by various corporate scandals involving oil companies and their complicity in violent political and ethnic conflicts in regions like Nigeria, Columbia, and Indonesia, to name a few (Wettstein 2012). Given the economic power of these multinationals and their presence in these regions, it is not uncommon for protesters to target their employees or even vandalize their assets. Allegations of oil companies’ use of security forces to stifle protests and the ensuing human rights abuses against local communities drew the attention of the home governments of these multinationals. Thus, starting in March 2000 the US and UK governments initiated and presided over months of discussions and negotiations between leading ESCs, human rights NGOs, and corporate responsibility groups to find common ground on security and human rights issues. Finally, December 20, 2000, saw the public announcement of the VPs by then US secretary of state Madeleine Albright in Washington, DC, and UK foreign secretary Robin Cook in London (B. Freeman et al. 2001). As a multistakeholder initiative, the VPs involve the participation of governments, corporations, and NGOs. The objective is to guide ESCs in respecting human rights while maintaining the safety and security of their business operations. Specifically, the VPs were designed to address the human rights concerns of local communities in the Global South, whose members have often suffered death, kidnapping, torture, and physical harm in the hands of security personnel hired by ESCs (Pitts 2011). Thus, for companies, joining the VPs Initiative is meant to create synergy between corporate policies and practices pertaining to the provision of security for operations in accordance with internationally recognized human rights principles. Civil society groups can also become member organizations of the VPs and interact with business and state actors to push for the design of corporate policies, practices, and procedures that are in line with the VPs. Governments that participate in the VPs can supposedly tackle some of the challenges relating to security and human rights concerns within the extractive industry. According to B. Freeman et al. (2001), one of the strengths of this nonbinding standard is that it has created a process of collaboration, information sharing, and dialogue among home governments, ESCs, and NGOs. However, B. Freeman (2004) also draws our attention to its implementation challenges as this voluntary initiative has yet to demonstrate an ability to spur concrete progress on the ground. This is partly because the VPs are said to lack monitoring mechanisms as no follow-ups by states are required (B. Freeman 2004).

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Despite these criticisms, the government of Ghana decided to subscribe to the VPs as a potential strategy to respond to pressures from community leaders and civil society campaigns related to environmental degradation and human rights issues (e.g., the brutalization of host communities by security forces) within the extractive sector. For instance, in March 2008, Ghana’s national human rights institution, the Commission on Human Rights and Administrative Justice (CHRAJ), published a national study that investigated the nature and cause of corporate human rights abuses in mining communities. This study prompted the government to respond to the allegations of human rights violations made by host communities by adopting a number of guidelines and global standards like the VPs (see Table 3.1) in managing business-related human rights concerns within the mining sector (CHRAJ 2008). Even though the government of Ghana does not explicitly engage with the GPs, they nevertheless remain relevant as some nonstate actors, such as mining companies (e.g., Golden Star Resources), have adopted the framework. Generally, the GPs are based on three principles. The first is the state’s existing duty to respect, protect, and promote human rights and the fundamental freedom of its citizens. States are required to protect against human rights violations within their territories and/or jurisdictions by third parties, including businesses, by taking appropriate measures to prevent, investigate, penalize, and redress such violations through policies, legislation, regulations, and adjudication (United Nations 2011). The second principle refers to the responsibilities of business enterprises. The framework asks all businesses, irrespective of size, sector, location, ownership, and structure, to comply with applicable laws and prevent infringement of human rights. With regard to the range of human rights, businesses must respect internationally recognized civil, political, economic, social, and cultural rights as specified in the International Bill of Human Rights and the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work. Among other requirements, companies must avoid or mitigate adverse human rights impacts directly connected to their business activities, even if they have not contributed to those impacts (United Nations 2011). Hence, companies have an obligation to obey the law even when the formulation and enforcement of national laws are limited or nonexistent (Ruggie 2008). Furthermore, businesses are called to exercise due diligence by identifying, preventing, and adequately handling human rights issues. Graff and Iff (2017) argue that while the concept of human rights due diligence for businesses can potentially be reduced to operational, financial, and reputational risks for the company, its main purpose is to reduce risks for

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those who could potentially be negatively affected by a company’s operation. Ruggie (2008) suggested that companies exercise due diligence by adopting human rights policies, undertaking human rights impact assessments, creating an internal corporate culture based on a commitment to human rights, and tracking and reporting their performance. The third principle within the framework puts the responsibility on the state to facilitate access to effective remedies for those affected by business-related human rights abuses through administrative, legislative, or other appropriate means. Remedies can come in different forms, including but not limited to apologies, restitution, rehabilitation, financial or nonfinancial compensation, and punitive sanctions, as well as the prevention of harm through injunctions or guarantees of nonrepetition (United Nations 2011). While widely acknowledged, the GPs have also been heavily criticized. For instance, Addo (2014) maintains that the GPs approach to business and human rights is distinct and adequately robust compared to other governance regimes. For him, some of the characteristics that make the GPs unique include their flexibility, their blend of processes and substantive standards, and their support and acceptance by stakeholders from various industries (Addo 2014). In contrast, Jägers (2011, 160) noted that “from the very beginning Professor Ruggie has steered determinedly away from the concept of human rights obligations for corporations and instead placed exclusive emphasis on the State as the sole duty-bearer.” Jägers (2011) attributed this weakness to Ruggie’s pragmatic approach to developing the GPs, which ultimately led him to interpret corporate responsibility for human rights in a minimalist fashion. Similarly, Cragg (2012) suggested that the corporate duty to respect human rights should be based on ethical rather than pragmatic grounds (i.e., enlightened self-interest) as suggested by Ruggie. For Cragg (2012), the assumption that respecting human rights will always be in a corporation’s economic interest is not credible or not likely to be seen as credible. Therefore, Cragg views this as a serious weakness of Ruggie’s framework that could impede its implementation. While these debates continue, limited efforts have been directed at exploring the effects of the PRR Framework on the ground so far. Study Area

Dumasi is a village with a population of approximately 2,776 (Ghana Statistical Service 2014), located four kilometers north of the Bogoso processing plant complex in the Wassa West District of the western region of Ghana. The village is about four kilometers away from the town of

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Bogoso but still considered part of Bogoso and the Prestea Huni-Valley District. Dumasi is divided in two by the main road that connects Tarkwa/Bogoso and Prestea. The leading ethnic groups are Wassa, Fantes, Ashantis, and Nzemas, with Ewes, Kusasis, and Dargartis as the minorities. Community members speak Wassa, Fante, and Twi (Ghana Statistical Service 2014). The village is located in the tropical evergreen rainforest and possesses fertile soil for the cultivation of food crops and cash crops (Obiri 2007). In terms of basic social amenities, the community has one school building and no clinic or hospital. There are three water streams in Dumasi (i.e., Apepre, Beenya, and Wurawura), which used to be the sources of safe drinking water (Tetteh 2012). Following major cyanide spills in October 2003 and June 2006, these sources of water became contaminated and unsafe for daily use. As a result, the company supplies the community with water on a day-to-day basis through six large poly tanks that have been installed across the village (Geenen 2016). With regard to economic activities, most inhabitants earn their livelihoods through agriculture, fishery, and forestry (Ghana Statistical Service 2014). In 1999, Golden Star Resources acquired the Bogoso concessions, which include several pits (i.e., Chejuh, Dumasi, Bogoso North, Buesichem, Opon, and Ablifa). Therefore, the Dumasi village is in close proximity to mining activities. During the active operation of the Dumasi pit, community members experienced blasting and frequent harmful mine gas. On January 30, 2013, a resettlement agreement was signed between GSR and the Dumasi Negotiation Team, which consisted of thirty-three representatives of elders, religious groups, traders, farmers, artisans, civil servants, youth, unit committees, and the Dumasi Oversight Committee. Initial discussions regarding relocation started in 2005 (Thorpe and Gyamfi 2013) after the company “identified the need to reopen and expand the existing Dumasi pit, which is adjacent to the Dumasi community” (cited in Geenen 2016). However, the actual negotiations began in January 2011. A total of twenty-five working meetings were facilitated. According to the agreement, members of the Dumasi community were supposed to be relocated to a new site approximately five kilometers from the village, near the main road leading from Bogoso to Kumasi. As part of the process, about 1,696 structures from within 533 compounds would have been physically displaced. Compensation was to be made based on “buildings for buildings”—cash compensation was allowable only for annexes and second or third houses of multiplehouse owners. It was anticipated that production from the Dumasi deposit would commence in early 2015 and that the deposit would provide both refractory and nonrefractory ore sources for at least six years (Golden Star Resources 2013). However, according to the community

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leaders of Dumasi, GSR halted the resettlement process due to financial constraints and may or may not resume at a later (unspecified) time. Thus far, GSR has not issued an official public statement or press release to provide clarity about the resettlement status of Dumasi. Golden Star Resources and Community Relations in Dumasi

Incorporated in May 1992, Golden Star Resources is a global mid-tier gold mining and exploration company headquartered in Toronto, Canada. While the company has several subsidiaries (i.e., Golden Star [Bogoso/Prestea] Limited, Golden Star [Wassa] Limited, Caystar Holdings, Bogoso Holdings, Wasford Holdings, Golden Star Exploration Holdings, etc.), its gold properties are situated in southwestern Ghana. It owns 90 percent of two operating mines: (1) Wassa and (2) Prestea/Bogoso, located in the Ashanti Gold Belt in Ghana (Golden Star Resources n.d.). Having operated in Ghana for over seventeen years, the company is now strategically concentrated on becoming a high-grade, low-cost, nonrefractory gold producer. In 2017, GSR started expanding its operations through the development of two underground mines below existing open-pit operations. In light of fluctuating gold prices, GSR’s strategy for improving profitability includes an increase in gold production and a reduction in operating expenses (Golden Star Resources n.d.). An integral element of its mission and vision is to be both a profitable gold producer and a responsible corporate citizen that creates value for shareholders, develops internal talents, adopts global standards, and becomes a desirable partner for indigenous communities and the host government (Golden Star Resources n.d.). Consequently, GSR facilitates a number of community development initiatives to foster good relationships and maintain its social license to operate (Thorpe and Gyamfi 2013). According to GSR’s 2015 and 2016 Corporate Responsibly Reports, business operation and CSR programs can help promote the enjoyment of human rights such as the rights to education and to health. Thus, GSR believes its CSR practices are in line with a human rights approach to sustainable community development. This view might be due to the shift from a top-down to a bottom-up approach to CSR that occurred in 2005 after several allegations of human rights violations and environmental degradation arose against the company. Prior to that, GSR suffered from reputational damage and a trust deficit within its host communities, partly due to its own actions or inactions. Then, in 2005 the senior management of GSR made concerted efforts to improve the company’s social and environmen-

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tal performance via internal changes and the initiation of community-led projects (Puplampu and Dashwood 2011). For instance, in 2006, the Golden Star Development Foundation in Prestea and the Golden Star Oil Palm Plantation (funded with US$1 per ounce of gold produced) were created to serve as long-term strategies for sharing the socioeconomic benefits of mining with host communities (Thorpe and Gyamfi 2013). Similarly, a company representative explained that “GSR has had a foundation for years. Community members are in the driving seat and make the decision so it is a very participatory process” (R6).2 Despite GSR’s efforts to remodel its CSR approach, the legacy of “bad” corporate behavior has left stains on its relationship with host communities (Puplampu and Dashwood 2011). This means that GSR must continuously renegotiate its social license to operate and implement preventative and mitigating strategies to foster positive corporate-community relations (Idemudia 2014). Drivers of Conflict and Human Rights Abuses in Ghana’s Mining Sector

Underpinning many of the conflicts between TNCs and mining communities is the failure of the governance mechanisms (see Table 3.1) in the mining sector due to the nature and character of the Ghanaian state. In essence, the Ghanaian state seems to show some characteristics of areas of limited statehood3 along sectorial4 and social5 dimensions. With regard to the sectoral dimension, the state appears to lack the will and the capacity to implement and enforce mining-related laws. In fact, a respondent indicated, “One of the major challenges we face relates to weak state institutions and weak enforcement of the law. It seems to me that there is little appreciation for democratic principles by some government officials. For instance, when citizens are breaking the law, they might turn a blind eye due to fear of losing votes in the next election” (R6). Another respondent expressed a similar concern about the regulatory environment by stating, “There are a lot of uncertainties with regards to regulations. Presently, there are too many regulators trying to pass conflicting laws. For instance, there is a regulator for air, one for diesel, another for vehicles, and yet another for water and so on” (R19). For the NGO WACAM, the inefficiency of regulatory bodies contributes to corporate-community conflicts: “One thing we have realized is that in most instances, most of the stakeholder, and I’m speaking from the community point of view and our experiences, we have realized that there is a very slow response from the regulators to these [human rights–related] reports from communities. This has led to several forms of riots between the community and the

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company and even the regulators” (R23). Based on these accounts, the state appears to be unable to serve as an impartial arbitrator of conflicting and competing stakeholder claims. Consequently, while the Ghanaian government has enacted laws and policies (see Table 3.1) to regulate corporate behavior, the extent to which these laws and policies can deliver on their objectives remains questionable. The neglect of mining communities by the Ghanaian government represents the manifestation of the social dimension of the areas of limited statehood. For example, a community member complained, “The government is not helping at all. I can’t remember the last time I even saw one of them in the community” (R16). This view was shared by a number of community members in Dumasi, where the company was unsuccessful in relocating the community twice, allegedly due to a lack of funds to carry out the resettlement process. Because of this, the members of the Dumasi host community are living in limbo—that is, in a state of uncertainty and ambiguity with regard to their ability to secure their livelihoods and build a stable sense of community. Moreover, based on Articles 73 and 74 of the Minerals and Mining Act of 2006, issues surrounding resettlement and compensations are to be negotiated between the holder of the mineral rights (i.e., mining companies) and the owners or lawful occupiers (i.e., community members). Often this means that government oversight and involvement in these procedures is either minimal or absent. For example, a respondent asserted, “The government knows about our plight and has not shown any willingness to step in. For instance, when we approach the District Assembly with a request, they rather refer us to GSR as they believe it is an issue that falls within the responsibility of the company” (R14). These quotes signify that governmental preference for self-regulation is indirectly allowing government not to meet its responsibility to protect host communities. Indeed, from the perspective of some government officials, companies should take more responsibility when social and environmental problems are directly or indirectly related to their operations (Idemudia 2017). For example, a respondent from the government noted, “If a mining company is taking the livelihood of community members, I expect more of them. For me, providing water when you have contaminated the water is not CSR. The company is simply providing an alternative as it should” (R3). The implication is that emphasis on self-regulation means the Ghanaian government is indirectly transferring governmental responsibilities to the mining companies. Furthermore, the contestations between government and mining companies that often result from this governmental transfer of the regulation function allow for the human rights of communities to be violated, with no adequate remedies provided (Idemudia 2014).

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Since the inception of commercial gold mine production in Ghana, conflicts between mining companies and local communities regarding the use of land and control over natural resources have existed (Hilson and Nyame 2006). Due to the near absence of government in these communities and the limited legal instruments to protect community rights, mining communities tend to expect companies to function as a surrogate for the government by contributing to sustainable development (Garvin et al. 2009). As an employee from Ghana’s Minerals Commission put it, “Companies say that they are not surrogate government, but the community believes that they represent the government” (R3). However, a community member noted, “Communities have lots of expectations and want the company to do the work of the government due to their [i.e., community members] lack of understanding” (R4). Nonetheless, the expectation of host communities that mining companies should initiate sustainable development projects is partly a result of the negative effects of mining on their lives. For example, one respondent pointed out, “If we look at our environment, the blasting and vapor from the mining site always bring sickness and problems to the community. Some houses have cracks. Others have even collapsed completely. So there are always problems but the company doesn’t respond to our demands. There is no hospital in this community meanwhile blasting is going on” (R17). In a similar vein, another respondent said, “Sometimes the company cuts our crops and damages the land in order to do their mining activities but they don’t compensate the farmers adequately” (R26). In the case of Dumasi, community members believe that the government is neglecting their demands partly due to the resettlement status they have been labeled with. The implication here is that by being marked for resettlement, the community is further marginalized as it creates uncertainty for governmental community interventions. According to one youth, “It’s been ages since GSR promised to relocate us, but every time they set a date, they fail us. Even if somebody wants to do something to better the community, they will end up not doing it because of the resettlement plan” (R17). Similarly, host communities have expectations of mining companies’ developmental role because they believe they should also benefit from the business activities in their immediate vicinity (Idemudia 2007). As one community member put it, “Mining is still going on but we are not profiting from it. Only the foreigners do but we the youth of Dumasi are not reaping the benefits of mining” (R17). Another respondent noted, “You know when someone asks me where I am from and I mention this place, the response will usually be ‘Wow, so you are from the gold town.’ But the truth is I have never had the privilege of holding any of that gold in my hands” (R10).

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Unfortunately, host communities’ expectation that mining companies should assume this quasi-governmental role (Crane 2011) does not always align with mining companies’ strategic priorities of increasing production while minimizing operational costs. According to a staff member from Ghana’s Chambers of Mines, which is the national association that represents the interest of mining companies, “It is important to keep in mind that mining companies are not agents of development but rather facilitators of development. Mining companies can contribute to sustainable community development through the Mineral Development Fund that goes to the District Assembly and by providing more procurement opportunities for members of their host communities” (R19). The implication is that mining companies in Ghana see themselves as tools rather than agents of development. Whereas businesses simply contribute to development when they are tools of development, they consciously facilitate development and become accountable for their actions when they assume the role of agents of development (Blowfield 2012). This is at the heart of the disagreement between mining companies and host communities. Community members expect the companies to assume the role of agent of development, but mining companies see themselves merely as tools of development. As such, it appears that the three stakeholders (i.e., government, companies, and communities) share different views about the roles and responsibilities of both the government and companies. Consequently, Garvin et al. (2009) have explained that differences in expectations about the roles and responsibilities of companies and host communities contribute to misunderstanding, lack of trust, and disputes. Essentially, host communities demand increased community investments that will minimize the negative social and environmental externalities of mining activities and ensure they extract some developmental benefits from the presence of mining companies. When these community expectations are not met, corporate-community conflicts tend to become persistent, with associated human rights violations. For instance, one respondent from Dumasi stated, “The conflicts are plenty. We have done countless protests about different issues in the past” (R16). In contrast, the company points to high community expectations and emphasizes the challenges it faces when trying to meet them. For example, in an interview, a company representative stated, “Sometimes a community member might not be happy with the outcome of the grievance process. The issue might be resolved but because the outcome did not meet his or her expectation, it then becomes another issue. For instance, the government has a standard rate for land and crop valuation. And even though most of the time, we pay more than the set rate, community members are hardly ever satisfied” (R6). However, the above statement glosses over the fact that mining multinationals are primarily concerned with increasing cost efficiency and

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profitability, which in turn sets constraints on how many resources are directed toward community development. For instance, during an interview with a Ghanaian business newspaper, Katherine Sutton, director of investor relations and corporate affairs at GSR, stated that weak gold prices impact all areas of business, including community investments. As profit margins decrease, GSR will face pressure from shareholders to contain operational expenses (Dugbartey 2016). Indeed, a government official captured the issue in the following manner: “There is competition between companies’ pursuit for profit maximization and community members’ livelihood, and mining communities tend to be on the losing end” (R3). Because ESCs operate within a neoliberal business model, where capital accumulation constitutes the ultimate measure of success, their approach to community engagement tends to be encapsulated within a risk management framework (Idemudia 2009). This tension between community expectations and mining multinationals’ neoliberal business logic continues to form a source of conflict in Ghana’s mining sector and often creates the context within which human rights abuses occur. Business and Human Rights in Ghana’s Mining Sector: Empirical Analysis

Under international law, it is generally assumed that sovereign nationstates command “effective authority over their territories” and consequently have the capacity to govern their own domestic affairs (Schuppert 2011; Ladwig and Rudolf 2011). Over the last years, states have been prompted to sign on to legal and other binding instruments in numerous policy areas (Zangl and Zürn 2004; Ladwig and Rudolf 2011). At the same time, a number of global institutions and politically driven programs are underpinned by the idea that the modern Western nation-state embodies “good governance” (Magen et al. 2009). To an extent, the PRR Framework is grounded on these assumptions. States are given the responsibility to protect and fulfill the human rights of citizens and ensure that victims of corporate human rights abuse have access to effective remedies. Questions about the nature of the state and its actual capacity to satisfy these duties are not sufficiently taken into consideration. Yet, these are pivotal questions that have implications for the implementation of the PRR Framework. For example, according to one respondent, “Generally, it is the responsibility of the government [to protect and promote human rights]. But given the existing governance gap, all stakeholders must contribute. It is not helpful to simply fold your arms if the government is not doing its job” (R2). In line with this view, another respondent stated, “We all [government, business, and civil society] need to do more

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to protect and promote the human rights of mining communities” (R2). These quotes indicate that while countries like Ghana might embrace their human rights obligations, they can lack either the institutional capacity or the political will to protect human rights. Hence, there is the expectation that nonstate actors like businesses will complement their efforts. In fact, Dagbanja (2012) pointed out that the corporate duty to respect and uphold human rights is provided for in chapter 5 of the Ghanaian constitution of 1992. Specifically, he refers to Article 12(1), which states that human rights and freedoms are to be respected and upheld by all natural and legal persons in Ghana, including mining companies and other business enterprises (Dagbanja 2012). However, as he explained, the mechanisms that will ensure businesses fulfill this constitutional duty are presently missing. There are two implications emanating from Dagbanja’s analysis. First, there appears to be an unrecognized tension between global norms adopted by mining companies and the national laws of the host country where mining multinationals operate. Second, government capacity that is seriously lacking in the context of limited statehood is key for transforming PRR into concrete benefits for local communities. While the VPs and GPs seem to inform the business and human rights policy environment in Ghana, the VPs appear to be more pervasive in the public sphere. This is because, in a bid to address the growing concerns about alleged business-related human rights violations within the extractive industry, the government of Ghana supposedly opted for a more context-appropriate international soft law (i.e., VPs) as a strategy to potentially generate compliance from ESCs. This is consistent with Abbot and Snidal’s (2000) argument that states tend to prefer softer forms of legalized arrangements over hard legalization, as soft law provides strategies for handling uncertainty, infringes less on domestic sovereignty, and facilitates compromise among various actors. As one public servant elucidated, “Signing on to the VPs was to ensure that corporate entities get to uphold human rights as well, particularly in the extractive sector where it is deemed that a lot of abuses take place. So we had companies sign on to it, not because they had a choice, but once a country signs to it, it becomes mandatory for private entities to sign on to it as well” (R21). From the perspective of the Ghanaian state, the VPs are a useful tool through which to ascribe human rights responsibility to mining companies. This is because actors within the Ghanaian political sphere seem to view the business practices of mining companies as the root cause of corporate human rights abuse (Government of Ghana 2014) and disregard how the state’s inability to enforce national laws contributes to the problem. Perhaps not surprisingly, some respondents emphasized that the government has taken and continues to take its human rights obligations seriously and made mention of the human rights provision in the Ghanaian constitution. For

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example, one public servant maintained, “The government on its own, without the VPs, has an agenda to protect human rights because it is enshrined in the constitution. We set up the Commission on Human Rights and Administrative Justice to ensure that is done. Most countries don’t have a body to protect human rights so that’s at least a step in the right direction” (R21). This is further affirmed in the VP Country Implementation Plan, which says, “Before signing unto the VPs, Ghana had in place legal provisions and institutions aimed at upholding, promoting and protecting the rights of its citizenry. . . . Ghana has in line with the provisions in the 1992 Constitution established a Commission on Human Rights and Administrative Justice (CHRAJ) and given it a broad mandate to protect universal human rights and freedoms” (Government of Ghana 2014, 4). Given that the state has already signed up to the VPs, the value of Ruggie’s framework may have diminished. For instance, when asked about the GPs, a public servant responded, “I’m wondering how this [the GPs] is different from the VPs” (R21). Hence, the decision not to produce a separate action plan on business and human rights may partly be because the VPs are seen as serving a similar purpose as the GPs. However, in the choice of the VPs over the GPs, two issues might have played a role. First, while ESCs are positioned as the central actor within the VPs, the PRR Framework is predominantly state-centric and assigns more responsibilities to the state than to businesses. Yet the Ghanaian government sees the practices of mining companies as mainly responsible for human rights violations; as such, a norm that focuses on their behavior might be more appealing. The second issue pertains to the contextual relevance of a norm and the perception that the GPs’ overemphasis on state responsibility might indirectly interfere with state sovereignty and expose its limited capacity. For example, a respondent stated, “International guidelines like the Ruggie framework can de-incentivize a country from developing its own human rights guidelines, laws and systems that fit the specific context” (R2). Another respondent argued, The responsibility to protect and promote human rights must rest on government first and foremost. In fact, the Ghanaian constitution provides for the fundamental human rights of every citizen. When an incident occurs, we involve police officers to resolve the issue. In protecting citizens’ human rights, the government tries to use contextspecific approaches and institutions. For instance, the Commission on Human Rights and Administrative Justice was set up to ensure that human rights of citizens are guaranteed. (R18)

The implication here is that the Ghanaian case may provide some insight into why a number of African states might be reluctant to adopt Ruggie’s framework on a national level.

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Furthermore, there is also the issue of the extent to which Ruggie’s framework can effect change in corporate behavior on the ground. The lack of accountability mechanisms makes the PRR Framework attractive for companies as it allows them to facilitate corporate greenwashing. Golden Star Resources is among the few foreign mining multinationals in Ghana that has publicly acknowledged its commitment to human rights through its annual sustainability reports (Golden Star Resources 2015, 2016). In line with Ruggie’s framework, GSR developed a policy on community relations and human rights in 2015 that stipulates the company’s commitment to sustainable development and respect for human rights within its host communities. When asked about the reason and motivation behind the adoption of the GPs, the company answered, “We adopted the UN Guiding Principles to be proactive. In 2005, GSR became a member of the UN Global Compact and since then we have been making constant efforts to improve. For instance, we have a zero tolerance for child labor and compulsory labor. Employees are free to form labor unions and create a bargaining agreement. In fact, management attends union meetings” (R6). In theory, subscribing to the GPs is supposed to improve a company’s human rights conduct; in practice, this might not always be the case. In fact, narrations from members of GSR’s host community in Dumasi suggest that the relationship between the company and the community has not improved and that human rights concerns remain prevalent. In particular, community members complained about the lack of transparency with regard to the resettlement process and environmental issues: “In 2006, GSR started the dialogue regarding resettlement again and this time about 80 percent of the community agreed to it. But since the last four years or so, the resettlement has been halted due to the lack of funds. As far as I am concerned, GSR people are liars. If they come for negotiation, we can take them to court. Community members had lands but stopped building houses because of resettlement. Now the houses are not built and we are still living here” (R14). Another respondent stated, “We have a very bad relationship. GSR has seriously disturbed us. We used to have clean water but they have polluted all our three water streams so we have fought and fought with them” (R15). Thus, community members’ reports on GSR’s engagement with them indicate that, despite the company’s public commitment to the PRR Framework, it has not substantially altered its business practices. This is consistent with scholars’ arguments that multinationals might seek to align with international standards as a way of mitigating the credibility and legitimacy deficit arising from their operations within the context of an institutional void (Gilbert et al. 2011; Lu and Abeysekera 2017).

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Emerging Issues and Conclusion

This chapter has provided an empirical analysis of business and human rights in Ghana and accordingly made an important contribution to the debate pertaining to the relevance and implementation of the GPs (Cragg 2012; Muchlinski 2012; Addo 2014). Three emerging issues are worth highlighting. The first important contribution of the study is the unearthing of some of the underlying assumptions underpinning Ruggie’s framework and how these assumptions may undermine the effectiveness of the framework. Specifically, we draw attention to the importance of taking the nature and character of the state seriously. Indeed, the findings offer some empirical evidence that the allocation of human rights responsibility between the state and businesses may not be adequate in countries where state actors cannot effectively set and enforce collective binding rules. Implicitly, the PRR Framework rests on the assumption that all governments possess the institutional capacity to protect and promote human rights as well as to ensure access to remedies for victims of corporate human rights abuse. However, the findings suggest that this premise does not necessarily hold true in countries with weak governance structures and consequently constitutes a fundamental flaw of the framework. In fact, the case study reveals that the Ghanaian government already instituted different measures to guarantee the enjoyment of human rights for its citizens, but the problem seems to be the inability to enforce them. The second implication this chapter highlights relates to the insight provided on the contextual relevance of the GPs framework for countries in the Global South faced with business-related human rights violations by powerful foreign ESCs. Presently, the vast majority of governments that have produced a national action plan are Western nations (with the exception of two Latin American countries: Columbia and Chile) (see United Nations Human Rights Office of the High Commissioner website). Based on our findings, the PRR Framework appears to be somewhat limited by its state-centric emphasis and inattentiveness to the developing-country context. Given the limited nature of the state in Ghana, the GPs are perceived as an indirect attack on the state’s sovereignty. Such concerns might partly explain reluctance by the state to adopt global norms like the PRR Framework. Although the framework is meant to make sure businesses do not adversely impact the human rights of their stakeholders through their operations, the focus remains on governments whose power to exercise social control over international businesses has been restricted as a

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result of globalization. Charney (1983) argued that the spread of international codes is partly due to the quest of governments in the Global South to increase their control over multinational corporations. Hence, international standards like the VPs that can potentially shift the unequal power relationship to the advantage of governments could be seen as more desirable, especially when the standards correspond more closely with local realities. Finally, by joining the VPs, the Ghanaian government ensured that mining multinationals would deal with mining communities’ social, economic, cultural, and political rights on a practical level. More importantly, the findings presented here indicate that Brenkert’s (2016) assertion—that the lack of businesses’ public recognition of and commitment to human rights represents a major obstacle—may be too simplistic. This is because the case study demonstrates that public acknowledgment of corporate human rights duties through sustainability reporting does not automatically yield better human rights outcomes for affected stakeholders. In fact, companies may simply be adopting the framework for symbolic purposes rather than as a guide to align business activities with the human rights concerns of stakeholders. Thus, this study offers analytical nuance to the debates in the business and human rights literature. Notes 1. For instance, from October 23 to 27, 2017, the Intergovernmental Working Group of the United Nations Human Rights Council met in Geneva to start negotiations on a binding treaty on multinational corporations. During these sessions, stakeholders discussed the human rights obligations of TNCs and states as well as access to justice for victims. 2. Primary data were collected during three months of fieldwork in Ghana. Golden Star Resources, the Ghana Chamber of Mines, government officials, traditional authorities, local communities, and civil society organizations were interviewed face-to-face. A total of nineteen semistructured individual interviews, two semistructured group interviews, and four community discussions were analyzed using a standard approach to qualitative data analysis. Field notes, containing reflective information, further enriched the analysis. Respondents in the interviews were numbered. 3. Börzel and Risse (2010) define areas of limited statehood as territories, policy areas, and/or parts of the population where the government does not hold a monopoly over the instrument of force and possesses limited political and administrative capacity to undertake authoritative decisions or enforce collectively binding rules and policies. 4. The sectorial dimension of limited statehood refers to a specific policy field like security. 5. The social dimension of limited statehood refers to a segment of the population that is excluded from service provision by the state.

4 Multistakeholder Partnerships: Community Development in the Extractive Sector Hevina S. Dashwood

Mining companies operating in poorly served rural areas in developing countries have developed corporate social responsibility (CSR) initiatives that respond to the socioeconomic needs of local communities affected by their operations. Often these initiatives are part of a broader CSR strategy informed by social risk management, with the aim of gaining and maintaining community support for their operations (the “social license to operate”). For their part, mining-affected communities often become dependent on mining companies for the delivery of public goods such as schools and clinics, undermining government responsibility and accountability. The “culture of social risk management” and the “culture of dependency” limit the extent to which mining companies’ CSR initiatives can foster sustainable socioeconomic development in surrounding communities. Such CSR initiatives, if carried out in consultation with local communities, can meet short-term development needs but tend to reinforce the dependence of communities on the companies in the long-term. This chapter explores the potential of multistakeholder partnerships (often referred to as cross-sectoral partnerships) in the extractive sector to overcome some of the limitations of individual companies’ CSR. Multistakeholder partnerships, broadly understood to entail collaboration with the private sector, nongovernmental organizations (NGOs), and/or government, have gained acceptance as a way to enhance CSR initiatives. Lacking internal competency in development promotion, mining companies frequently turn to development-oriented NGOs for their expertise. In the extractive sector in Africa, such partnerships are typically between a company, local communities near the mine, and 75

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NGOs. Although there are challenges inherent in multistakeholder partnerships, this chapter argues that they have the potential to improve upon the limitations inherent in individual companies’ CSR strategies by changing the orientation of companies to CSR and the way they engage with local communities. To develop this argument, the chapter draws on case study research of a partnership between Rio Tinto Alcan (RTA), the World University Service of Canada (WUSC), and the Bibiani-AnhwiasoBekwai District Assembly (BABDA) in the western region of Ghana. This was one of several pilot partnerships funded in part by the former Canadian International Development Agency (CIDA), which was folded in 2013 into what is now Global Affairs Canada. CIDA’s role in funding the pilot partnership projects proved to be very controversial. Although mining companies have long worked with NGOs in developing and delivering community initiatives, these specific partnerships were criticized in part because the Canadian government was seen to be aiding Canadian mining companies’ CSR, an inappropriate use of development funding (Bodruzic 2015). Leaving aside the merits of the debates and the widespread media attention they received, comparatively little attention has been paid to the voices of the many stakeholders involved, including the intended beneficiaries of the projects. By documenting the perspectives of the participants in the project, including WUSC, RTA, local government officials, and community representatives, this chapter provides another lens through which to assess multistakeholder partnerships in the extractive sector. A second objective is to identify the characteristics developmentoriented multistakeholder partnerships should have to be appropriate to the locales where mining typically takes place in Africa. These characteristics include the approach the project takes in working with the various partners, how the goals of the project are established, and the motivations behind the partnership. It is important to consider the process aspects of the project alongside the often intangible and therefore difficult to measure impacts of the project (Kolk and Lenfant 2012). The final objective of this chapter is to contribute to the theoretical literature by joining the literature on multistakeholder partnerships, which is focused predominantly on developed countries, with the literature on sustainable community development in the Global South, which is the setting where many of the partnerships in the extractive sector take place. The next section briefly sets out the context for multistakeholder partnerships by outlining the impetus behind mining companies’ CSR in Africa, the role of CSR as a strategy to earn community consent for

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their operations, and the resulting focus on community development initiatives, before turning to the tensions inherent in a social risk management approach to CSR. Section three provides a brief review of the literature on multistakeholder partnerships and community development in order to highlight the main strengths and weaknesses identified in the literature, against which the WUSC-RTA-BABDA partnership can be assessed. Section four describes the research methods, before turning to section five, where the research findings are presented. Section six analyzes the findings before concluding with a discussion of the implications of the findings for the literature on multistakeholder partnerships in resource-rich developing countries. CSR as Social Risk Management and Community Development

Mining companies operating in sub-Saharan Africa are typically located in heavily populated rural areas characterized mostly by subsistence farming and poverty. As in other parts of the world, environmental degradation and human rights abuses associated with mining have left negative legacies and prompted community opposition (Akabzaa 2000; Campbell and Laforce 2016). Mining companies face operational risks arising from community opposition, protests, and even violence, which can hinder operations, leading to costly delays in production and, in rare cases, the entire temporary closure of the mine (York 2011). The need for a “social license to operate,” understood as local community support for mining operations (Hodge 2014; Hamann 2014), came by the 2000s to inform the CSR initiatives directed at the communities adjacent to mining companies’ operations. Originally coined in 1997 by James Cooney, a senior executive at Placer Dome Canada (now Barrick Gold), the term was meant to bring attention to the need for mining companies to pay attention to stakeholder issues, particularly risks associated with lack of community support or acceptance of their operations (Boutilier and Thomson 2018; Webb 2012, 80). CSR initiatives were intended to repair poor community relations, to address community expectations of mining companies arising from low levels of development, weak government capacity, and/or neglect of rural areas, and to earn consent for mining operations. Mining companies in Africa must therefore respond to the greater expectations of the communities affected by their operations for the provision of basic social services. For this reason, the focus of CSR in Africa tends to be on local community development initiatives.

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Limitations of Company-Led CSR

To address the need to secure and maintain a social license in the communities where they operate, a social risk management approach to CSR informed by an “audit culture” (Power 2003) has been widely adopted in the mining sector (Kemp et al. 2012). Social risk assessment is well justified when applied to the technical and operations aspects of mining. A social risk management approach is very useful internally within companies when trying to communicate social elements to multidisciplinary teams often made up of engineers, lawyers, and accountants (interview with RTA official, April 2018). Social risk management is laudable when employed as a frame to protect communities from the risks of adverse socioeconomic and human rights impacts associated with mining activities. However, CSR informed by a social risk management approach that perceives community stakeholders as risks that need to be managed denotes a corporate approach that is inwardly oriented. From this company-centric perspective, routine audits informed by strategies to identify and manage social risk (Kemp et al. 2012, 3) are expected to help the company earn or maintain a “social license to operate” as well as reputational benefits. An approach to CSR that reflects a desire to manage interactions with community stakeholders may not lead to the best outcomes for either communities or mining companies in the long term. The audit culture encourages strategies to contain community dissent rather than promoting genuine consultation with communities (Muthuri et al. 2012, 368–371). Internally, it discourages genuine dialogue and learning within the company about the challenges faced in implementing CSR as well as receptiveness to new approaches to community development (Kemp et al. 2012). The privileging of measurement in the audit process discourages attention to processes (such as the quality of community interactions) and internal dialogue within the company that provides space for the voices of those implementing CSR at the operational level to be heard. The culture of social risk management creates incentives to develop highly visible, tangible projects, such as schools, clinics, and infrastructure that can be easily measured (e.g., two schools were built in a given year). Known as the “bricks-and-mortar” approach to CSR, such projects are helpful in a context of poverty and government neglect and are wanted by the communities themselves. The challenge is that communities tend to look to companies, rather than local government, for public service provision, creating a culture of dependency within communities and absolving local government of responsibility

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(Crane 2010; Muthuri 2007; Idemudia 2007; Dashwood and Puplampu 2010). Brand-new schools with inadequately trained teachers are unlikely to result in improved educational outcomes for students. Social capital and skills development are more conducive to long-term development, but for various reasons both communities and companies may prefer a short-term approach. The “culture of social risk management” has an impact on the processes, content, and outcomes of community development initiatives. In the past, corporate social responsibility has tended to reflect firm-centric understandings of what is needed in local communities. This tendency was reinforced by the notion of “stakeholders” dominant in the business literature (R. E. Freeman et al. 2007), in which firms understood themselves to be at the center of a circle of various internal (e.g., workers) and external (e.g., communities, NGOs, government) stakeholders. Recently, there has been a shift in thinking on the part of some mining companies, whereby they see themselves as one actor among many, working to achieve common goals such as sustainable development (Sagebien and Lindsay 2011). CSR informed by social risk, however, reinforces the firm-centric orientation of mining companies and negatively affects the process by which community development initiatives are conceived. Community development initiatives may be ill suited to the needs of local communities because of a lack of or inadequate consultation (Maconachie and Hilson 2013; Maconachie 2010; Ackah-Baidoo 2012; Dashwood and Puplampu 2015). Kemp et al. (2015, 50–51) argue that corporate community development initiatives typically entail a transactional relationship that prioritizes business interests over serving the needs of the local community. Lack of adequate community consultation on the development of community initiatives can lead to an “elite”-driven process involving company officials and a few community leaders who are not sufficiently representative of community perspectives (Hilson 2012; Muthuri 2007). Furthermore, CSR strategies may not be well integrated into the core business functions of the company (Kemp and Owen 2013; B. Harvey 2014). The need to contain costs and meet timelines driven by financial considerations runs up against the need to take a long-term view to promoting sustainable community development (Kemp and Owen 2013). The challenge, then, is to explore ways to reconcile the short-term, corporate-centric social risk approach to CSR with the long-term perspective required for sustainable community development that survives beyond the life of the mine. Processes and structures need to be in place to ensure that companies are attentive to the long-term concerns and

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aspirations of communities (Owen and Kemp 2012). To put appropriate processes and structures in place, companies require an internal orientation that reflects a culture of commitment to community well-being (B. Harvey 2014). This requires that development initiatives be community led, rather than corporate controlled, so that they are appropriate to community needs (Essah and Andrews 2016; Maconachie and Hilson 2013). Mining companies are beginning to recognize that the attributes necessary for sustainable community development are also essential to effective social risk management when the end goal is good community relations. In their study on the conditions that produce a “social license to operate,” Moffat and Zhang (2014) highlight the importance of “procedural justice,” involving ongoing dialogue with communities (as opposed to consultations), as an important predictor of community acceptance of mining companies. Bird (2004) stresses the need for a “fair exchange” between companies and communities in the form of investments in communities in return for the social dislocations companies’ presence causes. Ongoing consultation, engagement, and dialogue with communities is a prerequisite for both effective social risk management and beneficial community development. It further requires attunement to shifting community dynamics, since communities are not homogeneous entities (Muthuri 2008), as well as a willingness to engage with community leaders deemed legitimate by the communities. As such, the culture of social risk management need not be an either/or proposition in terms of sustainable community development. Although companies may now recognize that they must move beyond the bricks-and-mortar (or philanthropic) approach to CSR, a further challenge is that mining companies lack the expertise to promote sustainable community development; that is not what they are set up internally to do (B. Harvey 2014; Owen and Kemp 2012; Puplampu and Dashwood 2011). B. Harvey (2014) argues that mining companies’ efforts can lead to a blurring of the appropriate boundaries in terms of the responsibilities of companies, government, and communities and can lead to unintended consequences. Furthermore, they can undermine the capacity of locals to tackle their own development challenges (Muthuri et al. 2012). For this reason, many mining companies have increasingly turned to multistakeholder partnerships to overcome this conundrum. To summarize, multistakeholder partnerships have the potential to overcome the shortcomings of a firm-centric audit culture/social risk approach to CSR, to address the problem of community dependency on mining companies for public services, and to undertake projects that are appropriate for the long-term development needs of communities.

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Conceptualizing Multistakeholder Partnerships

Although multistakeholder partnerships are not new in the context of mining, more recently they have acquired a new significance because of the growing importance assigned by international development agencies, major donors, and multilateral organizations to the central role of the private sector in promoting development (Bella et al. 2013; Kindornay et al. 2014). Partnerships supported by major donors vary widely in their form and purpose, but most major donors, such as the Department for International Development and the US Agency for International Development, have incorporated some form of partnership with the private sector in their development initiatives. The Paris Declaration on Aid Effectiveness (2005) and the Sustainable Development Goals (2015) explicitly call for partnerships with the private sector to promote development. There is a substantial literature on various types of multistakeholder partnerships, but much of it has focused on the developed world and is written from the business perspective (for an overview, see Austin and Seitanidi 2012). Partnerships depicted in the literature are often two-way, or bilateral, meaning they are private-sector partnerships with NGOs or governments, but they may also be three-way, or tripartite, partnerships between NGOs, companies, and government (Seitandi and Crane 2009). In the language of Austin and Seitanidi (2012), expanding the range of stakeholders beyond the dyadic partnership creates the potential to realize “integrative” and “transformational” value creation. In their oft-cited work, Austin and Seitanidi (2012) develop a four-stage model of crosssector partnerships. At one end of the spectrum is the “philanthropic” stage, which typically entails a one-off transfer of resources from the company to a “nonprofit” organization (here referred to as an NGO) for a specific initiative. At the “transactional” stage, both the NGO and the company allocate resources to a specific project over the short to medium term. Partnerships take on an “integrative” quality when both organizations are deeply involved and work together over the medium to long term in developing a plan, thereby creating trust and greater alignment of values and strategies. Transformational partnerships are achieved when multiple partners share in the financing directed to multiple stakeholders and are all actively involved in advancing a “social-issue platform” centered on social and/or environmental causes. The business literature has come to recognize that financial value should incorporate environmental and social value creation and is being reflected in partnerships that provide a benefit to the larger society (Austin and Seitanidi 2012; Porter and Kramer 2011). Businesses willing to participate in such partnerships likely have reassessed what is

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meant by “value” to the organization, entailing the “reconstitution” of value as “shared value” (Austin and Seitanidi 2012, citing Porter and Kramer 2011). Austin and Seitanidi (2012) acknowledge, however, that societal betterment as the ultimate value for partners is largely absent, both in the literature and in practice (Crane 2010). In the context of mining, “shared value” has been explicitly linked to a company’s recognition of the need to acquire and maintain a social license to operate and as part of its external risk management strategies (Austin and Seitanidi 2012). Partnerships in the mining sector that are philanthropic or transactional in nature will not likely move the company beyond a narrow social risk management approach to CSR. Partnerships with NGOs can also, however, push mining companies in the direction of CSR that is more supportive of sustainable development (Kindornay 2016, 3). Defining Multistakeholder Partnerships in the Developing-Country Context

Variously referred to as cross-sectoral partnerships or public-private partnerships, not all partnerships have an explicitly developmental focus. Partnerships that incorporate a focus on the promotion of socioeconomic development are referred to by the North-South Institute (Kindornay 2016, 4) as “cross-sector development projects” (CSDPs), defined as “commitments between or among public, private, and/or non-profit institutions in which individuals from partner organizations commit various resources and agree to work cooperatively toward common development goals.” Drawing on the distinction made by Tamutzer and Schafer (2006), to qualify as CSDPs, engagements between and among government, nonprofit organizations, and the private sector must have an “explicit pro-poor orientation in which the private sector is a proactive partner” (Kindornay et al. 2014, 4). This study accepts this definition but employs the term “multistakeholder partnership” because it better captures the complexity of the partnerships as well as the initiatives involving multiple stakeholders to promote socioeconomic development in the developing-country context. The complexity speaks to the number of partners actually involved, the scope and breadth of initiatives undertaken, and the reach of such initiatives (Addae-Boahene 2013). Challenges Facing Multistakeholder Partnerships

The existing literature on multistakeholder partnerships has drawn attention to a number of the challenges inherent in such partnerships. Establishing partnerships is a very complex process for all organiza-

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tions involved, and Seitandi and Crane (2009) found in their research that earlier interactions, typically through smaller, one-off partnerships, were important in building the trust critical to effective implementation. Valente (2012) has similarly noted the sequential dynamics of partnerships: that previous, smaller projects with an NGO were important for trust building, laying the groundwork for subsequent, larger projects. Personal chemistry between the people in each organization was found to be equally important to the successful implementation of a project (Seitandi and Crane 2009). Partnering with organizations in other sectors can entail serious risks for the organizations involved. Partnering with mining companies can be especially risky for NGOs focused on the environment, development, and human rights, so they must consider the potential impact on their organizational reputations and legitimacy (Bouchard and Raufflet 2015, 13; Seitandi and Crane 2009). In the developing-country context, partnerships with foreign-owned mining companies and globally based NGOs entail a significant level of complexity in terms of intra- and interorganizational coordination of partnership initiatives. Learning processes are influenced by the cultural and institutional contexts of both home and host countries, a dynamic not typically accounted for in the literature (Antal and Sonczak 2014). At the local level in Africa, where mining operations take place, the multiple and even overlapping layers of governance structures add further complexity (Hamann 2008). In Ghana, for example, traditional authorities, in addition to their formal representation in local government (district assemblies [DAs]), also maintain their historic role (and power) in representing and speaking for the communities (Guri 2006). The responsibility of traditional authorities for the natural resources and land in their areas means that when conflicts arise over land between mining companies and community members (typically farmers), both stakeholders look to a traditional authority to sort problems out (Guri 2006). A further challenge specific to partnerships with mining companies centers on the identification of communities. Partnerships typically involve projects for the benefit of local communities, but the definition of “community” in partnerships is usually understood and executed from the perspective of the firm (Muthuri et al. 2012). From the mining company perspective, local communities refer to those that are adjacent to or in the near vicinity of their operations (the catchment area), which can create tensions with other nearby communities that are excluded (Muthuri et al. 2012; Valente 2012). Mining companies thereby play a role in directly influencing the governance context in which they operate (Hamann et al. 2011, 263).

