Multinational Corporations and Host Communities: Proposing the Zero-Violent Conflict Model

Copyright © 2017 by Christian S. Yorgure, PhD.

Library of Congress Control Number:   2016920653

ISBN:      Hardcover         978-1-5245-6912-9

                Softcover          978-1-5245-6911-2

                eBook               978-1-5245-6913-6

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the copyright owner.

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Rev. date: 12/21/2016

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Contents

Preface

Abstract

Introduction

Chapter 1 Theoretical and Historical Foundation

Multinational Corporations: Definition and History

Theorists

Stakeholder Theory: Corporate Responsibility

The Moral Agents

Equitable Business Relationship

Comparing and Contrasting the Philosophies

Stakeholder Strategy as a Means of Avoiding Conflict

The Benefits of Multinationals

Regulating MNCs and Impact of Corporate Mobility

Conclusion

Chapter 2 The Review of the Literature

Literature Review

Literature-Review Essay

Violent Conflict

Triggers of Violent Conflict

Human Development and Violent Conflict

Conclusion

Chapter 3 Case Studies and the Zero–Violent Conflict Model

Case Study, Governance, and Economic Status of Host Nations

Royal Dutch Shell

Lonmin Case Study

CEMEX Case Study

Foxconn Case Study

Discussion

Conflict Triggers

Zero–Violent Conflict Model

What Host Countries Need to Know About MNCs

What MNCs Need to Know About Host Countries

Why the Zero–Violent Conflict Model Will Eradicate Violent Conflict

Conclusion

Chapter 4 Social-Change Implication

Resource Preservation

Incentives for Avoiding Violent Conflict

Conclusion

References

Appendix A

Appendix B

Appendix C

List of Appendices

Appendix A

Appendix B

Appendix C

List of Figures

Figure 1. Zero–Violent Conflict Model

Figure 2. Human Ecosystem

To my family—my wife and my children, who are my motivation

Preface

Conflicts between multinational corporations and resource-rich host communities are not uncommon, particularly in Africa and Central/South America. Regrettably, too many people live with the consequence of a violent conflict that could be avoidable. When multinational corporations and host communities engage in conflicts, both parties suffer devastating consequences. This book contains specific case studies of such conflicts. In particular, the Ogoni experience made a permanent impression on me. I spent a better part of my childhood and young adulthood in Ogoniland, my birthplace. Ogoni, one of the several ethnic groups that make up Nigeria, lies within the South-South region—a fertile land for agriculture with plenty of rivers and estuaries from the Atlantic Ocean for fishing and endowed with the abundance of crude oil and natural gas. These resources would later become a curse in the eyes of the indigenous Ogonis as violent conflicts ravaged the communities, leaving too many dead or maimed.

The zero–violent conflict model emanated in part from my experience—observing the devastation in other communities and reading the stories of occurrences in other parts of the world—and the urge to finding a lasting solution and to effect social change. The principle espoused in this book is applicable broadly; the focus on multinational companies involved in mineral resource extraction and their respective host communities offered case studies and a knowledge base that enabled the completion of this work. The foundation for the book started during my doctoral program.

This book would not be possible without the support of the few people who inconvenienced themselves, making selfless contributions to ensure a successful publication. I am grateful to Dr. James Stewart, who not only supervised the initial research work that gave birth to this book while also serving as my doctoral program mentor, but also edited and reviewed several iterations of the manuscript. Dr. David Gould, also my mentor and doctoral dissertation supervisor, was always on call for me; I consulted with him quite often as I raced to get the manuscript to my publisher. Dr. Gould, thank you for your attention to details; your support and guidance were invaluable. Dr. Raj Sardesai reviewed my manuscript for technical accuracy, applying his vast experience as an engineer, lawyer, and corporate leader; thank you so much, Raj. I owe a lot of gratitude to various people, but I must thank Jim Cucinelli especially for the tremendous support. Jim is pivotal to my success in many ways, and for that, I am ever grateful.

The role of my immediate and extended family remains vital to my success; but first, my love to Mama and Papa in blessed memory. Mama, you eventually gave up, forcefully, in the hands of your murderer. I love you so much, and your consistent counsel is ever fresh on my mind. May your soul rest in perfect peace. To my wife and children, my siblings, nephews, nieces, and friends: thank you all!

Christian S. Yorgure, PhD

United States

Abstract

Perpetrators of violent conflict are inclined to justify their actions. However, no reason is sufficient to warrant the devastation that violent conflicts cause on the people and the human ecosystem. Violent conflict was seen as being synonymous with war, with similar outcomes. The avoidance of violent conflict presented the potential for several positive social-change opportunities. The social-change benefit of the zero–violent conflict model stemmed from its potential to eradicate violent conflicts. The social-change implication of a zero–violent conflict model, as identified, did include the absence of violent conflict, the stability of families, the eradication of hunger, the alleviation of poverty, the curtailment of diseases and reduction of premature death, increase in the development and provision of social infrastructures, and balance in the human ecosystem.