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The above points highlight the concern raised in many studies on development-oriented partnerships about the power asymmetries between communities, companies, and NGOs (Garvey and Newell 2005; Muthuri 2007; Newell 2005). If partnerships are to reach the integrative or transformative stage, companies have to be prepared to give up control of the process (Schmitt 2010), a challenge that can be insurmountable if the objective is external risk management. Community participation in decisionmaking is a critical component in addressing uneven power dynamics and minimizing the culture of dependency in communities in the long term (Muthuri 2008). Partnerships characterized by philanthropic or transactional exchanges tend to perpetuate community dependence on mining companies. In summary, the characteristics of development-oriented multistakeholder partnerships need to go well beyond a firm-centric approach to one that accounts for the needs of the communities, not just the partners involved in delivering community development initiatives. The literature depicting partnerships as ranging from philanthropic to transformative has largely been concerned with the impact of the partnerships on the partners executing the project, as opposed to the intended beneficiaries. The majority of existing partnerships for development have not focused sufficiently on capacity building, with many involving knowledge sharing, engagement in policy dialogue, or simple financial transfers (Bella et al. 2013). Capacity building is a central feature of transformative partnerships so that communities are in a position to help themselves (Kolk and Lenfant 2012, 502). In addition to promoting the capacity of local communities to identify their own development needs and establish a means to realize them, local government must also be the focus of capacity building. Capacity building in this sense is not so much about technical skills as it is about the orientation and culture of local government with respect to whom it should be accountable. Processes that allow local communities to participate directly in decisionmaking about their development priorities and that encourage local government to adequately represent the interests of communities are essential ingredients of transformative multistakeholder partnerships. As Muthuri et al. (2012) note, processes are just as important as outcomes when the goal is sustainable community development. One approach to involving communities in development decisionmaking is through participatory learning and action (PLA), which promotes the active participation of people in decisionmaking processes on matters that affect their lives (International Institute for Environment and Development n.d.). In contrast to traditional approaches, where outside agents “deliver” development, PLA aims to involve people who are oth-

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erwise marginalized or excluded in decisionmaking to take action to address development needs (Mukherjee 2002; Wetmore and Theron 1998). With the criteria for successful, development-oriented partnerships that focus on sustainable community development projects in mind, the chapter now turns to the WUSC-RTA-BABDA partnership. Methods

Due to the gap in the literature on detailed analysis of specific multistakeholder partnerships in the developing-country context, a case study approach was adopted. The case study approach afforded the researcher the opportunity to speak to multiple stakeholders under time and budget constraints. Data collection methods included semistructured interviews with key informants within the three organizations (WUSC, BABDA, RTA) and focus group discussions with representatives in four of the twelve communities included in the project. To preserve the anonymity of key informants, interviewees are referred to as “WUSC 1,” “RTA 1,” and so forth. The majority of interviews took place in Ghana in November 2013, with follow-up interviews conducted by Skype in December 2013, and by phone and in person in May and June 2015 and by e-mail in February through April 2018. The author also attended a special meeting of the BABDA on November 13, 2013, to hear a discussion between a WUSC representative and BABDA representatives about the possibility of extending the project subject to funding. The perspectives of DA representatives about the project were drawn from that program development planning meeting organized by WUSC. Representatives at the meeting included members of the Environment, Health, and Sanitation Department, the Community Development Department, the Ghana District Education Office, the District Training Office (Ghana Education Service [GES]), the GES Supervision and Monitoring Department, the Business Advisory Center, the district coordinating director, the Social Welfare Department, the director of the Ministry of Food and Agriculture, and the district development planning officer. The research was conducted in accordance with Brock University’s research ethics protocol. The four communities visited by the researcher included Kofikrom, Kodjina B, Nkatieso, and Bassengele. The communities were selected in consultation with the project coordinator, with variation in terms of proximity to operating mines, level of engagement with the project’s aims, socioeconomic status, and types of initiatives undertaken. Practical logistical considerations were also a factor, as the communities are spread apart over a wide area, with poor roads and the need to ensure

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that a sufficient number of community representatives could attend the focus group meetings. The project coordinator reached out to community representatives, and as it was the harvest season, selection criteria for attendance were based on availability. Of the four communities, two (Bassengele and Kodjina B) are not directly affected by mining, while Nkatieso is in a gold-mining area, and Kofikrom is downstream from the Chirano mine (Kinross) and has allegedly experienced water pollution due to mining activities. None of the selected communities are affected by RTA’s bauxite mine; nor are they within the mine’s catchment area. Of the twelve communities, Awaso is in RTA’s immediate catchment area, but all had previously received support from RTA through its Social Sustainability Initiative projects. Chirano and Subiri are in Kinross’s catchment area and received financial support for some community initiatives within the framework of the Bibiani-AnhwiasoBekwai District Development Project (BABDDP) (WUSC 2014). The timing of the research trip, near the end of the project, meant that enough time had elapsed for stakeholders to form views on the impact of most of the project initiatives. The perspectives of the community members provide an important insight into how they benefited from the project. It was also possible to assess the process by which the project was implemented (e.g., engagement with and participation of community members), a critical dimension of the extent to which the project could be considered to be transformative for the partners and intended beneficiaries (Kolk and Lenfant 2012; Muthuri et al. 2012). The Bibiani-Anhwiaso-Bekwai District Development Project

The BABDDP was a partnership between WUSC, RTA, and the BABDA in cooperation with the Ministry of Local Government and Rural Development. In 1974, the Ghana Bauxite Company (GBC) was formed as a joint venture between Alcan, a Canadian company, and the government of Ghana. Rio Tinto Alcan is the aluminum product group of Rio Tinto, which acquired Alcan Bauxite and Alumina in 2007. RTA owned 80 percent of the Ghana Bauxite Company, with the Ghanaian government holding the remaining 20 percent. In early 2010, before the project began, RTA sold its share of GBC to Bosai, a Chinese company. GBC is located in the Bibiani-Anhwiaso-Bekwai (BAB) District in the western region of Ghana. WUSC is a Canadian NGO whose mission in Ghana expanded from strengthening education opportunities for youth and school-age girls to include socioeconomic development with an

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emphasis on capacity building to support youth and women’s employment and empowerment (www.wusc.ca). The BABDA is the local government responsible for the BAB District. Under Ghana’s 1992 constitution, which brought a formal end to years of military rule, a system of local government through decentralization was enacted. Elected DA members are responsible for the delivery of services to local communities in their area, as well as for the representation of community needs in medium-term development plans (FriedrichEbert-Stiftung 2010). The 2010 Decentralization Policy Framework provides for local participation in the development planning process that produces the district development plans, which feed into the mediumterm development plans (MTDPs) (for details on local governance challenges, see Antwi-Boasiako 2010; Friedrich-Ebert-Stiftung 2010). The BABDDP was designed to support Ghana’s decentralization policy by improving the participation of local communities in development planning as well as the accountability of local government to the communities in representing their interests. The overall aim of the project was to improve the governance capacity of both the BABDA and the communities through better service delivery to the 134,000 residents of the district and by strengthening governance structures and processes within the twelve communities selected for the project (for detailed project description and outcomes, see WUSC 2014). WUSC and RTA signed a partnership agreement in early 2010, with RTA contributing CDN$300,000 and WUSC contributing CDN$160,000 (WUSC 2014). In March 2010, after RTA had sold its share in GBC, WUSC applied to CIDA for funding to expand the scope of the project and received CDN$500,000. Due to the long delay in securing CIDA funding, the project did not start until February 2011 and wrapped up in March 2014. In keeping with the overall project objective to support the Ghanaian government’s decentralization policy, WUSC worked with the BABDA to help it develop its district development plan. The district development plan would then feed into Ghana’s MTDP. This process began in early 2010, before the start of the project in January 2011. The delay in starting the project meant that the DA and communities could be engaged in the process of establishing priorities for the MTDP, which in turn informed the parameters of the project. Through the direct involvement of BABDA officials and the twelve communities, four main areas of focus were decided on, including improved governance, improved water and sanitation services, improved educational outcomes, and youth small-business skills training. Aligning the goals of the project with the broader development planning process increased its relevance to the development needs of the communities, an important criterion in assessing the project.

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The promotion of gender equality informed the three main components of the project: (1) enhanced governance and service delivery, (2) strengthened quality of services provided in the communities, and (3) promotion of economic growth and youth employment. The first component entailed the engagement of the communities in planning and implementing development activities, leading to the development of community action plans (CAPs). The CAPs served as the participatory development planning framework for each of the twelve communities, and action plan implementation committees (APICs) were established in each community to implement them. The second component focused on strengthening the delivery of education, access to clean water, and improved sanitation (WUSC 2014). Existing structures within the communities, such as parent-teacher associations (PTAs) and water and sanitation committees, were strengthened, or they were established where they did not already exist. WUSC supported the creation of boys’ and girls’ clubs in order to enhance the confidence, leadership, and life skills of boys and girls (WUSC 2014). Under the third component, economic growth and employment for youth, training in skills development and entrepreneurship was provided to youth in the twelve communities, with a focus on four agricultural trades, including piggery, local poultry, beekeeping, and cocoa nursery (WUSC 2014, 8). The first and second components were completed by the end of the project. However, due to delays, the third component did not commence until the last six months of the project, raising concerns about its sustainability (WUSC 2014, 37). Early Challenges

Prior to the start of the project in 2011, some significant challenges arose that affected its implementation. The first, as already mentioned, was that after signing a partnership agreement in early 2010, RTA sold its share in the Ghana Bauxite Company to Chinese-owned Bosai Ltd. Although RTA honored its financial commitment and for the first year kept a Ghanaian company official on the ground who served as local liaison between WUSC and RTA, it was no longer playing an active role in the project. Furthermore, Bosai was not prepared to step in and work with WUSC and the BABDA in moving the project forward. RTA did, however, continue to participate in the annual meetings with Canadian partners (WUSC and Canadian International Development Agency [CIDA]/Department of Foreign Affairs, Trade and Development [DFATD]) held to evaluate project progress, and the Community Relations Department monitored the implementation of the project (WUSC 2014, 32, 34). In that respect, although

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no longer operational on the ground, RTA saw participation in the project as an opportunity to demonstrate responsible departure from the site (RTA 1, April 2018). Although RTA’s departure did not negatively affect the implementation of the project, which was WUSC’s responsibility, over the long term it raised questions about its sustainability. RTA was no longer present to provide ongoing support once the project ended. When discussions took place in late 2013 about the potential extension of the project, which the DA strongly supported, Bosai was not supportive. The second challenge was the fact that the Canadian government stipulated an unrealistic three-year timeline for the project’s completion, despite consensus on the part of WUSC, RTA, and the BABDA that the time frame was too short. The short time frame ran against good development practice (Smillie 2016), which considers five years more realistic. Given the complexity of the project, five years would have increased the likelihood that all components of the project were completed. With those limitations in mind, this chapter now turns to the partnership dynamics and the perceptions of the partners and community beneficiaries about the project. Partnership Dynamics and Perspectives Perspectives of WUSC and RTA. The partnership between WUSC and RTA was preceded by a significantly smaller collaboration on a two-year project from 2008 to 2010. RTA provided funding to WUSC for a project in Awaso, the community within RTA’s immediate catchment area. WUSC’s role was to provide teacher training and improve learning outcomes at Kanaso public school, which served the families of mine workers and some of the surrounding community (WUSC 3, 2012). In keeping with the literature, the partnership was “transactional” in the sense that it was short term in focus and RTA provided funding to WUSC to implement the project (Austin and Seitanidi 2012). However, as anticipated by the literature, the success of the project helped pave the way for further conversations between WUSC and RTA about the possibility of future collaboration. The experience of the Kanaso school project showed that there was a good alignment between WUSC’s expertise in school improvement/education and RTA’s needs (WUSC 3, 2015): “Being in the field with key people from WUSC and RTA was really helpful in building common understanding and trust” (WUSC 3, 2015). RTA also found the Kanaso school project to be a positive experience and valued WUSC’s expertise in the areas of education and gender sensitivity, expertise that RTA, as a mining company, lacks (RTA 1, 2015).

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The project served as the starting point for a broader discussion of what could be done beyond the immediate catchment area of the mine. Other factors influenced the willingness of WUSC and RTA to work together on a project significantly more ambitious in scope and duration. WUSC was looking to expand its programming in Ghana to include broader socioeconomic development activities. Drawing on its experience elsewhere on sustainability and local government capacity building, WUSC leveraged that knowledge to support the design of the project in Ghana (WUSC 3, 2012). WUSC’s capacity-building approach and longerterm vision was a good fit with the direction RTA was taking with its CSR (RTA 1, 2015). RTA was an early mover in terms of trying to shift its CSR away from a mostly “bricks-and-mortar” approach to a greater emphasis on capacity building. Rio Tinto had a long-standing practice of working with local government, including on projects in Ghana where WUSC was not involved (RTA 1, 2015). In 2006, RTA announced its Social Sustainability Initiative in Ghana, with $300,000 in funding over three years. The goal of the initiative was to support the Ghanaian government’s decentralization process, by working with the DA and local communities to achieve the Millennium Development Goals (MDGs) (Rio Tinto Alcan 2012). It was in the context of this initiative that WUSC was brought in to help promote the MDG goal on education. The Kanaso school project was carried out in partnership with the BAB District Education Directorate and the BABDA. WUSC’s emphasis on local government capacity building and local community participation and “buy-in” aligned with RTA’s vision for an alternative to “handouts” to communities in favor of sustainable community development (RTA 1, 2015). In discussions about the BABDDP, WUSC and RTA recognized that they shared similar values in their approach to sustainable socioeconomic development in their aim to foster communities’ ownership of and accountability for projects (RTA 1, 2015). RTA already had experience partnering with local government and other government institutions through its CSR. Both organizations cited the lengthy due diligence process around the BABDA project as crucial to strengthening the relationship, involving an extensive process of information sharing across different levels of the organizations: “This process led to the development of strong interpersonal relationships, strengthening trust between the organizations. This process helped break down stereotypes about how each organization was perceived by the other—RTA saw that WUSC is a very professional organization, and for its part, WUSC noted RTA’s commitment to community development through the fact it hires people with expertise in international development and anthropology” (RTA 1, 2015). For WUSC, partnering with a mining company entailed

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risks to reputation and around working in a newer type of partnership, and due to its high visibility, this particular project required extensive discussions within WUSC and the board. RTA’s commitment to partnering with local government institutions reflected its view that it should not be at the center or focus of community relations. RTA recognized that “it would be hard for it to replicate WUSC’s vision on its own, because it lacked the expertise and resources for its development-oriented approach, since the core business activity is mining” (RTA 1, 2015). RTA had also learned that implementing a capacity-building approach was hard when the communities saw it as having “deep pockets.” In RTA’s projects in Ghana where WUSC was not involved, the local government was expected to contribute 10 percent to the total cost of the project, and the communities were expected to contribute 5 percent (cash and/or in kind) (Rio Tinto Alcan 2008). In its press release announcing its partnership approach, the first principle enounced was that with partnerships “the company is no longer at the center of many bilateral relationships. . . . [R]ather, it addresses issues of common interest with a wide range of stakeholders” (Rio Tinto Alcan 2008). By seeking not to be the focal point of what was going on, where local stakeholders all had a role to play in realizing a shared goal, RTA had laid the groundwork for partnerships with WUSC and other development-oriented organizations. The above demonstrates that RTA’s shift in understanding about the nature of its relationship to local communities laid the foundation for a partnership with WUSC where the communities’ needs, not the company’s, would be at the forefront. RTA’s explicit intention to move away from the traditional “bricks-and-mortar” approach to one that enhanced the capacity of the communities and DA set the conditions for potentially transformative outcomes for the local communities. RTA’s departure was not fatal to the project, because in designing the project with WUSC, it started from a non-firm-centric self-image. The evolution in RTA’s thinking about its approach to CSR suggests a learning process through adaptation to the needs of the communities near its operations, as well as a change in its approach to working with communities. This change in thinking provided the preconditions for the eventual partnership in the BABDA project. Significantly, RTA’s change in thinking came before the launch of the project, so rather than causing RTA’s evolving approach to CSR, the project reinforced it. The perspective of the BAB District Assembly. The DA was an active

partner in the project, shaping its focus, direction, and scope. It was also a beneficiary, because it received capacity-building training related to the

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three components of the project. Prior to the commencement of the project, the DA successfully advocated for its expansion to include more communities. The DA felt that too few communities were being allowed to participate (WUSC 4, 2016), so the five communities originally selected were expanded to twelve. The DA’s request reflected its active support for and participation in the project as a full partner alongside WUSC and RTA. Indeed, DA officials specifically noted that if there were to be a second phase, the project would need to be extended to the entire district (DA/WUSC meeting, November 13, 2013). Unfortunately, in the absence of a corresponding increase in funding, resources had to be spread more thinly across the twelve communities. There was therefore a trade-off between the positive need to include more communities and the consequent need to accomplish more with less. The DA played a direct role in the execution of the various project initiatives, working with all the relevant stakeholders, including working with communities on their development aspirations and district development plans (a part of the MTDP process), as well as on gendersensitization and teacher training. One official argued that both the DA and WUSC should get credit for the community mobilization exercises that led to the development of the CAPs (DA 4, November 13, 2013). The official noted the role the DA played in meeting with different groups separately, including men, women, the chiefs, and committees such as the PTA (DA 4, November 13, 2013).

The perspective of the communities. WUSC sought to include the beneficiary communities as partners in the project. The approach employed by WUSC to work with the communities was based on participatory learning and action, as described above. Such an approach is intended to empower local communities by emphasizing capacity building to increase the potential sustainability of the project. The PLA approach is consistent with the criteria on community consultation noted in the literature on sustainable community development. The following information on community perspectives was obtained from WUSC officials and the end-of-project report (WUSC 2014). Community concerns about the approach were raised when the project was launched but were not raised at the meetings held in November 2013 with the four communities as part of this research, shortly before the end of the project. Although PLA is considered good development practice, an immediate challenge to the approach was a lack of buy-in from many of the communities at the outset of the project. Some communities were expecting the traditional “bricks-and-mortar” approach, through the provision of tangible physical structures such as schools or clinics

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(WUSC 1, 2013). Others were skeptical of what WUSC was proposing to do and were apprehensive about whether WUSC would deliver what it was promising (WUSC 2, 2013). The skepticism was especially pronounced in communities within or near mining operations’ catchment areas or that had some other link to the mine (WUSC 1, 2013). Negative legacies, such as inadequate compensation, lack of jobs, or negative health or environmental impacts from the mines, also led to a lack of faith in the process among these communities. Some communities were more receptive from the start because the leadership understood the importance of capacity building to development (WUSC 1, 2013). The requirement that community members contribute levies to various project initiatives was met with strong resistance. From past experience with other fund-raising initiatives, monies collected for various undertakings had on occasion gone missing due to a lack of transparency and accountability (WUSC 2014, 33). Beyond that, it could be argued that communities affected by mining were resistant to the additional costs associated with mining operations when it was felt those costs should have been borne by the company as part of its CSR. On the other hand, many practitioners view community contributions to projects as good practice, as this is seen to empower beneficiaries as active agents in the project, allocates a “value” to the initiative, and often helps secure commitment/buy-in (WUSC 1, 2013; WUSC 3, 2018; WUSC 4, 2018). According to the WUSC final report, “A lot of community members either defaulted or completely refused to contribute to levies . . . [but] over time, the project team built trust and transparency amongst key stakeholders in the communities” (WUSC 2014). Overall, however, the initial reaction on the part of communities was reflective of the legacy of mining in the area. Communities had come to depend on mining companies for the delivery of projects and, indeed, expected this of mining companies. WUSC’s challenge, then, was to sell the PLA approach to local communities and demonstrate its effectiveness through successful implementation. Project Implementation: Process Dimensions and Perspectives

By focusing on capacity building, direct community involvement in development planning and decisionmaking, and promoting ownership through self-help, the project met many of the requirements of sustainable community development projects identified in the literature. What follows are the perspectives of the partners on the processes by which the partnership’s goals were met.

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WUSC. The initial community resistance to elements of the PLA approach

is partly reflective of the fact that changing the culture of dependency on mining companies is a long-term undertaking. In the view of WUSC officials, PLA entailed supporting communities to develop capacity to identify their own needs, prioritize them, and lead in their own development (WUSC 1, 2013). The PLA was employed as a community mobilization exercise and included the participation of DA representatives, who met with communities to discuss issues (WUSC 2, 2013). Once the project began, WUSC organized community-wide meetings to ensure accountability. This was more than just a consultation exercise, as each community was mobilized to develop its own community action plan (WUSC 2, 2013). In the process, WUSC helped strengthen the communities’ ability to advocate (WUSC 2, 2013). Since the DA was a partner in the project, communities were directed to the DA rather than to the mining company if they needed something. By assuming responsibility for their own development needs, communities learned about the claims they could rightfully make on the DA (WUSC 1, 2013). Assembly members were expected to understand the situation on the ground and to advocate on behalf of communities at the DA level. Ownership was encouraged by the expectation that community households would contribute a small amount toward initiatives, such as the maintenance of newly constructed boreholes or the purchase of new computers.

DA officials. In discussions at the meeting with the DA organized by

WUSC on November 13, 2013, in contrast to the initial reaction of communities, officials expressed strong support for the PLA approach and the identification of development priorities. As one official noted, “Most of the communities in the district were unable to identify their own needs. WUSC has helped them to sit down and prioritize [their development needs]. People now know what they should be getting from the DA and they now understand their role in the governance system. When they come up with their own ideas, they gain confidence” (DA 5, November 13, 2013). Notwithstanding initial resistance from communities, support was expressed by DA officials for the raising of levies to fund various initiatives: “communities should not just be given money. . . . [Rather], the DA and communities should work together” (DA 3, November 13, 2013). This comment can be interpreted as concern about community dependence on mining companies for infrastructure. A couple of officials noted the benefit of helping community members understand the role they should be playing in taking initiative on their development needs (DA 4; DA 3, November 13, 2013). One WUSC official nevertheless noted that more work needs to be done in

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helping communities identify the relevant DA departments they should approach about issues (WUSC 2, November 13, 2013). On aligning the project with broader development objectives, DA officials appeared to appreciate the role of WUSC in ensuring the project parameters were consistent with the input from the communities in setting priorities for the MTDP (2010–2013). One official identified the central importance of community participation in decisionmaking so that “planning becomes the property of everyone, not just those in office.” He further noted, “People should be informed and see that the DA is working for the people” so as to ensure “accountability” (DA 5, November 13, 2013). DA officials highlighted the value of the capacity training they received to help them improve the delivery of services (the second project component). Training provided by WUSC was identified as a key factor in the success of the initiatives in improving the quality of education, including greater attention to girls’ education (DA 4; DA 6, November 13, 2013). In addition to the training of teachers (which was described as “excellent”), training provided to district education officials and parents representing the PTAs was deemed crucial. Through this training, the quality of education improved, as did oversight of the teachers. Gender sensitization was noted to be highly effective in increasing girls’ enrollment, and the girls were said to be very keen to join the girls’ clubs (DA 4, November 13, 2013). In the context of education, the felt need to extend the project to the entire district was especially strong. One official noted that the district education service was trying to train another thirty clubs to expand the benefits they bring beyond the original twelve target communities, and concern was expressed about how this could be accomplished (DA4, November 13, 2013). A recurring theme raised by DA officials at the meeting was with respect to the sustainability of the project initiatives. Concerns about the ability to sustain what had been accomplished were most acute with respect to the third component. The execution of the component, from the registration of youth, to skills training, to setting up trades, to running them as a viable business, was very complex and required more time than the three-year time frame of the project (as acknowledged in WUSC 2014). It was noted that the basic skills training (e.g., how to build a pigsty and care for the pigs) was insufficient, as more advanced skills training was needed in how to get products to market and how to market products (e.g., honey) (DA 1, November 13, 2013). In a separate interview, the same DA representative noted the need for follow-up screening of youth after the first round of training. Concern was raised about how this could be achieved in the face of a reduction in the number of agricultural extension workers.

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Concern was also raised about whether skills had been sufficiently built up at the community level to sustain consultation with the DA about issues that arise (component one) (WUSC 2, November 13, 2013). As one official explained, “The parents are illiterate, lack information and it is hard for them to explain their needs. It is necessary to ensure that the communities will be able to sustain the initiatives by themselves” (DA 3, November 13, 2013). With respect to both the youth skills component and the extension of the boys’ and girls’ clubs, it was clear that broader systemic issues, such as too few trained officers within the district and insufficient resources, would negatively affect the sustainability of initiatives undertaken through the project.

Community perspectives. All the meetings with community representatives took place on November 12, 2013. Although there are differences between the communities in terms of the impact of mining operations, quality of infrastructure, or the number of girls attending schools, all the community members attending the focus group meetings were very effusive about the impact of the WUSC project. Despite the initial community skepticism about the PLA approach cited by WUSC staff, none of the community representatives made any reference to this. While perhaps a sign that the issue had been successfully addressed, it’s also possible that, once RTA signaled its departure, community members realized that they could no longer look to the company for projects. A key criterion for successful community development projects is the fostering of ownership of the process as well as improved capacity of communities to identify their own development needs. In Nkatieso, the chair of the action plan implementation committee (APIC) spoke positively about the training he received from WUSC and the subsequent meetings he organized with the community to develop the community action plan. In Kofikrom, one representative spoke of the capacity-building training WUSC provided, which helped the community to solve issues. For example, the community decided that it should have a school food program, and WUSC helped it to mobilize funds to build a kitchen. WUSC also coached the community on approaching the DA for funding for the operation of the program (Kofikrom). In Kodjina B, the community action plan (CAP) gave priority to constructing a borehole, which was built with WUSC funding. In Bassengele, deemed the most successful of the project communities, four APIC members were present at the meeting. One representative noted that all new development proposals now go through the APIC and that the committee was currently reviewing a proposal for the construction of market stalls (Bassengele). Initiatives to improve the governance capacity of communities were widely acknowledged by all communities as being very successful.

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There was much enthusiasm about the revitalization of the PTAs through training provided to members (Kofikrom) and the holding of regular meetings (Bassengele), resulting in improved relations between parents and teachers. The creation of the boys’ and girls’ clubs was widely seen to have been successful, and school trips to Accra and Kumasi were frequently cited. The boys’ and girls’ clubs were credited with increased enrolments and improved grades, especially for girls (Nkatieso). Given the strong initial resistance by communities to raising their own funds for projects, the reference to fund-raising for schoolrelated projects is indicative of the success of the revitalization of the PTAs. For example, five cedis were collected from parents for the purchase of school supplies not locally available (Kofikrom), and in Nkatieso money was collected to buy two computers. Building more boreholes was a strong priority for all communities, and in one community the newly trained members of the water and sanitation committee were collecting fees toward repair of a borehole (Kodjina B), a significant development in light of the initial skepticism noted above. The raising of funds seemed to have the expected effect of strengthening ownership of community-identified development projects. Gender-sensitivity training clearly had an impact on community members’ perceptions of the importance of girls’ education. It also ensured greater participation in and ownership of the project initiatives by women and girls. The impact of this training was not evenly felt, however. Kodjina B, the poorest of the communities visited, had low school attendance and a very low ratio of girls attending school (see also WUSC 2014). The issue of girls’ education was not brought up without prompting, there were no women representatives at the meeting, and there was no boys’ and girls’ club at the time of the meeting. By contrast, in Nkatieso, the improvement in girls’ test scores was noted, and women were well represented at the meeting. One representative confirmed, “Gender training has been very beneficial and important; girls’ enrolment has gone up, and gender issues are being raised at meetings” (Women’s Representative, November 12, 2013). At Bassengele, a representative praised the gender training WUSC had provided, which had “sensitized the community to the need to send girl children to school, leading to increased enrolment” (Women’s Representative, November 12, 2013). She also noted that women’s participation in meetings had been encouraged, and the timing of meetings was moved to early morning or after dinner so that it would be easier for women to attend. After the meetings in Nkatieso and Bassengele, a female representative from each community took the author aside to reiterate how important and valuable the gendersensitization training had been.

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There was much discussion of the final component of the project, the youth skills training and trades initiative, much of it focused on the long delays in getting the program started, problems with the rollout of the initiative (Nkatieso, Kofikrom, Kodjina B), and issues about the design of the program (Kodjina B, Bassengele). Although the training itself was much appreciated, with the exception of Bassengele the communities expressed concerns about the sustainability of the trades after the end of the project. Discussion

The partnership and project entailed many layers of complexity. The complexity pertains to the composition and dynamics of the partnership, the design and implementation of the project, and the broader context, including the legacy of resource extraction, poverty, and local governance structures and practices. The fact that three of the partners representing different sectors (CIDA, RTA, and WUSC) had offices in both Canada and Ghana presented some communication and coordination challenges (Addae-Boahene 2013). These added layers make “multistakeholder partnership” a more apt term for these types of partnership. While the existing literature can account for some of this complexity, analysis of this project confirms the need for greater attention to multistakeholder partnerships in the Global South. The process by which RTA and WUSC became committed to the project is largely consistent with the literature on cross-sectoral partnerships. The success of the 2008 Kanaso school project laid the foundations for the BABDA project by building trust, establishing good relations with personnel across the organizations, and developing an appreciation of the values they held in common. As Valente (2012) argues, even one-off philanthropic community initiatives (such as assisting with emergency food aid delivery during drought) can deepen community ties and foster learning on the part of the company about community issues. The reorientation of RTA’s CSR away from the traditional “bricks-and-mortar” approach toward sustainable community development was a factor both in moving ahead with the BABDA project and in shaping its design. RTA understood that WUSC had the capacity it lacked to implement the participatory and capacity-building approach, providing a strong rationale for the partnership alongside the BABDA and communities. The BABDDP is an important case because it addresses a number of the criticisms in the literature on community development projects, including the tendency for CSR projects to be disconnected from the

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broader development agendas of local and national government; the fact that communities, while they may be consulted, are rarely invited to participate directly in decisionmaking on their design and objectives; and the lack of attention to capacity building for both local government and communities, a feature crucial to the sustainability of community development projects. The PLA approach to mobilizing communities in decisionmaking on their own development priorities is consistent with the call in the literature for community-led processes (Muthuri et al. 2012). In the meetings with community representatives, the development of the community action plans and the establishment of the action plan implementation committees were highly praised, as were the efforts to revitalize PTAs and water and sanitation committees. These initiatives were consistent with the emphasis in the literature on governance capacity building within communities. The participatory approach to working with communities nevertheless presented significant challenges because of the amount of time required to set the process in motion and the extensive consultation this involved. The emphasis on capacity building entailed the creation of new management and governance structures that linked communities to the DA, as well as extensive training, both complex and timeconsuming tasks (Addae-Boahene 2013). However, due to a variety of factors, the project fell short of meeting the “sustainable” part of community development called for in the literature. There is a disconnect between the DA and the communities, both physically, because of the long distances between them and the DA, located in Bibiani, and in terms of the challenge community representatives faced in discerning whom they should approach about various issues. With the short time frame of the project, it is not certain the initiatives to enhance governance capacity, improve service delivery, and build on the youth trades training will be sustained. Of the four communities visited, Bassengele showed the greatest promise for sustaining the initiatives. This community already benefited, however, from a committed assembly representative, who was characterized as a committed leader and played an active role in the project (WUSC 1, November 2013). Without the benefit of ongoing coaching from WUSC staff on the ground, the sustainability of the initiatives is unknown. Due to the nature of donor-based projects and current funding models for development, WUSC was not in a position to evaluate the postproject long-term impacts (WUSC 3, March 2018). This study was, however, able to document the process dimensions of the project, entailing extensive training, consultation, and knowledge sharing, the “intangible asset provision” (Valente 2012) aspects that are an important dimension of sustainable community

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development initiatives. The enthusiasm of community representatives for most of the project outcomes points to the empowerment and sense of ownership the project helped to foster. The participation of community members in decisionmaking for their own development is consistent with the expectation in the literature that ongoing dialogue reduces the power asymmetries between the various stakeholders. Yet one of the most significant challenges was the initial community resistance to moving away from the “bricks-andmortar” approach to a participatory approach focusing on direct participation and capacity building. Moving communities away from a culture of dependency on mining companies requires time. It also takes time for local government to be more responsive to community needs. The sectoral context of the project, mining, also has implications for the difficulties inherent in moving communities away from a culture of dependence on mining companies. The departure of RTA (and the unwillingness of the new owner to participate in the project) points to the logic of the community preference for tangible evidence of a company’s contribution through a “bricks-and-mortar” approach. Yet the relatively common occurrence of ownership changes due to acquisitions in the mining sector points to the importance of community and local government capacity-building initiatives to reduce dependence on the mining companies over the long term. Conclusion

This chapter argues that multistakeholder partnerships can provide a way out of the contradictions inherent in a narrow social risk approach to CSR. Development-oriented NGOs can lend their expertise to the design and delivery of community development initiatives that focus on capacity building as central to achieving sustainable outcomes. Multistakeholder partnerships thereby allow the major actors, companies, communities, NGOs, and local government to lend their respective competencies to various dimensions of the project. Analysis of the RTA-WUSC-BABDA partnership highlights many of the characteristics and processes deemed in the literature to be necessary for successful partnerships and conducive to sustainable community development. The findings from this case study suggest that companies that have already laid the groundwork for effective community consultation and development are more likely to participate in initiatives conducive to sustainable community development as these same conditions are necessary for successful partnerships. While this confirms the literature in

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terms of the role of shared values in arriving at a more “transformative” project, the implication is that companies with a narrow social risk management approach to CSR might never agree to the type of partnership undertaken by RTA, WUSC, and the BABDA. RTA’s prior efforts to move away from the “bricks-and-mortar” approach to a more sustainable community development approach entailing a less firm-centric identification of community needs, as well as a willingness to work with the DA, influenced WUSC’s willingness to work with the company. Where a company has not shifted its orientation away from a firm-centric and short-term social risk approach to CSR, multistakeholder partnerships will likely have a more transactional quality. Such partnerships can, however, promote learning about the potential of partnerships that are appropriate to the needs of communities. Given the entrenched culture of dependency of communities on mining companies, mining companies may need to meet their short-term social risk management needs through bricks-and-mortar-style CSR, while also laying the groundwork for the long-term needs of the communities and the interests of the companies. As mining companies come to accept that a long-term, developmentoriented approach to CSR that involves ongoing dialogue with communities is most conducive to community acceptance of their operations, then their need for a social license to operate need not be incompatible with the development needs of communities. The findings confirm the benefit of joining the literature on multistakeholder partnerships with the literature on sustainable community development to give it greater applicability to the Global South. Projects cannot be assessed without reference to the broader governance dynamics in the countries where they take place. Chronic neglect of rural areas by central government and underresourcing of local government have clear implications for what can be accomplished through multistakeholder partnerships and projects. More attention needs to be paid in the literature to the local communities themselves, as well as to local governments, which can be both partners in and beneficiaries of multistakeholder projects. A social risk management approach does not move the company away from being the focal point, which is in the long-term interest of the company. Multistakeholder partnerships require the company to exercise agency by stepping back while bringing together partners with the necessary skills (typically NGOs) and the necessary responsibility (local government). By joining the literature on multistakeholder partnerships with the literature on sustainable community development, this chapter has identified the need to tilt the focus away from the transformative qualities of the partnership itself toward the community and local government beneficiaries, who themselves are partners.

5 A Three-Way Relationship: Labor, Multinationals, and Local Suppliers Nicole Helmerich

Right after lunch, everybody was tired and stuffed. Twelve hundred people came back from the patio where they had eaten and reconvened in a large conference room in a hotel in Managua. The movement Maria Elena Cuadra (MEC), which annually hosts a conference of female maquilas workers,1 had organized a local music group. The music started playing, and female maquila workers asked corporate responsibility directors from transnational companies headquartered in North America to dance a couples’ dance. This chapter describes and analyzes how agency is enacted and contested in a triangle of agency between workers, multinational corporations (MNCs), and local suppliers from the angle of workers’ agency. Much of the agency of nonstate actors in private regulation has been discussed within the analysis of multistakeholder initiatives at the transnational level (Fransen 2011; Bartley and Smith 2010). The discussion of agency of nonstate actors in this literature is rather limited and, like in the literature on global governance, solely adds nonstate actors to the analysis instead of theoretically clarifying their agency (Hofferberth 2019). In addition, the literature on transnational private regulation does not unpack but instead black-boxes the company (see Chapter 1). In addition, much of the analysis of the agency of companies rests on the transnational level. Yet global value chains that multistakeholder initiatives aim to govern, in one form or another, are complex structures with various important actors at the transnational, national, and local levels in developing countries, where production takes place. In this chapter, I argue that agency of multinational corporations in global governance takes place in relation to local supplier representatives and workers in developing countries, where 103

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the majority of the garment production is taking place. I argue that agency in global production is enacted in the triangle of MNCs, suppliers, and workers. I follow a relational approach to agency (Hofferberth 2018; Burkitt 2016; Zanotti 2017). Agency in global production is enacted, created, and lost in specific situations in an exchange between MNCs, suppliers, and workers. If this exchange in specific situations takes place repetitively, actors activate and amass power resources to nudge the transformation of the structural power between MNCs, suppliers, and workers. My case study takes place in the garment sector in Managua, Nicaragua, which is producing mainly for the North American market. Using an ethnographical approach, I analyze the annual convention of a civil society organization, the movement Maria Elena Cuadra, bringing 1,200 female workers from the garment sector from all over Nicaragua together with representatives of multinational corporations and local supplier factories. I examine instances, during this one-day event, of agency in the triangle of MNCs, suppliers, and workers from the angle of the workers. The short description of the dance scene at the annual convention of the MEC movement at the beginning of this introduction is one instance of many during this event in which unequal power relations between company representatives and workers are situationally reversed. These instances of power reversal contribute to an overall change in the triangle of agency between MNCs, suppliers, and workers in global production. This chapter is structured as follows. First, I elaborate on the implementation of transnational labor governance in the Global South. Second, I present my theoretical framework around the concepts of relational agency of actors and their power resources. Third, I put forward an indepth ethnographic analysis of the annual Maria Elena Cuadra convention in 2011. I analyze how workers’ agency is enacted in cocreation with corporate agency, and I show the different functions of voicing demands and their consequences for the construction of agency. In addition, I show how these demands are transformed into power resources and how they change the overall situation in the maquila industry in Nicaragua. Fourth, I conclude that events like this annual convention can enact and change workers’ agency and have a lasting impact on economic relations and the labor rights situation in the maquilas in Nicaragua.2 Transnational Labor Standards and Local Implementation

The garment sector is one of the sectors with the longest history of transnational private regulatory initiatives (PRIs), which issue labor stan-

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dards mainly for multinational corporations producing globally (Anner 2012) as well as company codes of conduct (Kolk et al. 1999) and corporate social responsibility (CSR) (Bair and Palpacuer 2015; Lohmeyer 2017). Code elements cover, for example, nondiscrimination, harassment or abuse, forced labor, child labor, freedom of association and collective bargaining, health and safety, environment, hours of work, and compensation.3 This set of code elements has a dual function. It aims at improving labor standards for workers in MNC supply chains and, at the same time, reducing MNCs’ risk of reputational damage and consequently lost revenue due to labor scandals in their supply chains. MNCs sign up to a private regulatory initiative and therewith bind themselves to a set of transnational labor standards. Sometimes suppliers, like Foxconn, also join PRIs and sign up directly to the labor standards. Even though PRIs and their membership rules differ, they directly or indirectly demand that MNC suppliers comply with labor standards at production sites to improve labor conditions for workers in supplier factories. In global production chains, this creates a relational triangle between MNCs, suppliers, and workers at supplier factories in implementing transnational labor standards emanating from PRIs or company codes of conduct. Both aims, risk reduction and improved labor standards, entail some sort of implementation of transnational labor standards in local settings at supplier factories in the garment sector in the Global South. There are different ways to implement transnational labor standards in supply chains of MNCs: factory audits, training and capacity building, awareness raising, remediation in noncompliance cases, complaint hotlines, due diligence, and so forth. We can distinguish here between proactive and reactive ways to implement transnational labor standards. With reactive ways, I mean all politics and policies addressing the remediation of noncompliance, including ad hoc reaction to specific conflict cases of labor violations in supply chains. Proactive ways are long-term politics and policies geared toward implementing transnational labor standards. Participating in events like the annual convention of the MEC movement is a proactive form of implementing CSR by multinational companies and exercising stakeholder relationships. Central America, Transnational Labor Standards, and Workers’ Agency

Central America is a very apt region for studying workers’ agency and corporate agency in transnational labor governance. After the emergence of transnational social and labor rights standards in the mid- and late 1990s, Central America was one of the first regions where transnational

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social and labor standards were put into practice locally (Honduran Independent Monitoring Team 2005). It is a region with experience of corporate social responsibility and transnational labor standards implementation since the late 1990s and early 2000s. This entails experimentation with company codes of conduct, implementation of transnational labor standards in supply chains of transnational corporations, development of auditing and monitoring, and creation of one of the first capacitybuilding projects involving transnational companies together with development agencies, civil society, unions, and local suppliers (COVERCO 2010; Perez 2010). For example, Gap started actively reaching out to civil society organizations in Honduras as early as 1996 (Honduran Independent Monitoring Team 2005). After Asia, Central America and the Caribbean comprise the second-largest region where apparel is produced. Following China, it is the second-largest market in terms of volume for US apparel imports (Maquila Solidarity Network et al. 2012, figure 10). The region has an important place in the supply chains of transnational corporations in terms of exports to North America because it is competitive with regard to lead times and speed to market (Sean Ansett, former CSR director of Gap, cited in Maquila Solidarity Network 2004), as well as labor costs (Maquila Solidarity Network et al. 2012; Carrasco and Julia 2007). In this region, brand-name companies in the garment sector have experimented with different ways of implementing transnational labor standards at the firm level. In the 1990s, front-runner firms such as Gap developed their auditing and monitoring systems and tested them in Central America. Company staff were the main auditors in the beginning; later MNCs also outsourced auditing to third parties such as private regulatory initiatives or NGOs auditing for them. Besides auditing, MNCs started to participate in local capacity-building programs to improve labor standards implementation and reduce labor violations. These capacity-building programs are undertaken by private regulatory initiatives such as Social Accountability International, by foreign government agencies such as the US Department of Labor together with USAID, or by the Better Work Program of the International Labor Organization. Capacity-building programs that were more successful in enhancing the implementation of transnational labor standards established multistakeholder participation at the local level (Helmerich 2018). This means that they asked local suppliers, MNCs, and workers from the supplier factories to partake in training together. In addition, in Central America MNCs actively participated in various remediation processes at supplier factories where infringement on the freedom of association,

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harassment, and the like, had occurred. This development in Central America established a web of direct and regular exchange between MNCs and local-level actors such as management from supplier factories, labor NGOs, women’s rights organizations, unions, human rights organizations, auditing companies, maquila workers, transnational labor NGOs, and private regulatory initiatives. This development paved the way for creating spaces where MNCs, suppliers, and maquila workers meet each other and are able to voice their demands or views with regard to labor violations or other issues of labor standards implementation. Actors that formerly have never talked to each other are now actually sitting down at a table (Helmerich 2018). This is exceptional in the field of implementation of transnational labor standards. Therefore, this region is very apt for analyzing the agency of workers vis-à-vis MNCs and suppliers. Besides a long history of transnational companies experimenting with CSR and the implementation of labor standards in Central America, there is also a long history of a labor movement and a women’s movement in this region fighting for better labor conditions in the garment sector (Armbruster-Sandoval 2005). Agency and Power Resources in Transnational Governance

Agency “is increasingly located in sites beyond the state and intergovernmental organizations” (Biermann and Pattberg 2008, 280). This “agency beyond the state” also manifests itself in the implementation of transnational labor standards in the Global South. Therefore, I argue that we need to unpack the relationship between multinational companies, their suppliers, and workers at the supplier factories and the community level to understand agency in transnational labor governance. I build my theoretical framework on Burkitt’s (2016) understanding of relational agency and Barnett and Duval’s (2005c) relational power approach. I follow Burkitt (2016, 323), who posits that “agency . . . is to do with people producing particular effects in the world and on each other through their relational connections and joint actions.” This approach understands humans as being deeply shaped and influenced by the web of interactions with other humans. Therefore, Burkitt (2016, 330) conceptualizes humans “as in relations that transform the real through their productive joint activities as well as in relations of communication.” Drawing on Elias’s (1978) notion of interdependence, Burkitt argues that interdependence with others rather than merely the individual relation to structure shapes our agency. Applying Burkitt’s

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approach to agency to the context of transnational labor governance means, I argue, that we need to look into the relationships between workers and business and more closely at their communication with each other to understand how their agency in transnational labor governance is co-constructed. In addition, “relations cannot be reduced to ‘shared meanings’ as they involve a range of interdependencies that are physical, meaningful, emotional, practical, economic, political, and social, all of which involve the various things we do for each other— support and constraint, satisfaction or frustration of need, and fulfilling certain roles and functions” (Burkitt 2016, 331–332). Burkitt (2016, 336) argues that “social relationships should not be understood as merely constraining or enabling agency, but as constituting the very structure and form of agency itself” (emphasis in the original). Along with Burkitt (2016), I further theorize that if agency is mainly constituted through the nature of our interdependence with others, power and constraints of power also rest on the nature of our interdependence. “In these interdependencies there emerge power imbalances as some attain greater positions of power or control of key resources” (Burkitt 2016, 331). In transnational labor governance, there is an interdependency between multinational companies, their supplier factories, and workers in the supplier factories when it comes to implementing transnational labor standards. Within this triangle, we can analyze the interdependencies, power, and agency of these three actors being enacted, challenged, and confirmed by one another. We can also find claims of agency, potential agency, and agency that can change the outcome of a labor conflict at a supplier factory. Barnett and Duvall’s relational approach to power fits well with Burkitt’s relational approach to agency and complements my theoretical framework. I define power according to Barnett and Duvall (2005c) as “the production, in and through social relations, of effects that shape the capacities of actors to determine their circumstances and fate.” Power has two dimensions and concerns, “both social relations of interaction and constitution, that is, both ‘power over’ and ‘power to’” (Barnett and Duvall 2005c, 44). In regard to the “power over” dimension, MNCs, a supplier, or a worker can exert power as an actor attribute and as an attribute in their interactions. “Power to” refers to actors’ social identities and capacities (Barnett and Duvall 2005c, 42). Agency and power are matters of degree and malleable in the interactions of interdependent actors. “In interrelation, interdependence and interactions with others, interactants are always active and passive, powerful and yet vulnerable to various degrees, acting on others and being acted on by those others” (Burkitt 2016, 336). Therefore, there is

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an active and a passive aspect to agency in interactions. McNay (2003, 141) posits that it is important not to stick exclusively to the view of “passive subjects” and to focus also on an “active dimension within subject formation” when analyzing the making of agency. Therefore I analyze the triangle of agency between workers, MNCs, and local suppliers in a proactive setting, that of the annual MEC convention. This making of agency is this focus of this chapter. Following a relational approach of power (Barnett and Duvall 2005b, 2005c) and a relational approach of agency (Burkitt 2016; Hofferberth 2018; Zanotti 2017), I analyze the making of workers’ agency and workers’ voice in a relational setting to corporate agency and being enacted and challenged in practice. Agency is enacted in practices of actors voicing their demands toward other relevant actors, in our case toward the two other actors in the triangle of global production, multinational businesses and suppliers. In this practice, I argue, these actors of the triangle need to be present and to listen, and this voicing of a demand needs to have an effect on the actors being addressed. Therefore, not only power but also agency is relational and constructed or enacted in a process of exchange between the actors in the triangle. Agency can be not only created or enacted but also disclaimed or dismissed. Agency and power are linked to the power resources of actors. These resources can at the same time be possessed by actors and exercised in an interaction and also be gained or lost through an interdependent interaction between actors. Power resources constitute agency and enable actors to exercise power. The voicing of demands can create and amass power resources. In industrial relations research, union and union power form a core part of the literature. Lévesque and Murray (2010) propose four union power resources: internal solidarity, narrative resources, infrastructural resources, and network embeddedness (which they also call external solidarity). These power resources, I argue, can also be used to analyze actors in a triangle of agency between multinational companies, suppliers, and workers at the supplier factories in the realm of transnational labor governance. I apply their union power resources approach to studying female workers’ agency at an event held by a movement of female workers in the Nicaraguan maquilas. This movement has union-like characteristics and exercises union-like functions for female workers in the Nicaraguan maquila. I use Lévesque’s framework in a novel way, adapting it to a microsociological analysis of the enactment of relational agency and the construction of power resources. From the perspective of workers, agency emerges when power resources are created through voicing their demands, making themselves heard by MNCs

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and supplier representatives, changing their power position in the triangle, and ultimately improving their labor conditions. Put differently, the practice of voicing demands can create internal solidarity and narrative resources in a specific situation. Internal solidarity of a group, in this case of a group of female maquila workers, relies on a “sufficiently cohesive identity” (Lévesque and Murray 2010, 336). Drawing on Hyman (1975), Lévesque and Murray (2010, 336) posit that “unity of purpose enhances power, whether it flows from common collective identities or deliberative processes where members surrender their individuality in favor of a collectivity.” Narrative resources “consist of the range of values, shared understandings, stories and ideologies that aggregate identities and interests and translate and inform motives” (Lévesque and Murray 2010, 339). Workers create values, shared understandings, stories, and ideologies during recurring events and during practices of voicing demands. “Infrastructural resources refer to material and human resources and to organizational practices, policies and programmes” (Lévesque and Murray 2010, 340). Network embeddedness or so-called external solidarity “is built through horizontal and vertical links within and between unions and the community” (Lévesque and Murray 2010, 338). If workers can gain through interactions with other actors and exercise these four power resources, they may be able to change their overall power position in the triangle of MNCs, suppliers, and workers and ultimately their labor conditions. In this chapter, I specifically focus on the process of voicing demands (Nazneen and Sultan 2014) as a form to enact and create power resources such as internal solidarity and narrative resources (Lévesque and Murray 2010, 2013) and power rituals (R. Collins 2004; Goss et al. 2011). For R. Collins (2004) there is a transformative power of rituals and ritual mobilization that can change power dynamics and fuel social changes. Agency in global production is enacted, created, and lost in specific situations in an exchange between MNCs, suppliers, and workers. If these specific situations take place repetitively, they have the power to nudge the transformation of the structural power between MNCs, suppliers, and workers. Workers’ agency can be exercised in trade unions organizing collectively (Cumbers et al. 2008; Riisgaard and Hammer 2011) or through unorganized workers (Lund-Thomsen 2013). Besides traditional unions and unorganized workers, labor NGOs that are training workers, offering legal consultation, and supporting the organizing of workers play an important role for workers with regard to agency. I follow a political ethnography approach (Schatz 2009) and provide an in-depth microsociological analysis (R. Collins 2004; Goss et al. 2011). I participated in the annual convention of the movement of Maria

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Elena Cuadra in Managua, Nicaragua, on March 6, 2011. This participant observation is complemented by audio tapes of all speeches of the various actors in the plenum, notes of the working group sessions, and other occurrences outside the plenum. In addition, I analyzed the documents of prior and latter annual conventions, I interviewed actors who participated in the event, and I attended an evaluation of the annual convention at the offices of the movement Maria Elena Cuadra on March 7, 2011. The following section provides an in-depth analysis of the annual convention of the MEC movement embedded in an overall analysis of the enactment of workers’ agency in the triangle of agency together with MNCs and suppliers and the creation of power resources that construct the workers’ agency. The Colloquium of Maria Elena Cuadra

On the morning of March 6, 2011, my taxi driver was late. It was 7:30 a.m. and the thirteenth colloquium of female workers organized by the NGO Maria Elena Cuadra, titled “Strategies to Confront Forms of Violence Against Women,” was supposed to start at 8:00 a.m. When I finally arrived at the conference venue, all 1,200 women and a handful of men had already made their way into the conference room. When the women at the conference reception desk asked for my affiliation, I informed them that I was an academic researcher from Berlin. They gave me the program and accompanied me into the conference room, dragging me toward the front of the room past the 1,200 women working in Nicaraguan textile and apparel plants. All eyes were on me as I passed the female workers. I was placed in the first row, right next to some directors of corporate responsibility programs of North American apparel brands. In the front row among the corporate representatives, I recognized the familiar face of a CSR staff member of a large transnational company. I had interviewed this individual before in the United States. The women, who dragged me up to the front row, placed me alongside this CSR staff member. We hugged warmheartedly, and all the workers could see this gesture. The workers by then probably perceived me as one of the business actors.4 Meanwhile the leader of the movement of Maria Elena Cuadra, Sandra Ramos López, welcomed everybody to the conference. The MEC convention takes place every year. It brings together around 1,200 female workers from textile and apparel companies (socalled maquilas) from all over Nicaragua. The conference takes place on a Sunday, the only free day of workers in this industry. In the 1990s, reunions took place secretly and with only a few female workers. The

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gathering grew constantly and became an official conference meeting in a large hotel uniting the female workers every year with company representatives from MNCs producing in Central America, some representatives of supplier factories, and local business representatives such as the president of the high council of private Nicaraguan companies, the Consejo Superior de la Empresa Privada Nicaragüense (COSEP). The majority of the workforce in maquilas in Nicaragua are women (Redcam 2011; Maquila Solidarity Network et al. 2012). In 1994, female workers in the garment sector in Nicaragua left the patriarchal labor unions and created a movement outside the union, the Maria Elena Cuadra Movement of Working and Unemployed Women (Barberena 2009). To this day, this movement plays a central role in defending the rights of female workers, politicizing female workers, and nudging female workers to take agency with regard to labor rights and their violation in the Nicaraguan maquila industry. Since its creation in 1994, MEC’s influence rests on three pillars. First, right from the beginning the movement received external financial support from international NGOs and unions such as CoDevelopment Canada, the Canadian Union of Public Employees, the Maquila Solidarity Network, and German NGO Christliche Initiative Romero (CIR n.d.; CoDevelopment Canada 2012). The financial support was intended for self-help and empowering the Nicaraguan female worker movement from the start. Second, in 1996 MEC created, together with six other female labor rights groups from Guatemala, Honduras, and El Salvador, a solidarity network called Central American Women’s Network in Solidarity with Women Maquila Workers.5 Third, MEC has attained an important national political role in Nicaragua when it comes to partaking in negotiating and proposing laws and regulations to improve the situation of female maquila workers, raise their wages, and combat violence against women. It is also defending women in labor court cases (Barberena 2009; CIR n.d.). In addition to these three pillars, bringing together workers, MNCs, and local suppliers at this event allows a study of the relational agency between these actors and the putting into practice of transnational labor governance at the local level of transnational supply chains. Therefore, the annual convention serves as an important arena to analyze the implementation of transnational labor standards of MNCs and agency in labor governance and the making and enacting of workers’ agency in relation to corporate agency. Constructing Agency of Companies and Workers

One of the first speakers is a corporate responsibility officer of an MNC in the garment sector. Now based in the United States, she was born in

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Central America and still has family in the region. She starts her talk with a personal note before continuing with the classical CSR jargon of MNCs. “This is the second time that I have participated in this event. I have never been invited to something so powerful.”6 This personal note revealed that she was very impressed by the uniting of female maquila workers in Nicaragua by the Maria Elena Cuadra conference, which she had attended the year before. She stressed the importance of the event and her admiration for the movement of the female workers in an evaluation meeting the following day in a smaller circle with representatives from NGOs, MNCs, and me present. She repeated this position in a private conversation with me a couple days later too. With her presence at this event as well as in her speech, she acknowledged the agency of the maquila workers in Nicaragua. When approached during lunch by workers informing her about alleged noncompliance with labor standards at their supplier factories, she took note and gave them her business card. She listened to their problems and included this information in her current and future audits of these factories. Multinational companies have come a long way concerning accepting responsibility for labor violations in their supply chains and overcoming resistance to talking to supplier factory workers directly. In the 1990s, when the first sweatshop scandals in the garment sector came up, multinational companies denied responsibility for labor conditions at their supplier factories (Armbruster-Sandoval 2005; Klein 1999). Multinational companies in the garment sector started to set up corporate responsibility in the 1990s and 2000s (Van Tulder and Kolk 2001). In Central America, their first attempts to implement corporate social responsibility were to place English company codes of conduct in Spanish supplier factories and to institute a cut-and-run policy with suppliers in violation of labor rights instead of trying to remediate those violations with the supplier and the workers (Paredes 2011; Yanz 2010). In the 2000s, multinational companies began to partake in so-called capacitybuilding projects in Central America involving local suppliers, unions, other multinational companies, and sometimes local NGOs. Also around this time, they started exchanging with local NGOs and local unions on alleged cases of noncompliance in their supply chains. By the early 2010s most multinational companies implementing corporate social responsibility in Central America had hired CSR staff with local roots and the ability to speak the local language. In addition, they started supplier programs and audits to improve labor situations at the supplier factories in the region. Through capacity-building projects and the involvement of multinational companies in remediation processes at supplier factories, multinational companies began to exchange more frequently

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with local labor NGOs, unions, and maquila workers to be informed about the work situation at their suppliers. This development led to more frequent exchanges between the staff of multinational companies and maquila workers in Central America (SITRASTAR Honduras 2011). This led to the co-construction of agency by multinational companies and maquila workers in Central America, also put into practice in the colloquia of the movement of Maria Elena Cuadra. In the 1990s and 2000s, the annual MEC conventions were mainly held by women working in the maquila for women working in the maquila, with the attendance of some transnational labor NGOs and other regional labor rights activists. This changed in the late 2000s. MEC started inviting other actor groups such as representatives of local businesses, MNCs, and local suppliers, as well as experts presenting studies on female workers in Central America. This created an exceptional and reiterative space, where workers meet MNC representatives and local business representatives. Female workers of the maquila make a stand and voice their injuries due to working in the garment sector, labor rights violations, and instances of noncompliance with transnational labor standards in their respective factories. For this reason, the MNC representative quoted above called this a powerful event. She took a short break, changed her wording, and continued with the following more classical CSR jargon: “As a brand, we have only recently come to Nicaragua, but we have been working with our suppliers globally for more than twelve years now to improve the conditions at the factories, but all of us know that there are many challenges but our commitment concerning a decent and healthy workplace is continuing.”7 In her speech, she mentioned that she spoke for three large brands in the textile, apparel, and footwear sectors that were present at the event that day. These three brand-name companies are the most important sourcing partners for Nicaraguan maquilas producing for the North American market. These multinationals construct themselves in this situation not as mere profit-maximizing companies but as companies that take responsibility for their supply chain and listen to alleged violations of labor standards at their supplier factories.8 In the front row, where they were seated, I also spotted a few representatives of large local suppliers in the garment sector in Nicaragua. In addition, the president of the high council of private Nicaraguan companies addressed some welcoming remarks to the female workers. Inviting business representatives to a women’s and labor rights event in Central America is exceptional for the region. In many of the Central American factories producing garments mainly for the North American market, line supervisors and human resource personal, especially in Guatemala in the 1990s, had a former military or paramilitary

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background. The violent conflicts and civil wars in Central America ended in the 1990s.9 Even today, within the factories, line supervisors are the personnel considered by workers to commit the most labor rights violations within the factory (Rapporteur, Working Group 2).10 The postconflict time in Central America was marked by an increase in export-processing zones already set up during the 1970s in that region. Garment companies are almost exclusively producing in exportprocessing zones in this region and are mainly producing for the North American market (Maquila Solidarity Network et al. 2012). Given this violent history and the working conditions in the maquilas, an invitation from 1,200 female workers to a handful of transnational and local business representatives to attend a labor rights event seems an attempt to reverse at least temporarily the regular power ritual between order givers and order takers (R. Collins 2004). The mere attendance of transnational and local business actors at this event gives agency to female workers in the maquila to voice their demands and enact agency toward business. Yet not only workers’ agency but also the corporate agency of MNCs and local suppliers is created in this space. MNCs such as these three brand-name companies voice their commitment to the implementation of transnational labor standards with speeches like the above. If they back away from their local commitment afterward, transnational and local labor NGOs present at this event would hold them publicly accountable. So events like this can contribute to a communicative entrapment of MNCs to not only talk the talk but also walk the walk. In addition, workers use this event to approach MNC representatives to tell them about current noncompliance with transnational labor standards at their factories. At the Maria Elena Cuadra colloquium, a few representatives of large local suppliers in the garment sector in Nicaragua had accepted the invitation to attend. They were sitting side by side with the representatives of the multinational companies in the first rows. Unlike multinational company representatives, none of them spoke at the event. Suppliers form part of the triangle of agency between MNCs, maquila workers, and suppliers. The argument behind that, as elaborated in the theory section, is that without the supplier, maquila workers cannot attain full agency, enact their power resources, and improve their labor conditions. If suppliers do not implement transnational labor standards in their factories and remediate labor rights violations, the exchange between workers in supplier factories and MNCs cannot lead to an improvement in labor conditions. All actors in the triangle, MNCs, workers, and suppliers, are needed to change labor conditions at supplier factories. Local supplier factories in the garment sectors around the world usually do not attend such events and sit and listen to workers. Their mere presence strengthens workers’

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agency in the triangle. Although the mere presence of supplier representatives at this event can be seen as giving agency to workers, at the same time these representatives left early and did not listen to the workers’ testimonies about labor violations in their factories. This weakens the agency of workers. If suppliers do not listen to their workers with regard to alleged labor rights violations, remediation is very difficult. The following sections focus on the co-construction of agency between these three actors in the triangle. A special focus will be on the construction of workers’ agency in the triangle of MNCs, suppliers, and workers. Relational agency is linked to the creation and dissolution of power resources in the exchange with the other two agents. Therefore, the following sections are organized along the four power resources articulated by Lévesque and Murray: internal solidarity, narrative resources, infrastructural resources, and network embeddedness. Female workers from the garment sector in Nicaragua voiced violations of labor rights during the event. These testimonials took place in three different settings: in the plenum, to enact their rights; during lunch, by approaching MNC representatives and voicing violations at their factories; and during the working groups, as a uniting narrative to create identity. Female workers participating in this event generate demands and solutions, exchange with transnational and national company representatives and transnational NGO representatives, and participate in the event as a means to empowerment. Creating Internal Solidarity

The first dimension of the power resources of workers according to Lévesque and Murray (2010) is creating internal solidarity in a group. After welcome speeches and presentations in the plenary, there was a breakout into seven different working groups. The “Impact of the Gender and Social Division of Work: Improvements and Setbacks of Rights of Female Workers”11 working group started with a presentation by a male researcher on the situation of female workers’ rights in Nicaraguan maquilas and the role of the financial crises in their current situation. This presentation was based on a regional study that was introduced prior to the breakout sessions in the plenum with the title “The Impact of the Global Economic Crisis on Female Workers in Central American Maquilas, 2007– 2010”12 by the Central American Women’s Network in Support of Maquila Workers (Red Centroamericana de Mujeres en Solidaridad con las Trabajadoras de la Maquila, or Redcam), a network of Central American labor NGOs and women’s rights groups (Redcam 2011). This study encompasses 354 pages of analysis of the maquila sector in all Central American

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countries, including personal interviews and focus group interviews with female maquila workers—the very same ones sitting now in this working group and listening to the summary of findings regarding labor rights violations and health and safety issues in the maquila industry in Nicaragua. After the presentation of the study, the organizers opened the floor for the roughly sixty female workers to talk about their experiences with regard to labor rights violations in the maquila. Besides the male presenter of the study and me, only female workers were present. The report had summarized the general findings, and now the female workers, inspired and motivated by the report and the space created to give testimonials, presented their personal experiences with labor violations in the maquila. What followed was about one and a half hours of personal testimonies about discrimination in the workplace, injuries and accidents, chronic pain, addiction to painkillers, and harassment. The first speakers were a bit shy and spoke in a low voice. As the session went on and the number of testimonials grew, the women spoke louder and the statements got more confident and angrier. Every time women mentioned where in the different factories and free trade zones they worked, other women from the same company or export-processing zone identified themselves and assented to their testimonials. One woman testified that she was addicted to pain killers. Due to repetitive movements at her sewing machine in the factory, she had suffered an inflammation of her shoulders. The doctor had prescribed her painkillers and now she increased the doses constantly to stop the pain: “I have had pain in my shoulders for some years now. The line supervisor sent me to the doctor. The doctor gave me painkillers. During the last months, I have had to take more and more pills to stop the pain.”13 This testimonial invited more women to talk about their injuries and chronic pain due to the repetitive work in the production line of the maquila. Other topics that emerged included forced overtime, problems receiving medical treatment after an injury at work, nonpayment of the minimum wage, and blacklisting of workers wanting to organize and create a union. In deliberating about such labor violations and noncompliance with health and safety standards, the female workers of the Nicaraguan maquila created internal solidarity. They defined themselves, experienced themselves as part of the group of female workers, and supported each other. When one worker gave a testimonial, the other workers listened, nodded, and vocally supported or clapped to underline the statement. The international solidarity created in this working group setting was carried over to the panel, when the female workers presented the results of the working groups in the plenum of all workers and the representatives of the MNCs.

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Even the most disadvantaged women were included and encouraged to give their testimonials. For example, in the plenum session after the working groups, each working group had female workers serve as rapporteurs to summarize the group’s discussion. Two female workers from Working Group 2 came to the front of the plenum. One held the microphone; the other held the notes. They were looking at the brand-name companies in the front row of the audience. Before they started with the working group summary, a female worker who was part of the MEC organizing group stepped in and explained, “We are reporting from the working group number two. It is the two of us, yes, representing the working group number two. The woman [pointing to her colleague], since she cannot read well she is accompanied by my friend [name left out here].” The friend spoke into the microphone and looked at the notes. “In the name of [says the name of the women who cannot read well] . . .” Then she started with the summary of the working group.14 The woman whose reading skills were limited still came up front and held the notes for her colleague. Her colleague spoke on her behalf, reading the notes aloud. The voicing of labor violations and health and safety issues creates solidarity and contributes to a cohesive identity among female workers in the maquila. They are creating an identity as rights holders. With the realization of being female workers with labor rights, they voice their demands to end labor violations in the maquila in the presence of corporate actors in the plenum. This internal solidarity exercised, created, and strengthened during the annual convention of female workers organized by the NGO Maria Elena Cuadra can also be found in manifestations and statements of maquila workers (Niell 2014). A Honduran maquila worker, for example, states the following: I think it is for the first time that high-level executives from the United States sat down with workers to negotiate, and I think that during this process us women we also thought in the collective and we are so dedicated to search for benefits for all and not only for one. Another aspect is that we women have a strength because we are looking for job security because we are single mothers, we know our responsibilities and that the living conditions of our children and our families depend on us. We have responsibilities.15

Narrative Resources and Voicing Demands to Companies

The second power resource is narrative resources (Lévesque and Murray 2010). After the seven different working groups held in parallel, the women came back to the plenum to summarize their discussions and voice their demands. For each working group, one or two women

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approached the microphone and gave a summary of the working group’s discussion and demands. This practice of making their demands heard in the plenum in front of all female workers and business representatives reinforces the internal solidarity that has been practiced during the working groups. In addition, it amasses narrative resources. The fifth female approaching the microphone did not start right away with voicing demands from the working group but instead shouted proudly, in a fierce voice, “Please applaud all women.”16 Women who reported about injuries, harassment, chronic pain, and violence against them in the maquilas during the working groups started clapping joyously. The rapporteur continued, “Long live women!”17 The 1,200 female workers replied, “Long live women!” and clapped again. The rapporteur continued, but more demandingly in a louder voice, “Where are the women? Louder! I cannot hear you.”18 The audience responded and got more and more excited and started chanting, cheering, clapping, and whistling. I was looking into the crowd of women and observing their faces, which were all smiles; their body language emanated contagious self-esteem. The applause swelled to a frenetic celebration of themselves. This performance felt like a release mechanism for oppression and harassment and a potent empowering process. This unifying moment transformed them from suffering objects of abuse into agents with pride and power. After this cheering for themselves, female workers summarized the content of the seven working groups and voiced their demands. Some were explicitly geared toward business. Female workers of the maquila served as rapporteurs for each working group. They went up to the front, looked out at the first row where the representatives of the transnational companies were seated and at the 1,200 female workers in the room, took the microphone, read their notes, and voiced their demands. Some of them even yelled their demands into the microphone. We demand to regulate the behavior of the line supervisors who are the principle violators of labor rights.19 We demand that workers of the free trade zones are consulted directly regarding the negotiation of a minimum wage.20 We demand that the employers value the work that we do and that they see us as human beings and not as an object in the production process.21

This reporting went on until all demands of all seven working groups had been voiced in the plenum. During the entire time, the representatives of the transnational companies sat in the front row and listened. None of them were playing with their phones or chatting.

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With these statements, the members of the labor movement of female workers in the maquila constructed narrative resources. Narrative resources comprise a “range of values, shared understandings, stories and ideologies that aggregate identities and interests and translate and inform motives” (Lévesque and Murray 2010, 339). Throughout the day in the speeches and testimonials, narratives reoccurred around certain concepts: “decent work,” “we are human beings,” “we are female workers with rights,” “we suffer due to labor rights violations,” and “we demand the remediation of labor rights violations.” This enacted workers’ agency but unfortunately had only limited impact. The most important brand-name companies in the garment sector in Nicaragua were present. This is very important. They are powerful players and can pressure suppliers to remediate conflict cases and comply with transnational labor standards. At the same time, the representatives of the supplier factories had already left the event before the working group summaries. The third actor in the triangle of agency between workers, suppliers, and MNCs was absent. The suppliers did not listen directly to workers’ demands. I argue that this minimized the effect of workers’ agency. Put differently, the triangle of agency is incomplete and missing the third angle, the suppliers. Enacting External Solidarity

The third power resource proposed by Lévesque and Murray (2010), enacting external solidary, or network embeddedness, is quite strong among female workers in Central American maquilas. It refers to “the degree to which unions are linked to their own and other union organizations, community groups, social movements or other types of actor” (Lévesque and Murray 2010, 339). This power resource is created during this annual convention of MEC but also reiterated and enacted in many other meetings, joint publications, and organized protests across borders. The female workers in maquilas in Central America and Mexico are well connected across borders. Since the 1990s these groups have visited each other regularly, participated in joint training organized and financed by the transnational NGO Maquila Solidarity Network and the regional NGO Redcam, and released declarations of solidarity for maquila workers across borders (Redcam 2011, 2014a, 2014b). During the MEC event in the morning and evening plenum sessions, various allies and local actors made short welcoming remarks. Some of these allies, including a representative from a Canadian transnational advocacy network, a Honduran union activist, and a Nicaraguan parliamentarian, have supported MEC since the 1990s. Lynda Yanz, for exam-

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ple, is the founder of the transnational advocacy NGO Maquila Solidarity Network based in Toronto, Canada, which has been supporting local labor movements in Mexico, Central America, and the Caribbean since the 1990s. She gave a speech in the morning session of the plenum. At the MEC event in 2011, the Nicaraguan female workers exchanged with other women’s rights groups and female union leaders from Honduras, who participated in the plenum and organized a working group titled “Analysis of the Political Participation of Women in Unions.”22 In the afternoon plenum, a Nicaraguan parliamentarian, Wilfredo Navarro, gave a speech. Sandra Ramos López, the leader of the movement of Maria Elena Cuadra, welcomed him: “We hear next Dr. Wilfredo Navarro, who showed us this morning that he is a friend of Maria Elena Cuadra [the women’s movement].”23 The first segment of his sixteen-minute speech reads as follows: Good afternoon. . . . I would like to greet all people, the women who are here and the men although we are in the minority participating in this convention of the female workers Maria Elena Cuadra. I would like to greet the organizers who supported this event, big thanks to you for collaborating with this effort by the women to waltz their way to demand their rights and especially the way to stop violence against women. But also I would like to acknowledge the representatives of the brands who are present this afternoon here because during our history of work, of our labor area, I have never seen the presence of representatives of the brands accompanying the workers and especially to launch this commitment with the health and the social demands of all of you. I hope this effort they [the brands] and your strength [addressed toward the workers] you have in requesting your demands lead to achieve many points that the seven working groups analyzed. I am proud to be here today and not only because I have been invited. In fact, I have fifteen years of association with the movement of Maria Elena Cuadra and I do not feel like a stranger. I feel like somebody who is committed toward the efforts of women.24

In this speech, a Nicaraguan parliamentarian created worker as well as corporate agency in three important ways. First, he committed to women’s and labor rights and revealed that he has been supporting the movement of Maria Elena Cuadra and its demands for fifteen years. This was exceptional, as the majority of Central American parliamentarians form part not only of the political elite but also of the economic elite of the region. Many of them either possess factories or have heavily invested in the maquila sector. Second, he especially referred to the brand-name companies present at the event and stated that he had never seen the presence of representatives of brands at an event like that before. He noted that the brands had launched a commitment toward

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resolving health and safety issues and other social demands. Third, he acknowledged female workers as rights holders and legitimate agents to demand improvement in their own working conditions. The creation of external solidarity or network embeddedness of female maquila workers in Central America has been very successful and long lasting. Since 1996, the Central American Women’s Network in Solidarity with Women Maquila Workers has been in place. Since the 1990s, MEC together with Redcam has had international financial support from Canadian, German, and Dutch NGOs and development agencies. MEC evolved out of secret meetings among a few female maquila workers in the early 1990s into a public movement and managed to attract a parliamentarian’s support and a voice in the parliament of Nicaragua regarding labor rights issues and violence against women. In sum, female workers created alliances to enact external solidarity with international NGOs, regional women rights groups, international development agencies, and national state representatives such as the labor ministries. Female maquila workers consequently empowered themselves and learned through creating internal solidarity that they have the power and strength to voice their demands. Through capacity-building workshops, learning, exchange, and knowledge sharing, they developed their rhetorical and political skills. A woman from a labor NGO in Honduras sums this up: “ It is progress for us that the female workers who formerly had fear, panic to speak, today do have courage, and now have the capacity to speak and not only to speak but also knowledge to argue well and transmit the problems in the media as well as to the social insurance agency and the ministry of labor and to the maquila owners.”25 In addition, external solidarity is created through a strong regional alliance of maquila workers in combination with the voicing of violations through transnational solidarity networks with international labor rights NGOs. A Honduran female union activist and a female labor NGO representative stated the importance of regional alliances and regional solidarity: We will never give up the strategy to continue to denounce internationally because through this we found the best way to assure respect for workers.26 . . . We were used to work very isolated like on islands. Each organization did its own bit and protected its bit [from others] and protected its relations.27

The labor NGO representative continued, “To understand that the maquila phenomenon, the problems in the maquila cannot be resolved only in one country alone, there needs to be a chain of solidarity, a chain of joint actions, joint strategies that allow for sustainable changes.”28

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This analysis of the external solidarity of the female workers in the Nicaraguan maquila shows that they have developed strong cross-country alliances with other civil society organizations. Various important stakeholders accept their invitation and speak at and participate in the event, among others a parliamentarian, a founder of a transnational labor NGO, a female union leader from Honduras, a representative of the local business association, supplier representatives, and representatives of the most important brand-name companies in the North American market. Infrastructural Resources

The fourth power resource, infrastructural resources, are “material and human resources and . . . organizational practices, policies and programmes” (Lévesque and Murray 2010, 340). The movement of Maria Elena Cuadra has some paid staff, such as lawyers to consult and represent workers in court, and a large network of trained female maquila workers who work in a decentralized manner in the communities where the maquilas are located. MEC’s office space in Managua provides workshops to educate female workers about their labor rights, pro bono legal advice, and a room with computers and internet for female workers to train and educate themselves. In the aftermath of the thirteenth colloquium of female workers in 2011, MEC’s mediation center “addressed 4,191 cases of labour rights violations in 2012 including workers who were denied salaries or benefits or who were victims of violations such as physical abuse,” and MEC offered counseling to almost 1,440 women in the same year (CoDevelopment Canada 2012, 2). MEC, in cooperation with Redcam, regularly issues studies on the situation in the maquilas, labor rights, and violence against women. For example, in the aftermath of the annual convention, MEC and its alliance partners in Redcam produced various policy documents, including the results of the convention and the demands of the Nicaraguan female maquila workers voiced during the event. In addition, this contributed to an exchange that brought forward a women’s labor rights agenda for the Central American maquila industry in 2014. The 2011 annual MEC conference was one of the events that led up to the declaration of the “women’s labor rights agenda for the Central American maquila industry,” which was endorsed by eleven national women’s organizations and two trade union bodies throughout Central America (Redcam 2014b). In addition, MEC forms part of a Nicaraguan tripartite body called the mesa tripartita, which mediates maquila and wage conflicts between the labor ministry, the maquila association, and worker representatives, and is able to present its studies and voice its demands within this body (CIR n.d.).

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The colloquium of female workers organized by the NGO Maria Elena Cuadra takes place every year and has on average 900 to 1,000 participants, including mainly female maquila workers but also representatives from MNCs and suppliers as well as representatives from regional and international solidarity networks. This colloquium serves as a place of empowerment for female workers and of exchange with MNCs and suppliers about labor violations in garment factories. Conclusion

This chapter has analyzed the enactment of relational agency and the constructing of power resources. In transnational labor governance, there are regular incidences of local coproduction of workers’ agency and corporate agency. This analysis adds to the literature on agency in international relations (Hofferberth 2019). I illustrate my argument with a case study of a proactive means of implementing transnational labor standards: a joint participation of MNC representatives, supplier representatives, and female garment workers at an annual convention in Nicaragua. Through a microsociological analysis of this event, I showed how worker and company agency is constructed in a specific context and enhanced or weakened in a triangle of relational agency between multinational corporations, suppliers, and factory workers. I argue that agency and power resources are relational and context specific. If one of the three actors in the triangle of agency between MNCs, suppliers, and workers is absent, the four power resources of female workers—internal solidarity, narrative resources and voicing demands, external solidarity, and infrastructural resources—can be amassed but remain incomplete. In the case of the annual convention of the labor rights NGO, the supplier representatives left the event before the women gave their testimonials on labor rights’ violations. The workers could only voice their demands to the MNCs present. They could not therefore address their demands for improved labor conditions at the maquila factories directly to the suppliers, hampering the implementation of their demands. Workers have to rely on MNCs’ willingness and desire to enforce labor rights through pressure at the supplier factories. Notes 1. A maquila is a production facility that produces goods in free trade zones in low-wage countries for multinational companies for the Organisation for Economic Co-operation and Development markets. In my usage, maquila is synonymous with supplier or supplier factory.

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2. It is important to note that this analysis takes place prior to the crisis in Nicaragua that began in 2018. 3. See, for example, “Code of Conduct,” Fair Labor Association, http://www .fairlabor.org/our-work/labor-standards (accessed November 1, 2017). 4. It seems that most workers perceived me as a company representative. During lunch, I sat at a table of workers. I tried to make conversation, but people were very shy, and the conversation did not flow. Not only was nobody talking to me, but also nobody was talking at the table. I gazed over to the other tables and saw people chatting and laughing. 5. Also see http://observatoriocentroamericanodeviolencialaboral.org/index.php /paises (accessed November 1, 2017). 6. Speech of a representative of a multinational company, audio: “Esto es la segunda vez que asisto a este evento e es fenomenal. Nunca me han invitado a, es de, a algo tan poderoso.” 7. Speech of a representative of a multinational company, audio: “Es que como marca llegamos relativamente poco tiempo trabajando en Nicaragua pero tenemos más de 12 años en estar trabajando en mejorar las condiciones de nuestras fábricas globalmente pero que todos sabemos que existen mucho retos y desafíos pero nuestro compromiso a un trabajo justo, saludable y sano sigue de pie también.” 8. At this moment, at the event, it remains unclear whether they are implementing their promises. In retrospect, we can see that around this time labor conditions had slightly improved in the maquila in Nicaragua (Gereffi and Bair 2010; Maquila Solidarity Network et al. 2012). What has definitely improved through such events and in the aftermath is the accessibility of MNCs to worker allegations of labor rights violations at Central American supplier factories. 9. For example, peace agreements were signed in El Salvador in 1992, in Nicaragua in 1990, and in Guatemala in 1996. 10. Rapporteur, Working Group 2: “Exigimos a regular el comportamiento de los supervisores que son los principales violadores de los derechos laborales” (“We demand to regulate the behavior of the line supervisors who are the principle violators of labor rights” [own translation]). 11. Impacto de la division sexual y social de trabajo: Avances y retrocesos de los derechos de las mujeres trabajadoras. 12. Impacto de la crisis economica mundial en las mujeres trabajadoras de las maquilas en Centroamerica. Diagnostico, 2007–2010. 13. Female worker, Working Group 2, at the MEC event in 2011: “Tengo dolor en mi hombro hace unos años. El supervisor me mandó al doctor. El doctor me dio pastillas. Los últimos meses tengo que tomar más y más pastillas para parar el dolor.” 14. Rapporteur, Working Group 2, audio: “Nosotras nos toca el coloquio numero dos . . . estamos aquí las dos, verdad, representando coloquio número dos. La señora como ella no puede leer bien verdad entonces la va a acompañar mi amiga . . . en nombre de [nombre de la mujer que no puede leer bien].” 15. Reyna, female worker in the maquila at Jerzee Honduras Fruit of the Loom, Choloma Honduras, interview in the documentary Made in Honduras (Niell 2014, min. 38:35–39:30; own translation): “Yo creo que es una primera vez donde en los altos ejecutivos de Estados Unidos se han sentado en una mesa redonda con las trabajadoras a negociar y yo creo que todo este proceso que ha pasado, las mujeres siempre pensamos en colectivo y somos tan decididas a buscar beneficiarnos que no sea directamente a uno. Lo otro es que nosotras las mujeres existe esa fortaleza porque buscamos mantener una estabilidad laboral porque somos madres solteras, sabemos nuestras responsabilidades que las condiciones de vida para nuestros hijos, nuestras familias dependen de nosotros. Hay una responsabilidad hacia nosotros.” 16. “Un aplauso para todas las mujeres.” 17. “¡Que vivan las mujeres!”

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18. “¿Donde están las mujeres? ¡Más fuerte! ¡No les escucha!” (own translation). 19. Rapporteur, Working Group 2, audio (own translation): “Exigimos a regular el comportamiento de los supervisores que son los principales violadores de los derechos laborales.” 20. Rapporteur, Working Group 2, audio (own translation): “Exigir que en las negociaciones para el salario mínimo que nos consultan directa con los trabajadoras de las zonas francas.” 21. Rapporteur, Working Group 2, audio (own translation): “Exigimos que los empleadores valoren el trabajo que realizamos como seres humanos y que no nos vean como ejemplo de producción.” 22. “Análisis de la participación política de las mujeres en las estructuras sindicales.” 23. Sandra Ramos, audio (own translation): “Llamamos al Dr. Wilfredo Navarro que este mañana viene a demostrarnos que es . . . amigo de Maria Elena Cuadra.” 24. Dr. Wilfredo Navarro, audio (own translation): Buenas tardes. . . . Quiero saludar a todas las personas, las mujeres que están aquí y los hombres aún estamos en minoría participando en este coloquio de mujeres trabajadoras Maria Elena Cuadra. Quiero saludar a los organizadores apoyando este evento, definitivamente las gracias por colaborar con este esfuerzo de las mujeres derrumbarse por el camino de reivindicaciones de sus derechos [sic] e en especial el camino por derrotarse . . . a la violencia contra las mujeres. Pero también quiero hacerle reconocimiento a los representantes de marcas que están presentes esta tarde aquí porque a lo largo de nuestra historia del trabajo del área laboral no había visto la presencia de representantes de marcas acompañando a los trabajadores y a las trabajadoras y en especial en empezar ese compromiso con la salud y con las reivindicaciones sociales de todos ustedes. Ojalá, el esfuerzo que hagan ellos y la fortaleza que ustedes tengan en la demanda de sus reivindicaciones pueda lograr muchos de los puntos que los siete grupos han analizado. Me siento orgulloso de estar aquí no solo porque soy invitado, realmente yo tengo casi quince años de estar vinculado al movimiento de Maria Elena Cuadra y por tanto no me siento un extraño, me siento como alguien comprometido con el esfuerzo de las mujeres. 25. Maria Luisa Regalado from La Colectiva de Mujeres Honduñas, interview in the documentary Made in Honduras (Niell 2014, min. 27:39–28:10; own translation): “Es un avance para nosotras es que las trabajadoras que antes tenían miedo, pánico de hablar, hoy ya tienen el valor, ya tienen, la capacidad de hablar y no solo de hablar sino conocimientos para poder argumentar los problemas tanto al nivel de medios de comunicación como también antes del mismo seguro social antes del ministerio del trabajo y ante los empresarios maquiladoras.” 26. Evangelina Argueta, union leader of Central General de Trabajadores, interview in the documentary Made in Honduras (Niell 2014, min. 39:34–39:49; own translation): “La estrategia de seguir denunciando internacionalmente no la vamos a abandonar, no va vamos a abonar por ningún punto. Porque es allí donde hemos encontrado el mejor camino de respetos para los trabajadores.” 27. Maritza Paredes, founder of Equipo Monitoreo Independiente de Honduras, interview in the documentary Made in Honduras (Niell 2014, min. 42:27–42:36): “Estábamos acostumbrados a trabajar como islas. Cada organización haciendo su pedacito, cuidando su pedacito, cuidando sus relaciones.” 28. Maritza Paredes, founder of Equipo Monitoreo Independiente de Honduras, interview in the documentary Made in Honduras (Niell 2014, min. 39:51–40:06; own translation): “Entender que el fenómeno de la maquila, los problemas de las maquilas no se pueden resolver solo al nivel de un país. Tiene que haber esa cadena también de solidaridad, cadena de acciones conjuntas, estrategias conjuntas que permitan que los cambios sean más sostenibles.”

6 The Corporate Supply Chain as Global Governance Christopher May

My approach moves beyond two common perspectives used to conceptualize the relationship between corporations and global governance: as input (shaping the agendas of global governance institutions) or as output (the impact on corporations of institutional decisions) (Brühl and Hofferberth 2013, 354). Rather, I suggest that the global corporation can be considered as an institution of global governance itself, with a clear realm of interest in which it operates. The corporations’ supply networks have been built to enhance or extend a range of explicit economic and noneconomic benefits, and given that the network itself is a significant (organizational) asset, we should not be surprised that corporations’ governance of such networks is likely to be more sophisticated than merely an exclusive focus on market relations (Dunning and Narula 2004). As with any asset the “owner” seeks to both maintain its value and manage its deployment to gain further advantage. This approach differs from discussions of (global) supply chains that focus on their management by suggesting there is a governance function being undertaken by corporations, characterized by explicit and implicit (political) power relations, not only the technical management of efficiency in network interactions. Certainly, authority may not necessarily reach beyond a corporation’s own network(s), but because of its global reach its political economy parallels many of the characteristics more usually identified with global governance. All institutions (with the partial exception of the United Nations) deal with a realm of interest that is less than universal but potentially global in range. Thus, while they are configured differently, once we have established that governance is an activity undertaken by corporations, 127

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then their differences with the more normal subject of global governance research are a matter of degree, reach, and scale, not of character. To some extent this approach parallels Lynne Dallas’s (1988, 114) notion of the power model of corporate governance (counterposed to an efficiency model): “[The corporation] actively seeks to structure its environment to serve its needs of autonomy and discretion. While certain concrete realities exist, such as the scarcity of resources, how these resources are used and distributed is a matter of social organization, dependent on cultural, historical, social and power factors.” The decisions made by the corporation are directly concerned not necessarily with efficiency or profit maximization but rather with the perpetuation of control and the values stressed by the central management group(s). Moreover, these values are likely to vary from sector to sector: corporations in the pharmaceutical or high-technology sectors will have considerably more interest in the manner in which their networks treat, use, and protect intellectual property rights (IPRs) (May 2010) than a corporation in the food sector might. Likewise, corporations in capital-intensive industries such as energy generation will confront different governance issues than clothing retailers with extensive and complex supply chains. For instance, a high-technology corporation will be concerned not just with the manner in which partners utilize specific IPRs but also with the national legal context and a state’s government’s willingness to enforce such rights; Chinese past (lack of) willingness to enforce IPRs has been identified as an issue for the development of some supply chain relations, with core corporations unable to govern such relations in a manner that allows the retention of control over knowledge resources. However, for clothing and/or assembling networks, the impact on brand(s) reputation and labor relations profile will be a much larger concern, with contractors seeking to either distance themselves from unwelcome incidents (such as the Rana Plaza fatal building collapse or the suicides of workers in intensive assembly plants) or seeking more direct control of labor standards though forms of relational contracting. Governance in these production networks is seldom entirely hierarchical but is more often a process of negotiation and engagement; not command and control but, as I will develop below, a process of legitimated governance. The central corporation may have distinct advantages, but subsidiaries, contractors, and others may also have forms of leverage that can be deployed within supply chain decisionmaking. Where the core corporation is accessing particular technologies or localized resources or knowledge(s), the contractor may have significant asymmetric bargaining opportunities. Hence, while lead corporations are likely to seek ways of constructing and maintaining effective monopolies (perhaps via branding

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or through the control of technology), their governance of the production network will often focus on how to enhance competition between suppliers and contractors (Milberg and Winkler 2013, 116–123). Importantly, this should not be regarded as akin to a spot market between contractors; rather, it takes place within a system of managed access and as such resembles centralized (corporate) planning more than crude supply and demand, or the unalloyed use of the price mechanism. The key corporate planning priority is the preservation of the overall supply chain, not necessarily maximum efficiency of all its component elements (Pistor 2014, 239, 242). This is to say the governance of the network will sometimes be focused on establishing a competitive environment around its outer edges but not necessarily within its well-established networks. Generally, and following David Ciepley (2013, 142), we can then posit that “within its jurisdiction, the business corporation exercises powers analogous to those of government, if more limited, including the right to command, regulate, adjudicate, set rules of cooperation, allocate collective resources, educate, discipline and punish.” However, while Ciepley and others are right that when compared to the sovereign state there is considerable difference in the scope and range of such legitimate capabilities (Crane et al. 2008, 72–76), when we compare the global corporation to the typical institution of global governance, these differences are much less significant. Corporations are often better able to effectively govern and, in the last resort, sanction network members than international organizations can govern state members. On one level this is due to a difference in the characteristic relations within the network; most institutions of global governance are (legally) different from their sovereign members, leading to an imbalance in legalized (international) social power, even if sovereignty is formally “pooled” or partially transferred via membership in any specific institution. In the corporate supply and/or production network, despite vast disparities of size, all organizations are essentially similar (and indeed private contract law is built upon such an assumption). This is to say that despite clear disparities in power and influence, the legal character of their engagement with each other is based on a legal equality in a way that is different from the normal relations of global governance. Given the similarity in governance purpose, it is perhaps unsurprising that global corporations have developed processes that often mimic legal structures, negating many unwelcome consequences of globality; in the absence of supranational laws of property or contract, the global corporation’s network of subsidiaries and affiliates respond to the internalized law-like rules and regulations the core corporation puts in place (Gessner 2012, 151) and less to differences in national legislation. Within its own

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network (or effective “jurisdiction”), the corporation plays the role of a governing body, but the authority it is able to mobilize is not completely separate from government; rather it flows from the legal mechanisms (such as incorporation and property law) that facilitate corporations’ operational modes in specific jurisdictions. Crucially, the corporation’s governance function is not against the state but rather is partly facilitated by the state (Robé 1997; Mayer and Phillips 2017). Yet, as Ciepley (2017, 420– 421) points out, the state’s delegation of authority and its delegation of jurisdiction are different things. The former is a relatively common practice, while the latter does not produce the sorts of principal-agent relationships normally prompted by delegation. Rather, delegation of jurisdictional authority can only be rescinded as a whole, while specific actions within the delegated jurisdiction are no longer any responsibility of the state. As such, corporations have long enjoyed considerable latitude in the internal governance of their business relations, and this has been expanded (as normal practice) into their global networks. Of course, where differences in national legislation are to the corporation’s advantage, the relationship between globalized internal rules and national laws is finessed to ensure both elements serve the corporations’ needs and do not violate the inner governance logic(s) of the jurisdictional space of the supply chain. Therefore, although global corporations certainly interact with the other institutions of global governance, they themselves also govern significant realms of the global political economy, sometimes in conjunction with the regulations and guidelines of other institutions, sometimes as single governing authorities. While using forms related to and indeed constituted by states, their actual character and effect within the corporation’s “internal” relations (that is, within its networked supply chain and not only within its incorporated core) are defined by the corporation, not the (or a) state (Robé 1997, 66–67). Where corporations are constituted differently from the dominant Western model, perhaps incorporated in states across the Global South, or are state-owned enterprises, although the formal/legal issues may vary considerably, prompting in some cases very different governing practices, the underlying requirements for efficacy are likely to be similar (even if this would need to be confirmed by research into specific cases). Likewise, large privately owned firms (IKEA or Zara, to name two) also operate global supply chains, but again the governance issues and power relations within the supply chain networks are likely to be similar. To be effective (even if state sanctioned), forms of supply chain or network governance need to be regarded as legitimate by network partners, contractors, and participants. Without some recognition of legitimacy around decisionmaking and instruction giving in the network, not only will the central corporation likely incur increased costs in securing

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compliance, but it is more likely that contracted participants in the supply chain will have little incentive to reduce various forms of cheating that distant relations allow; with legitimized decisionmaking, network partners and/or contractors, however, will be more willing to maintain the standards and practices that are regarded as both normal and required by the main/core corporation to sustain its network. It is this deployment of legitimacy that marks out the corporation as a governance institution, but before exploring this central aspect of governance, I want to establish how we might best see the space occupied by the supply chain as the realm in which corporations’ governance function is deployed to shape and control these network relations. The Space of the Supply Chain: Seeing Through Logistics

In this section I use the lens of logistics to assemble an account of the space in which supply and value chain governance takes place. This space is (socially) produced by the availability and efficacy of logisticsfacilitated circulation, without which the network that is subject to corporations’ governance function could hardly be said to exist. I cannot develop a detailed history of the development of logistics here, but needless to say, as the recent interest in containerization has demonstrated, it is finally finding its way into the analysis of the manner in which supply chains have developed over the last sixty or so years.1 It is also worth noting that with around two-thirds of all global trade flows being between corporations,2 the question of logistics is itself firmly linked to the analysis of the supply chain; they are in a sense cosupporting, with each depending on the other for its continued growth. Taking a governance approach emphasizes the realm of supply chain relations that lies between integration and/or affiliation on one side and a reliance on spot-market-like relations on the other, where each transaction within the network is treated as essentially an isolated moment of interaction. The highly populated realm between these two points is where forms of governance have been developed to maintain relations and to ensure some resilience to network configurations. Thus, to be clear, I am suggesting here that forms of analysis hitherto deployed to understand governance elsewhere in the global system might be of some help in making sense of what is actually happening within the global production (and supply) networks organized by globally active corporations. Governance is concerned with both the generalized needs of the supply chain and the particular requirements of specific interactions within it. Indeed, popular demands that corporations act responsibly under the rubric of corporate social responsibility (CSR) already recognize that

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corporations are effectively governance institutions able to prompt shifts and changes in practices (albeit imperfectly) within the political economic spaces they govern (Macdonald 2014, 169; Anderson 2006, 34). However, if it is relatively common to recognize that corporations are political institutions, as well as economic ones, this is seldom used to assess the more general governance function that such recognition must imply. Moreover, such governance functionality is not necessarily limited to the corporations at the end of such networks; given the patterns of subcontracting within global supply chains, significant networks of contracted relations are managed (and thereby likely governed in the manner discussed here) by lead contractors working with their own networks of linked subcontractors. Although this would need to be investigated further, it is likely that successful modes of governance will also be adopted by such lead contractors if it enables them to ensure their own networks remain effective as regards the demands and needs of the overall supply chain, with such lead contractors also benefiting from the advantages of the accepted legitimacy of their decisionmaking. Characterizing these relations more generally, Gary Gereffi and Joonkoo Lee have developed a much-used typology of governance forms that pattern global supply chains; their analysis aims to understand the manner in which governance practices allow the capture of value across the supplier network, often referred to as a global value chain analysis. Their five types of supply chain governance range from hierarchical at one end (essentially fully integrated corporations with wholly owned subsidiaries) to market governance at the other, where all interactions in the chain are conducted via the market and governance is through the price mechanism—the distinction I made above. Between these two extremes, three broad types of (possibly temporary) balancing points between competition and cooperation can be identified: • Modular: Suppliers work to the standard specifications of purchasing agents in the chain; while these can be complex, communication between suppliers and purchasers allows these intermediate goods to be relatively easily specified. • Relational: Relations are deeper, involving negotiations about burden sharing and knowledge transfer; these will be increasingly based on social ties between partners and burgeoning trust relations. • Captive: Relations are (perhaps) pathological, with suppliers increasingly dependent for their ongoing profitability on a few (or even single) buyers/networks operating under conditions that are relatively rigid and/or intrusive and may be specific to a particular supply chain network (Gereffi and Lee 2012, 25–26).3

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These three intervening types, between conglomeration and the spot market, are where the (global) governance function of corporations (and large firms) is evident. Crucially, in extended supply chains or production networks, different parts of the network may be characterized by different types of interaction. In the past these general forms of supply chain were mobilized around core production-focused corporations, but increasingly global supply chains (especially in textiles and consumer technologies) have become organized by and around key buyers, controlling global brands. The particular relations within networks fall into one or more of these broad categories at least partly on the basis of the possibility (or lack thereof) of easily codifying requirements for the supplier. The more complex the requirements (the more tacit knowledge and coordination required), the more likely relations will move from modular, to relational, to captive at that point in the network (Gereffi et al. 2005). Thus, governance failings or a lack of ability to achieve required outcomes may shift relations into more explicitly integrated arrangements and, by doing so, increase the direct exercise of power by the central coordinating corporation (but at an increased cost for governance in time, organization, and other resources). While Gereffi and Lee helpfully offer a characterization of the driving logics between the varying forms of relations between the two (ideal typical) endpoints of their continuum, they do not fully develop the political aspect of the question of governance in these relations. Thus, I am adding to their approach a question about how these relationships are governed. As noted, I suggest that by adopting analysis developed in the global governance literature, we can reveal a political process in addition to any process of day-to-day management of these relations. This leads us to examine how the decisionmaking processes within these varying relations are rendered legitimate and, by doing so, expand our understanding of how political power is both developed and maintained so that decisionmaking becomes (at least partly) consensual and “public”-regarding rather than a process of command and control, which in such large networks, due to the efficacy of surveillance and sanctions, is unlikely to be particularly effective. Certainly, we can posit that there are degrees of legitimated governance and that, in certain realms, governance may be more coercive than consensual, but I want to make the point that in any global supply chain and/or production network, even if not universally evident, significant areas will be (and are) governed and not merely managed. We will return to this issue of how we can deploy global governance analyses, but first I want to explore in a little more detail the space of governance in which these relations take place. This space can be usefully

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“seen” through the lens of logistics: by focusing on the physical web of connections, we can see clearly where and why governance functions are required; we can see the terrain of governance by identifying its arteries and connections. Moreover, I want to suggest that it is this visualization of a terrain of patterned connectivity, usefully depicted in the reports discussed below, that has prompted the development of governance rather than the more instrumental management of supply chain complexes. We might examine this space via a value chain approach or even through a lens of the deployment and utilization of standards or intellectual property rights, but I have chosen logistics because, more than these other lenses, logistics has a salience for the entire supply chain from the farthest reaches of subcontracting microfirms to the central and core corporation. This is not to say these other ways of looking at the space of the supply chain are unhelpful, only that they are by their character more unevenly experienced than the logistical dimension. The World Bank Connecting to Compete Reports, 2007–2016

In 2007 the World Bank launched an ongoing series of reports on trade logistics, and, as so often, the method used to “see” this terrain was a series of indicators. The initial (2007) report sought to provide “some insights on the cost of poor logistics to country competitiveness—and the sources of those higher costs,” pointing out that “beyond cost and time taken to deliver goods, the predictability and reliability of supply chains is increasingly important in a world of just-in-time production sharing” (Arvis et al. 2007, 3). Indeed, in its first year, the report already concluded that “good logistics performers benefit more from globalization. Logistically friendly countries are more likely to have better global value chain integration” (Arvis et al. 2007, 11). In the second report this was (again) emphasized: “The reliability of the supply chain is the most important aspect of logistics performance” (Arvis et al. 2010, 20); in a world of just-in-time production processes and the coordination of complex routing through the supply chain for intermediate goods and components, the report’s authors stressed that delays not only are costly but in governance terms disrupt the stability of supply chain throughput and by doing so can cause considerable knock-on effects. Of course, it is as well to be clear that while the Connecting to Compete reports provide useful time-series data, the survey evidence is based on the perception and sentiment of logistics professionals and thus cannot be regarded as “hard” or fine-grained statistical evidence of the costs and/or effectiveness of logistical networks. It does, however, very effec-

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tively establish an agenda for policymakers and corporations (and their associates or lobbyists) around the issues that require attention if logistics are to, at the very least, not impede economic development and, more positively, actually contribute to the integration of countries into the supply chain and trade networks that are regarded nowadays as the sine qua non of economic progress for developing and newly industrialized countries. There is also a clear internal audience for these reports, focusing on the justification of World Bank projects to enhance and expand logistics capacity in developing countries, which are being prompted to explore the opportunities of global supply chains (Cowen 2014, 59). However, here I will focus on the manner in which the reports present and contribute to the visualization of a supply chain terrain patterned by logistics-based arteries. To build the comparative Logistics Performance Index, the World Bank research team took into account seven areas of performance: • Efficiency of the clearance process by customs and other border agencies • Quality of transport and information technology infrastructure for logistics • Ease and affordability of arranging international shipments • Competence of the local logistics industry • Ability to track and trace international shipments • Domestic logistics costs • Timeliness of shipments in reaching destination (Arvis et al. 2007, 8)

Survey respondents then were asked to rate on a scale of 1 to 5 each of these elements for the country in which they operated. Like all such surveys, this one had some evidential shortcomings, although equally the researchers had a (perhaps relatively legitimate) expectation that logistic professionals would be well versed in the comparative strengths and weaknesses of their domestic arrangements vis-à-vis the global logistics environment. Interestingly, and perhaps responding to such a critique, the second report in 2010 contains an explicit defense of the methodology, noting that academic research “confirms that qualitative measures of constraints can capture meaningful variations across countries and within countries and therefore reflect a real assessment of actual conditions on the ground and how important they are to the firm” (Arvis et al. 2010, 6, Box 1.2). In any case the reports clearly provide time-series data over nearly a decade, and for my interests they more importantly present a significant view-shaping role of the manner in which the global logistics space/terrain might be understood.