Multinational corporations (MNCs) and corresponding host nations in the business of natural resource extraction were examined for their modus operandi within the context of stakeholder theory, based upon the theories and perspectives of Gerard Elfstrom, Hertner and Jones, and R. Edward Freeman. There was sufficient evidence to conclude that MNCs and host nations share responsibility for generating triggers of violent conflict.

Developments in conflict management and resolution between MNCs and host nations were examined by synthesizing and analyzing recent peer-reviewed articles. Each article was analyzed for triggers of violent conflicts that were attributable to MNCs or host nations. Poverty and ethnic-based grievances and other triggers of conflict were identified for development of a zero–violent conflict model.

Drawing on violent-conflict triggers that were identified in chapter 1 and chapter 2, the third chapter examined and critically analyzed case studies for conflict-free activities. The proposal of a zero–violent conflict model, which is a listing of need-to-know due diligence items, is an important contribution to the literature in this field. The listed items constitute a checklist for multinational corporations and host nations’ consideration when choosing host nations by MNCs and to accept MNCs by host nations.

Introduction

This publication is an extension of an independent research work during my doctoral studies. The structure is, therefore, influenced by and modeled after an academic research. Whereas my experience is partly the cause, I engaged this topic recognizing that maintaining peace is a shared burden and a responsibility for all no matter our vocation or location on earth. I believe that conflict is avoidable in all spheres of human endeavor, but that can truly come to fruition only with a better appreciation for what triggers conflict in the first place. This book contains a listing and explanation of need-to-know items that, together, constitute the zero–violent conflict model. Realizing that the maintenance of peace is the responsibilty of everyone, this book is for everyone—from ordinary citizens to lawmakers and leaders of organizations and to governments everywhere in the world.

Leaders of multinational corporations must have also come to the realization that atrocities anywhere will potentially reach everywhere. The era when corporations, operating under the protection of state powers, could commit atrocities in remote parts of the world and go unnoticed are gone. The stories and showings of atrocious images broadcast across multiple media platforms stoke empathy—an act perfected through technology. Due to improvements in communication technologies, boundaries have thinned beyond the obstacles earlier posed by land and sea. These stories captivate and attract a level of sympathy never seen before, resulting in a surging force and desire for accountability to which companies, governments, and their leadership are held at both home and abroad. Hence, the increase in cases wherein MNCs are defendants in home countries, usually developed nations, where the plaintiffs perceive stronger and better judicial systems. The plaintiffs in the majority of these cases are citizens of poor developing nations with military and/or corrupt and inept democratic systems of governance. MNCs ought to see the avoidance of violent conflicts as a good business case that is worthy of investment.

Poorer nations are prone to rulership by corrupt and tyrannical elites. These dictators operate at the national level, but maintain surrogates at the local community levels. Typically, MNCs attempt to be socially responsible, and they sort to meet and negotiate with the local communities. However, they are often misinformed and misled by the corrupt representatives of the elites operating at the local levels. The way it works is that after the MNCs meet with the elites at the national level, they are referred to the leaders at the local community level, unknown to the unsuspecting MNC that they are going to meet with few loyalists. Depending on the part of the world, these corrupt surrogates may be referred to as kings, chiefs, royal highnesses, kingsmen, elders, or leaders—all pretending to be the conscience of the ordinary people. The fact is that they collude to defraud the local communities of every aid and/or compensation. Eventually, the community hears about a transaction, and violence ensues. Recently, youths have organized and formed pseudo-organizations to gain recognition as representatives of youths of local communities, and to also receive compensation from MNCs. The task of identifying an honest group that surely represents a community could be daunting. Host nations and MNCs are vicariously liable for the occurrence of violent conflicts.

The cost of conflict to corporations and host nations is enormous by all counts. Violent conflicts lead to widespread destruction of lives and much-needed infrastructure. Conflict stagnates development and income for all stakeholders when it occurs.

However, the history and volumes of literature on the relationship between MNCs in the natural resource extraction business and their host nations (or communities) and the relationship’s complexity has, until now, made the notion of a zero–violent conflict model too ambitious or even an insane proposition. The constant fighting and numerous litigations—including the fact that some state powers may covertly stoke violent conflicts to sustain the inequitable flow of resources—justify skepticism, apprehension, and cynicism where they exist. Nevertheless, the proposed zero–violent conflict model is based in research motivated by my personal experience. The zero–violent conflict model, I will argue, has the potential to usher peaceful coexistence between MNCs and host nations.

The literature on violent conflict between MNCs and host local communities is in abundance. The zero–violent conflict model contained in this book is a preventive measure; it is an abatement of violent conflict. The case studies included are evidence, and they illustrate the potential of the zero–violent conflict model as a tool for unity and peaceful coexistence of MNCs and host communities. To the extent that these parties exist harmoniously as business partners, this model is an instrument of development, a tool for stability, for improving the standard of living with high potential for positive social change.

The basic premise of the zero–violent conflict model resides in simple steps necessary for building