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So taking the initial seven elements that make up the index, what do they tell us about how the space in which supply chains interact is envisaged by the World Bank’s research team? The efficiency of clearing processes is a key concern not least because for many complex multinational supply chains, components and semifinished goods may pass across a number of national borders before entering their final market as finished goods. Here, delays can be caused by both inefficiencies of handling and the multiplication of bureaucratic forms for clearing. Interestingly the fifth element suggests that corporations’ own tracking of their supply chain networks can be enhanced (or conversely compromised) by the ability of logistics operators to provide good information on these international shipments. The other five elements are much more concerned with the internal handling of the flow required by supply chains, both incoming and outgoing from the surveyed (national) location. This immediately indicates that the logistics interface is regarded as symmetrical, which is to say it is concerned with both imports and exports, a key requirement for any country seeking to locate itself within a complex global supply chain where intermediate goods are moved around the network for various forms of processing or combination. Efficient and effective movement across the border is required for entry into the local logistics network, but equally the internal/domestic network also needs to work well to ensure that as intermediate goods are completed, they can reenter the international logistics network at this point to move back across the border and on to their next stage/destination. Interestingly in the second report, released in 2010, the range of information on the border was expanded—three of the four extra data points/survey questions concerned the efficiency and/or costs of transit across the national border, including border security measures (Arvis et al. 2010, 5). Indeed, in the second report the question of the border was considerably more prominent. The second Connecting to Compete report noted that while there was a convergence of approach and procedure(s) between different countries’ customs operations, separate border agencies and regional variations continued to undermine the relative coherence of the terrain over which logistical services operate (Arvis et al. 2010, 16–22). Moreover, by the third report in 2012, even this limited convergence had halted, with the researchers suggesting that in the midst of a global recession, governments’ focus on improving their regulation of key aspects of border transit had been replaced by other policy priorities (Arvis et al. 2012, 2). As this suggests, while corporations will seek to govern their networks, they remain engaged with state practices at specific transit points. By 2014, the report’s authors were warning policymakers that they needed to

The Corporate Supply Chain as Global Governance

focus greater attention on supply chain reliability and predictability [and] the emerging networked structure of global and regional trade, which is linked in part to the rise of value chains. In a network, small disruptions at one point can spread rapidly and sometimes unpredictably to other points. . . . [C]ountries that cannot provide the conditions for developing predictable and reliable supply chains will become increasingly disconnected from world markets where networked production models are common. Low-performing countries need greater policy attention to improve their connectivity and to stem any further marginalization from the global trading system. (Arvis et al. 2014, 26–27)

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Here, as I will mention below, the ability of the core corporation to deny access to potential network participants due to the shortcoming of the interface with the space of the supply chain is a crucial impediment (in the World Bank’s view at least) to the enjoyment of the fruits of economic development. Moreover, reflecting the rise of “environmental sustainability concerns,” in the 2010 report a new measure of the demand for green logistics was introduced; in that year’s survey a third of those shipping into Organisation for Economic Co-operation and Development countries identified the existence of such a demand, while only 10 percent of those shipping into developing countries answered affirmatively (Arvis et al. 2012, 3; see also Arvis et al. 2014, 31, Box 3.2). To a large extent, this is driven by shippers rather than by the logistics firms themselves (Arvis et al. 2012, 31; Arvis et al. 2016, 35), and here the role of a growing supply chain governance focus on green impact is clear. A shift in supply chain governance priorities leads to a shift in the demands put upon the supply chain “partners” to ensure that the logistical element of their involvement in the network responds to these lead corporation priorities. By the fifth report, the authors were warning that global supply chains “are becoming more complex, and the safety, social, environmental, and other regulations affecting traders and operators are becoming more demanding” (Arvis et al. 2016, 4). As this indicates, the space mapped by logistical pathways has become ever more subject to concerns that are at the center of corporations’ governance function, with the search for trusted partners who can buy into and deliver the outcomes required by enhanced CSR demands. As the first Connecting to Compete report noted, “Traditional measures of performance such as direct freight costs and average delays, while important, may not capture the overall logistics performance and thus the ability of countries to use trade for growth. The predictability and reliability of shipments, while more difficult to measure, are more important for firms and may have a much greater impact on their ability to compete” (Arvis et al. 2007, 18). And in “ability to compete” what is

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at stake is the ability for local companies to be integrated into global supply chains. This move to establish that it is not actual costs measured in prices or delays in the system that may be most important immediately shifts focus to the sorts of issues that supply chain governance is concerned with: the construction of reliable, which is to say trusted, operating relations that are predictable and whose role in the overall supply chain system can be sustained and is stable. Interestingly, over the five reports the focus on the need to satisfy the requirements (and thereby the governance requirements) of global supply chains becomes an increasingly central concern for the Connecting to Compete research team. By the fourth report the preface by two World Bank directors boldly asserts, “Supply chains are the backbone of international trade and commerce” (Arvis et al. 2014, 3), and in the fifth, the main report starts by noting, “Efficient logistics connects firms to domestic and international markets through reliable supply chain networks” (Arvis et al. 2016, 1). Increasingly, the terrain over which logistics operate is regarded as a space dominated by the needs of complex and (potentially) global supply chains. However, while from the start the reports were interested in the border as a key site of friction for supply chain logistics, as they progress the focus on the border, customs, and the range of state agency interventions that might be made at the border (from security to health-and-safety checks) became an ever more central preoccupation of the reports’ authors/researchers. Thus, the Connecting to Compete reports see the space in which corporations’ supply chain–related governance takes place as having a number of key attributes: • The border is an important source of friction. • Internal/domestic logistic performance is important but secondary, a source of potential inefficiencies. • The performance of logistics is dependent on both the actions of the private sector and the regulatory and other facilitative infrastructure(s) provided by the state. • The exposure to corporate governance concerns, best exemplified by the growing demand for green logistics, includes the political shift in the acceptable character of the routes and practices of contemporary logistics.

Looking at the space of the supply chain through the lens of logistics it becomes a series of nodes that require specific friction-reducing actions and practices. These are often presented as questions of technique or efficient nodal practices, but a governance approach reveals these to also have a considerable political element—both in the question

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of corporations’ relations with authorities in national jurisdictions and within the supply chain as regards the manner in which contractors engage with logistical demands and practices designed to make the supply chain both effective and resilient but also increasingly “green.” These range from the physical entry of goods into logistical arrangements and the (localized) interaction with political authorities with regulatory oversight of the logistical nodes through which the chain’s various products flow to the manner in which contractors respond to the requirements of the supply chain’s lead corporation(s). This framing is reflected in David Dollar’s (2017) assessment of the difficulties that developing countries encounter when seeking to engage their domestic industries with global supply chains. As he puts it, Non-tariff trade costs in today’s world—freight, insurance, and other cross-border related fees—tend to be much larger than any remaining import tariffs as products travel through the various stages of production. Those trade costs have a monetary dimension (for example, transportation, insurance, and other fees), but also a more intangible dimension: information costs, nonmonetary barriers (regulation, licensing, and so on), and weak trade governance leading to uncertainty. . . . [This] tend[s] to impede trade, but their effects are most pernicious in sectors requiring that parts move back and forth across borders. The costs of impediments cascade. Countries with very high trade costs will not be able to participate in [global supply chains], and any exports are thus likely to be traditional goods, often primary products.

Moreover, seeking to deal with this problem by organizing industry into export-processing zones limits the scope of benefits for the whole economy, and thus these costs (which are largely coterminous with the concerns of Connecting to Compete) need to be controlled; performance on the comparative Logistics Performance Index is indicative of the ability to enter a space where corporations govern relations to establish a global production network. Legitimacy, Democracy, and Resilience in the Supply Chain

Having presented the supply chain as a space revealed through logistics, I now return to the question of governance and how it relates to this space. For governance to be achieved, as opposed to coercion, those directing must be seen as exercising legitimate authority. The construction of the legitimacy of corporate network governance therefore needs to take place across three initially negative aspects of power relations: differences in circumstances, disparities in interest, and requirements for compulsion (Beetham 1991, 59–63). First, the difference between the

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core/organizing corporation and its partners needs to be legitimated: this may be achieved through recognition of the ownership of technology or through appreciation of brand value(s), through control of access (albeit indirectly) to established sales networks, and/or via other resources or assets that can only be utilized through the network. The core corporation sustains an asymmetry of power across its network (Milberg and Winkler 2013, 129) but achieves this through governance, not crude command and control arrangements. Second, the subordination of decisionmaking (governance) that results from involvement in the network has to appear in the interests of participants; it is crucial that involvement in the network is seen as allowing partners to effectively access various important assets. Third, to remain legitimate the relation must be (or at least plausibly be seen as) consensual; negotiations around “incomplete contracts” and conditions of supply will have significant impact on whether the governance of the network is regarded as legitimate or exploitative.4 Differences between actors can also be justified through “cognitive” legitimacy (linked to the acceptance of market relations as themselves being generally legitimate), but where relations go beyond the one-off spot-market contract, more developed forms of legitimacy make supply chain governance possible. The complex networks of the supply chain are tied together through a web of contracts (Picciotto 2011, 132–133). Thus, when we think of global corporations’ governance function, the key issue is not necessarily the ownership of assets and resources but rather the ability and a desire to control access to those resources (Rajan and Zingales 1998). While significant parts of the supply chain network are not (and cannot be) owned by any particular global corporation, the ability to control access to the central resources of the network and also (through noncompetition clauses in contracts, for instance) to constrain access to key “independent” elements of the network is an important aspect of corporations’ governance function. Although the ownership structures of global corporate networks are often complex, it is the management and control of these networks that produces identifiable governance effects. However, this complexity may also cause some difficulties in establishing legitimacy; where there are groups of network participants/members whose views of what might be regarded as acceptable levels of accountability over decisionmaking differ (Black 2008), then constructing a variable form of legitimacy will be a key challenge for the core corporation. Here, the ability to mobilize discursive power over the perception of normality across the supply chain (as discussed below) will be a crucial arena of corporate governance seen as political power. Moreover, management interest is not limited to the issue of prices or market conditions; rather, given their network character, it is also

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(crucially) an issue of managing time and space. A global corporation’s managers seek to control its political geography to maximize its returns and remain a going concern (Dixon 2014, 62–63). Indeed, as the United Nations Conference on Trade and Development’s (UNCTAD) 2013 report on global value chains (GVCs) suggests, the governance of these networks will have a “number of aims in mind”: First, the transmission of goals and requirements related to products, processes and activities—along with relevant technologies, skills, technical specifications etc.—to affiliates, contract partners and independent firms (for arm’s length transactions) Second, to maintain and enhance as much as possible, their power balance over these same firms, and Third, to maximize their appropriation of the total value in the GVC. (UNCTAD 2013, 141)

Although this is not a formally ranked hierarchical list, it is nonetheless notable that only in the third element does the issue of revenue (value capture) enter consideration—again emphasizing the nonfinancial drivers behind the governance function of corporations with developed production networks. Moreover, as Dallas reiterates, the main, and perhaps only really effective, direct lever that corporations have is their ability to mobilize and allocate resources across the space they seek to control. Here we should understand “resources” widely to include “social products,” including influence, legitimacy, and preferences that the central managerial coalition governing the supply chain can deploy to shape micro-level decisionmaking (Dallas 1988, 83–84). Thus, one way of seeing the work to establish a networked supply chain in a space defined/delimited by the logistical activities that make interchanges effective is to regard this space itself as a social resource of the corporation. A space in which the normative legitimacy underpinning the core corporation’s decisionmaking capability is (relatively) unquestioned is one in which governance is a resource that is deployed. At its maximum this is a space that is coterminous with the reach of logistical conduits of the network, where corporate decisions over logistics practices remain salient. In this space, we see the institutionalization of network-specific relations, habits, and socialized knowledge about what would be regarded as normal activity. Seeing corporations as global governance institutions requires a focus on ongoing relations within these networks that allow such outcomes to be achieved through negotiation and settlement, and not merely a view of a series of periodic intranetwork transactions managed by economic incentives. Legitimacy and acceptance of governance priorities is

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required if corporations are to achieve one key outcome: the transfer of risk away from the central corporation and onto other stakeholders and/or partners in the supply chain. For example, global corporations set standards and rules in many market sectors directly via the contracts that are used to pattern the supply chain, but also because many global sectors actually function as effective oligopolies (Harrod 2006, 25); as such these sectors are controlled by a small group of corporations whose managers, even if not colluding with each other, share a broad set of interests. This it to say, acceptable and normal practices in often quite closely bounded markets segments are set by a small number of corporations. The corporation(s) at the center of these supply chains seek to perpetuate their position by recreating this environment where and when possible and, as change/innovation is required, shaping it to maximize their capture of any associated advantages or benefits (Dallas 1988, 98), while shifting the risks associated with change into the supply chain; costs of transition are often borne by contracting partners, not the core corporation itself. However, for many corporations theirs may only be one among a number of supply chains serviced by a particular supplier, and their ability to govern the actors involved therefore often remains incomplete; indeed as there is little formalized clarity (unlike with states) about the legitimate reach of corporations’ jurisdiction across the supply chain, corporations need to work to maintain legitimacy within the network. One might expect that the more subcontracting network partners were dependent on the core corporation, the more compliant they would be, although there is also an issue of specificity of their own technology and/or other assets that might mitigate the asymmetry of power prompted by a narrow range of network engagements. It is also the case that supply chains tend to offer opportunities to a very small proportion of local (potential) contracting partners, and joining the network often requires practices and procedures that can only really be developed within the network, leading to a self-perpetuating group of contractors, jealously guarding their position and ensuring any benefits from “upgrading” are retained by the existing group (Dallas 2015, 903). Thus, the governance function may also be levered by partners to maintain their position within the network and continue to exclude those firms as yet not “ready” to engage with the supply chain, balancing the acceptance of transition risks with continuity of network membership. This leads Kate Macdonald (2014, 179) to characterize the governance of supply chains as exhibiting “decentralized, non-hierarchical dynamics, without established deliberative processes or other norm- or procedure-governed mechanisms to determine outcomes or resolve conflict.” This demonstrates the utility of developing a critique of (global) governance in these circumstances, identifying how parallel problems in other issues areas have played out. For instance, where the governance

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of labor standards has become an issue for the core corporation, then there may be a political need for the governance function, and the regulations to which it is applied, to become a more collective endeavor (even “democratic,” as I develop below) among a number (sometimes quite a large number) of corporations/contractors and civil society actors (Mosley 2017). Here the internal governance function of the corporation and the realm of private authority, as exemplified by civil society organizations (and civil regulation), interact. Governance, Power, and Corporations

Utilizing the analytical approach adopted by Doris Fuchs, we can disaggregate the power of corporations in global governance into three analytical elements: instrumental power, encompassing direct influence based on the deployment of corporations’ extensive and diverse resources; structural power, revolving around rule making and the establishment of agreed-on rules of practice; and discursive power, by which certain settlements are politically legitimated and/or normalized outside the formal processes of rule adoption (Fuchs 2007, 56–58).5 The first dimension Fuchs identifies relates to the exit-threat issue and to corporations’ ability to control access to their producer/supplier networks; and of course this gatekeeping can be used as a relatively crude governance device. Nevertheless, it is highly effective as, as Katharina Pistor (2014, 233) points out, contracting “firms unwilling or incapable of complying with [core corporations’] standard[s] will not be able to join their global supply and distribution networks.” The second dimension plays out in the supply chain through multifaceted negotiation and network surveillance activities. This is strengthened by a (variable) ability to utilize the entrypromise/exit-threat in specific instances, although when significant sunk costs are evident, a break would not be cost-neutral for the core corporation, and contractors are well aware of this. The discursive element in the governance of the supply chain is evident in the manner in which the corporations’ codes of conduct seek to normalize specific behavior and practices, but most importantly through supplier support and contractor engagement intending to socialize partners into the particular ways of working of the supply chain. The key point about the discursive element as regards the argument herein is that it involves corporations being able to establish the parameters of debate, the agenda of possibilities, in a way that does not require the imposition of more direct forms of power. This emphasizes the role of legitimacy of decisionmaking in global supply chain networks: the discursive power of the core corporation normalizes the recognition of the appropriate site for strategic and other decisionmaking in the network; it

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establishes the normality of core corporations’ consideration of the resilience of the entire supply chain rather than merely specific nodes. And, as noted above, the construction of a normality for supply chain relations through such discursive power will be instrumental in dealing with the complexities of supporting claims for legitimacy where there may be contending views on acceptable modes of relational accountability (Black 2008); there will always remain the possibility that measures to enhance legitimacy in one area of the network may, through differences of perceptions of acceptable levels of accountability, cause tensions that then will need to be negotiated. Thus, using Fuchs’s deception of power to think about the global corporation as an institution of global governance suggests that such a focus would require not only an analysis to take account of instrumental or compulsory power differentials in supply chain networks (as often identified) but also the development of an account of the manner in which corporations seek to constitute and produce the socioeconomic and spatial terrain that the supply chain encompasses—how the corporation governs the space that appears when viewed through the lens of logistics. However, it is seldom, if ever, the case that a corporation has a single directing mind or a closely knit management team with a single and defined set of governing principles and norms (even if profit maximization may be emphasized). So, while incorporation and contract relations might often give credence to a reified view of the identity/personality of the corporation, the corporation, like many institutions of global governance, is actually subject to “bureaucratic politics,” which is to say that internal bargaining, negotiation, and (internal) political resources actually shape decisionmaking. Governance is therefore multifaceted and a set of negotiations between the contracting partners and the various groups that make up the corporations’ own management structure; legitimacy is constructed where these discussions allow for a space of engagement for the contracting partners and for differences over forms of accountability to be mediated between contracting partners. If governance is to be seen as legitimate by those contracting partners within the network, the approach advocated here suggests that for governance practices to be effective, they must be regarded as transparent and have modes of accountability to deliver the value that can be derived from these relations, over and above any basic market-based form of contractual relations. Conversely, the closer that relations between network “partners” approximate market relations (and are governed via market mechanisms), the less legitimacy will be required. The notion of the market will still need to command legitimacy, but this is a wider issue and not immediately affected by one corporation’s action within its supply chain.

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Democratic Moments in Supply Chains?

Finally, when we discuss (global) governance, the question of legitimacy is often tempered by a question about democratic accountability. As Dan Danielsen (2005, 424) has pointed out, “The decisions and actions of corporations have social consequences largely indistinguishable from those created by public regulators, but . . . corporate decisionmaking [i]s largely insulated from public participation, engagement or scrutiny. . . . If corporations are significant institutions in the transnational governance regime, then policymakers and activists will need to find ways to affect the decisionmaking of these corporate institutions.” The democratic deficit that is often identified as compromising the legitimacy of global governance is likely more serious if corporations by their very actions are regulating economic interactions without any real direct political accountability. The choice between competing standards, differential corporate governance regimes, and the incorporation of national rules into standard corporate practices allows corporations to decide which regimes they might use, how they interpret them, and if, as in the face of no acceptable standards or rules, they can and need to set their own for their network’s internal relations. However, there is also a more micro-democratic dimension to the governance of supply chains. Now certainly, it may seem a little odd to refer to democratic issues within supply chain governance, although this may be the result of the discursive normalization of market relations as being “outside” democracy. However, once we adjudge corporations to be acting as (political) governance institutions, then a normative concern with how they construct their “democratic” legitimacy becomes appropriate (Ylönen and Teivainen 2017, 455–457). In this space, the democratic community concerned is not the general population but can be regarded as the member firms of the governed network. Where governance is not limited to basic market mechanisms, the reciprocity captured by this phrase is likely to be of some importance. In global governance the response to the recognition of a democratic deficit has often been to empower, or seek to empower, civil society, which directly parallels the moves in CSR monitoring and auditing (and indeed is often used as an example in mainstream debates). However, in the supply chain network, such empowerment is more likely to be achieved by membership in task-oriented groups and by opportunities for supply chain partners’ managers to visit the core corporations’ home site, while also often receiving visitors from the various teams working on various aspects of supply chain practice and contracts. At a general level, the democratic aspects of (global) governance can be evaluated across four general dimensions:

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1. How is participation mediated—how do groups (in our cases contracted partners and other suppliers) gain access to the network? 2. What forms of deliberative forum are available to network participants? 3. How accountable is decisionmaking in the network? (In supply chain networks, rather than examining the wider context, it may be more appropriate to limit concerns here to the notion of stakeholder groups, but even so this would be wider than merely participating network members.) 4. Is there a real potential for contesting governance decisions within the network, and as such are sanctions applied where contests/conflicts arise, or are they treated as legitimate concerns by the central (corporate) authority?6

While it is unlikely that any corporate supply network would expect or likely achieve a very high rating in any of these four dimensions, the relative legitimacy of governance across different corporate supply chain networks nevertheless would be illuminated through a comparative assessment of their performance across these criteria. Moreover, as with other global governance institutions, as there is a falloff of perceived legitimacy, suppliers may seek exit options, moving to other more amenable supply chains where plausible or to ones where the prospect of “upgrading” is more obvious; therefore, the issue of relative democratic legitimacy of governance functions may help explain aspects of volatility within some global production networks. Conversely, where lock-in issues are evident, then other resistance activities may be deployed, and civil society organizations may be drawn in to engage with the legitimacy of specific elements of the governance function. Most importantly for assessing this democratic element of supply chain networks, it is clear that the actors that benefit from empowerment are not only civil groups (labor, environmentalists, those seeking to promote human rights) but also the smaller contractors themselves, whose interests and requirements may be quite different from those of the usually identified civil society actors. Thus, by identifying a governance function and allowing that the jurisdiction of the core corporation encompasses the supply chain or production network, the resilience of any specific network can be examined via a concern with its governance practices. Where these practices are insufficiently developed, we might expect considerably more volatility in the network. Where some semblance of quasi-democracy and perceived legitimacy accompanies governance, we might posit greater stability; governance is delivering the much-valued stability and resilience that helps sustain an effective supply chain.

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Conclusion

While there are lots of ways of understanding a particular corporation’s competitive success and long-term sustainability, from the ability to maintain profitability to the control and furtherance of innovation, here I have identified the supply chain governance function as a potential issue for assessing corporate activity and success. The distinctive skills, routines, and knowledge that enable corporations to develop well-functioning supply (and value) chains are too often subsumed beneath the supposition of the logic of managing for efficiency. While efficiency of operations cannot be discounted, when it comes to the supply chain’s role in the operation of the corporation, the manner and legitimacy of the governance function is key. For the lead corporation, as I have suggested, the sustainability and stability of the supply chain is vitally important. For the contracting partners, however, not infrequently their business strategy will be focused on “upgrading”—on moving up the value chain and capturing operations that offer more opportunity to secure the profits from adding value to the final product. 7 However, lead corporations often seek to maintain a “glass ceiling” in the value chain, frustrating the strategic aims of their contracting partners (Pananond 2015, 100–101). Hence, to maintain involvement in the supply chain while also trying to constrain partner firms’ desire to upgrade the value-added contribution, the core corporation’s legitimacy and (as I have referred to it above) democratic governance needs to function to balance both continued participation in the supply chain and a recognition of the strategic demands of the partners. Thus, interestingly, most newly industrialized economies examined by the International Monetary Fund in 2016 had been able over a decade to raise their general level of value added, even while remaining in a similar overall economic position (Boddin 2016). Clearly contractors may eventually break away to develop their own multinational network (Pananond 2015, 104), but the core corporation’s governance function will be focused on delaying that move, even while allowing some development of role and expansion of the capture of value added. There may also be different logics to the required governance effects sought by differently characterized production networks or supply chains. One often noted divergence is between buyer-led (often brand-dominated) supply chains and production-driven networks. Space precludes a discussion of these differing strategic ends and their impact on the governance function, but this would be a fruitful development of the approach briefly laid out above. Likewise, there is some

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suspicion that much of the governance of these networks is heavily influenced by the requirements of international “tax efficiency” (Ylönen and Teivainen 2017). However, I contend here that a better understanding of these varying strategic drivers through an analysis of such practices as governance will produce more salient insights than merely seeing production networks and supply chains being managed for profit maximization. Finally, as the discussion of the logistical lens above suggests, governance is about rendering a mosaic of political spaces as a single production network by reducing and side-stepping frictional nodes (often, but not only, at borders) while also seeking to arbitrage advantages by exploiting the differences between these spaces’ regulatory undertakings. Moreover, by setting these sorts of dynamics within a logic of global governance, both through the political process of legitimation and the mapping of logistical space(s), I hope to have shown that corporations qua institutions of global governance are more than merely instrumental profit maximizers. We can usefully see global corporations as dominating specific (albeit bounded) realms of the global political economy and can understand that governance as having a (perhaps unexpected) democratic dimension. This recognition, I suggest, enables a clearer appreciation of how corporations are able to maintain and sustain large complex networks that lie behind their delivery of services and products to their end-users. By seeing corporations as institutions of global governance, we are better able to apprehend the patterns of power in the global system and appreciate the manner in which such power is rendered legitimate in global corporate jurisdictions. Notes 1. For the history of (military) logistics, see van Crevald (2004), and for more recent commercial developments, see Cowen (2014). 2. In the 2013 UNCTAD World Development Report, this proportion was estimated at 80 percent (UNCTAD 2013, 135–136). 3. This typology was adopted by the UNCTAD in its World Development Report 2013, deploying Gereffi et al. (2005). 4. This tripartite schema is drawn from Suchman (1995). 5. An alternative set of analytical tools is provided by Barnett and Duvall (2005a), but here I have focused on Fuchs’s work as it explicitly is concerned with the relation between corporations and global governance and as such shares much of the focus of this chapter. 6. Adapted from Steffek and Gomes Pereira (2011) with some modification for use in the corporate realm (without, I hope, violating the original analytical intent). 7. For a detailed discussion of the developmental implications of upgrading, see UNCTAD (2013, 164–175).

7 Shaping Conflict: Corporate Actors in Community Engagement Tricia D. Olsen

Corporate-community conflict in the mining industry is ubiquitous. Yet there is interesting variation around whether divergent opinions regarding mining operations escalate into conflict or resolve peacefully. The Conga project in the Cajamarca region of the Peruvian northern highlands is a complex case of corporate-community relations gone wrong, despite numerous efforts to encourage dialogue and collaboration between the company and local communities. In 2016, after nearly two decades of negotiation about environmental impacts and the displacement of host communities, US-based Newmont Mining Corporation abandoned the project at a cost of nearly US$2.1 billion. In the same region—and in 2004, as protests over Conga were gaining momentum—a South African mining company, Gold Fields Limited, engaged with local community members and agreed to work with an NGO to improve herders’ pastures, dairy cattle, and cheese production. It also worked with local politicians to improve access to electricity and potable water (The Economist 2016). By 2012, the Cerro Corona mine was Gold Fields’s most profitable worldwide. Such examples highlight the interesting variation in corporatecommunity relations. These differences are especially noteworthy, given the number of initiatives—at both the domestic and the international levels—to help corporations improve their relations with local communities. Over the past fifteen years, governments, corporate actors, and civil society have joined to create a number of self-regulatory or multistakeholder initiatives (MSIs) to help reduce corporate wrongdoing and improve corporate conduct. MSIs are prevalent in the mining industry, where there are frequent corporate-community disputes. Today many 151

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mining companies partake in such initiatives that seek, for example, to improve transparency (e.g., Extractive Industry Transparency Initiative [EITI]), respect human rights and sustainable practices (e.g., UN Global Compact, UN Guiding Principles and Business and Human Rights), and the use of security services (e.g., Voluntary Principles on Security and Human Rights [VPs]). Most MSIs seek to encourage and empower corporations to use their agency, primarily through policy adoption and engagement strategies, to improve relations with community actors and reduce the likelihood of conflict. Even so, we see great variation in corporate-community relations. Why does such variation exist? And in a complex, multiactor environment, how does corporate agency shape conflict? This chapter begins by exploring the paradox between the prevalence of corporate wrongdoing combined with the proliferation of multistakeholder initiatives to reduce such behavior. The next section provides an overview of the broad changes in the extractive industry and the rise of corporate-community conflict. The current literature struggles to explain such variation, as the tendency is to adopt a singular focus on either states or firms without carefully considering the dynamic nature of the interaction between states, firms, and local communities. This chapter builds on a subset of literature about institutional isomorphism, which theorizes about the dynamic interaction between different types of organizations. This literature seeks to explain why institutions adopt similar organizational structures and processes, yet largely assumes structure will shape behavior. This chapter draws from a comparative case study of two open-pit copper mines and the communities in which they operate (Freeport-McMoRan’s Cerro Verde and Southern Copper’s Tía María) in Arequipa, Peru, to explore the limits of institutional isomorphism. Even with similar engagement strategies, isomorphic effects lose their potential for change if trust is lost. Corporate Abuse, Weakened States, and Global Governance

Since the mid-1990s, the mining industry has experienced substantial changes, as much of its work has moved from “traditional” mining communities, such as the United States, Canada, and Australia, into countries with developing or emerging economies. This shift is the result of four key changes: first, depletion of the “easy” reserves in traditional mining countries; second, an increased demand for basic metals in emerging economies, in particular, China; third, key technological advances that facilitate the profitable extraction and processing of lower-grade deposits; and, fourth, the interest of developing nations in

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attracting foreign direct investment (FDI) for natural resource extraction to boost economic growth (Bebbington 2009). A Poor Track Record: Allegations of Abuse in the Extractive Industry

In this new landscape, we often observe a lack of state capacity to administer the industry and a lack of corporate capacity to navigate weak institutions and community contestation. Conflict stems from the fact that companies may have permission from the government to move forward with exploration or extraction but not from the citizens who live in the region. Muriel Mining Corporation, for example, faced allegations of not conducting prior consultations with affected communities in Colombia. The company stated that it had letters of agreement from indigenous authorities allowing them to start the exploration phase (Muriel Mining Corporation 2009); however, additional communities contested its presence. Similarly, in response to community opposition, Goldcorp Inc. stated that its operation of the Marlin mine in Guatemala had the support of the Ministry of Energy and Mines, which verified that there was no negative impact to the environment or the health of local populations (GoldCorp 2011). Companies, in general, struggle to address conflicting stakeholder perspectives: even after garnering support from federal or state governmental bodies, they often lack support from key host communities. In addition to difficulties in obtaining the social license to operate, companies can also face allegations after extraction begins. Such challenges, which can originate from heightened expectations, complicate private actors’ ability to maintain the social license to operate. State actors may have promised the local community that, with rents from mining, they will receive certain benefits, such as roads, new schools, or other public goods. In the Apurímac region of Peru, site of the Las Bambas mine, for example, contestation due to unmet expectations is widespread. In an effort to make the mining project attractive to those living in Apurímac, the state initially offered to provide a fund for community projects with financing from Xstrata, the company operating the mine. Today, there is a lack of transparency around the fund and a general mistrust among all actors. A campesino group, which represents fourteen communities living in the region, opposes the mine and has halted its operations on various occasions due to community protest. Additional contestation, however, can also arise due to allegations of corporate human rights abuses, which are widespread across Latin America. The Corporations and Human Rights Database (CHRD) (Olsen and Payne 2014) is the most comprehensive data source of corporate wrongdoing across Latin America; it contains nearly 1,400 claims of corporate

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wrongdoing between 2000 and 2014. The CHRD systematically categorizes information collected in an online archive of the Business and Human Rights Resource Center, a London-based nonprofit organization, and supplements that information with additional data collected from reliable international and country-specific sources (e.g., through LexisNexis Academic). The CHRD shows that approximately one-third of claims (456 claims, or 33 percent) are made against extractive companies, followed by agriculture (249 claims, or 18 percent) and apparel/ textiles (221 claims, or 16 percent). Given the importance of the extractive industry for economies across the region, the prevalence of abuses and conflict is concerning. Of those allegations against the extractive industry (mining and oil/gas) in Latin America, physical integrity abuses (e.g., beatings, murder, forced disappearances, forced labor) and environmental claims (e.g., water, air, land contamination) comprise approximately two-thirds of all claims (see Figure 7.1). Of the nearly five hundred claims against the extractive industry, forced disappearances, forced labor, beatings, and murder are the most frequent types of abuse. Environmental claims tend to be about water pollution primarily, followed by concerns about land or soil contamination. One in five claims are about development

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Figure 7.1 Claims Against the Extractive Industry Across Latin America (%)

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concerns, which, for the extractive industry, involves the community’s right to prior consultation and lack of support for the extractive project. Claims made in Peru are illustrative of broader trends in the region, as shown in Figure 7.2, with only slight differences from the regional averages (seventy-nine cases, total). Abuses, or violations of physical integrity rights, represent about one-third of the claims made against the extractive industry. In Peru, these abuses include beatings, arbitrary detention, and death. Environmental claims represent another third, reflecting concerns about water contamination or usage, land pollution and erosion, and general destruction of natural resources. Claims about development in the Peruvian case deal almost entirely with inconsistencies in the prior-consultation process or the exploitation of indigenous land. These categories, of course, are not mutually exclusive. In fact, many of the physical integrity abuses began as claims about some substantive issue, which then turned violent. Such instances are of particular interest for this chapter, given its focus on corporate agency. A closer look at those cases that become violent, relative to those that do not, is warranted. Of the claims of abuse, or those involving physical integrity violations, nearly four in five (87 percent, or twenty of the twenty-three abuse cases) were originally about development concerns. That is to say that in those cases in which we observe some type of violent outcome,

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Figure 7.2 Claims Against the Extractive Industry in Peru (%)

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the initial allegation is often about encroachment on or exploitation of indigenous lands, lack of prior consultation from host communities, or denial of freedom of expression (i.e., protests that turned violent). This suggests that beyond claims about environmental pollution, health effects, or labor conditions, those allegations dealing with a firm’s social license to operate and development processes are also those that most frequently grow violent. Understanding the variation in corporate-community relations—that is, when they become collaborative and when they are conflictual—is of utmost import, both to the host communities that host firms and to the firms seeking to mine the land. The Governance Gap and Corporate Agency

Abuses persist due, in part, to the combination of a weakened state, or institutional voids, and increased corporate power. This is what scholars and policymakers call the “governance gap” (Ruggie 2013; Deva and Bilchitz 2013; Deitelhoff and Wolf 2013). The governance gap recognizes the difficulty states face in regulating large, powerful, and increasingly global corporate entities. Multinational enterprises have more power and influence today than ever before. Some companies’ assets are larger than the GDP of the countries in which they work. General Motors (GM) produces more revenue ($135.59 billion) than the GDP of Hungary ($129 billion), where GM opened a plant in 1991. As of 2016, Walmart would be the twenty-fourth-largest economic entity worldwide if its revenue were compared to countries’ GDP (Business Insider 2018). This trend is exacerbated, however, by the fact that states are thought to have weakened in the face of increased corporate power.1 Corporations are working in “institutional voids,” or arenas in which institutions are weak or nonexistent. Numerous scholars have lamented the fact that governments, in an increasingly globalized market economy, are less able (or unwilling) to regulate business (Aaronson 2003; Abouharb and Cingranelli 2008; Fourcade-Gourinchas and Babb 2002; Kindermann 2009). Efforts to attract foreign direct investment or increased lobbying efforts by large industry associations leave states with less bargaining power than they perhaps once had. States are also less likely to hold companies accountable when wrongdoing does occur. While some countries are unwilling to challenge foreign companies upon which their economies depend, jurisdictional issues also quickly become overwhelming (Clapham 2006). It is sometimes unclear how to regulate companies that are domiciled in one country, have operations in a number of others, and may hold their financial assets in yet another country (Clapham 2006). Existing legal tools may seem somewhat anachronistic in today’s increasingly mobile and globalized economy.

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How corporations behave within this governance gap or institutional void is an area of important empirical inquiry. One set of scholarship highlights the enormous potential for corporate agency to improve social good through corporate social responsibility (Carroll 1991; Porter and Kramer 2002). Seeking to engage corporations in global, voluntary efforts to address pressing issues, many policymakers and corporate leaders are optimistic about the role corporations can play to reduce wrongdoing and, ultimately, ensure development efforts are longlasting. The Extractive Industry Transparency Initiative, for example, was launched in 2003 to improve the transparency of payments in the extractive industry. Today, over eighty of the world’s largest oil, gas, and mining companies support the initiative (EITI 2017), which seeks to promote good tax governance, accountability, transparency, and the prevention of corruption through the verification and full publication of company payments and government revenues. Companies are required to submit data to state authorities and provide support to prepare the reports and to implement the standards (e.g., BP in Azerbaijan and Indonesia; Barrick Gold in Peru and Zambia). The EITI recognizes the importance such revenues have in transforming economies, reducing poverty, and improving the living conditions of the populations of resource-rich countries. By promoting corporate and state transparency, the EITI seeks to bypass corrupt actors. In a similar vein, many mining companies have also joined the UN Global Compact, an initiative that seeks to encourage—through reporting, learning, and sharing—businesses to adopt sustainable and socially responsible policies. Though this voluntary initiative has a larger scope, one of the key objectives is to engage business directly in improving human rights practices and sustainable development efforts. The Global Compact, while voluntary, incorporates a transparency and accountability policy known as the Communication on Progress (COP). The annual posting of a COP is an important demonstration of a participant’s commitment to the UN Global Compact and its principles. After harsh criticism, primarily from civil society, the Global Compact began delisting those companies that were noncompliant. Even so, others still question the utility of the Global Compact, as members must only report on their progress, not on actual adoption of policies or improved behavior. Addressing the governance gap or institutional voids through multistakeholder initiatives has come with some criticism as well. Many of these initiatives are voluntary—not binding—thereby raising questions around the likelihood that state and corporate actors will credibly commit to difficult and sometimes costly practices. Instead, some observers, policymakers, and academics are concerned that multistakeholder initiatives only serve as window dressing (Potoski and Prakash 2005; Rasche

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2012). Such initiatives may be agreed upon to satisfy specific constituents, but ultimately those who are most effected by mining practices will see few changes. At the heart of this critique is an important question about how corporate agency plays out in the context of weak institutions or institutional voids. While tremendous effort has been put forth to shape firm behavior through global MSIs, what happens on the ground? Why does such variation in corporate-community relations exist? And how does corporate agency shape the prospect of conflict or collaboration? Existing Literature

Extant theory does not adequately explain the dynamic nature of corporate actors, corporate agency, or the variation in corporate-community relations. The discussion here echoes many of the themes explored in the first chapter of this volume, which focuses on the tendency in the international relations literature, consumed primarily with understanding state-to-state dynamics, to overlook the role corporate actors play in shaping state power, conflict, and peace. This discussion draws from the political economy scholarship, which engages in questions that are more closely related to private actors (e.g., What explains variation in foreign direct investment? What explains variation in economic growth?), and yet, as in the international relations literature, state action and policy are the key drivers. Firms, in other words, are acted upon. Scholarly Myopia: A Focus on States or Firms

Initial theoretical contributions of comparative political economy, especially of non-Western states, focused on the broader international economic system and how it might shape states’ chances of economic growth (e.g., modernization theory, dependency theory). Later scholarship, however, departed from such structural factors and developed institutional explanations (i.e., North’s [1990] “rules of the game”) and emphasized enforceable rules (Levi 1989) to explain variation in state policy and related implications for socioeconomic outcomes in the developing world. This literature, in general, explores how institutions, both formal and informal, shape the emergence of central political and economic actors, their interests, their strategies within the marketplace, and ultimately the growth and distribution of wealth. A subset of this research focused on the type of state that might be most likely to achieve key development outcomes. Gerschenkron (1962), for example, explored state support (primarily financing) for entrepre-

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neurial elites. He argued that developing countries needed to promote technological advancements and entrepreneurship to compete with other, more industrialized economies. In this way, the state could assume some of the risk taking and become actively involved in organizing and directing financial markets. Others moved away from Gerschenkron’s (1962) “state as investment banker” or Hirschman’s (1958) “disequilibrating investments” and, inspired by the impressive development outcomes in Southeast Asia in the 1980s and early 1990s, wrote about the “developmental state.” Rather than assuming a linear path from policy to practice, this literature highlighted the symbiotic relationship between the state and, in these cases, nascent industrial groups. Explaining South Korea’s late industrialization, Amsden (1992) illustrated how the state must provide protection and impose performance standards. Similarly, Wade (1990) illustrated in the case of Taiwan that state policies do not just change the behavior of existing actors; they also help create the societal actors without whom industrial development would be impossible. A similar claim about myopia, though, can be made about the management literature, which tends to give agency to firms and treats the state as context. The nonmarket strategy literature, broadly speaking, seeks to understand how firms shape government policy or interact with nongovernment stakeholders (e.g., the media, nonprofit organizations) to gain or protect their competitive advantage. This literature seeks to identify how firms do—or should—engage with external stakeholders (E. Freeman 1984; Mitchell et al. 1997), how firms seek to shape policy through “corporate political activity” (Hillman et al. 2004), or how firms react to variation across state or institutional contexts (referred to as the “organizational field”). Although this literature provides some insight into firm behavior in the nonmarket sphere, it also falls short of explaining the complexity of firm behavior, given the multifaceted environment in which firms operate. Strategy scholars have traditionally focused on an industry-based view, which suggests that industry-specific conditions will shape and determine firm strategy and performance (Porter 1981; Caves and Porter 1977). Yet, given that the strategy literature grew out of an interest in understanding how firms shaped policy outcomes in the United States, the generalizability of such claims is limited, especially as we think carefully about nonmarket strategy in the Global South. Peng et al. (2008) note that this scholarship can be “criticized for largely ignoring the formal and informal institutional underpinning that provides the context of competition among industries and firms studied with these lenses” (Kogut 2003, cited in Peng et al. 2008, 1). A closer look at state institutions, particularly their dynamic nature, is largely absent from this literature.

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Institutional Isomorphism: Endogenizing States and Firms

While the scholarship explored above tends to focus on either states or firms, a prominent literature on institutional isomorphism strays from this trend in that it seeks to understand organizational change as a result of repeated interactions with external institutions. It engages in questions about how states and firms interact over time. This literature initially set out to answer why there are so many similarities across organizations in distinct industries and locales. DiMaggio (2001) developed the idea of institutional isomorphism, or the ways in which institutions tend to adopt similar structures and, by extension, behavior. In “The Iron Cage Revisited,” DiMaggio and Powell (1983) suggest that institutional isomorphism falls into three types: normative, coercive, or mimetic. They identify that isomorphism is on the rise as “the expansion of the central state, the centralization of capital, and the coordination of philanthropy all support the homogenization of organizational models through direct authority relationships” (DiMaggio and Powell 1983, 151). Other scholars note that DiMaggio and Powell’s highly influential article has “led to a one-sided picture of institutional development . . . in which isomorphism is given undue analytic weight” (Mizruchi and Fein 1999 in Beckert 2010, 151). Beckert (2010) responds directly to their work on institutional isomorphism and extends the theoretical premise upon which their work is based. He notes that in numerous instances the very same mechanisms they identify in explaining homogenization might also be used to better understand divergence. The underlying mechanism behind coercive isomorphism is power, which, if distributed differently, can also explain the heterogeneity of institutional structures. Those mechanisms identified in the institutional isomorphism literature to explain homogenization, in other words, can also explain the heterogeneity of organizations as well. The challenge of institutional isomorphism, then, is twofold. First, we continue to see important sources of divergence—even in the context of greater economic and political globalization. Political science scholars have responded to ideas around institutional convergence or homogenization by identifying the ways in which organizations, namely states, have deviated from global norms. Garrett (1998), for example, argues that market integration coexists with interventionist governments and greater policy divergence. Pushing back on the idea that increased globalization necessarily means a weakened state, scholars have identified the ways in which domestic autonomy and agency persist, even in the context of increased global governance. Olsen and Sinha (2013), for example, put forth a theory of “relative divergence” to illustrate that

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states in emerging economies are employing innovative strategies that give shape to domestic industries, even with strong pressure to comply with international agreements. Second, the literature on institutional isomorphism assumes strong institutions exist. DiMaggio and Powell’s (1983, 151) initial explanation was, in part, about the “expansion of the central state.” And yet, how does institutional isomorphism explain corporate agency in institutional voids or governance gaps? How can we explain convergent or divergent behavior in contexts in which firms have similar organizational structures? Even more complex, how do multiple institutions—in this case, global MSIs and federal or local states—influence corporate agency, which in turn, shapes firms’ relationship with host communities? In the first chapter to this volume and elsewhere (Hofferberth 2017), Hofferberth brings to light the tension between the two dominant depictions of corporate actors as “rational market actors” and “good corporate citizens” (Flohr et al. 2010, 244–245). The tendency to focus on one or the other, Hofferberth argues, has resulted in a scholarship that largely ignores different dimensions or layers of corporate agency. In so doing, it leaves the observer wondering which governance role the enterprise assumes in each particular context. Rather than assuming a singular and strong set of institutions, the scholarship must move to better understand how firms operate across multiple sets of institutions. Institutional isomorphism, in other words, may lead organizations to adopt similar structures but may produce divergent outcomes. By illustrating the limits of isomorphic changes through a comparative case study of two highly contested mining sites in Peru, this chapter seeks to contribute to this gap in the literature by aiming to better understand corporate agency in a complex institutional environment. Methodological Approach and Case Selection

Methodologically, the analysis presented here adopts a controlled comparison, which, as discussed by George and Bennett (2005), has clear methodological advantages for theory development. The key distinction of the case study method is its capacity for “analytic generalization, in which a previously developed theory is used as a template with which to compare the empirical results of the case study” (Yin 2009, 38). This particular case study employs a most-similar design (or Mill’s method of difference; see also Teune and Przeworski 1970). This study also takes advantage of temporal variation and is thus a so-called cross-case and within-case comparison, which adopts a logic of control and employs purposive case selection to explore social phenomenon (Gerring 2001).

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This approach “greatly reduces the risks of inferential errors that can arise from [single-case studies]” (Gerring 2001, 234). This chapter compares cases that are similar in theoretically important ways but different in key attributes. The two cases explored here— Freeport McMoRan and Southern Copper—are both located in the southern Peruvian region of Arequipa. Both cases are in the same state so as to control for differences in the canon minero, or the mining royalty program, and federal-state relations. While both mines are located in the same region of the country, the Cerro Verde mine, owned by Freeport since 2007, has been in operation for nearly a hundred years. And while Southern Copper acquired the property for the Tía María mine in 2009, it has not yet begun operation due to conflict with the local community. Both mines are operated by a multinational mining firm, though Freeport is based in the United States and Southern Copper is a majority-owned indirect subsidiary of the Mexico-based Grupo México. Using newspaper reports and company documents, the case studies below explore how each company engaged with and responded to concerns from the host community. Mining in Peru: Variation in Corporate-Community Relations

Peru is home to some of the largest mineral reserves in the world and is Latin America’s leading producer of a number of important minerals and metals. It is the world’s third-largest producer of copper, silver, tin, and zinc and fifth among the world’s leading producers of gold (Soto-Viruet 2015). This natural resource wealth is reflected in the national economy as well. According to the Ministry of Energy and Mines (Ministerio de Energía y Minas, MEM), Peru’s mining sector accounted for $25 billion in exports, or approximately 60 percent of total export revenues, in 2013. The mining industry attracts substantial foreign direct investment as well and accounts for about 24 percent of the country’s FDI (Soto-Viruet 2015). Yet the nature of mining in Peru has changed substantially over the past few decades. Since the 1990s, mineral expansion has increased for a number of key reasons. First, Alberto Fujimori, who was elected to the presidency in 1990 and in 1992 dissolved the Peruvian congress and courts to seize dictatorial powers, facilitated the implementation of broad, neoliberal economic policies. In keeping with the adoption of the Washington Consensus across much of Latin America, Fujimori encouraged FDI in the mining industry and privatized many state-owned companies. In addition, Fujimori pushed through mining-friendly legislation. New operations, for example, were exempt from royalty payments and

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could defer the 30 percent profit tax until their initial investments had been recovered (Arellano-Yanguas 2011). Moreover, Fujimori also signed a “fiscal stability agreement” with some mining companies, which relinquished the government’s ability to change the mining tax regime without agreement from the private companies (Arellano-Yanguas 2011). Other regulatory changes around licensing procedures, performance requirements for foreign investments, and labor protections also sought to reduce the regulatory barriers foreign firms, particularly from the extractive industry, would face (Ponce and McClintock 2014). Even after the fall of Fujimori in 2000, the mining sector’s growth continued as global demand for basic minerals grew with the increased demand of emerging economies. Between 2004 and 2009, the mineral price boom helped Peru reach impressive levels of growth (9.8 percent in 2008), even while the global economy was contracting. Increased demand from China in particular helped to increase the profitability of mining in Peru. In 2013, after demand had somewhat slowed, China still received approximately 26 percent of Peru’s mining exports (Soto-Viruet 2015). However, as Peru democratized after Fujimori’s regime, community opposition to mining expansion continued to be a challenge for the industry. Subsequent regulatory changes under Presidents Alejandro Toledo (2001–2006), Alan García (2006–2011), and Ollanta Humala (2011–2016) sought to achieve the dual goal of ensuring the mining sector remained attractive for foreign direct investment while also seeking to diminish conflict and contestation between companies and their host communities. Of particular import was the move to yield not only political control to regional and local governments but also the canon minero, or royalties, collected from mining activity. In 2001, the government increased the proportion of revenue directed to the territory in which the profits were generated from 20 to 50 percent of the income tax paid by mining companies (Arellano-Yanguas 2011). In 2004, the legislature amended these laws to further include more local jurisdictions in an effort to reduce growing social unrest (Arellano-Yanguas 2011). Even with growing revenue and increased decentralization, corporate-community conflicts continued to rise. According to the Office of the Ombudsman (Defensoría del Pueblo), conflicts nearly quadrupled in four years, from 47 in February 2004 to 197 in December 2008. In 2008, the legislature passed regulation to outline how companies should engage with local communities and ensure specific processes were followed to facilitate citizen participation.2 These norms required companies to inform host communities about future and ongoing activities, even if they were already approved by the state. Yet violent conflict ensued. In the following year, twenty-three police officers and ten civilians were left dead after a violent confrontation between local populations and security forces

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in the Amazonian town of Bagua (Sanborn and Paredes 2004). In an effort to further ensure proper consultation with host communities, President Humala signed into effect the Law of the Right to Prior Consultation for Indigenous and Native Peoples, making Peru the first country in Latin America to incorporate International Labour Organization Convention 169 into national legislation (Sanborn and Paredes 2004). President Martin Vizcarra, who took office after former president Pedro Pablo Kuczynski stepped down to avoid impeachment in March 2018, gained experience facilitating improved corporate-community relations when he was governor of Monquegua. He emphasized the important role he hopes mining will play in reinvigorating not only the economy but also Peruvians’ faith in democracy (The Economist 2018). Case Studies: Mining in Arequipa

Arequipa, the site of the two case studies below, is the second-largest copper-producing region in the country (after Ancash). The city of Arequipa is Peru’s second-largest metropolitan area, which has grown rapidly due to emigration from the Andes highlands. While the Arequipa department accounts for approximately 19 percent of the country’s copper, as is the case elsewhere around Peru, water scarcity and mining’s environmental impacts are of great concern.

Freeport-McMoRan’s Cerro Verde. The US-based Freeport-McMoRan (hereafter Freeport) is the second-largest producer of copper in the world; in 2015 over two-thirds of the company’s revenues were from the sale of copper (Freeport-McMoRan 2016). The company might be familiar to many due to the controversy over the Freeport-owned gold mine— the world’s largest—in Papua, Indonesia. A New York Times investigative report from 2005 alleged that the company “courted” Indonesia’s dictator, President Suharto, and funded the Indonesian government to secure the mine through the military’s oppression of the local population (Perlez and Bonner 2005). Despite this rather appalling past, Freeport is also an active participant in a number of multistakeholder initiatives. Since 2008, it has supported the Extractive Industry Transparency Initiative with its mining sites, including Cerro Verde, in Peru and the Democratic Republic of Congo (Freeport Sustainability Report 2016). According to the EITI website, Freeport has provided data to EITI-implementing countries, and it is part of the US-led multistakeholder group (EITI 2017). In addition, Freeport reports that a company executive serves on the International EITI Board, and “senior-level Freeport-McMoRan employees are representatives on these countries’ multi-stakeholder groups or are

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actively supporting the in-country processes” (Freeport-McMoRan 2016, 18). In a report titled “Working Toward Sustainable Development,” Freeport writes, “The payments our company makes to host governments via taxes, royalties and other obligations are a significant contribution to national, regional and local development. We believe that increased transparency of natural resource revenues and payments promotes better governance and accountability regarding the distribution of natural resource revenues” (Freeport Sustainability Report 2016, 17). Beyond EITI commitments, Freeport also reports annual cash payments to governments, including subnational governments, in all the countries in which it conducts business. In recognition of such commitments, the US Department of State’s Bureau of Economic and Business Affairs awarded Freeport’s Cerro Verde operations (one of six awards given) the Secretary of State’s Awards for Corporate Excellence in Transparent Operations (Freeport Sustainability Report 2016). In addition, Freeport reports it has been an active participant in the Voluntary Principles on Security and Human Rights since the initiative was first established in 2000. A company representative is serving a twoyear term on the VPs Initiative Steering Committee and Board of Directors. In addition, Freeport reports that it continues to advance the integration of the UN Guiding Principles on Business and Human Rights into its practices. Specific to Cerro Verde, it notes that a site-level human rights impact assessment (HRIA) was completed in 2017. The report states that the human rights–related topics “have been mapped against recognized international human rights to ensure a comprehensive, rightsdriven approach while being organized in a way that is relevant to our mining related activities” (Freeport Cerro Verde HRIA 2017). The HRIA, for which two external consultants met with 142 stakeholders in and around the Cerro Verde mine, noted that the mine’s environmental management system (ISO 14001) and health and safety management system (OHSAS 18001) had been effective in minimizing human rights– related impacts (Freeport-McMoRan 2018a). Freeport owns a majority share and operates the open-pit Cerro Verde mine, located about twenty miles from the capital city of Arequipa. It is one of the largest copper reserves in Peru, having estimated reserves of 4.63 billion tonnes of copper ore. As with most large mining operations, ownership is spread across a number of different companies. The Anaconda Copper Company owned the mine until 1970, when it was acquired by the Peruvian government. Cyprus Amax purchased the mine in 1994; it was then acquired by Phelps Dodge in 1999 and then by Freeport in 2007. Today, US-based Freeport-McMoRan has a 53.56 percent stake in Cerro Verde. In addition, SMM Cerro Verde Netherlands (a subsidiary of the Japanese firm Sumitomo Metal Mining Company, Ltd.)

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owns 21 percent of the operation, while the Peruvian Compañía de Minas Buenaventura, S.A.A., owns 19.58 percent (Freeport-McMoRan 2018b). The mine is located in the Atacama Desert, where climate change, population growth, and mining activities place substantial strain on water use and treatment. In 2008, the Arequipa chapter of CORECAMI (Regional Coordinator of Communities Affected by Mining) and CONACAMI (National Confederation of Peruvian Communities Affected by Mining) created an official declaration of their concerns about the negative effects of mining in the region, which were primarily about water, related health issues, and the negative impact water use might have on small-scale farmers (CORECAMI Arequipa 2008). While Freeport has had to confront other issues over the years, including labor strikes and legal battles around tax payments, the nature of its relationship with the host community in Arequipa was largely shaped by how it responded to concerns about water use. Notably, this case entails a relative dearth of violent incidents; instead, corporate-community disputes have, unlike many conflicts across Peru, been resolved peacefully. The cooperative nature of Freeport’s relationship with the host community stems from its effort to create long-term, sustainable solutions. As corporate leaders began to explore the possibility of expanding Freeport’s operations in Cerro Verde, they already knew water was scarce. It was common knowledge that water scarcity had created insurmountable conflict for other mining projects, including Newmont’s Conga project, mentioned earlier. Since 1983, representatives from the mine have been part of a multisectoral water committee (ICMM 2017). In 2006, Freeport agreed to support water infrastructure projects, which included financing the Bamputañe dam and cofinancing 40 percent of the Pillones dam (CIRDI 2017). The dams collect freshwater, thereby increasing the amount available for regional use and benefiting “the local population, farmers, and Cerro Verde” (CIRDI 2017, 4). As Freeport sought to expand its mining operations, it recognized the need to create sustainable solutions with key stakeholders. Social leaders and local water authorities first proposed the idea that the mine might use treated wastewater for the mine expansion (Fraser 2018). In 2010, the company held over two hundred meetings and workshops to “explain the wastewater treatment project to municipalities and authorities, to citizens of Arequipa, and to water users upstream and downstream of the mine” (Fraser 2018, 7). This type of early engagement with local stakeholders was fundamental in garnering the support of the community. Moreover, when the state was unable to fulfill its own promises (e.g., the state initially agreed to build the water treatment plant but was unable to secure funding or a locale), Freeport continued to work with it to ensure the project was completed (Fraser 2018).

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With a water management plan in place and support from the community, Freeport was able to embark on the mine expansion. Today, “Arequipa has a system of seven dams, two of them, Pillones and Bamputañe, were built by Cerro Verde; a new potable water treatment plant, La Tomilla II, which was financed by the mining company and inaugurated in 2012; and two wastewater treatment plants: La Escalerilla and La Enlozada, both of which were financed by Cerro Verde” (El Comercio 2015). La Enlozada, inaugurated by former president Humala, will be administered and operated by the mining company for twenty-nine years; Cerro Verde will assume the cost of wastewater treatment and have access to one cubic meter of water per second. In sum, while seeking to meet its own water-usage needs, Freeport was also instrumental in securing potable water for Arequipa and rehabilitating the Rio Chili, the primary water source in the region. Today, 90 percent of Arequipa’s citizens have potable water in their homes, and all the wastewater produced in the city can be treated and later used by the mining company (El Comercio 2015). Freeport also enjoys a uniquely harmonious relationship with the community, relative to the many mining projects plagued by controversies throughout the country. And it pays off. In 2015, the company completed a US$4.6 billion expansion of Cerro Verde, which nearly tripled the mine’s copper output (Reuters 2015). This is not to say the company is free of conflict entirely. In 2016 thousands of farmers from the Arequipa province protested the benefits given to the Cerro Verde company that permit it to take a larger amount of water than is allocated to the agricultural sector in the region (Servindi 2016). The president of Freeport, Bruce Clements, stated, “Farmers in Arequipa use approximately 71% of the available river water. We use another 10%, and the city, the remaining 19%. There is more water than people believe there is. Many farmers are using flood irrigation systems that are not efficient. By increasing efficiency, they could expand their cultivable land. We can certainly help them in this process” (Servindi 2016). Moreover, Harry Conger, president and COO of Americas and Africa Mining at Freeport, suggests greater potential for downstream farmers: “One of the big upsides of the project is that, because of the quality of the water that farmers downstream were getting before, they could not meet the export standards for produce. Now, with the improved quality, they have a wider choice in terms of what they can produce” (Global Business Reports 2016, 75). While these are not solutions, per se, C-suite statements such as these indicate a willingness to help downstream farmers achieve more, given their access to clean water. Perhaps most tellingly, Freeport recognizes the ongoing, long-term nature of this relationship. To that end, the company has permanent offices in Arequipa, Yarabamba, and Uchumayo.

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Even with such matters outstanding, it seems that Freeport has made a concerted effort to engage with its host community in a way that has fostered trust and shared understanding about the benefits and challenges of mining responsibly. Disputes are to be expected. With a strong foundation and mutual trust, Freeport and the surrounding community have found a way to resolve such disagreements peacefully.

Southern Copper’s Tía María. Southern Copper is among Peru’s leading copper companies, producing approximately 22 percent of copper exports (Ministerio de Energía y Minas 2014, 38–42). Southern Copper, originally a US-based company, was established in 1952 as a joint venture of four North American firms in which Asarco, Inc. (formerly the American Smelting and Refining Company), held a controlling interest (Becker 2014, 37). The Peruvian government, during Juan Valesco Alvarado’s military regime (1968–1975), attempted to nationalize the company (Preble 2016). Today, however, 88 percent of Southern Copper Corporation Peru is owned by the Mexico-based conglomerate Grupo México. Like Freeport, Southern Copper, and perhaps most notably Grupo México, is not without controversy. Grupo México is the largest mining company in Mexico and the third-largest copper producer in the world. The company and its subsidiaries (specifically, US-based Asarco) have been found responsible for severe environmental pollution at twenty superfund sites in the United States (EPA 2009). In addition, its mining operations in Mexico have been plagued with labor disputes, which include the prohibition of unions in Mexico, deaths of union organizers, and one of the largest environmental spills in Mexico (Estevez 2017). Southern Copper, unlike Freeport, is less involved in global governance initiatives. While the company supports the EITI, it is not a participant in the VPs. No information can be found indicating it is involved in that initiative and/or uses the principles. Nor is there information about the participation of Southern Copper or Grupo México in the Global Compact. Moreover, there is some evidence that socially responsible investment firms have delisted Southern Copper and Grupo México due to egregious environmental, labor, and human rights violations (International Metalworkers Federation 2010). Southern Copper Corporation Peru, a subsidiary of Grupo México, is poised to operate the open-pit Tía María mine, which is wholly owned by Southern Copper. Tía María is located in the district of Cocachacra, though neighboring districts (Punta del Bombón, Deán Valdivia, and Mejía) in the province of Islay, Arequipa, are also involved. These communities are primarily concerned about water usage and contamination, as at the Cerro Verde mine discussed above. As a result, while the company has all the official permits to begin mining, it con-

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tinues to lack the social license, or the community support, for the project and has not yet started operations. The Tía María mining site has been rife with conflict. Nearby communities formed the Tambo Valley Defense Front, which in October 2009 organized a popular referendum that rejected the mine. Southern Copper and the national government did not adhere to the outcome of the referendum and, instead, moved forward with the mine’s environmental impact assessment (EIA). Strikes and roadblocks in late 2010 and early 2011 led to the deaths of four community members when they clashed with police (Arce 2014, 123). In 2010, the MEM requested that the United Nations Office for Project Services (UNOPS) review Southern Copper’s EIA. The UNOPS report, made public in early 2011, included over 130 observations and recommendations. In short, the report found that the initial EIA lacked important information about the hydrogeological characteristics of the project area and that Southern Copper had “underestimated the importance of social participation in the project” (Dube 2011). In a rare move, the government suspended the project for 180 days to evaluate the EIA and to “maintain peace” in the region due to “great social commotion, violence and instability in the province of Islay” (Perú21 2011). In 2012, Southern Copper began to work on a new environmental impact study, which was approved by the MEM in April 2014. The company held public hearings on December 20, 2013, to discuss the revised EIA. In response to concerns about water treatment and usage, Southern Copper proposed building a desalinization plant and using seawater (Perú21 2014c). By December 2014, protests were in full force again due to concerns about irregularities in the approval process of the EIA (Perú21 2015a). While newspaper reports confirm that the company “complied with the procedures for citizen participation” (Perú21 2014c), others challenged this claim. The president of a citizens’ group, Junta de Usuarios del Valle de Tambo, demanded the government suspend operation again: “We will continue [protesting] until the Executive hears our claim that we did not know about the mesa de diálogo [roundtable] held in Islay because we were not invited to participate in it” (Perú21 2015c). This conflict, quite notably, is marked by internal divisions. Local politicians approved the protests and even joined in (Perú21 2014a), while regional politicians indicated that the proper regional permits had not been acquired (Perú21 2014b). Perhaps helping to ignite further unrest, Southern Copper’s internal discord also became quite public. On March 27, 2015, the director of Southern Peru Copper, the branch of Southern Copper based in Peru, Julio Morriberón, announced the company would abandon the project. The minister of MEM reported that, after hearing of the announcement, he called the president of the board

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of Southern, Oscar González Rocha, who was surprised to hear such a statement (Perú21 2015e). Instead, Rocha stated that the company hoped to hold additional mesas de diálogo, or roundtables, to resolve conflict with host communities (Perú21 2015e). Later that day, the company issued an official statement saying that it “appreciate[d] all the efforts that the government authorities ha[d] made to establish a Development Board,” which would “make it possible to establish synergies between agriculture and mining” (Southern Copper 2015). Shortly thereafter, President Humala made a public statement reiterating that mining can “cause uncertainty for the people dependent on agriculture, but if we talk and reach consensus, it can work” (Perú21 2015d). Despite additional efforts at dialogue, the conflict continued. In April and May 2015, the disagreement escalated, as protesters declared an “infinite strike,” which grew into a regional protest. In response, the federal government dispatched the national police, indicating they could use firearms in a “rational manner” (Perú21 2015f). Numerous clashes with protesters ensued, resulting in the deaths of two protesters and one police officer. In May, armed forces were deployed to support the national police, and another state of emergency was declared for sixty days (Perú21 2015b). To date, seven individuals have died as a result of the conflict around the proposed mine (six community members and one police officer), and hundreds more have been injured. While protests continue, their size and frequency appear to have diminished, especially after the arrest of Tambo Valley Defense Front president Pepe Julio Gutiérrez, who was caught on tape agreeing to end the protests for a payment of $500,000. He stated, “Do not tell me there’s no money; I’ll start a Trojan fire” (Perú21 2015b). He is now serving four years in jail. For its part, Southern Copper highlights that its employees have held over two hundred informative talks attended by more than 3,000 individuals. They have also carried out two information workshops and a public hearing in Cocachacra, which was attended by approximately 1,600 people. While the company notes it has complied with the Law of Citizen Participation, it still lacks the social license to operate. In May 2015, Minister of Energy and Mines Rosa María Ortiz urged Southern Copper to “reverse the image that citizens have about it” (Perú21 2015g). She noted that the government cannot guarantee anything to Southern Copper; rather, the company must demonstrate that it can engage with the community and illustrate how mining and environmental stewardship can be combined. Ortiz stated clearly, “If [Southern Copper] does not change their attitude, they will not be able to carry out the project—and it won’t be because the government didn’t provide them with the opportunity, but because they are not making the effort” (Perú21 2015g).

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Discussion and Conclusion

Variation in corporate-community relations is of interest to host communities and firms seeking to reduce conflict. The two cases discussed above are quite similar in that both involve open-pit copper mines operated by multinational corporations in Arequipa state. In addition, host communities in both cases are concerned, primarily, about water usage and contamination. Importantly, if we were to make a check list, both firms sought (and received) government approval, completed EIAs, held community meetings, and offered to build and finance costly but sustainable solutions to the water-usage issue. As the institutional isomorphism literature might suggest, convergence—at least in terms of the firms’ structure and processes—is quite clear. What stands apart, however, is the limits to institutional isomorphism. Freeport was proactive, while Southern Copper seemed to acquiesce as a last resort. Isomorphism without trust, in short, is ineffective. The host communities near Cerro Verde and Tía María are both primarily concerned with water usage and contamination. Each company complied with the letter of the law in engaging with host communities. What perhaps went awry in the Tía María case is that Southern Copper completed the first EIA poorly. When it overlooked key community concerns and provided only what was perceived to be a rather cursory treatment of those issues, distrust grew. Once trust was broken between the local community and Southern Copper, momentum to reject the mine entirely took hold, while those seeking to find a middle ground were silent. Freeport, despite its rather tarnished reputation internationally, has engaged meaningfully with the local community. Perhaps most importantly, Freeport was willing to use some of its own resources to not only resolve the issue at hand (around water usage and contamination) but also substantially improve the lives of those living around the mine. Today most of the city of Arequipa enjoys potable water due to the investment and infrastructure provided by Freeport. As noted above, this is not to claim the mining site is void of conflict. On the contrary, it seems as though the company has garnered the trust of the local community and, as a result, enjoys a collaborative—rather than conflictual— relationship with its members. Ongoing issues are resolved peacefully, and, importantly, no lives have been lost. This case study facilitates our understanding of the role of MSIs and examines the effectiveness of norm adherence through institutional isomorphism. Overall, this analysis suggests that MSI engagement does have a positive impact on practice. Yet, to the extent that engagement is shaped by exposure to ideas in multistakeholder venues or via federal policy, we

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see a relatively stark contrast between Freeport and Southern Copper. Both corporations engaged in similar behavior; yet the isomorphic effects were stunted in the latter case. While Southern Copper complied with the letter of the law, the host community did not trust the company and has since worked to oppose the project all together. Freeport, alternatively, recognized the important role the host community would play. Ironically for some, perhaps, having engaged meaningfully with community actors, Freeport is able to move forward with its work and, ultimately, maximize shareholder value. As of this writing, Southern Copper continues to face an uphill struggle in obtaining community approval for its project. This chapter makes two contributions. First, it moves beyond the tendency to focus on either states or firms and highlights the dynamic and interactive process at play in shaping corporate-community relations. In doing so, it engages with the literature on institutional isomorphism and, in particular, highlights its limits. Isomorphism may occur, but with distinct outcomes. Both firms, taken out of context, behaved in a similar manner. Yet the perception of such behavior (and, possibly, each firm’s capacity to follow through) shaped the conflict. Institutional isomorphism is not enough; such efforts lose their potential for change if trust is lost. Second, this chapter has important implications for global governance mechanisms and MSIs in general. MSIs recognize that not all behavior can be prescribed. Global governance mechanisms in general take into account that local-level conditions may require distinct processes and pathways. Even so, the local implementation of such broad goals must be addressed in greater detail. Miguel Incháustegui, a Gold Fields manager, was asked about that company’s success in what seemed like impossible circumstances. He simply said that the keys to achieving social consent were to “listen more than talk and to ensure that living standards improve for people in the surrounding area” (The Economist 2016). Notes 1. On the contrary, the narrative of a weakened state is challenged by political scientists, who have observed policy divergence and increased regulatory behavior, even in the face of globalization (Garrett 1998; Hall and Soskice 2001b; Olsen and Sinha 2013; Thelen 2014). 2. Regulation of Citizen Participation in the Realization of Hydrocarbon Activities (DS-EM 012-2008); Regulation of Citizen Participation in the Mining Sector (DS-EM 028-2008); Rules for the Regulation of Citizen Participation in the Mining Sector, approved by Ministerial Resolution No. 304-3008-MEM/DM and valid since June 2008. The latter were designed to further develop mechanisms for citizen participation that are stipulated in the prior ruling.

8 Securing Value over the Long Term? ExxonMobil and the Aceh Crisis Matthias Hofferberth

The 1990s marked a rather challenging decade for enterprises from the extractive oil industry. With Unocal in Myanmar, Royal Dutch/Shell in Nigeria, BP in Colombia, Chevron in Angola, and ExxonMobil in Indonesia, major companies from this sector came under public scrutiny and were charged with complicity in human rights violations as well as environmental degradation. More than before, local communities and transnational civil society coordinated their efforts to mobilize against these enterprises, called for global “buycotts,” and ran professionally organized campaigns to reveal the role they played in local conflicts and the social and ecological disruptions they caused (Dashwood 2012; Haufler 2010). Despite the fact that no company immediately divested, each case documented and reinforced new expectations that extractive oil enterprises would include nonmarket issues such as human rights and the environment in their considerations. In a nutshell, against the background of accelerated globalization and new and expanded notions of corporate social responsibility (CSR) (Auld 2008, 425–429), extractive enterprises in particular became subjects of public debate and focal points of discussion and contestation (Rangan and Barton 2010, 245–246).1 While these cases and scandals have been discussed broadly, whether and how respective multinational enterprises (MNEs) respond(ed) to challenges and allegations advanced remains subject to debate. Different arguments have been made and conclusions reached based on different notions and conceptualizations of corporate agency, reflecting different assumptions about the likelihood and potential of corporate actors to become socially responsible global governors. Echoing the excitement 173

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expressed by corporate executives, scholars in the fields of business ethics and management studies, as well as those advocating global governance as a policy approach, seem to advance an optimistic story line that recognizes a changed role of MNEs since the 1990s: “Corporations become politicized in two ways: they operate with an enlarged understanding of responsibility and help to solve political problems in cooperation with state actors and civil society actors. Furthermore, they submit their growing power and political engagement to democratic processes of control and legitimacy” (Scherer and Palazzo 2011, 426). This account not only recognizes potential for change but assumes that it is already happening. Accordingly, MNE actors have embraced new and broader social and political responsibilities and thereby expanded their corporate activities beyond the economic realm. Arguably, there is an inherent danger to this narrative as it conceptually conflates what companies should do with what they actually do (Dashwood 2004, 191). At least, with authors calling for larger responsibilities, it seems that changed expectations are assumed to eventually translate into changed corporate roles (Ruggie 2013; Scherer and Palazzo 2011; Holzer 2010). Considered from within the normative-constructivist actor image outlined in the first chapter of this volume, extractive enterprises in particular have been discussed in rather favorable terms (Rangan and Barton 2010; Gillies 2010). For example, Shell’s story in Nigeria has been presented as a “lesson learned” as the enterprise allegedly shifted its stance from ignoring to promoting human rights in its policies (Lambooy and Rancourt 2008; Soares de Oliveira 2007; Lawrence 2002).2 Contrary to such accounts portraying extractive MNEs as chastened enterprises that have learned from past mistakes, scholars who draw on the rational image of corporate agency remain more skeptical. Rather than reflecting deeper changes or a new moral compass to operate with, corporate commitments to social responsibilities, they argue, are driven by instrumental reasons and represent nothing but lip service in the attempt to “whitewash” the respective company (Whelan 2012). Being subject to unforgiving competition and thus having to follow a ubiquitous logic of profit maximization, MNEs only commit to CSR because of social pressure, market value projections, and reputational damage from scandals and boycotts (Haufler 2010).3 The extractive industry in particular, so the argument continues, only committed to CSR because of its vulnerability in terms of asset specificity and public exposure. Any CSR activities, however, due to the very nature of the firm and its objectives, in the end remain “organized hypocrisy” and “misguided virtue” and do not reflect any deeper changes in corporate behavior (Lim and Tsutsui 2012; Henderson 2001).

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Following Börzel et al. (2013), who argue that deciding between these “two perspectives on the role of business for governance [remains] in the end an empirical question,” the two divergent accounts, I argue, exist and remain unrelated because extractive MNEs and their corporate agency are, for the most part, cast and framed in abstract and absolute terms. Both narratives advance rather strong and ultimately different ideas about how MNEs act and what their motivations are. As such, they constitute mutually exclusive accounts, with adherents of the rationalist image unwilling to embrace the possibility of change and proponents of the normative-constructivist image potentially arguing too strongly in favor of it. In other words, we have two irreconcilable narratives, which mutually relate by claiming that the “other” is based on incorrect assumptions. Such a (non)discussion, arguably, reveals more about academic practices and the inherent values of the scholars studying MNEs than about the actors themselves (Brown et al. 2010). Above and beyond, we still only know little in terms of how extractive MNEs define(d) their role and responsibilities in light of changing normative expectations throughout the 1990s and beyond (Cutler 2008; Kollman 2008).4 Against this criticism, the following case study of ExxonMobil in Indonesia moves beyond both narratives by allowing the enterprise to speak for itself. As such, corporate documents responding to the events unfolding in Indonesia around 2000 are considered. More specifically, ExxonMobil’s corporate agency in its attempts to make sense of and provide meaning to the crisis and its role within are reconstructed. This reconstruction is advanced without theoretical a priori assumptions about corporate dispositions or motivations, be they normative or rational. Rather, by studying ExxonMobil’s documents published in relation to the Aceh crisis, I hope to show how the enterprise first became exposed and then responded to new expectations in and of its role in global governance. In other words, the task at hand is to reveal interpretive frameworks that constitute how ExxonMobil defined itself as a multinational enterprise to then determine what action and implications followed for its attempt to make sense of and solve the crisis. As discussed below, the crisis itself was so important for ExxonMobil that it is still relevant today to understand if and how the company responded to it. To provide insights on this, the chapter proceeds as follows. First, I provide general remarks on studying corporate agency in crisis. Second, in order to contextualize the case, I introduce ExxonMobil’s engagement and the conflict in the Aceh province. Third, I reconstruct corporate agency and ExxonMobil’s attempts at sense-making expressed in the documents the company released during and, more so, after the crisis. These reconstructions reveal that ExxonMobil’s self-image

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is defined by holding on to a clear distinction between the economic and the political, with the enterprise being reluctant to even consider, let alone assume responsibilities for, the latter. The conclusion discusses implications of such a limited self-understanding expressed by a major extractive MNE and relates this back to the discussion on the role of these enterprises after their crises throughout the 1990s and 2000s. Studying Corporate Agency in Crisis and Beyond

Studying enterprises, given their complex nature and oftentimes oblique activities and decisionmaking, depends on abstractions (Cohen 2007). This is particularly true for extractive enterprises operating across borders since their activities and rationales often remain elusive and beyond public access. However, certain assumptions about corporate motivations are indeed indispensable; to even start research on them, they should at the same time be made explicit and thus opened to intersubjective debate. In addition, certain assumptions are arguably less demanding and open for discussion than those drawn from “abstracted, reductionistic, static paradigms that have guided I[nternational] B[usiness] education and research” until recently (Toyne and Nigh 1997, 9). That said, this section conceptualizes corporate agency as the social and creative “outcome of organized human activity—of relations between individuals, between individuals and the firm” (O’Neill and Graham-Gibson 1999, 13). This departure from conventional images of either rational or normative corporate agency needs to be unpacked in two ways.5 First, I understand corporate agency to be fundamentally social. As such, it is not only embedded in but rather constituted (yet also not determined) by social expectations and shared understandings. In other words, the very purpose of any enterprise, as a collective actor, is socially derived, as is the horizon of appropriateness for corporate activities. More precisely, corporate agency, both for the scholar observing it as well as for the corporate representative enacting it, is only perceivable and can only be maintained as it draws from and responds to social expectations of what a multinational enterprise is. While these can be contested and thus do not determine corporate agency, MNEs nevertheless “must engage in a process of creating some level of a shared understanding of what constitutes the rule system” (Kostova et al. 2008, 1002). In order to do so, MNEs constantly reconcile demands from different stakeholders by integrating certain expectations into their actions while disregarding others. In a nutshell, the meaning and boundaries that define (and confine) corporate agency are socially negotiated

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in and emerge out of interaction with others (Jackson 2010; Emirbayer and Mische 1998). Second, since social constitution does not determine agency all the way down, corporate agency also has to be probingly creative. Social contexts and situations, “themselves ever changing and thus always subject to reevaluation and reconstruction on the part of the reflective intelligence,” remain indeterminate (Emirbayer and Mische 1998, 967–968). In other words, corporate realities against which MNEs act have to be organized and made sense of in the first place in order to sustain agency (Geppert 2003; Weick 1995). Such interpretations rely on creative probing since each situation and its social meanings unfold in unique ways. Creativity in this vein thus is not an artistic disposition but rather an indispensable quality for maintaining agency. Applying this notion to MNEs, corporate agency cannot be reduced to “simply making a different selection from a reservoir of situation components that are either already defined or have no need of definition”; rather, it reflects attempts at “defining that which is as yet undefined” (Joas 1996, 133). Since the contexts in which MNEs operate are rather complex and challenging, corporate agency has to constantly be “imagined, evaluated, and contingently reconstructed . . . in ongoing dialogue with unfolding situations,” and these processes, structured by sociality, occur in contingent yet indeterminate dynamics (Emirbayer and Mische 1998, 966). Bringing both dimensions together, MNEs carry out actions “that are simultaneously constrained (in some direction) and empowered (in others) by the existing social structure” (Scott 2008, 77). As social and creative actors, enterprises thus are both structured and actively engaged in the reproduction of themselves and their structures. While social expectations constitute the contexts in which MNEs act, there is always a range of different meanings and expectations to connect to in any particular situation. Such situational actualizations obviously do not imply that corporate action will be successful (according to whichever standard applied). Rather, corporate agency represents attempts of “purposeful strategic interventions . . . capable of generating new elements of corporate culture and identity, and of creating the circumstances for future transactions and relationships,” and, as with any intervention, these attempts can succeed or fail (O’Neill and Graham-Gibson 1999, 13). In other words, corporate actions are not caused by anticipated consequences or normative considerations. Rather, corporate agency reflects and reproduces the boundaries of what it means to be a multinational enterprise. More broadly, MNEs as “extraordinarily powerful social agents . . . define particular realities” through the social and creative dimensions of their agency (Schoenberger 1997, 124).

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Both dimensions of corporate agency become particularly relevant and visible in crises. Speaking broadly, a crisis is a situation in which routinized resorts to established meanings no longer suffice to stabilize agency. As we engage with the world, we eventually experience it to be resistant and adamant to our wishes and established meanings. More precisely, prior routines fail as established interpretations mislead us, putting pressure on the actor to find new solutions and transition those into new routines (Hopf 2018; Joas 1996). Crisis situations are thus problematic in the sense that they differ from routine situations where “actions and counteractions are expectable; often repeated; governed or guided by rules, regulations, standardized procedures, agreements, or understandings” (Strauss 1993, 43). Whether perceived as such by the actor or not, a crisis in conceptual terms thus marks a situation in which agency relies more than usual on social expectations interpreted in creative ways to ensure stable action. This action scheme of moving from routine to crisis and back to stabilized agency and the social and creative dimensions it takes is why we continue to “surprise ourselves by our own action” (Mead 1967, 174).6 More to the subject at hand, we can think of corporate agency being defined by the regular occurrence of crises because it is impossible to consistently and permanently reconcile diverging expectations advanced by different stakeholders (Kristensen and Zeitlin 2005; Morgan 2001). In other words, MNEs constantly oscillate between routine and crisis since they are challenged to “operate in complex environments with heterogeneous legal and social demands so that often it is not clear which activities can be considered legitimate and which are unacceptable” (Scherer and Palazzo 2011, 903). In this light, we can distinguish two ideal types of corporate crises, which differ in terms of their temporal unfolding. In a long-term perspective, the emergence of global governance and expanding notions of CSR can be considered as a sustained series of crises, which establishes new expectations and demands new routines. On this level, fundamental questions “about the social definition of a corporation” are raised and the ways public and private actors interact are at stake (Kobrin 2008, 267). In this perspective, the blurring of the public/private divide and the emergence of a new interplay between the state, business, and civil society in the twenty-first century becomes a critical experience, which deeply affects corporate agency (K. D.Wolf 2008, 232–235; Crane 2011). However, like a glacier melting slowly, such changes only become visible in the longue durée. More pressing and hence more revealing are short-term crises, marked by immediate clashes of expectations, in which individual enterprises are explicitly challenged in their agency. Such situations are characterized

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by their novelty and their rapid unfolding and escalation of events, which call for direct responses as relevant others, whether state or nonstate actors, pressure MNEs to change their behavior (Prakash 2002). The events and developments involving the extractive oil enterprises listed in Table 8.1 were all marked by such crisis dynamics, featuring violent actions against corporate facilities and personnel as well as temporary shutdowns of operations.7 While this distinction obviously remains based on ideal types, whether short- or long-term, crises reveal the social and creative character of corporate agency as “boundaries [of what it means to be an enterprise] are structured, managed, redefined, and negotiated” (Morgan 2001, 11). For the researcher, crises thus can serve as lenses to reveal and assess interpretive processes within enterprises as previous beliefs fail and prior meanings no longer suffice to stabilize agency. The dynamics of a particular crisis (i.e., whether it plays out in a lengthy or immediate fashion) greatly influence corporate responses, and we are more likely to find MNEs responding to expectations if there is an immediate need. In other words, the more fundamentally and quickly expectations change and clash, the more likely we are to find responses to and interpretations of such changes expressed in corporate selfunderstandings and in corresponding documents.8 It follows from what has been discussed that corporate documents published in response to a crisis become an “indispensable . . . source of information about the range and robustness of the constraints faced” by the enterprise (Sabel and Zeitlin 1997, 15). In other words, content presented in annual reports and other corporate documents, when read critically with a reconstructive mind-set and not taken at face value, reveal attempts by MNEs to respond to novel expectations and thereby establish and justify new corporate meanings. While such documents are rhetorical in nature, carefully crafted and published with the sole purpose of presenting the enterprise in a good light, one can go beyond narratives of corporate excellence and reveal deeper beliefs expressed therein. Table 8.1 Selected Corporate Crises of Extractive Oil Enterprises in the 1990s Unocal Royal Dutch/Shell BP Chevron ExxonMobil

Region

Yadana Pipeline, Myanmar Niger Delta, Nigeria Casanare, Colombia Cabinda, Angola Aceh, Indonesia

Period

1993–1995 1993–1995 1996–1998 1998–2002 1999–2001

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These are important since they reflect what the enterprise considers to be socially appropriate and impact further action. In other words, I assume corporate rhetoric to be consequential in the sense that it is not only reflective but also constitutive of corporate agency (Taylor and van Every 2000). Looking beyond what is communicated, the interpretive frameworks reveal and sustain deeper beliefs held by the enterprise as to what defines corporate agency: “Whatever the original instrumental intent, language and symbolic action may have constitutive effects beyond what any particular agents—corporate communication departments, CEOs, other corporate rhetors, or their critics—can control. Corporate [communication reflects attempts at] (re)creating the firm and (re)constructing its relationship to nature, while opening up novel possibilities and action at the societal level” (Livesey and Graham 2007, 336).9 In summary, because of their sociality and creativity, as well as because of the crises MNEs find themselves in, corporate documents and the responsibilities and meanings expressed within have consequences. Even in the most cynical co-optation of social expectations in corporate whitewashing, there is at least the recognition that the enterprise has to respond to new expectations. More importantly, the particular way this is being realized by the enterprise reveals as well as constitutes its agency. In other words, reconstructing how enterprises perceive and make sense of a crisis, which corporate responsibilities they consider, and how they understand their role within provides a better sense of how enterprises define and frame their agency in the first place. Instead of focusing on governance outcome, this perspective provides answers to whether, how, and why MNEs do or do not become global governors. In order to provide an illustration of such an account of corporate agency in crisis and the potential it holds for broadening our understanding of MNEs in global governance, the following sections consider ExxonMobil in Indonesia and the responses it gave to the crisis the enterprise experienced throughout the late 1990s and early 2000s. ExxonMobil and the Crisis in Aceh

Historically, no other sector has influenced both the practice and the study of multinational enterprises as much as the extractive oil industry (Penrose 1968; Sampson 1975). For the task at hand, MNEs from this sector serve particularly well to illustrate the potential of studying corporate agency in crisis since they best epitomize the ambiguities and challenges of global governance. More specifically, extractive MNEs were among the first to invest across borders as their operations are

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determined by “geological imperatives.” Once they are in place, high asset specificity makes it very costly to leave again. Furthermore, in this sector we find some of the largest enterprises, which, for the most part, are vertically integrated and include the complete value chain from exploration to processing to distribution, making them visible and susceptible to consumer pressure.10 Finally, extractive MNEs rely on host governments granting rights and licenses for exploration and drilling. As such, they have a history of cooperating with corrupt governments in “rentier states” that show little awareness of human rights and do not distribute revenues to affected regions to enable social development (Gillies 2010, 104–106; Soares de Oliveira 2007, 30–32). Among extractive oil enterprises, ExxonMobil, created by the merger of Mobil Oil and Exxon in 1999, stands out as a particularly intriguing organization (Coll 2012). As the second-largest enterprise in the sector, ExxonMobil and its predecessors and subsidiaries have always maintained aggressive public relations and have been described as a “political symbol used by U.S. politicians to build support for reforms and by officials in other countries as a villain useful in rallying the masses against American influence” (Pratt 2012, 153–154). 11 Further adding to collective memory and haunting the enterprise is the Exxon Valdez disaster in 1989 and the enterprise’s vocal stance against the science of climate change (Layzer 2007, 110). However, the most constitutive experience in recent corporate history was the crisis in Aceh. Here, the enterprise experienced a situation of unknown dimensions as it tried to maintain its operations in an environment of political instability, human rights violations, and ecological destruction, which the next section describes in more detail. The Crisis Unfolding

Ever since taking off in the 1960s, Indonesia’s oil industry relied heavily on foreign enterprises. ExxonMobil’s predecessor, Mobil Oil, played a crucial role in this. Starting in 1971, the enterprise, in conjunction with the state-owned company Pertamina, discovered a large natural gas field in Arun, which lies on the northern shore of the Aceh province. Through its Indonesian subsidiary, the enterprise obtained exclusive rights for exploration and production in this field from the military regime led by General Suharto, which depended heavily on foreign investment and expertise (Barnes 1995, 22–25). The field was also of great economic importance for Mobil Oil Indonesia, which, over time, expanded its operations in Aceh to extract more and more natural gas. During the 1990s, revenues from Arun made up almost a quarter of the

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enterprise’s global revenues (ICTJ 2008, 7).12 Overall, the discovery of the field greatly helped ExxonMobil remain successful in Indonesia, while the Aceh province, until then politically neglected and economically weak, became a major driving force behind the annual 7 percent increase in GDP that Indonesia experienced throughout the 1980s and 1990s (Robinson 2001, 221–224). This rapid development, however, did not come without costs. The local population in particular experienced foreign investments mostly through social uprooting and environmental degradation. In addition, the centralist government decided to keep most of the tax revenues and did not redistribute them among those directly affected by corporate operations. Such injustices played out against a long history of the Acehnese people struggling for more political autonomy. Prior to the 1990s, this struggle had already escalated into multiple violent conflicts, first in 1953 in the Darul Islam Rebellion and later in a second insurgency during the 1970s led by the Free Aceh Movement (Gerakan Aceh Merdeka, GAM). Over the years these conflicts resulted in more than 12,000 casualties and hundreds of thousands displaced in Aceh. For obvious reasons, Mobil Oil became a popular target for GAM, which perceived the privileges granted to the enterprise as unfair and argued that the company was part of the problem since it courted and directly supported the oppressive and corrupt centralist government (Schulze 2007, 203–207). Mobil Oil never directly responded to or commented on these attacks but relied heavily on state security forces to maintain its day-today operations, noting a “complete breakdown of law and order in the province” in late 1999.13 The Suharto regime, on the other hand, depending on the revenues, feared that the Acehnese independent movement could gain further momentum and decided to respond in drastic ways. Local protest, whether peaceful or violent, was answered with a brutal and systematic terror campaign. Under the so-called Kolakops Jaring Merah, Aceh became a “military operational area,” and forces were dispatched to combat equally those striving for independence from Indonesia and those taking a stance against Mobil Oil. According to NGO reports, measures taken by the military in those years included “arbitrary arrest and detention, torture, ‘disappearance’ or summary execution” of individuals associated with GAM (Schulze 2007, 203). This occurred under the “pretext of operating as security for Mobil” in which “the Indonesian military killed, tortured, raped, maimed, and caused many villagers to ‘disappear’” (Taylor 2004, 274). For Mobil Oil, however, the worst was yet to come as the enterprise, for the time being, was able to maintain regular operations and did not face direct public pressure until 2001.

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The Turning Point of 2001

After the end of the Suharto era in 1998, the separatist movement in Aceh gained new momentum, and violence erupted once again. Foreign enterprises in general and ExxonMobil Indonesia, the recently created successor of Mobil Oil Indonesia, in particular became the targets of both peaceful protest and violent action. In a unique turn of events, a local GAM commander, Ahmed Kandang, approached the enterprise and demanded “taxes.” ExxonMobil refused to pay and officially announced its intention to retain its neutral position and not get involved in the conflict. In its daily operations, however, the enterprise continued to rely on, and allegedly also paid for, state forces known for their uncompromising and brutal counterinsurgency approach to any form of social protest in Aceh. While details remain subject to debate, we can safely assume that ExxonMobil in this context, at least in multiple instances, actively requested that military forces protect its assets despite the knowledge that they had committed human rights violations such as murder, torture, and rape in the past. Furthermore, charges remain that the enterprise also supported the Indonesian army logistically and material-wise in campaigns against GAM, in some instances equipping and training Indonesian soldiers and overall maintaining close relationships (Schulze 2007, 198). On the ground, the situation quickly deteriorated further, with multiple ExxonMobil employees being abducted and a number of vehicles, refineries, and a helicopter attacked (ICTJ 2008, 10). As a consequence, the enterprise was forced to temporarily shut down its onshore operations in March (W. Arnold 2001). Such a decision had not been made during the prior thirty years of violence and conflict in Aceh. And while the response of the Indonesian government, fearing loss of approximately $100 million in foreign-exchange earnings per month, echoed actions from the past—it immediately announced new military operations against GAM in 2001—ExxonMobil itself clearly had to find new solutions to maintain its business in Aceh. Even after it resumed partial operations in July 2001, ongoing security concerns caused the enterprise to limit itself to short-term production and day-to-day pumping (McBeth 2001, 24). As such, the violence in 2001 and the increased global scrutiny that followed brought home to ExxonMobil the inconvenient truth that the situation, despite cease-fires between the government and GAM, remained unstable at best. More specifically, the events revealed a “dysfunctional peace process [which] only increased the scramble for the spoils” and a status quo that, in economic and social terms, proved no longer viable for ExxonMobil (Schulze 2007, 185).

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In addition to lost revenues and social pressure, surviving family members of the victims in Aceh, with support from the Washington, DC– based International Labor Rights Fund, filed a lawsuit under the Alien Tort Claims Act in US Federal Court against ExxonMobil. Charges included complicity in human rights violations by providing heavy equipment and facilities. ExxonMobil immediately and emphatically denied liability in both legal and moral terms, which only spurred further protests and acts of violence (McBeth 2001, 25). The Indonesian government once more responded harshly despite ongoing negotiations, launched several new military operations, and placed Aceh under martial law. As yet another cycle of escalated violence unfolded, the largest tsunami in history hit Aceh on December 26, 2004, and claimed almost 170,000 lives in Indonesia alone. Ironically, “this natural disaster paved the way for another round of peace talks,” leading to a signed memorandum of understanding in August 2005, and the conflict “has since ceased to be fought by military means” (Schulze 2007, 216–219). ExxonMobil’s struggle to respond to the crisis, however, continued as the enterprise was challenged to redefine its own role and responsibilities.14 Corporate Agency in Crisis: ExxonMobil’s (Non)response in Aceh

Given the uncertain security environment, recurrent shutdowns of operations, global social pressure, and the legal litigation at home that ExxonMobil faced, the crisis it experienced in 2001 and the resultant challenges cannot be overestimated. Making matters worse, Exxon’s operations prior to the merger with Mobile Oil were located in “relatively serene parts of the world,” meaning that the enterprise had no prior experience in dealing with such a situation (McBeth 2001, 24). As such, not only the scale but also the novelty of the events unfolding in Aceh constituted a full-scale crisis for ExxonMobil in every sense of the word. Furthermore, as other enterprises faced similar developments in other world regions at the same time (see Table 8.1), ExxonMobil’s response to Aceh reflects how a major player in the sector struggled to maintain its agency and define its global role and responsibilities vis-à-vis others at a time when respect for human rights had supposedly become “part of a global script” for extractive MNEs (Börzel and Hönke 2012, 41). To reconstruct corporate agency, I focused on primary documents authored and issued by the enterprise itself. In order to focus on corporate perception and sense-making, I refrained from using secondary documents such as NGO reports. In other words, authenticity and immediateness rather than comprehensiveness in regard to all docu-

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ments speaking to the case determined which documents I selected for interpretation. In practical terms, I retrieved content directly from the websites of ExxonMobil and ExxonMobil Indonesia. In addition to information directly shared there, annual corporate reports, financial and operating reviews, news releases, speeches, and other documents such as Country Fact Sheets and the Standards of Business Conduct were considered and analyzed in terms of whether and how they presented, discussed, and framed the crisis in Aceh. Interestingly enough, aside from the obvious, I found no documents that directly responded to the situation at hand. In particular, during and directly after the events of 2001, there were no official statements, or at least none could be found in retrospect. In addition, even in the following years, few documents directly addressed the crisis. However, providing a long-term perspective, documents indirectly referencing Aceh published by ExxonMobil over the years after the crisis and listed in Table 8.2 were considered.15 Prior to 2005, ExxonMobil’s annual Corporate Citizenship Reports, presumably a likely place to discuss issues such as human rights and the crisis in Aceh, do not feature any references to the latter conflict.16 With the peace agreement in 2005, ExxonMobil first explicitly mentioned the crisis in that year’s report, followed by a “closer look” section on human rights in Indonesia in the 2006 report. Other reports throughout the years have related corporate activities in Indonesia to diverse topics such as HIV/AIDS prevention, local community engagements, women’s empowerment, water management, employment of the local workforce, and other social efforts, but the enterprise’s stance on the conflict is not further elaborated.17 In fact, after 2006 the crisis in Aceh is no longer

Table 8.2 Corporate Documents Considered for Interpretation Number

1

Title

Date of Publication

2005

3

2005 Corporate Citizenship Report 2006 Corporate Citizenship Report

Human Rights Brochure 2009

4

ExxonMobil Indonesia Profile Standards of Business Conduct

May 2010

2

5

2006

April 2017

Document Characteristics

First annual report published after the Aceh peace agreement “Closer Look” section on managing human rights issues in Indonesia Global and unspecific approach to a wide range of human rights issues General company description of ExxonMobil Indonesia Company statement focused on corporate values and policies

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mentioned in the reports at all. Rather, we find generic sections on “Human Rights and Managing Community Impacts” in which the enterprise repeatedly states its active participation in the Voluntary Principles on Security and Human Rights and otherwise refers to its Standards of Business Conduct and a human rights brochure published in 2009. Providing a broader perspective, these two documents were considered, as was a sixteen-page company profile of ExxonMobil’s operations in Indonesia.18 All references to the situation in Aceh in these documents were considered and interpreted as expressions of how ExxonMobil made sense of the crisis and defined its role vis-à-vis others. As such, these documents reflect how ExxonMobil responded to changing expectations and which responsibilities the enterprise assumed or rejected in this context. Questions raised for each document concerned the character and tone, the definition of the crisis, the corporate self-image created throughout, the responsibilities assumed and the scope of corporate action, and the relations to other actors that followed from this. Without going into a lengthy methodological discussion at this point, suffice it to say that the documents were read patiently in their own language without subsuming them under categories or concepts outside the original text. This allowed me to reconstruct meanings, worldviews, and beliefs collectively held by the enterprise.19 Taken together, these reflect a rather straightforward and consistent, albeit limited, understanding of the crisis. Most notably, the crisis does not affect ExxonMobil’s corporate self-image or the responsibilities the enterprise is willing to assume. Despite being confronted with allegations and forced to temporarily shut down its operations, it does not publicly respond to the crisis. Only years later did ExxonMobil emphasize the positive aspects of its activities in Aceh and elsewhere, such as providing energy and development. In this narrative of corporate achievements and excellence constructed throughout the documents, the enterprise advances and considers only economic characteristics, contributions, and responsibilities to define what ExxonMobil is and what it does. As such, it limits itself to being an economic actor and does not consider broader responsibilities. In other words, ExxonMobil rejects the very idea of being a global governor, playing an active role in human rights promotion and conflict management, as well as having any moral obligation to serve as one in the future. Going into the individual documents in more detail, corporate communication seems to be primarily directed at shareholders and customers (document 5). For them, economic measures and successes, such as sales volume and employment of ExxonMobil, in Indonesia and globally, are repeatedly presented. Constructing a grand narrative of how the enterprise

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became a leading energy company, the annual reports and other documents are deeply entrenched in a rhetoric of positive corporate branding. Apparently, for ExxonMobil this branding includes reporting on philanthropic commitments such as disaster relief efforts and local development issues while remaining conspicuously silent about the obvious crisis.20 Arguably, ExxonMobil refers to the other commitments in particular because they are voluntary and do not imply any further binding responsibilities or liabilities. In other words, the enterprise evokes a philanthropic notion of CSR that potentially had little impact and meaning for the everyday core business activities of ExxonMobil in Aceh. Such a position expressed throughout the documents reflects older CSR ideas supposedly already in retreat by the time the crisis occurred (Auld 2008). At the same time, even this limited understanding of CSR is subordinated to economic reasoning. Consider, for example, the language used throughout the documents. In rather explicit terms, it revolves around phrases such as “securing value for our shareholders over the long term” (document 1). Overall, ExxonMobil expresses a strong sense of competition with other enterprises and seems to be motivated mostly by the goal of “running the business profitably” (document 5). As a proper multinational enterprise, ExxonMobil has to be committed to global expansion and vie for profit shares. Further echoing Friedmanite ideas, corporate responsibility for ExxonMobil ends right there as corporate activities, admitted in open rhetoric, are instrumentally determined by economic rationales. For example, “the relationships we develop with local communities,” for ExxonMobil, have “a direct impact on the long-term success of our activities” and hence have to be nurtured.21 Human rights, however, are not an end in themselves but rather a means to ensure long-term economic success and business sustainability. Overall, there is no moral imperative but only a business case as core operations and profit come first and commitments above and beyond remain limited. The importance of ExxonMobil and its economic success in this perspective are repeatedly stated as the documents report corporate achievements such as expanding operations and increasing shareholder value. Steeped in this economic logic, the documents consistently argue that corporate size, global operations, and success rather than social engagement are constitutive for ExxonMobil. In other words, rather than its moral commitments, its existence as the “world’s largest publicly traded international oil and gas company” matters for ExxonMobil (document 4). Interestingly, even the fact that ExxonMobil frames these issues in instrumental terms is presented as a corporate asset. In a nutshell, the enterprise understands instrumental action to be a necessary rather than a negative feature of the corporate world of permanent competition. Its

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nonresponse to Aceh in this vein represents “an example of how we manage and respond to potential human rights issues” (document 3). Following this self-constructed logic, ExxonMobil can be considered an exceptionally “successful” enterprise precisely because it does not respond to the crisis: since it is imperative for the enterprise not to engage with moral issues unless they are instrumental for profit maximization, the nonengagement with the issue reflects the best course of action. Again, presenting corporate success rather than considering social responsibilities is paramount. Whether one agrees with this or not, in a crisis such as Aceh, ExxonMobil consequently and deliberately sees its own activities as limited to communicating security expectations to the host government. In a twist of arguments, the enterprise claims that it must not do anything so as not to jeopardize its profitable operations (which at the time were still at risk and under shutdown for the most part). Conveniently confining its own role in such a fashion, ExxonMobil willingly assumes a passive role visà-vis Indonesia and, as an economic actor, in society overall.22 Presenting itself as “one of the government’s trusted partners in developing Indonesia’s oil and gas resources and contributing to the country’s economic prosperity for over 118 years,” the company, in its self-image, “continues to play a role in helping meet Indonesia’s energy needs”23 but does not question government action. Ultimately, it is not the enterprise but the government that is responsible “for maintaining law and order, ensuring security, and protecting human rights” (document 3). Challenges to the legitimacy of the government or its practices in Aceh are proactively dispelled as ExxonMobil praises government efforts to secure “a peace movement and a cessation of the civil conflict that has challenged this region for 29 years” and frames the opposition as “separatist rebels” who have to be demobilized and disarmed (document 1). This brief discussion on Aceh not only reveals that the enterprise has a deeper awareness of the situation that it chooses not to communicate but also establishes the foundation for the years to come to justify the enterprise’s stance on security provision in Aceh. Without providing further information or context, ExxonMobil in this regard simply continues to state that whether it is working with private or host government security forces, both are expected to uphold human rights, and that concludes the enterprise’s discussion of the situation in Aceh.24 In addition, in another rare instance in which it discusses the crisis directly, the enterprise claims that security services “are solely for the purpose of providing defensive security” (document 3). How to distinguish between defensive and other forms of security in a conflict such as that in Aceh, however, is not further elaborated. The same applies to agreements with private security firms,

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which assumedly “include expectations for training and compliance with relevant local, UN and other security-related frameworks.”25 In the end, ExxonMobil does not recognize the need to provide any further details, with the overall controversial topic only touched upon in passing. With Table 8.3 summarizing the documents in detail, the corporate self-image ExxonMobil overall presents is informed by and reflects the notion of rational agency (or at least what the enterprise considers to be rational). The enterprise is clearly motivated by instrumental reasoning and considers this an asset to be proud of rather than a concern to worry about. Other responsibilities beyond rational profit maximization are only considered if they help the enterprise realize monetary gains and survive the competition with other enterprises. Given this frame of interpretation and the deeper beliefs it represents, ExxonMobil in the end is unable to make sense of the crisis since this would challenge it to reconsider its own logic and definition as an economic actor. Despite immediate financial losses, the enterprise does not even rhetorically entertain the idea of taking on new responsibilities. Wider sociopolitical impacts of corporate activities and operations are not considered, even in light of an immediate and violent conflict. The overall communication, despite a few instances of mentioning Aceh, thus remains generic and focused on corporate contributions to development rather than conflict: “Energy—in all of its forms—is critical to economic growth, development, and social welfare. . . . ExxonMobil’s primarily role in society is to provide reliable energy supplies to people around the world” (document 3).This limited understanding of ExxonMobil’s own governance role and further implications for its (non)transition into global governorship are discussed in the conclusion. Conclusion and Outlook

Due to their size and operations as well as the implications of their actions, multinational enterprises arguably play an increasingly important role in global governance today. While this broad statement applies to all major MNEs, it seems to be particularly true of extractive enterprises. More than other enterprises, they operate directly at the nexus of economics and politics. Two images of the enterprise help us to study and engage MNEs at this nexus. Research in the rationalist vein discusses the conditions under which MNEs instrumentally respond to normative expectations (i.e., increased public scrutiny, reputational concerns, etc.). Such an approach runs the risk of subsuming corporate action under an ideal-type mode, which might obscure actual corporate

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Table 8.3 Corporate Self-Understanding and Crisis Communication by ExxonMobil in Response to Aceh and Beyond

Character and tone of document Definition of crisis

Document 1 (2005) 2005 Corporate Citizenship Report

Short section with general bullet points

Document 2 (2006) 2006 Corporate Citizenship Report

Descriptive, attempting to appear factual and objective Concluded and solved Governance dilemma through peace of human rights and movement corporate security Corporate Secondary yet positive Instrumental for self-image influence on human development, rights and development depending on secure environment Corporate Support but not get Communicate security responsibilities involved directly expectations to host government Scope of Active yet limited Incapable of corporate incorporating human action rights or other values Relations to Productive and engaged Asking host government other actors yet playing a to provide security secondary role

Document 3 (2009) Human Rights Brochure

Document 4 (2010) ExxonMobil in Indonesia Profile

Document 5 (2017) Standards of Business Conduct

Global and unspecific; Descriptive, steeped in Openly instrumental, positive but superficial instrumental and which is considered strategic logic an asset Only briefly touched Not referred to due to Not explicitly discussed upon and not its political, but implicitly framed discussed as crisis noneconomic nature as political Engaged in partnerships As an economic actor, Obligated to yet limited as operating globally and strategically economic actor thus successfully maximize profit and shareholder value Broadly defined in Undefined but limited Economically defined economic terms yet to economic with moral values otherwise limited responsibilities subordinated Partnering with Very capable of and Limited to economic responsible institutions successful in activities beyond and agencies economic operations politics Very productive and Competing with other Responsible only engaged yet also MNEs toward shareholders playing a secondary role and customers

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motivation and the normative frameworks in which it is carried out (Woll 2010). The normative-constructivist image, on the other hand, establishes the case that enterprises such as ExxonMobil in contexts such as Aceh should assume broader responsibilities and consider political and economic reasoning. Research in this vein runs the risk of relying on a certain teleology and conflating what MNEs are doing and what we wish they were doing (Scherer and Palazzo 2011; Holzer 2010). Instead of evoking one or the other image, this chapter has introduced corporate agency as an indeterminate process unfolding through the enterprise’s sociality and creativity. One such process was illustrated by reconstructing interpretations, responses, and justifications expressed by ExxonMobil in response to its major crisis in Aceh, which, taken together, reflect broader self-images and understandings of the enterprise’s role and responsibilities in global governance. While the enterprise self-consciously framed its own agency in economic terms, it derived this rationality in response to privileging certain social expectations over others (i.e., those of shareholders over those of stakeholders). The enterprise’s expressed commitment to “focus on narrow economic issues [by which] they categorize[d] any problem as ‘political risk’ ” allowed them to argue that those other problems would simply lie “beyond their control” (Litvin 2003, xii-xiii). However, none of this solved the crisis at hand, which just became worse for ExxonMobil. Thus, the glossy rhetoric advanced in the corporate documents did not reflect a corporate masterplan. Rather, the streamlined communication and its lack of willingness to respond to broader social expectations reveals an organization struggling in a situation beyond its control, trying to regain said control by relying on established routines. In other words, the social and creative dimension of ExxonMobil’s agency in this instance played out in a rather conservative fashion as the enterprise maintained a strong distinction between politics and economics and thereby limited its own role and responsibilities in the years to come. Instead of proactively engaging, for example, in a discussion of how to relate to state security forces committing human rights violations and indicating a willingness to reconsider its own action, the enterprise mostly was preoccupied with documenting the economic pressures it faced as well as its success in the face of competition and thereby ultimately denying that its action had broader social consequences. These findings echo some of the more pessimistic conclusions about how ExxonMobil has not transformed into a global governor or a good corporate citizen (Taylor 2004).26 Arguably, with the discourse on MNEs in the United States being more instrumental than elsewhere, this can be explained by home-country dynamics and how CSR has been discussed there (Favotto et al. 2016). At the same time, internal dynamics of corporate governance and the fact that ExxonMobil only recently merged into

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existence prior to the crisis, as well as other past experiences, also likely influenced the course of action taken in the Acehnese context (Kostova et al. 2008). While providing a single explanation is beyond the scope of this chapter, ExxonMobil’s embrace of economic determinants over social expectations indicates that fundamental contradictions and tensions, at least in its world, between politics and economics remain. In light of the crisis, the enterprise was unable to reconcile them, and its transition to global governorship remains incomplete at best. Reducing corporate agency in these (non)transitions, however, “to rational models of hierarchy, control, and coordination [misses] a huge amount of the dynamism, conflict, and change that occurs” (Morgan 2001, 11). At the same time, assuming that MNEs—with a certain amount of social pressure and steering—can be “moralized” and thus eventually begin to meaningfully integrate social responsibilities into their calculations seems rather naive as well (Holzer 2010). In the end, the precise role and responsibilities of extractive MNEs “represent the contested terrain of global governance,” with MNEs trying to determine the notion in whichever way they perceive and construct their interests (Levy and Kaplan 2008, 445).27 Given the social and creative nature of corporate agency, the outcome of this is contingent yet not determined. In other words, the future role of MNEs in global governance, probably more involved than ever, for now remains undecided. Against the overall findings, I conclude that corporate actors, due to the consequences their actions have and the changing normative environments in which they operate, indeed have become involved in global governance. However, this involvement does not automatically imply fundamentally changed roles; nor does it directly translate into a willingness for MNEs to assume broader responsibilities. Rather, corporate transitions into global governorship are likely to remain incomplete and “subject to competing rationalities that often render compliance difficult” (Börzel and Hönke 2012, 42). In instances where MNEs “step in” and become involved, we need to determine the nature of their involvement and the underlying assumptions with which they engage. By de-essentializing corporate motives and interests in these contexts, we can reconstruct what roles and responsibilities they consider appropriate and whether we, as scholars and stakeholders, agree with them. By doing so, we create space for discussing the role MNEs should play in global governance. In this vein, framing corporate agency in its social and creative dimension echoes Zeitlin (2007) and his call for a renewed and ongoing “debate about the range of strategic choices open to us in the present and future” with regard to whether and how to integrate MNEs into structures of global governance. If

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anything, their increased involvement, together with their potential unwillingness to consider their own impact, in crises of human rights demands nothing less. Notes 1. Obviously, CSR includes more than human rights and conflict. For example, environmental responsibilities and commitment to labor standards play an important role too (Dashwood 2012, 9–12). Overall, the emergence of a more comprehensive and global notion of CSR has been discussed as “a new generation” of corporate responsibility, which ultimately permeates the boundaries between private and public (Stohl et al. 2007, 35–41). However, for the purpose of this chapter, I will focus on corporate responsibilities, and the obligations that follow from those, that pertain to issues such as conflict, security, and human rights. 2. Without doing full justice to the arguments in these accounts, one can assert that their conclusions are reached by considering in particular how Shell committed to local stakeholder communities, expanded its “social spending” during the 1990s, and established whistle-blower guidelines. Whatever the precise reasoning may be, though, it can be concluded that “within the corporate world, Shell—together with another oil giant, BP—is now considered a model for other firms interested in CSR” (Litvin 2003, 251). 3. Another rational argument often given in the literature to explain corporate commitment to CSR relates to corporate motivation to avoid strict(er) government regulation or at least reduce the heterogeneity of the regulatory environments they operate in (Flohr et al. 2010, 66–80; Börzel 2013). 4. Arguably, the shortcomings of academic reflections on MNEs have implications for the public discourse on the role of multinational enterprises in global governance as well as corporate practices themselves. Echoing these two narratives, promoters and opponents of CSR seem to be unable to relate to each other, while CSR managers and their units, at least to some extent, remain separated from corporate public affairs departments (Thauer 2014). 5. I am aware that this conceptualization of corporate agency is just another narrative and thus, as an ontological discussion, not “closer to truth” than those images discussed in the introduction. I would, however, contend that one can study important dynamics with it otherwise not considered and that, specifically through its following explication, this open-ended conceptualization invites debate whereas the other images seem to be more paradigmatic. 6. The references to Mead and Strauss, as well as the substantial discussion, should have made it clear to the reader that the chapter is strongly informed by a pragmatist theory of action advanced, among others, by Dewey (1922). 7. Keep in mind that not all crises are perceived as such by the actor; nor do they constitute “critical moments” in self-perception. Rather, the emergence of novel routines restabilizing our agency can, at least to some extent, happen without conscious effort and even without our noticing these dynamics (Joas 1996, 250–258). 8. According to Geppert (2003), similar processes take place and can equally be studied in routine situations of managerial transformation over time. In a broader sense, whether we should expect crisis to be the most common mode of action or if social lives are dominated by habitual action can to be debated (Hopf 2018). 9. The importance of corporate documents has also been established within the rational actor image recently. More specifically, based on the logic of consequentialism, it has been suggested that these documents are relevant and carefully worded

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by the enterprises simply because they can rhetorically entrap themselves and be held legally responsible to what is expressed within (Haufler 2010: 117–128). 10. The Global 2000 Forbes List of the World’s Biggest Public Companies lists six extractive oil enterprises—Royal Dutch/Shell, ExxonMobil, Chevron, Total, Sinopec, and PetroChina—among the top thirty that are well-known and present in consumer experiences. “The World’s Largest Public Companies,” Forbes.com, https://www.forbes.com/global2000/list (accessed November 30, 2018). 11. In this light, the 2017 appointment of Rex W. Tillerson, former CEO of ExxonMobil between 2006 and 2016, as secretary of state does not come as such a surprise. 12. As a nonprofit organization, the International Center for Transnational Justice (ICTJ) is dedicated to pursuing accountability for mass atrocity and human rights abuse through transitional justice mechanisms. 13. This quote from Robert Haines, ExxonMobil’s manager of international government affairs, comes from an internal memo sent in December 1999 and published through the lawsuit. See Memorandum and Opinion on Summary Judgment, August 27, 2008, 4, https://www.gpo.gov/fdsys/pkg/USCOURTS-dcd-1_01-cv-01357. 14. Without going into the full legal details of the lawsuit, I should mention that several federal judges and the US Court of Appeals denied ExxonMobil’s motion to dismiss the case based on the company’s rather weak arguments that it was compelled to use state forces to provide security, that it did not intend for the human rights violations to occur, and that it exercised no control over security management. However, at the same time it took until July 2015 to rule that the plaintiffs, given that they provided “sufficient evidence, at this stage, for their allegations of serious abuse” (ICTJ 2008, 6), could proceed in US court, with the outcome still pending. In the meantime, ExxonMobil sold its facilities to the state-run company Pertamina. This happened in October 2015, ten years after the peace agreement and assumedly for economic considerations rather than fear of further violence, as ExxonMobil Indonesia decided to focus on its field in Banyu Urip. “Our History in Indonesia,” ExxonMobil, http://www.exxonmobil.co.id/en-id/company/about-us/history-in-indonesia/our -history-in-indonesia (accessed August 31, 2018). 15. I first scanned the website of ExxonMobil for a different research project in 2011. Revisiting this, a renewed search was conducted throughout the summer of 2017. It is noteworthy to point out that some of the documents from 2011 were revised and updated, while others were no longer available at all through the website. To present a more detailed picture, shorter segments directly retrieved from corporate websites were also considered in addition to the documents listed here. On a methodological side note, this shows the difficulty of doing research on MNEs since there are no public archives. Access to documents thus depends on whether the enterprise makes them available or whether they are shared by other agencies elsewhere on the internet. Having said this, the decision to limit the material to “primary sources” should nevertheless be considered as a methodological argument to more willingly engage with corporate documents and consider them, for reasons outlined above, as important sources. Research using these documents, however, will be limited by the fact that it will remain somewhat anecdotal instead of comprehensive and systematic. 16. Interestingly enough, earlier reports mention corporate activities in Aceh but only in other contexts such as tsunami relief efforts and commitment to environmental initiatives. 17. A minor reference in the 2012 report suggests that the enterprise organized a stakeholder dialog on the issue and held implementation workshops on security and human rights in Aceh. However, no further information is provided until the next report, which states, “In 2013, we provided security and human rights training to approximately 500 ExxonMobil employees and security personnel in Chad,

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Colombia, Indonesia, Iraq, Nigeria, Papua New Guinea, Russia and the United Arab Emirates” (ExxonMobil Corporate Citizen Report 2013, 68). 18. Just as with other documents, this country profile was no longer publicly available in 2017. 19. The interpretive method only inadequately sketched here goes back to the German sociologist Ulrich Oevermann (2001). Applications and elaborations in international relations are still rather seldom but include Herborth (2012) and Herberg (2007). The method basically assumes that beyond the intended content of any document, its sequential interplay of opening and closing meaning is not arbitrary. Rather, it reflects those worldviews and beliefs of the author that we as researchers are interested in. First breaking documents into short yet meaningful sequences and detaching those from their flow of meaning generates possible interpretations and viable readings for each sequence. These readings are then contrasted with the following sequence, reflecting the actual selection of closing the last and opening the next sequence in the document. This sequentializing is done to retrospectively answer why individual sequences and then, in sum, the overall text are structured in specific ways in order to reconstruct how and why the author chose between different possible meanings. This choice ultimately reflects deep worldviews and beliefs, which constitute how we make sense of the world around us. Given the manifest and fundamental nature of worldviews and beliefs, the method further suggests that a few documents suffice to reach broad conclusions about how the actor sees his or her world. In other words, it is argued that close and detailed interpretation of how meanings unfold in only a handful of documents reveals how actors overall make sense of their surroundings. For a more detailed discussion of the method and its limits, see Maiwald (2005). 20. “Our History in Indonesia,” ExxonMobil, http://www.exxonmobil.co.id/en -id/company/about-us/history-in-indonesia/our-history-in-indonesia; “ExxonMobil Relief Efforts,” ExxonMobil, http://www.exxonmobil.co.id/en-id/community/relief -efforts/exxonmobil-relief-efforts/overview (accessed August 31, 2018). 21. “Human Rights,” ExxonMobil, http://www.exxonmobil.co.id/en-id/community /human-rights (accessed January 2018). It is noteworthy that the same generic content is being provided for every country ExxonMobil operates in. 22. Note in this context the rather telling subtitle of ExxonMobil’s Corporate Citizenship Reports, “Taking on the World’s Toughest Energy Challenges,” a slogan that was only recently dropped after the 2012 report. 23. “About Us,” ExxonMobil, http://www.exxonmobil.co.id/en-id/company/about -us/about-us (accessed August 31, 2018). 24. “Security Concerns,” ExxonMobil, http://www.exxonmobil.co.id/en-id/community /human-rights/security-concerns/overview (accessed August 31, 2018). 25. “Respecting Human Rights,” ExxonMobil, http://www.exxonmobil.eu/en -eu/community/human-rights/respecting-human-rights (accessed August 31, 2018). 26. Someone following the normative-constructivist image might add a “yet” at the end of this sentence, but I would contend that this is somewhat too deterministic and teleological. 27. It is interesting to note in this context that most extractive enterprises began to publish their corporate social responsibility reports at around the same time, with Royal Dutch/Shell leading the way in 1997 (Hofferberth 2017). As much as this was a response to increased pressure and changing normative roles, it was also an attempt to direct and steer the discourse and define the horizon of “appropriate corporate action” for extractive enterprises.

9 Managing “Undesirable and Disruptive” Events: Private Security Companies in Complex Environments Rebecca DeWinter-Schmitt

Since 1999, international relations theorists increasingly have recognized and studied the role that multinational enterprises (MNEs) play in efforts to govern transboundary issues, at times with and at times beyond the state (e.g., beginning with Cutler et al. 1999). Although different terminology has been applied to MNEs exercising this type of private authority in the international realm, this chapter refers to them as global governors (Avant et al. 2010) and refers to the myriad forms of such corporate engagement (e.g., Waddock 2008; Brown et al. 2010)—principles, standards, codes, reporting frameworks, monitoring and certification schemes, multistakeholder initiatives, public private partnerships, and so forth—as global governance initiatives. As Matthias Hofferberth discusses in Chapter 1 of this volume, despite the growth in scholarship, the literature on global governance has suffered certain shortcomings. A functionalist logic, which focuses on the outcomes of global governance, and a structural perspective, which examines the design of governance initiatives as means to solve problems and provide public goods, have dominated the literature. Even the recent growth in constructivist scholarship, which explores how social structures and the norms and ideas embedded in them shape identities and behavior, has neglected largely to apply its insights to MNEs (Kollman 2008). As a result, the tendency has been to study the participation of MNEs in governance initiatives and their interactions with other public and private actors within those initiatives, whereby the MNE itself is treated as a black-box acting in response to exogenously determined motivations, whether instrumental or normative in nature. In keeping with the theme of the volume, this chapter seeks to unpack MNEs as socially constructed actors whose identities, 197

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interests, and actions shape and are shaped by their participation in global governance initiatives. Underlying this chapter is a relational understanding of corporate agency, whereby the terms of corporate identity are understood as the outcome of social processes and interactions (DeWinter-Schmitt 2007, 45– 51). Relational theory can explain how actors are formed and attributed with properties that appear to convey determinate essences, which motivate action, without succumbing to essentialism, by recognizing that actors have no core identity separate from the social practices that result in the construction of that identity. According to Jackson and Nexon (1999), questions of identity construction and actions associated with identities are understood by examining social processes and interactions, and the stories provided to explain and justify them, rather than any presocial, preexisting attributes of actors. Through the drawing of boundaries between entities, new social configurations emerge that are attributed with agentic properties and legitimated through storytelling practices. Global governance initiatives created to regulate the behavior of private security companies (PSCs) operating in complex environments provide the lens through which this chapter elucidates how PSCs responded to changes in their context, actively influenced the design of those initiatives, and (re)asserted their identities as responsible managers of risk, to include human rights risk, and providers of security as a public good. Two types of global governance initiatives are at the core of the chapter. One is the International Code of Conduct Association (ICoCA), a Genevabased international multistakeholder initiative (MSI) comprised of PSCs, governments, and civil society organizations. The other is a series of third-party auditable, commercial, national and international management system standards for private security operations, whose development was funded by the Department of Defense, namely ANSI/ASIS PSC.1-2012: Management System for Quality of Private Security Operations—Requirements with Guidance (ANSI/ASIS PSC.1) and ISO 18788:2015—Management System for Private Security Operations— Requirements with Guidance for Use (ISO 18788). These initiatives emerged out of a moment of “crisis” related to the dramatic increase in the use of PSCs during the Iraq and Afghanistan wars (Peters et al. 2017). From a long-term perspective, the sustained crisis revolved around the debate over security as a public good and whether it should be provided by MNEs to support US foreign policy objectives and the objectives of other nations (Chestermann and Fisher 2010). In the short term, the crisis demanding attention was the involvement of PSCs in human rights abuses, Abu Ghraib and Nisour Square being among the highest profile (Human Rights First 2008). The result-

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ing media coverage and civil society mobilization challenged perceptions of the legitimacy of the private security industry, while numerous congressional committee hearings and proposed legislation threatened valuable government contracts. Such legitimacy crises reflect a “formative moment” (Ringmar 1996, 83–87) when actions are undertaken for the sake of establishing identity claims in the face of contested metaphors, which are no longer “taken for granted” and are “undermined and replaced” with new ones. This is true too of metaphors, which are always open to multiple interpretations, about (collective) corporate actors.1 Powerholders, such as corporations and government actors, will often seek to “reaffirm or reinterpret the old meanings that have kept them in power,” while challengers will attempt to attach new meanings to established metaphors or create new ones (Ringmar 1996, 85). In this case, PSCs actively worked with governments and civil society challengers in two very different types of global governance initiatives to address these crises, influencing the design of and relationship between these initiatives, which created a space with opportunities and limitations to deploy rhetoric to justify conceptualizations of PSCs’ identities as responsible corporate actors. The next section examines the literature that addresses global governance in the private security industry. It concludes that, as is the case for the global governance literature more generally, the primary focus has been on initiative design, effectiveness, and corporate motivations for participation, whether driven by rational business calculation or normative imperatives. The literature, however, does not seek a deeper understanding of the negotiation of corporate agency in moments of contestation and does not develop endogenous explanations of how corporate identity forms and shapes interests and ultimately actions that in turn influence the operating context of the private security industry and perceptions of legitimate behavior. The section thereafter elaborates a relational understanding of corporate agency in contradistinction to the essentialized notion of agency that pervades much of the global governance literature. After a short methodological note on the sources of data used and the subset of PSCs examined, the chapter then details how those PSCs, through interactions with other public- and private-sector stakeholders, legitimated a soft law approach to regulation and sought to create and shape the relationship between two different types of global governance initiatives. Disagreements about the nature of that relationship and their resolution opened possibilities for PSCs to elaborate their corporate agency in new ways by drawing on and reshaping extant rhetoric about the nature of security as a public good, the notion of responsible business conduct, and the importance of evidenced conformance to

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standards of good management. To date, the discourse of enterprise risk management (ERM) as an economically sound and practicable means to meet human rights responsibilities while sustaining profitability (i.e., the business case for being responsible) has prevailed over discourses focused on rights holders, their involvement in assessing and addressing human rights risks and impacts, and monitoring of those efforts by stakeholders independent of PSCs. The chapter closes with suggestions for further areas of research. Global Governance in the Private Security Industry

The number of academic publications on global governance initiatives in the private security industry is limited. Much like the global governance literature more generally, the publications tend to focus on initiatives’ design and effectiveness in meeting the underlying standards created to address an identified “problem,” in this case negative human rights impacts. Some examine relationships between global governance initiatives and whether initiatives are converging or diverging and the associated implications. More often implied than directly discussed, the agency imputed to PSCs is essentialized. Corporate motivations for participation in initiatives are either driven “internally,” by interests whose formation are not explored and are derived from exogenous assumptions about rational corporate behavior, or “externally,” by structural regulatory and market imperatives or normative shifts in the corporate institutional field that become internalized, although the exact mechanisms of norm socialization are left underspecified. In all, much of the global governance literature, to include that pertaining to private security initiatives, focuses on “broad explanatory variables, such as institutions, interests, and ideas to account for regulatory developments and outcomes” (Eberlein et al. 2014, 8) and does not examine the processes and mechanisms that drive dynamic social interactions and their specific trajectories, to include those involving the social construction of the identities of corporate actors. Much of the literature on private security governance initiatives tends to be descriptive, detailing their historical emergence and formation (Buzatu 2015); categorizing them into types and comparing them (Hoppe and Quirico 2011; Jaegers 2012); determining whether particular types, such as trade association codes of conduct and certification standards, can increase regulatory control and ensure greater responsibility and accountability (de Nevers 2009, 2010; Leander 2012; Ralby 2015; DeWinter-Schmitt 2016; Sebstead 2016); or elaborating key institutional

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design elements of initiatives with the goal of evidencing linkages between particular design elements and more effective regulation of corporate behavior (de Nevers 2010; Jaegers 2012; DeWinter-Schmitt 2016).2 None of these publications problematize the corporate agency of PSCs, as the initiatives are the unit of analysis and PSCs are subjects of regulation. At most, PSCs exercise agency by trying to shape initiatives’ design, whereby their actions are motivated by instrumental interests that ultimately revolve around the narrow profit motive. The question of effectiveness occupies much of the literature, with effectiveness defined in a variety of ways, to include, as noted, as increased regulatory control and greater accountability for rights abuses. For their part, Percy (2012) and Ralby (2015) examine whether global governance initiatives adequately address transformations in the nature of private security provision or are confined to regulating past problems (i.e., “regulating the last war”) (Percy 2012). Another measure of effectiveness is initiatives’ impact on states’ abilities to regulate the private security industry, provide security as a public good, and meet their international legal obligations to respect, protect, and promote human rights. For example, MacLeod (2011), skeptical of the enforceability of soft law initiatives, argues for a hybrid approach that combines international and domestic soft and hard law regulation. Similarly, Buzatu (2015) depicts current efforts to regulate the industry, in response to regulatory gaps left by globalization processes, through the multistakeholder ICoCA as an example of “coregulation,” whereby, via procurement requirements, state regulation is combined with a nonstate regulatory framework to improve oversight and accountability. Later work by MacLeod (2015) delves deeper into the effect of “prophylactic” soft law initiatives, namely the ICoCA and the management system standard ANSI/ASIS PSC.1, on states’ abilities to protect human rights and concludes that they may allow states to avoid their obligations under international law to ensure accountability and remedy. DeWinter-Schmitt (2009) addresses security privatization’s effect on people’s ability to access their right to security as a public good and identifies human rights benchmarks to determine when security privatization may be too risky to be justifiable. Leander (2012) takes a decidedly skeptical view, arguing that codes, writ large, facilitate the “militarization” of politics and continued legitimation of the privatization of force. Here, too, the literature that addresses effectiveness focuses on the initiatives themselves and their impacts on the regulatory environment and PSCs’ behavior and not on how participation in those initiatives may affect the terms of corporate identity. A subset of the literature examines the landscape and nesting of private security governance initiatives within the institutional field of

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business and human rights and corporate social responsibility initiatives, exploring the relationships between them, whether they are competitive or complementary and converge or diverge over time, and the associated implications. Ultimately, this literature addresses regulatory effectiveness in controlling corporate behavior as affected by the relationships between initiatives. The initiatives are the unit of analysis and less so the internal and external processes through which corporate behavior is directed. The assumption in most cases is that hard law, or soft law accompanied by elements of hard law, is preferable. For example, MacLeod (2011) directs attention to international business and human rights standards, namely the Organisation for Economic Co-operation and Development’s Guidelines for MNEs and the Protect, Respect, and Remedy Framework, which was later operationalized in the UN Guiding Principles on Business and Human Rights and serves as a normative reference in the ICoCA and private security operations management system standards. She concludes that their lack of enforceability will not allow for access to remedy for populations impacted by PSC activities. Her later work (MacLeod 2015) identifies cross-fertilization and complementarity in the influence of international business and human rights standards (such as the UN Guiding Principles) on private security initiatives, in part because of their normative referencing in the codes and standards that underpin those initiatives. Similarly, Jaegers (2012) finds that security initiatives foster vertical complementarity by referencing a common set of international human rights norms, although horizontal complementarity and cross-referencing of each other is limited. Ralby (2015) also identifies divergence among the multitude of private security governance initiatives, which he describes as a “patchwork” rather than a framework for governance, although he acknowledges nascent efforts to foster convergence. The strongest voice describing the convergence of complementary regulatory efforts into a coherent framework with the ability to improve regulatory effectiveness is Avant (2016). Through processes such as problem identification, connections between stakeholders, openness in their interactions, and attention to the workability of solutions, security governance initiatives offered forums where stakeholders could overcome their differences and provided a baseline on which other regulatory efforts could build. DeWinter-Schmitt (2017), while recognizing the linkages between private security soft law initiatives, views their institutionalization as more tentative in nature, backed by narratives about the operationalization of human rights principles into practicable business management standards. However, this discourse is open to potential reinter-

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pretation, and fragmentation remains a possibility unless convergence is actively pursued by participating stakeholders. Some of the literature would appear, via the concepts of motivation and norm internalization, to examine corporate agency as exercised in and shaped by global governance initiatives. For example, de Nevers (2009) investigates the private security industry’s capacity to self-regulate, to include motivating factors (e.g., avoiding mandatory regulation, responding to civil society pressure, maintaining reputation, gaining competitive advantage) and industry characteristics amenable to selfregulation (e.g., sense of a shared fate). Jaegers (2012) identifies similar motivating drivers to self-regulate. While providing an interesting study of the private security industry at an aggregate level, de Nevers (2009) does not address the exercise of agency by individual firms. All PSCs are assumed to behave similarly (i.e., if you have seen one [rational, instrumental] company, you have seen them all). Citing Milton Friedman, Rosemann (2008) offers a similar limited depiction of PSCs motivated by the instrumental logic of the profit motive. His study represents the first attempt to map the content of a code of conduct and served as the basis for developing the International Code of Conduct for Private Security Service Providers (ICoC), the code at the heart of the multistakeholder ICoCA. The business case made by Rosemann (2008) for PSCs to adhere to a code is based on the logic of consequences: PSCs will lose market share if they fail to adhere to expected behavioral norms. Thus, human rights should be ascribed a market value in order to fit into the corporate cost-benefit calculus.3 Additional positive benefits associated with a code include certainty of regulatory requirements, limited liability, attraction of investments, and distinguishing of oneself from the informal sector (Rosemann 2008, 24–25). In contrast, through the lens of a logic of appropriateness, MacLeod (2015) touches on norm internalization when she argues that human rights risk and impact assessment requirements embedded in ANSI/ASIS PSC.1 and confirmed by a third-party audit have “the capacity to help ‘internalize’ human rights norms within a company’s culture.” The processes through which this happens and the impacts on corporate identity are not elaborated. Acheson’s (2016) chapter relies on indicators (related to policies, organizational structures and procedures, accountability mechanisms, and external relations) to trace PSCs’ movement through phases of corporate social responsibility, from denying it, to accepting it based on a logic of consequences, to ultimately internalizing it based on a logic of appropriateness. Persuasion and argumentation account for this transformation in motivating logics, but as larger social processes they too remain underspecified at the agent level, and

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it is unclear if, or how, the researcher should determine if self-interest or an internalized norm drives PSC behavior. As the next section argues, there is no way for the researcher to discern the “true” drivers of corporate behavior. In sum, in most instances the unit of analysis in the literature is the global governance initiative, and the dependent variable is regulatory effectiveness defined in different ways, but most frequently as better control of PSCs’ behavior with the ultimate goal of preventing involvement in human rights abuses. The predominant assumption is that this can be accomplished through better design of private, public, and hybrid governance, involving the stick of oversight and sanctioning as much as the carrot of the business case for participation, reinforced through active efforts to enable convergence among initiatives. PSCs are depicted either as passive agents, the subjects of regulation, or active agents shaping regulation, although what this implies for their identities as corporate actors is not explored. PSCs are assumed to be like all corporate actors, driven by a logic of consequences to maximize profits and responding to shifts in normative expectations for instrumental reasons. The next section, by elaborating the relational construction of corporate identity, sets the stage for understanding how PSCs exercise agency in actively designing global governance initiatives and, in turn, are shaped by the contentious encounters with stakeholders to whom they must justify their behavior and legitimacy as corporate actors. Relational Corporate Identity Construction

The instrumental profit motive alone cannot adequately explain corporate acceptance of human rights responsibilities because that same motivation allegedly drives behavior when MNEs deny such responsibilities as when they embrace them (Hofferberth, Chapter 1 of this volume; DeWinter-Schmitt 2007, 4). Because it remains constant over time, the profit motive does not singularly account for variance in MNEs’ actions. Rather, this chapter argues that MNEs’ actions evidence efforts to reaffirm their identities as responsible companies to critics and other key stakeholders in the course of contentious encounters during moments of crises that call into question the veracity of their identity claims. While challengers may argue that such efforts are purely instrumental, meant to save reputations, avoid regulation and liability, and secure competitive advantage (and MNEs may deploy similar explanations), in the end there is no way to ascertain “true” internal motivations of companies. Explanations provided by MNEs and their challengers are a matter of intersub-

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jectively defining during social interactions who they are, what their interests are, and how they should act. Nor is it adequate to speak of norm internalization as if an external norm were brought wholesale “inhouse” and became an internal driver of corporate action. This would actually rob MNEs of agency as they become “automatons acting on the internal pressure of social norms and conventions which they have ‘internalized’” (Jackson 2004, 286). What constitutes responsible behavior must be given content and meaning and turned into action through narrated social interactions. Approaches that seek to ascertain motivating logics have in common that they essentialize corporate agency by assuming that “identity resides inside actors, and is grounded in their innate, stable essences which allow the researcher to neatly categorize actors into categories of like kinds and then predict behavior based on the interests and intentions that characterize those different kinds” (DeWinter-Schmitt 2007, 23–24; referencing Jackson and Nexon 1999, 296–297). Essentialism views actors as contained entities with fixed essences and as “ontological primitives of analysis,” which exist before social interactions and whose core nature dictates how they interact, yet remains unchanged by those interactions (Jackson and Nexon 1999, 291–293). An essentialist approach applied to MNEs would account for corporate behavior “based on the corporation’s attributes, such as the profit motive or specific hierarchical organizational and decisionmaking structures that separate it from transactions conducted in markets, and systemic constraints on it, such as governmental regulation, the logic of markets, or the social relations of production” (DeWinter-Schmitt 2007, 24). Yet essentialist approaches are limited; they can explain neither how corporate identity came into being, since its core attributes are immutable, pre-social givens, nor shifts in behavior that would seem to violate the core nature of the corporation, such as many of the social accountability initiatives undertaken by companies that do not appear to be a response to market signals or linked to increased profits. Nor can they explain when the boundaries between entities shift, such as when corporations take on functions that were previously deemed as belonging to the state. (DeWinter-Schmitt 2007, 24–25)

To avoid essentialization, the social construction of identity must be examined by analyzing the claims lodged by and about actors, whether individual or collective actors, during contentious encounters. Relationalism can assist since it views actors “more like contested zones of ongoing debate than like physical objects. Instead of possessing a constitutive essence, actors—whether states or individuals—

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should be regarded as the product of ongoing constitutive practices” (Jackson 2004, 285). Rather than as a “noun,” the corporation is thought of as a “verb”; processes of “personation” highlight how the corporation as a social actor is produced and sustained through social interactions (DeWinter-Schmitt 2007, 44–45; referencing Jackson 2004, 286–287). As Ringmar (1996, 13, 79) explains, actors do not independently decide who they are; they do so in relation to others, whose recognition they need to sustain their claims of legitimately being the type of actor they want to be. As discussed next, these identity claims are lodged in the form of stories. Tilly’s (2002) work also reflects a relational understanding of agency. He describes identity as a collective answer to the question of who someone is, offered by participants engaged in claim making. The process of identity construction rests on three elements necessary for the creation and perpetuation of identities: relations, boundaries, and stories (Tilly 2002, 11). As Tilly (2002) argues, identities live in “ties among persons”; thus, social relations are the loci to understand how actors are differentiated from each other. Differentiation occurs through boundary-drawing practices among actors during interactions. Boundaries exist prior to social interactions, since they are demarcated in the course of previous social interactions. Boundaries can be drawn on during interactions, and actors may destabilize or reify them as they seek to justify who actors are (Tilly 2002, 11–12).4 Justification of boundaries is accomplished through the telling of “standard stories,” which arise from, are modified by, and constrain social interactions (Tilly 2002, 9). In other words, “statements about who an actor is involve the drawing of boundaries, whose lines delineate a legitimate realm of action, ‘proper’ behavior, and a set of rights and responsibilities which accompany that identity” (DeWinter-Schmitt 2007, 12). Standard stories justify boundary-drawing practices and imbue boundaries with significance. “Key elements of a standard story include a ‘limited number of interacting characters,’ who engage in ‘independent, conscious, and self-motivated actions’ as a consequence of their prior deliberations and impulses. Outcomes are a result of characters’ actions which can be explained by the ‘motives, capacities, and resources’ they possess and deploy” (DeWinter-Schmitt 2007, 13; referencing Tilly 2002, 26). Thus, ironically, standard stories essentialize actors and enable definitive statements about who they are and how they act. A relational approach seeks to avoid essentialization but recognizes how essentialization occurs during everyday storytelling practices. In this sense, relationalism is underpinned by what Somers and Gibson (1994) call a “narrative ontology” and what Ringmar (1996) calls a

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“narrative theory of action.” Stories are guides to action, and identities are constructed through situating actors within stories in a fashion that lends meaning to experiences. Somers and Gibson (1994) do an excellent job of explaining how action and identity are linked in storytelling practices: Social action can only be intelligible, if we recognize that people are guided to act by relationships in which they are embedded and by the stories with which they identify—and rarely because of the interests we impute to them. . . . Whereas an interest approach assumes that people act on the basis of rational means-ends preferences or by internalizing a set of values, a narrative identity approach assumes that people act in particular ways because not to do so would fundamentally violate their sense of being at that particular time and place.

This resonates with the work of Dewey (1929), who argues that we can know actors, to include collective corporate actors, only by how they interact with other actors, whereby properties attributed to an actor are responses elicited from interactions. Similarly, Jackson (2001) posits that “an actor is what it does, including the justifications which tie various actions together and attribute them to the action of a particular actor.” The stories that actors tell about themselves and others must be validated, or recognized as legitimate depictions by others (Ringmar 1996, 78–81). This is accomplished by tapping into “rhetorical commonplaces” (referred to here also as rhetorics), which Jackson (2001) defines as “cultural resources, composed of general appeals and allusions, strategically drawn on by various sides in a public debate because they are recognizable by parties and audiences to the debate. They aid in determining what a thing is, but also refer to a coherent set of arguments that legitimate and delegitimate certain courses of action.” Rhetorical commonplaces are not fixed but rather are open to adaptation and creative deployment. That said, they cannot be deployed in any fashion whatsoever because there are limits to what constitutes a convincing argument. In other words, there is a larger “rhetorical landscape” of cultural resources (e.g., existing stories, beliefs, metaphors, etc.), which can be creatively drawn on and refashioned, but not all resources are available to us all the time, and there are limits to how far we can refashion these resources before confusion occurs (DeWinter-Schmitt 2007, 50; referencing Ringmar 1996, 74). Strategically deployed rhetorics lend legitimacy to social actors when they create a “fit” between new and existing ideas (Laffey and Weldes 1997, 202–203). Beyond aiding in determining what something is, rhetorical commonplaces “refer to a coherent set of arguments that legitimate and delegitimate certain future courses of action, since they

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provide a background against which to judge and evaluate action” (DeWinter-Schmitt 2007, 50–51; referencing Jackson 2001, 64–65). After a brief note on methodology, the next section explores the rhetorics deployed by and about PSCs, to include in the space created by the contested relationship between global governance initiatives in which the legitimate identity of PSCs was open for (re)negotiation. Methodological Note

The data for this chapter is drawn from three primary sources, namely theory-driven participant observation, semistructured interviews, and texts produced by the global governance initiatives and PSCs. Lichterman (2002) defines participant observation as “research in which the researcher observes and to some degree participates in the action being studied, as the action is happening. . . . Participant observation is distinct from other methods because it produces the most direct evidence of action as the action unfolds in everyday life.” According to Lichterman (2002), theory-driven participant observation combines direct observation with the extended case method by synthesizing evidence gathered from the former with theories of larger-scale social processes, allowing for an integration of micro- and macro-level analyses. The selected case is “theorized as an instance of the social processes at work and the researcher moves from the micro to macro, extracting evidence of the general processes from the specific case, as a way of building on and extending existing theory” (DeWinter-Schmitt 2007, 78). I participated actively in various capacities in developing the global governance initiatives examined here.5 Another primary source of data was semistructured interviewing. Blee and Taylor (2002) describe semistructured interviews as “guided conversations,” whereby the interviewer relies on an interview guide that consists of a general set of questions or topics to guide the interview while giving space to interviewees to digress and elaborate on what they view as important to share. Interviewees are chosen because of their knowledge and roles they occupy and not based on representative sampling. This chapter draws to some extent on interviews conducted in 2014 for a research project examining the interactions between private security governance initiatives, but it primarily relies on interviews conducted in October 2017. Interviewees included corporate representatives, government officials, civil society representatives, individuals involved in the governance initiatives, and employees of law and consulting firms. Interviews were conducted for nonattribution to facilitate a more open

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sharing of information. Texts from the initiatives and PSCs provided another source of data, as did secondary sources, including academic publications, reports from research institutes, news articles, and materials from civil society organizations (CSOs). Finally, it should be noted that this chapter does not undertake an indepth analysis of any one PSC; nor does it seek to generalize about shifts in corporate identity across the entire private security industry. Regarding the latter, there is limited agreement on how to delimit the industry. First, there are definitional disputes over what to call PSCs, linked to differences in views on the acceptability of privatizing the public good of (and right to) security (de Nevers 2009). One can think of a spectrum, which from a corporate perspective would range from perceived derogatory terminology, such as “mercenaries,” to more acceptable terminology, like “private military and security companies,” although “PSC” is preferred most by companies as it eliminates the military designation, thereby allowing them to distance themselves from perceptions that they provide offensive military capabilities. Second, although the industry operates on a global scale (Elms and Phillips 2009), there is no consensus about its size, in part because the definitional disagreements reflect differences about what services constitute private security (de Nevers 2009). For example, should logistical support, training, risk consulting, intelligence, weapons maintenance and operation, detention and detainee transport, kidnap and ransom support, and maritime security services be included? Furthermore, should security services provided in a domestic guarding context be likened to security operations in high-risk, complex environments? The former is generally viewed as far less controversial than the latter. Third, the ability to collect accurate data is compounded by a lack of transparency regarding clients and contracts. Until Blackwater guards’ involvement in incidents in Fallujah and Nisour Square, the industry was not well known to the public. Information on contracts with private-sector clients, such as humanitarian assistance and development organizations, media outlets, and industry clients, is not publicly available, and information about contracts with government clients is largely confidential unless governments choose to disclose that data. Finally, more PSCs are privately held than publicly traded, so annual public reporting is limited (Elms and Phillips 2009). This chapter addresses a subset of PSCs, which were leaders in the global governance initiatives examined here. The greatest percentage of those companies is based in the United States and United Kingdom, and many are prime contractors or subcontractors on US and UK government contracts in complex environments. For example, thirty-two of the ninety-six PSCs that are members of the ICoCA are headquartered in

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the United States and United Kingdom.6 The US and UK government contracts are of note because both states, in conjunction with Switzerland in the case of the ICoCA, drove the development of global governance initiatives. Those initiatives’ origins were rooted in efforts to respond to concerns about human rights abuses linked primarily to PSC operations on government contracts in Iraq and Afghanistan, which prompted Percy (2012) to describe them as examples of “regulating the last war.” That subset of PSCs responded to accusations of abuse by actively engaging with CSOs, governments, and other stakeholders in these initiatives as a means to establish their legitimacy. During their interactions, PSCs deployed claims and undertook new business practices to seek validation of their identities as responsible companies, although decisively on their own terms, as will be demonstrated next. Global Governance Initiatives: Managing “Undesirable and Disruptive Events”

Despite accusations of severe human rights abuses, including those linked to excessive use of force, and the damage they did to the private security industry’s reputation in the early days of the Iraq and Afghanistan wars (Human Rights First 2008; de Nevers 2009, 486– 487), PSCs did not go through a “defensive” stage of corporate responsibility development (Zadek 2004) in which they sought to dispute their responsibility to respect human rights. PSCs quickly undertook efforts to convince challengers and their clients that they operate in complex environments in a responsible fashion (Acheson 2016). Aware that challengers could amplify the immediate crisis into a larger one by questioning the legitimacy of the privatization of the use of force, PSCs, at times with the support of their powerful government clients, deployed “counter-rhetorics” (Ibarra and Kitsuse 1993) to quell or redirect challengers’ claims, reaffirm the legitimacy of the industry in its role of supporting critical war missions, and reassert their identity as responsible companies. Ibarra and Kitsuse’s (1993) concept of counterrhetorics provides a useful means of highlighting and categorizing the discourse utilized by PSCs during interactions with challengers, as uncovered in the data collected. While the counter-rhetorics reflect PSCs’ responses to claims about “problems,” they also evidence the type of corporate actors PSCs perceived themselves to be and how they wanted to be perceived. With the acceptance of the “problem” of actual and potential negative human rights impacts linked to their operations, PSCs mainly

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deployed “sympathetic” counter-rhetorics, indicating their willingness to accept elements of challengers’ claims and publicly evidencing their awareness of the situation and desire to address it, albeit on their terms. The only “unsympathetic” counter-rhetoric that indicated efforts to question the framing of the problem by challengers was “anti-patterning” (Ibarra and Kitsuse 1993, 41–42). PSCs sought to argue that excessive uses of force were isolated incidents and the behavior of a few “bad apples” (Acheson 2016), either individual guards unsuitable for the job or “fly-by-night” PSCs that managed to gain contracts in the boom period at the beginning of the wars but were ruining the reputation of an otherwise responsible industry. By singling out bad actors at the operational level, senior management of PSCs could distance themselves from the “aberrant” incident, remove the individual bad actors from the corporate collective, and reassert that, as a whole, the company continued to be a responsible security provider. By using this counter-rhetoric, PSCs sought to shift responsibility for abuses to individual guards and avoid corporate liability. Far more frequently, PSCs and their government supporters deployed “sympathetic” counter-rhetorics such as “naturalizing,” the strategy of rejecting certain calls for action because elements of a problem are deemed inevitable, and “perspectivizing,” countering a problem frame by arguing that it reflects merely one view of a complex issue (Ibarra and Kitsuse 1993, 39–40). Regarding the first counter-rhetorical strategy, the main thrust of the counter-claims was to legitimize the industry and normalize the privatization of force in support of armed conflict. The common refrain was that PSCs are here to stay and essential for military missions; thus better regulatory oversight rather than questioning their existence was the appropriate course of action. This logic led human rights organizations, like Amnesty International USA and Human Rights First, to participate in drafting the national security operations management system standard ANSI/ASIS PSC.1 rather than support legislation, such as the Stop Outsourcing Security Act, meant to limit the use of PSCs. Another component of this counter-rhetoric reflected efforts by PSCs and their government supporters to restrict the use of force to the realm of defensive capabilities (i.e., self-defense and defense of others). It was complemented by attempts to move away from using the term “private military contractor” to delink the association with offensive military capabilities. Leaving aside the challenge of drawing a bright line between defensive and offensive capabilities, irony resides in this rhetoric; by taking on security tasks formerly performed by the military, private security guards were placed in harm’s way, where the self-defense paradigm needed to be invoked. When

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serious incidents occurred, the metaphor of the “fog of war” was deployed to call into question prosecutors’ and jurors’ ability to judge the validity of a particular use of armed force.7 The guards themselves were portrayed as highly trained, ethical former military professionals not wont to spuriously use force (Acheson 2016). This tapped into existing rhetorical commonplaces around honoring and respecting those who served and cast the light of service to the country on PSCs. For example, Blackwater frequently stressed its identity as an American patriot supporting the US government’s foreign policy, rather than predominantly utilizing language that showcased its profitability as a company. The company actively embraced both its economic and political identities. The perspectivizing counter-rhetorical strategy further normalized the industry by pointing to its essential role in the US and UK missions in Iraq and Afghanistan at multiple levels (Peters et al. 2017). While acknowledging the need for better regulation so as not to threaten those missions, PSCs and their government clients lauded the capabilities they contributed, namely cheaper, more efficient, and more flexible support services. The amending of the military rationale with an economic rationale proved valuable in blocking any serious discussion of limiting the use of PSCs and was frequently deployed by PSCs and their industry trade association despite the lack of supporting data. 8 Finally, even if their primary objective is to protect their clients, PSCs also stressed the essential nature of their services by portraying themselves as contributing to the stability and safety of local populations.9 They sought to identify themselves as promoters of the human right to security to counterbalance the claim that their reputation and profitability rested on protecting the client at all costs, even if this meant exercising force in a way that endangered local populations.10 With a few exceptions, the industry’s main watchdogs, international human rights NGOs, seemed to accept the inevitability of the privatization of force and proved amenable to working collaboratively with PSCs and other stakeholders in global governance initiatives (Joachim and Schneiker 2015). By accepting the industry and validating its willingness to acknowledge human rights responsibilities, certain types of regulatory initiatives—the soft law approach—gained traction as more pragmatic and realistic than others, such as hard law or a binding international instrument. The latter was proposed by the UN Working Group on Mercenaries in the form of a draft convention, only to be soundly rejected by major contracting states, including the United States and United Kingdom, and the industry (DeWinter-Schmitt 2017). In interviews with PSC representatives, two discourses were offered to explain

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the reliance on soft law initiatives. Two industry leaders reported being told by US government officials in a meeting post–Nisour Square that the government would regulate if the industry did not; in other words, the shadow of hierarchy—government intervention—made self-regulation in the interest of PSCs. In contrast, another industry leader attested that some PSCs would have embraced government regulation were it not likely to be insufficient, given the complex jurisdictional issues that arise when regulating in conflict-affected, weak-governance zones. Therefore, it was in the enlightened self-interest of PSCs to self-regulate. Thus, PSCs tapped into an instrumental discourse, tinged with the normative logic of the business case for doing good, to justify demonstrating their responsibility via soft, rather than hard, law initiatives. The stage was set for the first part of the two-part Swiss initiative, namely finalization in 2008 of a nonbinding international declaration, the Montreux Document on Pertinent International Legal Obligations and Good Practices for States Related to Operations of Private Military and Security Companies During Armed Conflict. Drafted under Swiss leadership with the support of the International Committee of the Red Cross, the Montreux Document sought to counter perceptions that PSCs operated in a legal vacuum by recalling existing international legal obligations of states and detailing a set of good practices to regulate the industry (DeWinter-Schmitt 2017). The second part of the Swiss initiative, portrayed as a logical extension of the first part, was the finalization in 2010 of accompanying human rights and humanitarian law principles for PSCs as laid out in the ICoC (Buzatu 2015). While the development of a code was supported by both the US and UK industry trade associations, it was not initially clear if it would be a purely industry-led effort (Rosemann 2008). The decision to pursue a multistakeholder approach ensued, justified by the need for “coregulation,” involving state actors as clients and regulators of the industry as well as civil society to ensure “the process remained committed to the highest standards” (Buzatu 2015, 33, 35). At the time of the ICoC’s completion, 58 land and maritime PSCs had signed; that number rose to 708 in September 2013, then dropped after the ICoCA was established and began requiring evidenced conformance to the code’s requirements, and currently stands at 96.11 While the US- and UK-based PSCs leading in the ICoC effort accepted they had human rights responsibilities, what this meant in terms of business practices and evidencing fulfillment of those commitments became a new point of contention. PSCs and their US and UK government supporters were ultimately able to assert a model for meeting human rights responsibilities that framed and addressed respect for

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human rights as a matter of ERM and linked it to the ICoCA’s certification requirements, something not foreseen in the original plans for the ICoCA as discussed below. The contention revolved around the Department of Defense–funded effort to develop a third-party auditable quality assurance and risk management standard, namely ANSI/ASIS PSC.1, which served as the basis for the international private security operations management standard ISO 18788 released in 2015. By way of background, the ICoC and its accompanying multistakeholder governance and oversight mechanism, the ICoCA, and the management system standards (MSSs), ANSI/ASIS PSC.1 and ISO 18788, are two very different types of “certification standards” (Gilbert et al. 2011). MSSs are commercial standards embedded in a decentralized, market-based system of standards setting, accreditation, and auditing. National and international standards bodies, like ASIS International and the International Organization for Standardization (ISO), create standards, which organizations can purchase and implement to guide how they are managed based on a plan-do-check-act model of continuous improvement. National accreditation bodies, like the UK Accreditation Service (UKAS), accredit certification bodies (CBs) as competent to audit and certify companies to MSSs. PSCs hire CBs to certify that they conform to MSSs. Currently, there are three UKAS-accredited CBs that can certify PSCs to ANSI/ASIS PSC.1 and ISO 18788. In contrast, the ICoCA is a not-for-profit MSI comprised of PSCs, governments, and CSOs, which oversees implementation of the ICoC by member PSCs, certifies them as compliant with the human rights principles in the ICoC, monitors their activities via self-assessment reports and fieldbased reviews, and provides an outlet for complaints. Although different types of certification standards, they are currently linked to each other. The ICoC and Montreux Document are normative references in the two MSSs, and certification by the ICoCA necessitates that PSCs provide evidence of an MSS certification. In addition, PSCs seeking certification must provide the ICoCA with human rights–related information, such as their human rights risk assessment process, to address “gaps” in the MSSs’ human rights–related requirements relative to the ICoC’s requirements (DeWinter-Schmitt 2017). Contention arose when the Department of Defense funded the creation of ANSI/ASIS PSC.1 shortly after completion of the ICoC in 2010 and before finalization of the Articles of Association that established the ICoCA in 2013, then proceeded to require evidenced adherence to the MSSs as part of its procurement regulations.12 The Swiss government and its facilitator, the Geneva Center for the Democratic Control of Armed Forces, had foreseen that the ICoCA would provide guidance to

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member PSCs on operationalizing the ICoC’s principles in their business practices. In interviews, stakeholders expressed different views regarding the reasons for the development of the MSSs and their relationship to the ICoC/ICoCA. CSOs indicated that they viewed ANSI/ASIS PSC.1 as an effort to influence the design of the ICoCA in a way that would favor the industry by pushing the ICoCA to accept certification to the MSSs, thereby allowing PSCs to avoid an oversight mechanism with multistakeholder verification of compliance in favor of a business-dominated management system approach. They expressed doubt about the independence of CBs from the PSCs hiring them and the CBs’ competencies to audit human rights–related requirements. ANSI/ASIS PSC.1 and ISO 18788 are the first auditable management system standards to contain numerous human rights–related requirements, and national accreditation bodies and CBs have limited expertise in human rights issues. In contrast, PSCs and the US and UK governments claim there is a complementary fit between the ICoCA and MSSs to the extent that the MSSs reflect an operationalization of the ICoC’s human rights principles into business practice standards. This has become the dominant discourse. Government and industry representatives also noted in interviews that governments had familiarity with using MSSs in procurement decisions, which facilitated their incorporation into contracting requirements. PSCs welcomed the MSSs as a means to create a competitive differentiator in the contracting process. Industry representatives stated that PSCs and governments agreed to insert references to objective standards of business conduct shortly before the release of the ICoC, arguing that there needed to be auditable standards to measure conformance.13 CSOs were not included in those final negotiations and apparently were not fully aware that the references would tie the ICoC to the soon-to-be-developed MSSs. One industry representative saw significant value in this linkage, claiming it married a practical MSSs approach to the legitimacy of an MSI.14 The linkages between the MSSs and the ICoCA enabled a subtle shift in how PSCs framed and understood their identities as rightsrespecting companies. Whereas references to international standards in early negotiations over the ICoC referred to international human rights norms (Buzatu 2015), now standards referred to business practice standards and specifically MSSs built on the process of ERM as embodied in ISO 31000: Risk Management, which underpins both MSSs. Human rights, protected under international law as the foundation for a life with dignity, became a potential corporate risk if violated. The MSSs label negative human rights impacts as “undesirable and disruptive events”— in other words as material risks to the PSC, with risks to rights holders

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forming a secondary consideration.15 While the UN Guiding Principles state that human rights due diligence can be conducted via the ERM process, Fasterling (2017) warns that companies are likely to misinterpret their human rights risk management responsibilities by focusing on “social risk” to companies (i.e., material risks resulting from their implication in human rights abuses) rather than on human rights risks to rights holders, which must be assessed and addressed even when there is no clear effect on the corporate bottom line. The ERM approach is justified via the narrative of the “business case” for respecting human rights. It has deep roots in the corporate social responsibility literature and builds on an instrumental logic that companies can do well by doing good. Unfortunately, the business case appears to be more aspirational than factual, as there is limited data to support it (Fasterling 2017). In theory, PSCs operating in complex environments already undertake risk assessment processes, which can be amended to include human rights risks. By becoming certified to MSSs, PSCs can provide better services to clients of a more consistent quality; reduce operational, legal, and other costs associated with risks; and differentiate themselves from competitors by improving their reputations. Interviews with three industry stakeholders evidenced that PSCs do indeed focus on corporate risks over risks to rights holders. The interviewees went so far as to claim that the MSSs are not foremost human rights standards but rather risk mitigation and continual improvement standards for managing businesses. They noted that PSCs adopt standards only if the business case for doing so exists16 and seemed to imply that PSCs will only live up to their human rights commitments if it is profitable. Again, one sees a contradiction in deployed rhetorics (i.e., MSSs are the operationalization of the ICoC’s human rights principles versus MSSs are not human rights standards). Beyond concerns expressed in some interviews about risk managers’ competencies to undertake human rights risk assessments and whether they are being adequately conducted by certified PSCs, making the instrumental business case for a risk management approach and linking it to the ICoCA rendered other options for governance less valid. Both hard law regulatory regimes involving greater state oversight and a larger role for the ICoCA in creating operational business standards, overseeing certification, and monitoring compliance became less viable options relative to self-regulation verified by auditors selected and paid for by PSCs. As Buzatu (2015) and industry representatives interviewed describe it, PSCs and states have become coregulators, 17 and one could argue also coproviders, of the public good of security. This is perhaps not surprising since as Boatwright (2010) posits an ERM approach to address-

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ing all forms of corporate risks results in a move from external rulebased regulation by the state to internal risk-based regulation by the company. The role of the state regulator becomes “mainly to oversee the development and operation of firms’ systems of internal control and ensure their effectiveness and adequacy” (Boatwright 2010, 12). Thus, a reconfiguration of the boundaries between states and PSCs is occurring both in terms of who bears responsibility for the provision of public goods and who exercises oversight over corporate practices. In many accounts of identity formation, the state plays an important role in “certification” of identity claims, understood as the “validation of actors, their performances, and their claims by external authorities” (McAdam et al. 2001, 145). This certainly continues to be the case for the private security industry, where states are both regulators and procurers of its services. However, the private-private relationship between a CB and PSC takes on new significance as an instance of certification both of corporate identity and of conformance to MSSs. PSCs have significant leeway in implementing MSSs’ requirements, and research indicates that there may be limitations to the reliability of certification (Sebstead 2016). As a means for PSCs to evidence their identity as responsible companies, certification empowers market-based authority while constraining the multistakeholder authority of the ICoCA to exercise oversight. The voices of CSOs, which allegedly represent impacted rights holders, are also constrained since they have a limited role to play in validating MSSs and conformance to them relative to their equal decisionmaking and sanctioning authority with PSCs and governments within the ICoCA (DeWinter-Schmitt 2016). When concerns are raised by CSOs and other stakeholders about the sufficiency of certification to ensure respect for human rights, two sympathetic counter-rhetorics are regularly deployed. The first rhetorical strategy is that of “tactical criticism,” which questions the means claimants employ to assess and draw attention to a problem (Ibarra and Kitsuse 1993, 40). In this case, PSCs and their supporters claim that challengers do not fully understand “how the industry works.” They argue that even if companies do not use human rights terminology in their daily operations, they are already “doing” human rights in their own way if they are well-run companies with sound operational planning. One interviewee added that PSCs “get that human rights matter,” because not respecting them has “real world effects” understood as ultimately damaging the company’s bottom line. However, in numerous interviews, respecting human rights was circumscribed to addressing health and safety concerns, ensuring that human resources vet out potential “bad apples” and provide training, ensuring nondiscrimination

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at the workplace, providing adequate housing and food, having accessible complaints mechanisms, and the like. In other words, the claim that “we are already doing this anyway as an effectively managed company” closes the door to a comprehensive human rights due diligence process that may capture not-yet-identified human rights risks. A truncated due diligence process assesses known areas of potential or actual human rights impacts and entails limited engagement with affected rights holders. Without adequate human rights training and the application of human rights terminology, it is questionable if corporate culture will shift to embed human rights commitments throughout business operations. Another counter-rhetoric is that of “declaring impotence,” whereby a target claims it does not have the resources or power to address a problem (Ibarra and Kitsuse 1993, 39). In this case, PSCs will point to the human rights dilemmas they face in trying to implement human rights standards in parts of the world that lack familiarity with and protections for human rights. In interviews, industry representatives also shifted responsibility to differing degrees onto other stakeholders, noting either that they recognize the importance of human rights because that is what CSOs and government and other clients expect or equally that human rights will be less of a consideration if clients do not factor them into the selection of security service providers and instead select providers based on “lowest cost, technically compliant.” As one industry representative stated, “It all goes back to what the clients want.” Another industry representative also noted that PSCs may face challenges in implementing their responsibility to respect human rights if their clients do not adhere to human rights commitments as well. These rhetorics allow PSCs to claim the identity of socially responsible companies while simultaneously delimiting how and which human rights responsibilities they fulfill. Understanding the rhetorics that are deployed and their consequences in terms of defining and delimiting expectations of PSCs is important because an examination solely of the public texts and statements of PSCs could be misleading. Whereas other industries, such as extractives, were slow to acknowledge human rights responsibilities (Hofferberth, Chapter 8 in this volume), the requirements of the MSSs resulted in PSCs, among other things, adopting “statements of conformance” in which they voiced their commitment to human rights; identifying the needs and interests of and communicating with stakeholders; agreeing to conduct a human rights risk assessment; providing publicly available grievance mechanisms to address claims of wrongdoing; and more. In other words, on paper certified PSCs show a level of human rights commitment unrivaled by most companies. Yet this does not tell

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the whole story, and the ICoCA faces an uphill battle in conducting certification and monitoring because such efforts are often labeled “costly duplication” of certification to the MSSs. That said, this paper trail is of advantage to challengers as it allows for “rhetorical entrapment,” which offers a means to foster behavior consistent with corporate claims by highlighting when words and deeds diverge and threatening decertification of the legitimacy of corporate actors (DeWinter-Schmitt 2007, 151– 152; Schimmelpfennig 2000, 116). Surfacing inherent contradictions in deployed rhetorics is another means to challenge identity claims. One final irony in the validation of the MSS approach is worth noting. It appears to be limiting access of PSCs in the Global South to the ICoCA, which was created to address the global security industry and not primarily US and UK contractors. An ongoing debate within the ICoCA is whether there are barriers for small and medium-sized PSCs to receive certification to MSSs because of factors such as the high costs of implementation and auditing and language barriers for nonEnglish-speaking PSCs. The ICoCA has received push-back from certified PSCs to not offer alternative routes to certification via some type of ICoCA-directed certification process. The primary justification for this concern is fear that the “rigorous” nature of the standards may be “watered down.” The consequence may well be that access to the inner circle of “responsible PSCs” may be closed for some PSCs, irrespective of what instrumental or normative justifications they deploy to evidence their desire to access this social configuration. Conclusion

This chapter has only scratched the surface in terms of understanding corporate identity formation within the private security industry in the course of contentious encounters during moments of crisis. It points to a number of areas that warrant further research. In-depth case studies of identity formation of particular PSCs would be valuable, as would comparative studies across PSCs, which may highlight similarities and differences in the processes and mechanisms that lead to identity shifts. Here the influence of national corporate culture might offer interesting insights, as numerous interviewees elaborated distinctions between the cultures of British and American companies (de Nevers 2010). Although this chapter started with the period when PSCs largely accepted their human rights responsibilities, a case study of the transformation of mercenary private military firms into legitimate private security firms would offer a revealing look at the reconfiguration and legitimation of

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the boundaries of a social entity (Acheson 2016). This chapter also raises the question of how we bound a corporate actor when its corporate form and name change over time (e.g., Is Blackwater, Xe, Academi, and Constellis Holdings the same entity in any meaningful sense?). Furthermore, social processes and their constituent mechanisms of identity formation remain underspecified (McAdam et al. 2001). A reliance on anecdotal evidence would benefit from a more systematic examination of the frequency of particular mechanisms’ occurrence across instances. In addition, narrated action is an important concept in relational theory, but it tends to neglect the role of power in the deployment of standard stories, rhetorics, and metaphors. While relational theory sees power as residing in social interactions and the successful deployment of rhetorical commonplaces and not as something that actors possess, this would seem to downplay actors’ positionality within social structures. Are CSOs, PSCs, and government actors equally capable of deploying and gaining validation of their claims? Finally, the private security governance initiatives are ultimately meant to protect human rights. More outcome-oriented research may want to examine the human rights implications of an ERM approach to ensuring rights respect. Labeling human rights risks “undesirable and disruptive events” constructs a different type of human rights discourse than that which underpins the international human rights regime. How does the instantiation of corporate identity as a socially responsible corporate actor in the context of a risk management discourse affect how companies evidence that identity and ultimately impact the rights of affected populations? Notes 1. In common discursive practice the corporation is vocalized as a (collective) unitary actor and embodied with personhood by ascribing to it rational, intentioned actions as we would to human actors. However, the personhood of the corporation is itself a social construct, and business ethicists and legal scholars have explored the notion of fictitious personhood in greater depth, while others have challenged the metaphor as potentially empowering companies with unwarranted rights (DeWinter-Schmitt 2007, 23–35). Space constraints do not allow for an elaboration of this literature. This chapter accepts the metaphor of corporate personhood, which was not challenged during this contentious episode, while ideas about appropriate conduct for corporate actors were. 2. Monitoring, enforcement, and sanctioning mechanisms, transparency and inclusive participation of stakeholders, and access to remedy are the institutional design elements most often cited as necessary for effective self-regulation, of course depending on the specifics of their elaboration. There is agreement (e.g., de Nevers 2009; Hoppe and Quirico 2011; Jaegers 2012; MacLeod 2015) that they are absent or insufficient in private security governance initiatives.

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3. Rosemann (2008, 9) states at length, “Growth and profit opportunities remain the most important motivations for entrepreneurial action. If a market displays such growth potential and profit opportunities, but participation in it is subject to certain minimum standards through regulation or self-imposed obligations, an entrepreneurial cost/benefit analysis will be conducted. A CoC for PMSCs can only be successful if the benefits of limiting entrepreneurial leeway through normative human rights standards outweighs the profit opportunities offered by non-compliance. In other words, human rights and the standards of IHL must be accorded a market value.” 4. Abbott (1995) and Jackson and Nexon (1999), using somewhat different terminology, describe a very similar process, which they call “yoking” and “bounding,” respectively, through which social configurations emerge that are attributed with agent properties. Through these processes, “sites of difference” (Jackson and Nexon 1999, 315), or bounded entities that emerged from previous interactions and are recognized as stable and legitimate objects, are the material from which sites are reconstructed to form a new entity, which is attributed with essential qualities (DeWinter-Schmitt 2007, 48; citing Abbott 1995). 5. For purposes of full disclosure and as evidence of my participant observation, I was involved in the private security governance initiatives in the following capacities. In 2011, I represented Amnesty International USA to the Technical Committee that drafted ANSI/ASIS PSC.1. As an independent expert, I chaired the US Technical Advisory Group that developed ISO 18788: 2015. In 2017, I chaired the Technical Committee that conducted the five-year review of ANSI/ASIS PSC.1. I also participated in multistakeholder consultations when the ICoC was drafted and later participated in the convention that finalized the Articles of Association for the ICoCA in 2013. I represented the Washington College of Law’s Center for Human Rights and Humanitarian Law as a civil society representative to the ICoCA and currently participate as an observer. As a consultant, I have assisted companies with their efforts to implement management systems in conformance with ANSI/ASIS PSC.1. 6. An interactive map of the ICoCA’s member PSCs is available at “Membership,” ICoCA, https://www.icoca.ch/en/membership (accessed January 17, 2018). 7. This argument was used by lawyers defending the Blackwater guards indicted in the Nisour Square shooting. See Timothy M. Phelps, Richard A. Serrano, and Matt Hansen, “U.S. Jury Convicts Four Blackwater Guards in 2007 Iraq Killings,” LA Times, October 22, 2014, http://www.latimes.com/nation/la-na-iraq-blackwater -verdict-20140903-story.html. 8. The cost-effectiveness of the industry, particularly in light of limited competition for government contracts, has been called into question repeatedly. See, for example, David Isenberg, “Contractors and Cost Effectiveness,” Huffington Post, March 18, 2010, https://www.huffingtonpost.com/david-isenberg/contractors-and -cost-effe_b_402075.html. 9. One extreme example of this rhetoric was found in the US industry trade association’s journal, Journal of International Peace Operations, which at one point ran a Blackwater ad (on file with the author) portraying guards engaging in humanitarian relief by providing food to a malnourished child. 10. Blackwater frequently advertised the value of its services by stating that it had never lost a client. However, an October 1, 2007, memorandum from the majority staff of the House Committee on Oversight and Government Reform found evidence that in Iraq Blackwater guards were involved between January 2005 and September 2007 in 195 incidents involving the discharge of weapons and that in over 80 percent of those incidents, they were the first to fire. The memorandum is available at http://graphics8.nytimes.com/packages/pdf/national/20071001121609.pdf (accessed January 18, 2018).

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11. For a history of the ICoCA, see https://www.icoca.ch/en/history (accessed January 18, 2018). 12. The DoD does not require membership in the ICoCA of its security providers, while the Department of State requires membership as well as certification to an MSS on its Worldwide Protective Services II contract. 13. ICoC clauses 5, 7, and 10 contain references to business standards. 14. Another industry representative had a different perspective and reacted strongly against the idea that the industry needed to be legitimized by CSOs, arguing that the governance initiatives would have been developed much more quickly if industry had been left to its own devices. 15. To be fair, ANSI/ASIS PSC.1 references the “Protect, Respect and Remedy Framework” at the heart of the UN Guiding Principles on Business and Human Rights, and ISO 18788 has them as a normative reference, which, if implemented, would necessitate that PSCs identify risks to rights-holders and not solely to the company. 16. One interviewee is worth quoting at length to exemplify this position: “It [MSS approach] had nothing to do with human rights, although it could be used for that. It’s a matter of understanding when operations don’t happen as expected and exploring why and addressing that problem. It’s not an ethereal concept; it’s how things are controlled to deliver a reliable and repeatable product or service.” 17. Industry representatives noted that the Security in Complex Environments Group (SCEG) within the British trade association ADS represents a sort of “public-private partnership” to the extent that a member of the Foreign Commonwealth Office sits on the SCEG, and they work collaboratively to address industry issues for the “common good.” One industry representative made a point of noting that the SCEG did not engage in lobbying, framing the collaborative efforts more in terms of problem solving.

10 The Changing Power of the Twenty-First-Century Corporation Jeffrey Harrod

In this chapter I consider the corporation in the context of global politics referred to as processes of global governance. Further, the corporation is seen as an agent of global governance rather than as an appendage of a state or a coalition of global actors. The purpose of the agency approach is to examine what research will yield that can assist in the development of policies and strategies. Global governance appears in studies using the concept as a collection of codes, guidelines, and requirements developed and published by interstate organizations, advocacy groups, civil society organizations, industrial-sector organizations, corporations themselves, and occasionally states claiming extraterritorial jurisdiction. All but the last of these are voluntary; that is, they have no force of law. Most of these instruments have been developed in the last decades and relate to environment, labor conditions, and human rights. All of them are attempts to regulate, control, or direct the activities of corporations in their respective economic sectors and geographic spheres. Advocates of these developments and instruments, sometimes encapsulated in the concept of corporate social responsibility, see them as a move toward securing responsible policies of corporations. Others point to the continued environmental destruction and traumatic conditions of work associated with corporations (Tricia D. Olsen, Chapter 7 in this volume). In addition, being at the center of so-called corporate capitalism (Perrow 2002), the corporation is still charged with supporting transnational corporate imperialism and neocolonialism (John Mikler and Madison Cartwright, Chapter 2 in this volume). I argue that this gulf in perception, opinion, and research is the result of the emergence of the corporation in the twenty-first century 225

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with a different power and an enhanced role in all governing processes, not just global governance. Further, the new position of the corporation has not been accepted or perhaps understood by a variety of writers, thinkers, and activists, and until this situation is changed, any improvement in dealing with contemporary negative conditions will be delayed. At the core, I propose that the corporation must be put in a governance and political context rather than a market or economic framework. This argument is not new, but in its earlier versions it was only marginally accepted, and since that time the nature of the corporation has changed significantly. Increasingly, an approach that considers the corporation as primarily a social and political organization and an agent in governance rather than exclusively an enterprise in the market finds resonance in many studies that discuss the corporation in global governance and cross-national politics (Garsten and Sörbom 2017a). This chapter first presents the data and arguments that the power and position of the corporation has so changed that previous views and positions of it have to be reconsidered. In particular, the increase in the levels of concentration, the dominance in international trade and investments, and the merging of state and political elites at the national level are indicators of the new corporate position. In the second part, I discuss the move of the corporation into rent-seeking and what this means for its emergence as a governing organization. Connecting to the agency focus of this volume, I offer a new vision of the corporation as a powerseeking governing organization or even an organization of civil society in the already existing sources of global governance norms emerging from interstate and civil society organizations involved in sectoral regimes of governance at the global level. Sectoral regimes are seen as a possible organizing principle for future regulation of global corporations. Changes in Corporate Power and Position

The corporation has always been an important organization in national, regional, and global governance. However, significant changes in both national and international structures and dynamics have brought the corporation to positions of dominance in industrial and service sectors and from there to challenge, or at least share integrated power, with many national governments. Two fundamental changes have brought the corporation to this new position of power. The first change is the acceleration, within a similar time frame, of concentration in different industrial and service sectors. The second has been the growth in the last thirty years in global trade, investment, and innovation.

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Concentration: The Source of Power

The first increase in power, which has transformed the corporation over recent years, is that fewer and fewer corporations dominate national and global industrial and financial sectors. In the Anglo-American-European sphere, mergers and acquisitions seem to go in waves and periods. The last wave beginning around 2010 is considered to be the sixth, with the first beginning in 1897. This wave, still ongoing, is characterized by two factors not present to the same degree in the other waves. The first is the sheer size of the concentration, and the second is the increasing global scope. In Europe, for example, the value of mergers and acquisitions between 1998 and 2006 was fifteen times greater than between 1980 and 1998 (Gaughan 2011). The mergers and acquisitions were also increasingly multinational. Concentration has increased particularly within designated groups of investing countries. The mergers and purchases of corporations within the G20 group, for example, moved from 39 to 76 percent of the total between 2014 and 2016 (UNCTAD 2017, 17). Size also produces autonomy—the number of corporations listed on the US stock exchange has dramatically declined because corporations can now be “self-financing” via increased prices and surpluses to the point that it is not necessary to raise capital from the stock market (Davis 2016). The result of this is that, by now, most sectors are dominated by fewer than five corporations. The economist criteria of oligopoly, the so-called 4/40 criteria when four corporations control more than 40 percent of the market, is inadequate to explain corporate sectoral domination and, in most global sectors, has been easily surpassed. The control of any sector may be secured through tacit collusion between corporations or though control of inputs. Nevertheless, there are many clear cases of sector domination—Microsoft with 84 percent of the global market in disc operating systems, the duopolies of Airbus and Boeing in wide-body jets, Apple and Samsung in mobile phones, three corporations with geographic hegemonic arrangements in tires—Michelin (Europe), Goodyear (United States and South America), and Bridgestone (Asia)—among many more examples (Bonny 2017). Domination of global sectors often follows the development of concentration in the relevant sector at the national level. In the United States in 2012, four corporations controlled more than 90 percent of sales in arcades, sanitary paper, wireless telecommunications carriers, satellite TV providers, soft drinks, food-service contracture, light bulbs, and household appliances. Again in the United States, four corporations currently control over 80 percent of insurance, and two control the same percentage of the beer market. While three corporations

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control 90 percent of search engine use in the United States, one of those three, Google, controls 98 percent in the European Union.1 For economists, corporate market dominance weakens when price levels provoke consumers to seek a substitute. According to those assumptions, if a corporation raises prices or otherwise deters consumers under conditions where it is possible to switch to another supply of the same good, then they will switch or even desist from consuming if possible. To avoid such circumstances, many corporations in the recent past have sought to acquire stakes in the substitute to its core product and also to operate in the so-called natural monopolies for which substitution is difficult (core pharmaceuticals, energy, some food production), socially constructed imperatives (welfare, education, health), or infrastructure-created dependencies (transport), many of which were targeted for privatization beginning in the 1990s. After the first wave of mergers and acquisition in the United States, the state attempted to regulate and prevent abuse of power or encourage competition laws designed to prevent so-called trusts, cartels, and monopolies, and these laws persisted and were duplicated in Europe, Japan, and elsewhere. These laws have clearly been ineffective in preventing producer market domination. By design or miscalculation, the powers possessed by the enforcing agencies are not sufficient to deter the formation of dominate corporations in any sector or to prevent the use of this position for price, volume, revenue, political, or social purposes. In the EU, the competition authority is only able to impose financial fines of 10 percent of global turnover of the offending corporation. Not only does this not represent a deterrent, but many of the corporations involved in cartels make provisions against such fines while operating the cartel or engaging in ongoing collusion. In a high-profile case from 2017, the EU fined Google $2.7 billion for using its power improperly, although its global turnover at the time was over $90 billion. Economists and political economy theorists have generally accepted that control through market competition diminishes as concentration advances. The situation, as demonstrated above, logically indicates that if the market ever did control the behavior of firms, enterprises, and corporations, that control has now been substantially reduced or eliminated. In other words, the large corporation has successfully destroyed the product market (Harrod 2006). This chapter does not consider the wider implications of concentration at the domestic and global level, but it should be noted that domestic-level concentration is considered to be part of the cause of growing income and wealth inequality. Domination of corporations from one headquarter state in global sectors also has negative geopolitical ramifications.

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Corporate Control of Global Trade and Investment

It is estimated that corporations currently control 60 to 70 percent of world trade through intracorporate trade (between the subsidiaries of one corporation) and a further 20 percent through indirect trade (between subsidiaries of other corporations). A measure using the global value chain approach—the involvement of corporations in different stages of development of a product—claims that 80 percent of global trade is linked to corporations (UNCTAD 2013). The stock of foreign direct investment has increased over eleven times since 1990 (UNCTAD 2017, 233, Annex Table 4). Foreign direct investment should really be named foreign corporate investment, for multinational corporations are responsible for 95 percent of foreign direct investment. These are the two major transactions between states, and they are predominately in the hands of multinational corporations, even though the residue of twentieth-century interstate arrangements means that states appear to be the key decisionmakers. The explosion of cross-national investment has also brought newcomers to the more established multinational corporation. Chinese corporations are state controlled but nevertheless operate as enterprises in different industrial and service sectors in multiple societies. The global nature of direct investment has also accentuated the differences in corporations originating in different countries and cultures. European, Anglo-American, Japanese, and Chinese corporations in particular display different governances and behaviors (Mikler and Cartwright, Chapter 2 in this volume). Perhaps of equal importance to the expansion of the global scope of corporate power is the impact of it on the balance of corporate revenues between what is domestically generated and what comes from the rest of the world. In the United States, profits of corporations generated from domestic activities have declined progressively since the middle of the twentieth century. In 2017, some US-headquartered corporations received over 80 percent of their revenue from foreign sources.2 In France, major corporations in 2011 already received 60 percent of revenue from foreign subsidiaries, and the dependency on foreign revenue continues to increase (Nivat 2013). The corporations have now become conduits for the transfer of wealth and income from the rest of the world, and in so doing they have increased their material leverage in their headquarter states. The Corporation and State: State and Corporate Elites

The relationship between the corporation and the state has been a subject of concern and protest for centuries. In the seventeenth century, corporations

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were integral extensions of the state and were merged into the projects of imperialism and slavery. The corporation had only restricted autonomy, as it often relied on the state for armed intervention and protection. Scholars at that time and later—Rudolf Hilferding and Vladimir Lenin, for example—saw finance and corporations as causes of imperialism. In the nineteenth century, the corporation was discounted as an organizer of trade and investment in favor of the state. David Ricardo’s famous free trade argument, written in 1817, was entirely statist in that trade was between Portugal and England. The statist view caused him to ignore that wine, the core product of Portugal, was in the hands of a corporation that used all monopoly practices to distort the price, which he erroneously assumed was directly related to real costs. At the end of the nineteenth century in the United States, the corporation largely escaped control of the state, particularly as it was given a legal personality in analogy with the individual citizen (Korten 1995). In the early twentieth century, the theory of market-based control prevailed, but the monopoly corporations of the first decades of the 1900s provoked criticisms in the United States and elsewhere based on the argument that the corporation was responsible for wars and social ills (Josephson 1962; Engelbrecht and Hanighen 1934). This resulted in failed attempts to control the corporation through antitrust and competition laws. In the welfare capitalism period after 1935, social democrats assumed that although the market still existed, it could be controlled by direct state intervention and nationalization. Thus, in the past, the corporation exerted power on specific segments of the state government, secured favors though lobbying and bribery, dominated key national sectors, and, in the case of imperialism, used state support for operations abroad. The protests and solutions to the problems that emerged were directed at those issues. From the 1970s onwards, the market was again promoted as a guiding concept, and the earlier ideas and solutions were sidelined. In other words, the corporation as an organization of governance was rejected, and organization theory was relegated to functional internal operations. Stakeholder theory permitted the argument that the shareholder had primacy and that the goal should be increased shareholder value. Many of the ways of increasing shareholder value in the short term (mergers, retained earnings, price increases) stemmed from the increased power of the corporation. In the twenty-first century, this process of global expansion and concentration distinguishes the domestic place of the corporation from all its previous positions relating to the state. The change in global power of the corporation is one of magnitude. The change in the nature of domestic power upon which so much of global power rests is one of structure and discontinuity.

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The new position of the corporation is illustrated by the overt merging of state and corporate elites. In most governing systems based on constitutional monarchy, patronage, or parliaments, the governing elites had “interests” in land or possessed significant wealth. At the beginning of the twentieth century, when corporate structures were consolidated, the governing elites separated into those securing their power from the state and those with corporate power. Politicians often had wealth but were rarely directly involved in the management of corporations. At the global level, most of the leaders were career politicians arising from a variety of backgrounds and included peasants, trade unionists, and military men. National liberation movements and, occasionally, democratic processes provided pathways to power, which could be used even by those without wealth. This situation changed substantially in the last half of the twentieth century and accelerated toward its end and into the twenty-first century. More and more people with corporate experience moved into positions of state power or moved from state to corporate power. In the United States, the possibility of a corporate executive running for a political office more than doubled between 1980 and 2014 (Babenko et al. 2017). Cyril Ramaphosa became president of South Africa in 2018 after a dual career as politician and businessman, including service as CEO of a telecommunications corporation. Rex Tillerson, ex-CEO of Exxon, became US secretary of state for a year beginning in February 2017. Since 2017, Petro Poroshenko, originally the CEO of a chocolate corporation, has been the president of Ukraine. He was proceeded by a string of CEOs serving as presidents in other countries: Vincente Fox, formerly of Coco-Cola, became president of Mexico; Thaksin Shinawatra, formerly in mobile phones, became prime minister of Thailand; media mogul Silvio Berlusconi became prime minister of Italy; former oil executive George W. Bush became president of the United States; Mario Monti, the successor to Berlusconi in Italy, had worked at the bank Goldman Sachs. Even more heads of state later become businessmen; for instance, in the Netherlands former trade union leader then prime minister Wim Kok joined the board of the Shell Corporation. Even before formally moving to government, chief executive officers have become involved as much in the public domain as bishops and ministers did before. An overt illustration of the unity of the state and the corporation, as well as of the conflictual dangers inherent in it, occurred in 2012 when Argentina nationalized its main oil corporation. In the early 1990s the company had been bought by a Spanish-headquartered corporation as part of a privatization policy. After the nationalization announcement on April 16, 2012, the Spanish minister of industry, energy, and tourism,

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José Soria, claimed it was illegal and declared it “a hostile decision against Respol, a Spanish company, and consequently against Spain and the Spanish Government” (Llaudes and Kaczynski 2012). Then Spanish prime minister Mariano Rajoy made a similar statement: “Wherever there is a Spanish company, the Spanish government will be there defending its interests as its own” (The Guardian 2012). José Soria was subsequently forced to leave office because of revelations of inappropriate financial transactions, but sometime later, and relevant to the discussion in the next section, he was proposed by the Spanish government to be its representative at the World Bank. To summarize, the last quarter of the twentieth century saw the establishment of the sociopolitical ideology of neoliberalism, which argued that markets—that is, the sphere of the corporation—were more efficient than government. Many governments resorted to the private sector for services previously delivered through the public governmental sphere. The privatization of segments of government meant that public-private lines were blurred and interaction between elites was consolidated. Partially the result of the promotion of the private rather than the public sector, the state has become increasingly deficient in the technological expertise needed to develop, execute, and enforce policies. Government elites become more dependent on the technical knowledge and cooperation of the corporation. This is especially true in the high-tech sector, where relevant corporations moved quickly to dominance and even monopoly positions. Various political systems demonstrate different degrees of the integration of corporate elites into government. In China, the Communist Party remains supreme in the state sector, and a cross-over between state and corporation at this level is unlikely. However, at the technological and information level, the ruling party depends on corporations just as in any other country. Other political systems have integrated corporate elites via favoritism and patronage to such an extent that it is claimed that the state has become a mere facilitator of corporate demands (Acharya 2013). The consolidation of corporate power at the level of the state is not an extension of the decline-of-the-nation-state thesis (Strange 1996) because in most of these accounts, the divisions between states and markets was sustained. Further, governments in many countries of the Global South are weak not because of their lack of power in dealing directly with corporations but because of a general lack of economic and technical endowment (Börzel and Risse 2010; Uwafiokun Idemudia and Cynthia Kwakyewah, Chapter 3 in this volume). It is not then that there has been a decline of state power in relation to the corporation but rather that there has been a reconfiguration

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of state power to include, to varying degrees, corporate power (Garsten and Sörbom 2017b). Corporate concentration and domination of global trade and investment, although not structural, will not be subjected to violent or rapid changes. Corporate integration into nation-state governance, however, is dynamic. The implication of the emergence of the corporation as a governing organization at the domestic level is that the regulatory function of the state over the corporation has diminished. This is a volatile power factor inasmuch as political change is currently volatile and a restoration of state intervention and regulation may occur as rapidly as the deregulation process (Soskin 2013; Morris 2018). Leaving the Market

The general lack of appreciation of this new situation stems from the continued and promoted belief in the power of the market. Surprisingly, most classical economists assumed or accepted this view. Karl Marx and Adam Smith, for example, both accepted that the competitive market would force the corporation into rational profit-maximizing behavior. Smith thought the state might deal with the problem of concentration, while Marx accurately predicted it but believed that concentration and its consequences would destroy the whole system. The observation that the corporation has destroyed the functioning of the market is certainly not new. Writing in 1932, Adolf Berle and Gardiner Means, among the first exponents of so-called managerial capitalism, noted that competitiveprice theory was no longer valid. In 1960, another economist noted that there was no economic theory for oligopoly and that military strategy was the best option to understand it (Speight 1960, 318–319). Since that time, economists have bravely sought to use game theory and complex quantified economics of monopoly pricing to claim that economic theory has something to say in seeking to comprehend corporate behavior. However, these earlier views and solutions relating to the corporation in the first half of the twentieth century are distinguishable from the current situation. They were directed at monopoly corporations in restricted national markets with few if any activities abroad, and the concentration was developed though the economic factors of innovation and confined to specific sectors of the economy. Since that time, most of these characteristics have changed. Concentration and expanded global scope have transformed the corporation from a more-or-less profit-seeking organization based on rational decisions in the economic and material sphere into an organization maximizing

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operating surpluses, perceived benefits, and power and prestige in the sociopolitical sphere. Gains and surpluses achieved in any sector no longer depend on increasing efficiency in the production of goods and services as predicted by competitive-price theory. The Corporation as a Rent-Seeking Organization

Through tradition rather than logic, this situation is referred to as rentseeking rather than profit-seeking (Congleton et al. 2008). The use of this term arose from the classical economic argument that rent paid for the use of land did not require any input or action on the part of the landowner. Rent-seeking behavior thus means that surpluses are generated entirely or almost entirely through political and social manipulations, which are not connected with the competitive delivery of a good or service at a competitive price—through efficiency and increased productivity. Thus, for example, if a state taxes an item supplied by a dominant corporation, thereby dampening sales of that item, the removal of the tax will mean more revenue for the corporation without altering the nature or price of the product. The producer of the item then seeks to secure the removal of the tax rather than making the item cheaper and selling more, as would be the case in the competitive-price framework. In order to achieve this, the corporation must be involved in a wide range of political and social circumstances, none of which have the certitude of quantified profit calculations. Its behavior can no longer be predicted, especially when the sociopolitical rent-seeking strategy adopted may be misguided, erroneous, or complex or produce unintended consequences. Rent-seeking is an economist’s concept. Its use by economists, together with similar constructs, such as Directly Unproductive ProfitSeeking (DUP), as well as most discussions of nonmarket behavior, is set against the rational profit-maximizing motive—in this logic, rent-seeking behavior and nonmarket activities distort profit-making (Bhagwati 1982). Political scientists thus need another term for rent-seeking activities when rent-seeking corporations are attempting to deflect possible constraints to their power. It is a power-seeking or constraint-deflecting activity and should be recognized as such. One theory that can connect rent-seeking with power is Nitzan and Bichler’s (2009) view of capital as power. For these authors, profits are only the outcome of power, and therefore power is what is sought through the accumulation of capital. The core number is the return on capital invested, and when one sector drops below the average of all other sectors, the corporation moves to increase the return on capital using the power it has accumulated. In this way, the Middle Eastern wars are correlated with declines and increases in capital

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returns in the oil and energy sector (Bichler and Nitzan 2004). This theory allows us to understand actions that would seem illogical if the criteria were short-term profit maximizing. The most transparent rent-seeking behavior by corporations is lobbying at the national, regional, and global levels. In almost every case, lobbying is aimed at avoiding regulation, constraining control, or improving the so-called investment climate in the case of investment abroad without any significant change in the product or the nature of its manufacture. To change the investment climate in a country requires an important intervention in the lawmaking and political control of the target country. However, the result of concentration in global sectors and of rent-seeking has meant that the corporation is no longer restrained in the use of its revenue by competitive market pressures. Thus, dominant corporations are able to spend money on items that are only loosely connected or not connected at all, drawing from the sector in which an operational surplus is achieved. Finance for charitable and political activities can be passed on via increased prices in a way not possible when other corporations would be involved in price competition. This has clear advantages for the sectoral and global organizations arguing for these expenditures and seeking regulations that require incurred costs—as, for example, in health and safety and environmental regulations. Ovodenko (2016) argues that oligopolistic corporations in the mining or resources sectors, which are the subject of many case studies in this volume, are likely to be subject to greater state or stakeholder regulation because they can sustain the expenses entailed by compliance. In an attempt to retain rational choice theories, it has often been argued that there is profit or value in any action that improves the public/consumer image of the corporation. Only in the rare case of the brand-dependent corporation in a retail consumer market is this the case. Otherwise the value of the invisible asset of corporate image is almost impossible to calculate (Kaplan and Norton 2004). The Corporation as an Organization of Governance

The rent-seeking multinational corporation is a large-scale organization that has internal governance and functional rules for its employees and usually has an identifiable headquarter state or nationality but operates in several countries. It operates externally or in parallel with home and host states and thus must be placed in social contexts. The authors of the chapters of this volume reject the view that the corporation’s behavior and strategy are only for profit maximizing in favor of it being a possible agent in global governance. If the corporation is a rent-seeking

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agent of global governance engaged with stakeholders, it has essentially become an organization of civil society and/or government rather than an organization of the market. It should then be studied through theories and concepts of organization theory and civil society. Organization theory and not economic theory thus becomes the prime theoretical resource for analyzing corporate agency and future activities of the corporation. If organization theory is to be applied, it must be done so in its entirety, which management studies are reluctant to do. As it stands, management studies of corporate governance use organization theory applied to an organization of the market with assumedly fixed and quantifiable goals. Organization theory and the concept of corporate culture are used to assess “efficiencies” rather than as determinants of external actions. Only recently has corporate culture been used to consider the external behavior of the organization in rent-seeking and social responsibility (Matthias Hofferberth, Chapter 8 in this volume). Core concepts and ideas of broader organization theory—much of which was developed in noneconomic organizations—are ignored. For example, Robert Michels’s iron law of oligarchy in organization theory suggests that organizations gravitate toward sustaining the power of the existing power holders rather than the objective or goal for which the organization was founded. Michels’s (1915) study was of a political party and may not be considered applicable to a corporation. Yet, in a stable sector and a stable dynamic of power, production can become routine and surpluses constant, in which case the organization can easily move to a goal of maximum benefits for the top executives—the oligarchy—rather than any other stakeholders. Likewise, the possibility of goal displacement in rent-seeking-dominant corporations becomes possible. For those who believe in the market and the exclusive material goals of the corporation, the diversion into corporate social responsibility is already goal displacement, or at least “mission creep.” Viewing the corporation as an organization of governance raises other issues. The importance of public interest and public goods has been recognized for some time, but as usual it has been set in the constricting framework of profits or shareholder value (Nelson 2008). However, theoretically, it is possible that a globally operating corporation with pricing power can for reasons other than profit maximizing transfer excess pricing in one country to the public interest in another. In the private sector, this would be considered a betrayal of corporate rationality and of the owners, but in an integrated position and as an accepted organization of governance, public interest could be enforced. Again, trade unions have been required to look beyond the narrow interests of their members to a broader public criterion. In other

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words, such demands have already been placed on an organization of civil society and institution of governance. This situation would be different from corporate charity and owners’ charities in which the power to withhold or dispense is held by the corporation or the owner (McGoey 2016). Equally important is the study of the internal aspects of the corporate organization (Gourevich and Shinn 2005). Corporate social responsibility is known to have produced conflict within corporations between those who are and are not sympathetic to it. One study suggests that there are internal and external corporate social responsibility actions and that the internal ones are usually unknown externally (Hawn and Ioannou 2016). All these debates and propositions become possible when the contemporary corporation is placed in a governance framework and its agency stressed rather than in an economic framework disregarding said agency and whose structure and theories have limited applicability. Restraining Global Corporate Power: Changing the Practices

The new configuration of power at the state level thus requires new frameworks, approaches, and theories that move beyond constructivenormative versus rational action (Hofferberth, Chapter 1 in this volume), private versus public, and state versus market paradigms (Midttun 2005). One reaction to the increase in corporate power is the emergence of civil society organizations attempting to monitor, reveal, and contain both state and corporate power (Kettl 2002). Corporate power issues from civil society—it is a private power set within the legitimacy of state power. In the last two centuries, thinkers such as G. F. W. Hegel, Max Weber, and the functionalist David Mitrany have traditionally confined the enterprise to the market, and family and associative organizations to civil society. The current reconfiguration of state and corporate power represents a discontinuity with past practices. It challenges the exclusion of the corporation from civil society and all “state-market” thinking, which unfortunately is still at the base of so many social science and political economy accounts. Many corporations have become an active or even dominant partner in national governments and therefore should be seen as organizations of governance. I have argued elsewhere that the corporation has become the successor to the church as a governmental institution (Harrod 2006). As an organization of governance, concepts of public and national interest and public goods become important. However, under current conditions,

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these are only weakly covered by the norms and practices of corporate social responsibility. In democratic political systems, democratic and participatory theories could be invoked to strengthen them. When, in the mid-twentieth century, the civil society organization of a trade/labor union became formally involved in governance in the so-called tripartite system, it was insisted politically, and sometimes by law, that decisionmaking within the trade union should come from democratically elected leadership. Significantly, this demand was not applied to corporations even though they joined with trade unions in governance in the “socialpartner” model in Europe and the United States. Democratizing the corporation as a means of regulation has been attempted before. The stakeholder movements of self-management, worker participation in management, and public involvement in public corporations, as well as employee stock ownership, failed to make substantive changes. They did leave residues in corporate governance such as the involvement of trade unions on supervisory boards in Germany and elected employee committees and consultative arrangements in other European countries practicing social corporatism. The changed position of the corporation and the consolidation of its power now require a new framework and thus new theories applied to increase public and stakeholder power in the selection and monitoring of executive positions within the corporation. This is relevant, since Chin et al. (2013), after a study of 249 CEOs, convincingly argue that the personal ideology of CEOs—liberal or conservative—changes the corporate responsibility profile. Environmental and economic crises, coupled with the dynamics of power and the volatility of politics, mean that stabilization of the new configuration presented above is uneven, which in turn means that it is always possible that various national governments will attempt to take back control or more stringently regulate the behavior of corporations. Many political factions are based on this demand. Given that all large corporations are multinational, the implications of such activity are global and subject to interstate conflict. Any possible restraints on corporate global power arise from the codes, guidelines, and norms created and made public by a variety of sources. Interstate public organizations and organizations of civil society, including advocacy groups, churches, special interest groups, and social movements, play a special role in this context. The chapters in this volume deal with the end result of such changing norms and practices of global governance at the point of impact. Before I discuss them in detail, the next section outlines how interstate organizations and sectoral regimes provide such norms and rules and thus frame corporate agency.

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Interstate Organizations and Sectoral Regimes

Norms attempting to govern corporate activities can be divided into two groups: those that are universal, or intended to apply to all corporations and all countries, and those that are sectoral, or aimed at different industrial and service sectors. These two groups are also divided by the nature of the organizations within them: the first are predominately interstate organizations, whereas the second are a highly diverse number of civil society organizations focused predominantly on industrial/economic sectors. If, as proposed above, the corporation must be considered in a new theoretical framework, then current regulatory frameworks, practices, and procedures will require revision as well, since they have been set to deal with the corporation as an organization of the market and not as an organization of governance. Interstate Organizations of Governance

The production of universal norms and practices has been left principally to interstate organizations such as the United Nations and regional trading arrangements such as the Organization of American States (OAS), the European Union, and the North American Free Trade Agreement. Any assessment of their impact as sources of global governance norms must be seen, I argue, against the background, indicated above, of corporations with increased global power concentrated in global sectors and engaging in power-seeking strategies. The greater the merging of corporate and state/government elites, the greater will be the corporate influence on the representation of the state at interstate levels. Some scholars have long argued that the corporation has largely been able to influence most outcomes of international organizations (Sklair 2000). More conventional international relations scholars and lawyers either conclude almost the opposite or ignore the issue entirely, while others see the corporation as a freestanding international organization of global governance (May 2015). There are only two ways to determine this issue. First, case studies specifically using sociometry within sectoral regimes and as near as possible participant observation to judge the presence and input of corporate demands promise insights. Second, known corporate policies and intentions can be contrasted with the policy and regulatory output of the organization studied. Until 2004, the only formal representation of corporations in the UN system was through the International Labour Organization (ILO), which has a tripartite representation per state, including the delegate from the most representative employer organization of each

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state. The ILO lost its exclusivity when the United Nations, originally a security organization, created the Global Compact, which enabled corporations to adhere to some principles of global governance in return for accreditation as Global Compact participants. This was a significant break from the past of international organization as it brought corporations, on a voluntary basis, into interstate organization. It was at once a recognition of the changed power and status of the corporation and especially that it was a major player in global governance. At the same time, it was a recognition of the need for regulation and restraint upon the direct power of the corporation, particularly via its role in direct investment. The Global Compact produced no treaty-based legal obligations but established some norms, ideas, and regulations that would be available for other civil society organizations and states to use in negotiations within bilateral treaties and in considering the behavior of corporations. Apart from directly representing the corporation, associated institutions of global governance known as the international financial institutions (IFIs)—the World Bank and the International Monetary Fund (IMF)—are explicit both in constitutions and in seeking to enable global corporate activities. The comparison of output from these organizations and the requirement for global corporate operations is instructive. The most important and core requirement for global corporate operations is free access to resources, labor, assets, and consumer markets of foreign countries. Nationalist, state corporatist, socialist, and authoritarian regimes in the twentieth century severely restricted foreign corporate investment or banned it. One of the first interstate organizations to promote corporate foreign investment was the International Bank for Reconstruction and Development (the World Bank), founded in 1944. Paragraph 2, Article 1 of its constitution stated that the purpose of the Bank was “to promote private foreign investment.” This article was the reason why the USSR and other monist states would not participate. Notions of the free market operating through liberal trade regimes and acceptance of private foreign investment as legitimate have been incorporated in all major interstate initiatives since the middle of the last century. Access via liberal trade and investment policy was the main focus of the so-called structural adjustment programs of the World Bank and IMF, and the World Trade Organization attempted to make it permanent. All national policies that substantially restricted foreign capital entry, many of which were extant until late into the twentieth century, such as autarchy, delinking, and protectionism, were opposed and prevented. This required a global policy of opposing nationalizing governments and parties, protectionist trade unions, and government intervention in the economy. The core instrument to

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achieve this was leverage through indebtedness to secure acceptance of structural adjustment programs after 1982, which unleashed turbulence, conflict, and instability in the Global South (Harrod 1992). When, especially in the structural adjustment programs, the sale of public assets to both national and foreign corporations was made conditional to further loans and other forms of assistance, the corporate benefits became even more than apparent. The use of interstate organizations to create suitable conditions for corporate investment on a global scale and to oppose state intervention in political economies meant that the IFIs were subject of long-standing protest movements. The systemic support of the corporation at the global level has been the focus of attention especially from Marxist and neoMarxist and radical critical scholars because these activities support the argument that corporate lobbies are promoting and sustaining capitalism (D. Harvey 2006; Stephen 2014). Interstate-alliance-based and regional organizations are also subject to corporate involvement, as evidenced by the presence of 30,000 corporate lobbyists in Brussels attempting to influence the EU Commission and Council (Infante et al. 2018). Among the more specific interstate social and industrial sector organizations, we find first and foremost specialized UN agencies. In contrast to the more universal-scope organizations discussed above, these organizations cannot easily be reconciled with broader corporate interests. The history of the specialized UN agencies reveals that after a period when the organizations were largely funded and controlled by the most powerful industrialized countries, membership and policy demands changed. This resulted in the proposal for “new orders” in health, agriculture, economy, and communication based on the relevant specialized agencies (in these cases, the WHO, FAO, UNCTAD, UNESCO). Pushed by states of the Global South, organizations began to propose policies that would restrain corporate activity (Harrod 1988). However, these initiatives were short-lived as more powerful states objected, vetoed activities, reduced budgets, and sometimes withdrew from the organizations until they reverted back to their original positions (Adeyeye 2012). There are still cases, however, in which these organizations produced regulation or at least confounded immediate corporate interests. Thus, the specialized UN agencies have not been subject to complete regulatory capture. However, there are still serious issues concerning the manner in which they serve the public interest, which, arguably should be at their core (Deshman 2011). In an unusually frank statement, the former World Health Organization (WHO) director general claimed, “Efforts to prevent non-communicable diseases go against the business interests of powerful economic operators. In my view, this is one of the

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biggest challenges facing health promotion. It is not just Big Tobacco anymore. Public health must also contend with Big Food, Big Soda, and Big Alcohol. All of these industries fear regulation, and protect themselves by using the same tactics.”3 While corporations seek influence through the delegations of their home state, states still decide in the end. Furthermore, delegates are also subject to lobbying from other civil society organizations, many of which are in opposition to corporate practices relating to human rights and environment. The specialized agencies of the UN thus play an important role in at least formulating instruments of global governance, even if they are weak in enforcing compliance. The health and safety norms in global governance owe much to the ILO’s work on such issues. Recently, the declaration by the WHO-associated International Agency for Research on Cancer (IARC) that glyphosate pesticide was possibly cancerous played a major part in generating opposition to its use in Europe. The issue was eventually decided by a vote of states against a backdrop of an already concentrated supply industry in the throes of major acquisitions (Infante et al. 2018). The interstate organizations are remnants at the international level of the era of state supremacy at the domestic level. They function as if nation-states were the exclusive decisionmakers in all policy domains. The secretariats of these organizations have discovered, as the statement of the former WHO director general illustrates, that this is no longer the case. Because of the diversity among its member states, the UN intergovernmental agencies still retain the possibility of organizing governance, which regulates corporate activity. However, the current nature of the corporation requires a change from a simple association, as in the Global Compact, toward a construct that recognizes and holds accountable the agency of the corporation in global governance. In addition, each of the interstate organizations has a presence in a sectoral regime in which the corporation acts, and thus each is embedded in the global governance of the sector. Sectoral Regimes

Although it is not formally recognized and has no body of literature devoted to it, belonging to specific industry sectors is the organizing principle and thus the most important source of global regulation of the corporation. Most of the important civil society organizations, such as international trade unions and advocacy groups, are involved in activities surrounding sectors such as clothing, energy, and agriculture. There are some civil society organizations such as those in human rights or the environment that claim a universal scope, but even their activities often

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gravitate to specific sectors, such as environmental movements’ involvement with energy and agriculture. As such, it appears to be useful to think of these sectors as regimes. In the original form of regime theory in international relations, a regime was considered as an issue area around which states converged in order to develop norms, rules, and practices to govern the particular issue area (Krasner 1983). Adapted and further developed in neo-regime theory, this involves the state and nonstate actors. Regime theory then first examines and compares the nature and power of state and nonstate actors involved and, second, argues that power relations may produce not convergence but equally winners and losers in the contested objectives of the sector. For conceptual and methodological reasons, there is an important argument to pursue this sectoral perspective. The direct power of the corporation arises from the constructed freedom of the corporation to be able to purchase assets and land, employ labor, and so extract resources, produce goods, and deliver services. This and much more is implied in the concept of foreign (corporate) direct investment. The assessment of the general influence or impact of corporate direct power over or within foreign societies, however, is notoriously difficult, especially when the outcomes are likely to be held against varying criteria such as efficiency, social justice, or economic development. The effect of power in industrial sectors, however, is more observable and thus has become a focus of studies of corporate regulation in global governance (Prentice and De Neve 2017). The main characteristic of a sectoral approach is that most of the organizations attempting to regulate or mitigate the activities of corporations are civil society organizations that are not directly controlled by states. From the earliest times, international trade unions were based on a sectoral focus. Thus, trade unions were active in the chemical, garment, auto, building, and many other sectors. As trade unions lost influence domestically, they began to merge at the international level. Their sectoral orientation, however, continued. In the mining sector, for example, sectoral trade union representatives from Responsible Mining, the Extractive Industries Transparency Initiative, and IndustriALL discuss regulation. The textile sector (Nicole Helmerich, Chapter 5 in this volume) also features multiple sector-specific initiatives, such as the Clean Clothes Campaign, International Labor Rights Forum, Worker Rights Consortium, Maquila Solidarity Network, United Students Against Sweatshops, and International Union League for Brand Responsibility. The regime approach attempts to understand the power dynamics among all actors within a sector. Thus, a sector includes the power relations among corporations, interstate agencies, advocacy groups and other

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civil society organizations, governments and local communities, suppliers, and distant stakeholders. Part of the reason for a sectoral regime and focus is the dramatic differences of environment, labor, and productive technique found in different sectors. The principle characteristics of different sectors, which affect operations and power positions in global and national politics, are levels of capital and labor intensity, whether they are resource or consumer based, and whether the sector’s production is strategic to other sectors or has wider social and political impact. Corporations in labor-intensive production may be more concerned about labor costs, conditions, and regulations affecting them than those in the host country. The sensitivity of all governments to the level of employment means that commanding the possibility of large-scale employment becomes a key factor of power in both the headquarters and target countries. Corporations in capital-intensive sectors may be more involved with political risk. Insurance against political risk has always brought corporations into the political and social concerns of the host country because political risk is not easy to calculate. After decades of absence in political risk calculations, nationalization remerged in Latin America in the 2010s. Corporations in resource-based sectors have been at the core of international politics because of their impact in both the host country and the consumption of resources. If resources are strategic— oil, gas, rare earth—corporate actions directly affect the material and sometimes political destinies of nations. In each sector, a variety of organizations surround core production. Every sector has its association of producers and owners of the core product, and most sectors have an international trade union association. As tripartite governance (state-corporation-union) weakened, other civil society organizations became involved in sectoral dynamics. These include, among others, advocacy organizations attempting to secure environmental and human rights concessions, state governments, regional arrangements attempting regulation and competition, interstate organizations of relevance, state-based civil society organizations such as churches (Hevina S. Dashwood, Chapter 4 in this volume), interest groups and professional associations, international and local trade unions, compliance organizations, and occasionally even individuals. I have used the sector regime approach in two studies in sectors surrounding mining and strategic materials. In bauxite mining in Jamaica in the 1960s, corporations and unions colluded to prevent disruption of bauxite supplies to the United States and Canada due to strikes by Jamaicans. The substance had been declared a “strategic” resource by a US defense commission. In the intervention by corporations and civil society organizations, the political history of Jamaica was substantially altered (Harrod

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1972). In a study on the asbestos mining and production regime during the 1990s, actors involved in the issue were political parties in Canada and Thailand; corporations from the United States, Canada, and South Africa; UN interstate organizations; governments of producing countries, such as Russia; civil society organizations; issue groups; advocacy groups; individual activists; medical researchers; and international trade unions. The objectives of these actors were different: most advocated a ban; some sought compensation, others, recognition of dangers, still others, limited use or protected use, and so on. The regulatory output of the regime was state action to ban or reduce use of asbestos (Harrod 1985). The dynamics and balances of power resulted in separate countries taking up banning legislation very unevenly in both time and scope, ranging from a total ban in Iceland in 1967 to partial bans by type and by use finally approved in the United States in 2002. Recently, it has been shown that banning the mining and consumption of asbestos has little effect on the wealth of a country, which was one of the main arguments used against closing mines in South Africa, Canada, and elsewhere (Allen et al. 2018). Corporations were directly involved in interaction with civil society organizations. When asbestos became a target for restricted use, the corporations created asbestos institutes in many countries to promote its use, along the lines of groups and institutes set up by the alcoholic beverage industry (Babor and Robaina 2013) and, more recently, funding and contributions from soft drinks manufacturers to the nonprofit European Institute of Hydration.4 Based on these case studies, it appears that corporations are embedded in sectoral regimes. The different agencies and organizations within a regime become aware of each other’s language, technologies, personnel, and characteristics. They all possess the largely unrecognized skill of dealing with matters multicultural, international, or global as regimes affect or produce laws, regulatory procedures, habits of thought, and standard practices (Mueller et al. 2007). This power flux is dynamic as conditions change, for example, favoring one organization of the regime over others. Sectoral regimes are global politics and should not be confused by the use of the term in more general international relations. The sectoral regime may constrain or enhance the power of the corporation in which it is politically and socially embedded. It is also where corporate agency directly matters. Each addition, each intervention from any source, further affects the core power of a dominant producing corporation. To conclude, the sectoral regime approach allows an assessment of the power and countervailing power and the main participants in the sectoral regime. It allows the examination of the process by which governing norms and standard practices emerge. It involves corporate agency, but it is also the backdrop against which subsequent corporate

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agency plays out. Precisely this agency in different contexts was the subject of this volume and its chapters. Corporate Actors in Global Governance: Detailing the Results

The application of agency theory throughout the chapters in this volume situating corporations in their social and political ecology has resulted in an important array of insights and findings. While the focus on the corporation and its agency meant that sectoral regimes were not in general part of the research, many of the chapters in this book identify the names of the organizations involved and examine the relationships between them and the respective corporations. Some of the research indicates that the regimes, organized through suppliers, government agencies, and civil society, sometimes framed as multistakeholders, construct the very nature of the sector and thus impact corporate agency (May; Helmerich; Dashwood). Another group of findings concerns global governance. Often, without special emphasis, the problems of current global governance are revealed. These problems, it appears, are created by the voluntary nature of governing norms, the misplaced emphasis on states for enforcement (Idemudia and Kwakyewah), the unevenness of power and legitimacy (DeWinter-Schmitt), the norms issuing from corporate responsibility not sufficiently recognizing the social ecology of the field of corporate action (Dashwood), diverging normative expectations that allow corporations to hold on to and share their perceptions to influence if not determine the discourse as such (Mikler and Cartwright; Olsen; Hofferberth), and the lack of considerations of power in the supply chains (May). Global governance, both as a collection of norms, practices, and regulations and as a process in which the corporation is an agent, is thus unfinished, sporadic, and uneven (Olsen; Hofferberth). Nevertheless, some positive outcomes and the possibility of reinventing and thus improving global governance in these circumstances suggest that it is still worth pursuing. More specifically, with the problems of global governance identified by the agency approach, projects for reform, adaptation, or even the formulation of different avenues to achieve universal respect for environmental and labor standards can be advanced. Conceptualizing the corporation as an agent actively responding to its social and political environment and thereby shaping that very same environment required two positive and important adjustments to a standard view of the corporation as a profit-maximizing enterprise in a market. Both of these departures informed each individual contribution and

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thus define the collective contribution. The first is to reject the simplistic rationality of profit-making, which enables all actions to be rationally explained. The second is that the corporation is seen as an organization rather than as an enterprise. The authors either explicitly or by assumption suspend the view of rationality and rational profit-making (Hofferberth, 3; DeWinter-Schmitt, 204) because the examination of the corporation and corporate social responsibility at the point of impact makes any simple and all-encompassing view less than valuable. This is not to say that some of the actions may increase conventional economic parameters—Olsen argues that a mining corporation meaningfully interacting with the community was able to “maximize shareholder value” (172), while Helmerich notes that corporations risk losing revenue resulting from labor scandals in their supply chains (105). Even more so, Hofferberth recognizes the persistence of such cognitive frameworks (7–12), which, while limited as social theory explanations and as explanation of corporate behavior, nevertheless strongly inform if not determine corporate agency. In light of these findings, I have argued above that substitutions for power- or rentseeking transform the scope, integration, and involvement from a “market” to a political and social society. In other words, maximizing an operational surplus by power-seeking activities in this light becomes just another rather than the single motivational objective in corporate agency. In most cases, the suspension of the rationality assumption allowed the corporation to be viewed as an organization and subject to the factors affecting all organizations, including otherwise neglected themes such as corporate identity formation and externalization of internal conflicts and characteristics. May, in this light in this volume, claims that “the global corporation can be considered as an institution of global governance” (127). The corporate agency approach, with its focus on particular enterprises, thus has above all else revealed important details of corporate identity and perceptions. Arguably, this is valuable to all who study the “power chain” of corporate activities and decisionmaking. The unusual possibility of studying two corporations in the same country and the same sector enabled a controlled comparison between them in relation to their corporate activities (Olsen). Similarly, comparing several security multinationals (DeWinter-Schmitt) and two auto multinationals, again in one country (Mikler and Cartwright), provides findings of considerable importance in determining the nature of corporate actors in global governance. The national identity of a corporation and its potential national culture appears in the case of security corporations between US and British (DeWinter-Schmitt), in mining in Peru between US and Mexican (Olsen), and in automobiles in South Africa between German and US

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(Mikler and Cartwright). The agency approach to the global activities of enterprises operating across borders then has revealed some aspects that would have normally been buried under the notions of transnationalism and universal market rationality. Furthermore, in almost all cases, the agency approach has also revealed corporate policy and governance contributions (Hofferberth, Dashwood). Operating at the challenging nexus of public and private— in fact, blurring these dimensions to the extent that the distinction no longer appears useful—the picture that emerges from studying corporate agency in single cases is one of complexity and ambiguity. This raises methodological problems simply because it remains challenging and continuously difficult to study corporations as private organizations, which are not required to publish internal documents. In theoretical terms, the role of the corporation in global governance has been made more difficult to research because many of the prevailing assumptions are derived from eighteenth-century economists. In this volume, in response to these shortcomings, alternative methods and theories were used to study corporate agency in global governance. The agency approach and its different subtheories and methods used thus reflect a high demand for a fundamental rethinking of the position, theories, and nature of the contemporary corporation. This in turn requires the reconsideration of some of the most fundamental divisions and assumptions in the social sciences as those between states and markets and the nature of the state. This edited volume intends to be part of this shift and provides initial conceptual measures and theoretical ideas to undertake it. However, coming to terms with the twenty-first-century corporation, both conceptually and politically, arguably has just begun. Notes 1. Andrea Alegria, Agata Kaczanowska, and Lauren Setar, “Top 10 Highly Concentrated Industries,” IBISWorld, February 10, 2012, http://news.cision.com /ibisworld/r/top-10-highly-concentrated-industries,c9219248. 2. Niall McCarthy, “The U.S. Companies with the Highest Overseas Earnings,” Statista, October 26, 2017, https://www.statista.com/chart/11619/the-us-companies -with-the-highest-overseas-earnings. 3. “Head of WHO Criticizes ‘Big Business’ and Its Role in Public Health,” Global Policy Forum, June 12, 2013, https://www.globalpolicy.org/global-taxes /52420-who-criticizes-qbig-businessq-and-its-role-in-public-health.html. 4. “Giants of the Health Lobby Bankrolled by Coca Cola,” The Times, October 9, 2015, https://www.thetimes.co.uk/article/giants-of-the-health-lobby-bankrolled -by-coca-cola-xksp29j5sl8. Note that this is not an exhaustive list.

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The Contributors

Madison Cartwright is a visiting fellow in the Department of Government and International Relations at the University of Sydney. He researches the relationships among states, corporations, and institutions.

Hevina S. Dashwood is professor of political science at Brock University, Canada. She is author of The Rise of Global Corporate Social Responsibility: Mining and the Spread of Global Norms (2012). Her current research examines the adoption of global CSR standards at the local level in developing countries. She is principal investigator of a collaborative project on the Extractive Industries Transparency Initiative (EITI) and its implementation at the local community level in Ghana and Nigeria. Rebecca DeWinter-Schmitt directs the Human Rights in Business Program at American University Washington College of Law’s Center for Human Rights and Humanitarian Law. She is also senior managing director of the risk management consultancy Human Analytics.

Jeffrey Harrod is professor emeritus at the University of Amsterdam and the International Institute of Social Studies, Erasmus University, The Hague, Netherlands. His first books were on trade unions and labor (Trade Union Foreign Policy [1972]; Power Production and the Unprotected Worker [1987]) before he began, more recently, writing on corporate political activities and power.

Nicole Helmerich is a postdoctoral researcher at the University of Lausanne. Her publications are concerned with the role of business in transnational governance, transnational private regulation, labor rights, and digitalization in supply chains. Her most recent research is on workers’ voice in transnational European firms and good corporate governance and a data set project on the same topic.

Matthias Hofferberth is associate professor in the Department of Political Science and Geography at the University of Texas, San Antonio. His research focuses on global governance and the role of nonstate actors within. In addition to his book

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The Contributors

Multinational Enterprises in World Politics (2016), he has published in International Studies Review, Journal of International Relations and Development, Millennium: Journal of International Studies, Business and Politics, Global Society, and Palgrave Communications, as well as in several edited volumes.

Uwafiokun Idemudia is associate professor of development studies and African studies in the Department of Social Science at York University, Toronto. His research interests include critical development studies, political economy and political ecology approaches to natural resource extraction in developing countries, business and development, and issues of governance, transparency, and accountability in resource-rich African countries. He has published works in a number of journals, including Journal of Business Ethics, Extractive Industries and Society, Sustainable Development, Organization and Environment, Business Strategy and Environment, African Security Review, and Corporate Social Responsibility and Environmental Management.

Cynthia Kwakyewah is conducting research at the University of Oxford on when, how, and why corporations do or do not adopt human rights principles.

Christopher May is professor of political economy at Lancaster University, United Kingdom. He has written widely on intellectual property rights, the rule of law, and global corporations and authored the first independent study of the World Intellectual Property Organisation. While series editor for the IPE Yearbook series, he edited its Global Corporate Power volume, and he has just coedited Edward Elgar’s Handbook of the Rule of Law with the late Adam Winchester.

John Mikler is associate professor in the Department of Government and International Relations at the University of Sydney. His main research interest is global corporate power. He has published over thirty journal articles and book chapters and four books: Greening the Car Industry: Varieties of Capitalism and Climate Change (2009), The Handbook of Global Companies (editor, 2013), Climate Innovation: Liberal Capitalism and Climate Change (coedited with Neil Harrison, 2014), and The Political Power of Global Corporations (2018).

Tricia D. Olsen is associate professor and the Marcus Faculty Fellow at the University of Denver’s Daniels College of Business and the Korbel School of International Studies. Olsen studies and teaches about the political economy of development, with a focus on Latin America. She has received support from various organizations, including the Carnegie Corporation, USAID, Fulbright-Hays, and the British Academy/Leverhulme. She has published in Organization Studies, Business Ethics Quarterly, Journal of Business Ethics, and Comparative Political Studies, among others.

Index

Abbot, Kenneth W., 70 Aceh crisis. See ExxonMobil and Aceh crisis Acheson, Aileen, 203 Addo, Michael K., 62 Afghanistan War, 210 Agency: enactment of, 109–110; of local suppliers and workers, 107–111; of maquila workers, 114–115; MEC constructing, 112–116; power resources and, 107–111; in PSIs, 201. See also Corporate agency Albright, Madeleine, 59–60 Amnesty International, 211 Amsden, Alice H., 159 ANSI/ASIS PSC.1, 198, 201, 203, 211, 214, 215 Anti-patterning, 211 Areas of limited statehood, 65–66, 74n3 Arnold, Denis, 53 Asbestos, 245 Aubynn, Anthony K., 57 Austin, James E., 81–82 Avant, Deborah D., 202 BABDA. See Bibiani-Anhwiaso-Bekwai District Assembly BABDDP. See Bibiani-Anhwiaso-Bekwai District Development Project Barnett, Michael, 107–108 Beckert, Jens, 160 Berle, Adolf, 233

Bibiani-Anhwiaso-Bekwai District Assembly (BABDA), 21, 76, 86–92, 94–96 Bibiani-Anhwiaso-Bekwai District Development Project (BABDDP): discussion, 98–100; early challenges, 88–89; gender-sensitivity training, 97– 98; overview, 86–88; partnership dynamics and perspectives, 89–93; process dimensions and perspectives, 93–98 Bichler, Shimshon, 234 Bird, Frederick, 80 Blackwater guards, 209, 212, 221n10 Blee, Kathleen, 208 Boatwright, John, 216–217 Börzel, Tanja J., 175 Bounding, 221n4 Brenkert, George G., 55, 74 Bricks-and-mortar approach, 78, 80, 90, 92, 98, 101 Brown, Dana L., 13 Burkitt, Ian, 107–108 Bush, George W., 231 Business and Human Rights Resource Center, 154 Business ethics, 9, 12–16, 18, 55, 174 Buycotts, 21, 173 Buzatu, Anne-Marie, 201, 216 Canon minero, 162, 163 Capacity-building programs, 106–107 Certification bodies (CBs), 214–215, 217

281

282

Index

Charney, Jonathan, 74 Chin, M. K., 238 CHRD. See Corporations and Human Rights Database Ciepley, David, 129 Civil society organizations (CSOs), 209– 210, 217 Clements, Bruce, 167 Climate governance, 3 CMEs. See Coordinated market economies Codetermination, 37–38, 39tab Collins, R., 110 Communication on Progress (COP), 157 Conflict: corporate abuse, weakened states, global governance in, 152–158; discussion and conclusion, 171–172; existing literature on, 158–161; Freeport-McMoRan mine case study, 22, 164–168, 171–172; governance gap and corporate agency in, 156–158; local conflict, 22; overview, 151–152; in Peru mining, 22, 162–170; Southern Copper mine case study, 22, 168–172; study approach and case selection for, 161–162 Conga project, 151 Conger, Harry, 167 Congress of South African Trade Unions (COSATU), 41–43 Conzelmann, Thomas, 13 Cook, Robin, 59–60 Cooney, James, 77 Coordinated market economies (CMEs), 30, 32–34, 40, 43, 45–46 COP. See Communication on Progress Corporate actor images: in global governance, 3–16; normativeconstructivist image, 12–16; rationalist image, 9–12 Corporate agency, 3, 11; in conflict, 156– 158; creative dimension in, 17; downplay of, 14–15; of ExxonMobil, 175, 191–192; as fundamentally social, 176; images of, 193n5; insights into, 246–248; as lens for study, 4; MNEs and, 16–18, 177–178; relational theory and, 198; in social situations, 19; study of in crisis, 176–180 Corporate motivations, 193n3, 199; defining, 12; drivers of, 200; research on, 176; VOC and, 28–35 Corporate power: changes in, 226–233; concentration as source, 227–229; control of global trade and investment,

229; increasing, 156; of interstate organizations, 239–242; markets and, 233–237; organization theory and, 235– 237; rent-seeking and, 234–235; restraining, 237–238; of sectoral regimes, 242–246; of state and corporate elites, 229–233 Corporate rationality, 3, 9, 10, 11, 18, 236 Corporate social responsibility (CSR), 131–132, 174; adopting, 52; bricks-andmortar approach to, 78, 80, 90, 98; expanded notions of, 173, 178; ExxonMobil during Aceh crisis, 187, 191–192; global notion of, 193n1; global public domain and, 13; human rights and, 202; limitations of companyled, 78–80; multistakeholder partnerships and, 21, 75–76; political conception of, 14; as risk management and community development, 77–80; soft laws for, 4; voluntary, 20 Corporations and Human Rights Database (CHRD), 153–154 COSATU. See Congress of South African Trade Unions Counter-rhetorics, 210–211, 218 Cragg, Wesley, 62 Crane, Andrew, 15, 83 Crisis: in corporate agency, 176–180; MNEs and, 21, 179–180. See also Conflict; ExxonMobil and Aceh crisis Cross-sector development projects (CSDPs), 82 Crouch, Colin, 29 CSDPs. See Cross-sector development projects CSOs. See Civil society organizations CSR. See Corporate social responsibility Cutler, Claire, 13 Dagbanja, D. N., 70 Dallas, Lynne, 128, 141 Danielsen, Dan, 145 Darul Islam Rebellion, 182 de Nevers, Renee, 203 Decision-making, 18, 143, 247 Democracy, in supply chains, 139–146 Dewey, John, 207 DiMaggio, Paul, 160–161 Dollar, David, 139 Dore, Ronald, 31–32 Dörrenbächer, Christoph, 19, 30 Duval, Raymond, 107–108

Index Eden, Lorraine, 2 EIA. See Environmental impact assessment EITI. See Extractive Industry Transparency Initiative Elias, Norbert, 107 Enterprise risk management (ERM), 200, 214–216, 220 Environmental impact assessment (EIA), 169, 171 ERM. See Enterprise risk management ESCs. See Extractive sector companies Essentialism, 205–206 Extractive Industry Transparency Initiative (EITI), 157, 164–165, 243 Extractive sector companies (ESCs), 59– 60, 69, 71, 73 Exxon Valdez disaster, 181 ExxonMobil and Aceh crisis, 22; conclusion and outlook, 189–193; corporate self-understanding and crisis communication in, 190tab; crisis overview, 180–181; crisis unfolding, 181–182; CSR and, 187, 191–192; documents for consideration in, 185tab, 186–189; ExxonMobil’s non response in, 184–189; ExxonMobil’s self-image in, 188–189; Free Aceh Movement and, 182–183; normative-constructivist image and, 191; overview, 173–176; studying corporate agency in crisis, 176–180; turning point of 2001, 183– 184

Fasterling, Bjorn, 216 FDI. See Foreign direct investment Flohr, Annegret, 13 Fog of war, 212 Ford Motor Company: in case study, 35– 50; codetermination codes, 39tab; institutional environment of, 28; institutional hybridization and, 21; LMEs and, 37, 41, 46–49; management-labor relations in South Africa, 46–50; management-labor relations in US, 37–41; market forces codes, 37–38, 40tab; TNI, 36–37 Foreign direct investment (FDI), 29, 33–35 Fox, Vincente, 231 Freeman, B., 59–60 Freeport-McMoRan mine, 22, 164–168, 171–172 Friedman, Milton, 11, 203 Fuchs, Doris, 143–144 Fujimori, Alberto, 162–163

283

Galamsey, 57 García, Alan, 163 Garrett, Geoffrey, 160 Garvey, Niamh, 52 Garvin, Theresa, 68 GBC. See Ghana Bauxite Company Gender-sensitivity training, 97–98 Geppert, Mike, 19, 30 Gereffi, Gary, 132–133 Germany, 37–41, 238 Gerschenkron, Alexander, 158–159 Ghana: corporate misconduct in, 53; GPs in, 59, 61, 70–71; human rights abuses in mining sector, 65–69; human rights policies in mining industry, 54tab; Minerals and Mining Act of 2006, 54tab, 58, 66; mining policy and regulatory environment, 57–59; study area, 62–64; VPs in, 59–62, 70–71, 74 Ghana Bauxite Company (GBC), 86 Gibson, Gloria D., 206–207 Gillies, Alexandra, 13 Gilpin, Robert, 5 Glass ceiling, 147 Global corporations: automotive industry case study, 35–49; colonizing of markets by, 27; conclusion, 49–50; economic model for, 33; gaining new knowledge, 34; market concentration of, 29 Global governance: in conflict, 152–158; corporate actor images in, 3–16; defined, 225; MNEs and, 189, 192–193, 197; as norms, practices, regulations, 246; organization theory and, 235–237; proclaimed death of, 4; in PSIs, 200– 204. See also Supply chains Global South, 57, 73–74, 130, 159; instability in, 232, 241; partnerships, 98, 101; transnational labor standards in, 104–105, 107 Global value chains (GVCs), 141 Globalization, 1, 14, 24n12, 201; accelerating, 6; critics of, 34; globalization consensus, 28–29; what states make of it, 50 Gold Fields Limited, 151 Goldcorp Inc., 153 Golden Star Resources (GSR), 21; adopting GPs, 72; case study, 52–53; community relations of, 64–66; profits of, 69; promises from, 67; resettlement by, 63–64 Google, 228

284

Index

Governance gap, 156–158 GPs. See Guiding Principles on Business and Human Rights Graff, Andreas, 61 Granovetter, Mark, 17 GSR. See Golden Star Resources Guiding Principles on Business and Human Rights (GPs), 51–52, 56, 202, 216; criticism of, 62; in Ghana, 59, 61, 70– 71; GSR adopting, 72; implementing, 73; principles of, 61–62 Gutiérrez, Julio, 170 GVCs. See Global value chains Hall, Peter A., 27, 29 Hampden-Turner and Trompenaars, 32–33 Harvey, B., 80 Hegel, G. F. W., 237 Hilferding, Rudolf, 230 Hillemanns, C. F., 55 Hirschman, Albert O., 159 Hirschsohn, Philip, 42 Humala, Ollanta, 163, 167, 170 Human rights: abuses in Ghana’s mining sector, 65–69; Business and Human Rights Resource Center, 154; business history, debates, trends, 53–57; CHRD, 153–154; CSR and, 202; emerging issues in, 73–74; empirical analysis of, 69–72; era categories for, 54–55; evolution of, 21; Ghana policies in mining industry, 54tab; Ghana study area, 62–64; Human Rights First, 211; market value of, 221n3; MNEs and, 4; negative impacts, 22; overview, 51–53; PSIs and, 218–219. See also Guiding Principles on Business and Human Rights Huntington, Samuel P., 5 Hyman, Richard, 110

Ibarra, Peter, 210 ICoCA. See International Code of Conduct Association ICTJ. See International Center for Transnational Justice Iff, Andrea, 61 IFIs. See International financial institutions ILO. See International Labor Organization IMF. See International Monetary Fund Imperialism, 230 Incháustegui, Miguel, 172 Infrastructural resources, 109–110, 123– 124

Institutional hybridization, 21 Institutional isomorphism, 152, 160–161 Intellectual property rights (IPRs), 128 Internal solidarity, 109–110, 116–118 International Center for Transnational Justice (ICTJ), 194n12 International Code of Conduct Association (ICoCA), 198, 209–210, 213–218 International financial institutions (IFIs), 240–241 International Labor Organization (ILO), 44, 61, 164, 239–240 International Labor Rights Fund, 184 International Monetary Fund (IMF), 147, 240 International Organization for Standardization (ISO), 198, 214, 215 International political economy (IPE), 1–2, 5, 6, 8, 12, 16 International relations (IR), 1–2, 5, 6, 8, 12, 16 IPE. See International political economy IPRs. See Intellectual property rights IR. See International relations “The Iron Cage Revisited” (DiMaggio and Powell), 160–161 Irrationality of organizations, 18 ISO. See International Organization for Standardization Jackson, Patrick T., 198, 207 Jägers, Nicola, 62, 202–203 Jones, Geoffrey, 27 Joseph, Sarah, 55 Junta de Usuarios del Valle de Tambo, 169 Kahancová, Marta, 34 Kandang, Ahmed, 183 Kitsuse, John, 210 Kollman, Kelly, 13 Kuczynski, Pedro Pablo, 164

Leander, Anna, 201 Lee, Joonkoo, 132–133 Legitimacy: in corporations, 34; NGOs and, 83; in supply chains, 139–146 Lenin, Vladimir, 230 Lévesque, Christian, 109, 116, 120 Liberal market economies (LMEs), 30, 32; best practices of, 34; Ford Motor Company and, 37, 41, 46–49; model for, 33 Lichterman, Paul, 208 LMEs. See Liberal market economies

Index Local suppliers and workers: agency and power resources of, 107–111; conclusion, 124; MEC colloquium and, 111–124; overview, 103–104; transnational labor standards and local implementation, 103–107 Logistics Performance Index, 135–136, 139 López, Sandra Ramos, 121

Macdonald, Kate, 142 MacLeod, Sorcha, 201–203 Management system standards (MSSs), 214–219 Management-labor relations: of Ford Motor Company in South Africa, 46– 50; of Ford Motor Company in US, 37– 41; in Germany, 31; in Japan, 32; in South Africa, 41–43; of Volkswagen in Germany, 37–41; of Volkswagen in South Africa, 44–46, 49–50 Maquila workers, 103, 107, 124n1; agency of, 114–115; identity of, 110; infrastructural resources for, 123–124; internal solidarity for, 116–118; Maquila Solidarity Network, 112, 120– 121, 243; narrative resources for, 118– 120; network embeddedness for, 120– 123; uniting of, 113. See also Maria Elena Cuadra Maria Elena Cuadra (MEC): agency constructed by, 112–116; annual convention, 103–104, 111, 114; colloquium of, 111–124; creation of, 112; infrastructural resources created by, 123–124; internal solidarity created by, 116–118; narrative resources created by, 118–120; network embeddedness created by, 120–123 Market forces: Ford Motor Company codes, 37–38, 40tab; Volkswagen codes, 40tab Markets: concentration of global corporations, 29; corporate power and, 233–237; global corporations colonizing, 27; social construction of, 18. See also Coordinated market economies; Liberal market economies Marx, Karl, 233, 241 Matten, Dirk, 15 McBeth, Adam, 55 Means, Gardiner, 233 MEC. See Maria Elena Cuadra

285

Medium-term development plans (MTDPs), 87, 92, 95 MEM. See Ministerio de Energía y Minas Michel, Robert, 236 Mining industry, 245; allegations of abuse in, 153–156; change in world locations, 152–153; claims against in Latin America, 154fig; claims against in Peru, 155; conflict in Peru, 22, 162–170; firm-centric orientation of, 79; galamsey in, 57; Ghana’s human rights policies, 54tab; Ghana’s policy and regulatory environment, 57–59; human rights abuses in, 65–69; partnerships in, 83; stakeholder issues and, 77 Ministerio de Energía y Minas (MEM), 162, 169–170 Mission creep, 236 Mitrany, David, 237 MNCs. See Multinational corporations MNEs. See Multinational enterprises Moffat, Kieren, 80 Monopolies, 228, 230 Monti, Mario, 231 Montreux Document, 213–214 Morriberón, Julio, 169–170 MSIs. See Multistakeholder initiatives MSSs. See Management system standards MTDPs. See Medium-term development plans Multinational corporations (MNCs), 103– 107 Multinational enterprises (MNEs), 108; challenges of, 204–205; changing roles of, 174–175; corporate agency and, 16– 18, 177–178; crisis and, 21, 179–180; crossborder activities of, 19; defined, 23n1; foreign policy and, 198; global governance and, 189, 192–193, 197; as global governors, 1–3, 6–7; human rights and, 4; instrumental goals of, 10; rationality of, 11–12; research, 8; stakeholders and, 176–179; supply chains and, 22. See also Global corporations Multistakeholder initiatives (MSIs), 151– 152, 158, 161, 171–172, 198, 214 Multistakeholder partnerships, 1, 13; challenges to, 82–85; conceptualizing, 81–85; conclusion, 100–101; CSR and, 21, 75–76; in developing countries, 82; overview, 75–77; study methods, 85– 86. See also Bibiani-Anhwiaso-Bekwai District Development Project

286

Index

Murray, Gregor, 109, 116, 120 Muthuri, Judy N., 84

Narrative ontology, 206–207 Narrative resources, 109–110, 118–120 National Bargaining Forum (NBF), 42, 46– 48 National Union of Metalworkers of South Africa (NUMSA), 42–43, 46–47, 49 Navarro, Wilfredo, 121–122 NBF. See National Bargaining Forum Network embeddedness, 109–110, 120– 123 New sovereignism, 23n2 Newell, Peter J., 52 Nexon, Daniel H., 198 NGOs. See Non-governmental organizations Nitzan, Jonathan, 234 Nolan, Peter, 29 Non-governmental organizations (NGOs), 6, 8, 60, 112–115; advocacy of, 53; expertise of, 75; legitimacy and, 83; partnerships with, 81–84 Normative-constructivist image, 12–16, 191 NUMSA. See National Union of Metalworkers of South Africa Obara, Louise J., 52 Ochoa, Christiana, 53–54 Oligopolies, 142, 227, 233, 236 Organization theory, 235–237 Ortiz, Rosa María, 170 Ovodenko, Alexander, 235

Participatory learning and action (PLA), 84–85, 92–94, 96, 99 Peng, Mike W., 159 Percy, Sarah, 201 Peru: conflict in mining industry, 22, 162– 170; corporate abuse in, 155; ILO and, 164; mineral reserves in, 162; VPs in, 165 Pistor, Katharina, 143 Pitts, Chip, 59 PLA. See Participatory learning and action Policymaking, 19, 42 Poroshenko, Petro, 231 Powell, Walter W., 160–161 Power resources: agency and, 107–111; constructing, 124; infrastructural resources as, 109–110, 123–124; internal solidarity as, 109–110, 116–

118; of local suppliers and workers, 107–111; narrative resources as, 109– 110, 118–120; network embeddedness as, 109–110, 120–123; in supply chains, 143–145 Private regulatory initiatives (PRIs), 104– 105 Private security companies (PSIs): agency in, 201; conclusion, 219–220; global governance in, 200–204; human rights and, 218–219; managing undesirable and disruptive events, 210–219; overview, 197–200; relational corporate identity construction in, 204–208; study methodology, 208–210 Profit-making, 128, 247 Protect, Respect, and Remedy Framework (PRR), 52, 62, 69–73, 202 PSIs. See Private security companies Public health, 241–242 Ralby, Ian, 201–202 Ramaphosa, Cyril, 231 Ramasastry, Anita, 55 Rationalist image, 9–12 Redcam, 116, 120, 122, 123 Relational theory, 198, 204–208, 220 Rent-seeking, 234–235 Resilience, in supply chains, 139–146 Rhetorical entrapment, 219 Ricardo, David, 230 Ringmar, Erik, 206–207 Rio Tinto Alcan (RTA), 21, 76, 86–88; departure of, 89, 91, 96, 100 Rocha, Oscar González, 170 Rosemann, Nils, 203 RTA. See Rio Tinto Alcan Ruggie, John G., 20, 55–56, 59–62, 72, 73. See also Guiding Principles on Business and Human Rights Sabel, Charles F., 11 Saro-Wiwa, Ken, 52 Sectoral regimes, 242–246 Seitanidi, M. May, 81–83 Semistructured interviewing, 208 Shinawatra, Thaksin, 231 Smith, Adam, 29 Snidal, Duncan, 70 Social spending, 42, 193n2 Socialization, 13, 200 Somers, Margaret R., 206–207 Soria, José, 232 Soskice, David, 27, 29

Index South Africa: Ford Motor Company management-labor relations in, 46–50; management-labor relations in, 41–43; political economy of, 28; VOC in, 43, 49; Volkswagen management-labor relations in, 44–46, 49–50 Southern Copper mine, 22, 168–172 Strudler, Alan, 55 Suharto regime, 164, 181–183 Supply chains, 56; captive, 132; conclusion, 147–148; decision-making in, 143; legitimacy, democracy, resilience in, 139–146; MNEs and, 22; modular, 132; overview, 127–131; partners, 137; power in, 143–145; preservation of, 129; relational, 132; space of through logistics, 131–139; sustainability and stability of, 147; World Bank Connecting to Compete reports and, 134–139 Sutton, Katherine, 69

Taylor, Verta, 208 Theory-driven participant observation, 208 Tillerson, Rex, 231 Tilly, Charles, 206 TNCs. See Transnational corporations TNI. See Transnationality index Toledo, Alejandro, 163 Transnational corporations (TNCs), 53, 65, 74n1. See also Multinational enterprises Transnational labor standards, 21; in Central America, 105–107; in Global South, 104–105, 107; local implementation of, 103–107 Transnationality index (TNI), 36–37 UAW. See United Auto Workers UN Global Compact, 2, 6, 72, 157, 240 UN Working Group on Mercenaries, 212 United Auto Workers (UAW), 38, 39, 47 United States (US), 36–41

287

Utting, Peter, 51–52

Valente, Mike, 83 Varieties of Capitalism (VOC), 27; corporate motivations and, 28–35; criticism of, 30; FDI and, 33–35; Germany and US and, 36; goals of, 29– 30; in South Africa, 43, 49 Vizcarra, Martin, 164 VOC. See Varieties of Capitalism Volkswagen: in case study, 35–50; CMEs and, 40, 45–46; codetermination codes, 37–38, 39tab; institutional environment of, 28; institutional hybridization and, 21; management-labor relations in Germany, 37–41; management-labor relations in South Africa, 44–46, 49–50; market forces codes, 40tab; TNI, 36–37 Voluntary Principles (VPs), 168; development of, 59–60; in Ghana, 59– 62, 70–71, 74; in Peru, 165 Wade, Robert, 28–29 Wanderjahre, 39 Weakened states, 152–158 Weber, Max, 237 Wells, Louis T., 5 Whelan, Glen, 19 WHO. See World Health Organization Wim Kok, 231 Wolf, Klaus Dieter, 13 Wolf, Martin, 34 World Bank, 57–58, 232, 240; Connecting to Compete reports, 134–139 World Health Organization (WHO), 241– 242 World University Service of Canada (WUSC), 21, 76, 86–94, 96

Yanz, Lynda, 120–121 Yoking, 221n4 Zeitlin, Jonathan, 11 Zhang, Airong, 80

About the Book

What part do/should corporate actors play in global governance? With regard to concerns over such issues as public health, education, human rights, and the environment, they arguably are influential. But what is the actual nature of their engagement, and what motivates it? What challenges do they face when they assume more responsibility in these spheres? Are they responsive to the normative environments in which they operate? In answering these questions, the authors of Corporate Actors in Global Governance offer an empirically rich picture of the often contentious governance roles of corporations in today’s global political economy.

Matthias Hofferberth is associate professor of political science at the University of Texas at San Antonio.

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