Birkestad Svingby, S., Borglin, J. 2016. Business as driver for development and peace. GREAT Insights Magazine - Volume 5, Issue 1. February 2016.
As multinational companies increasingly seek new business opportunities in fragile environments the question arises: How to do good business while contributing to economic development and peace?
Economic development and peacebuilding
As the primary driver of economic development, the private sector’s ability to prosper is imperative to job creation and investments necessary for human security. Armed conflict and post-conflict situations constitute severe constraints on economic life and present a hostile environment to business and investments. The positive connections between the role and needs of the private sector and peaceful development are however still less explored.
Considering the multiple risks and associated high costs of violence, a peaceful development and improved socio-economic conditions typically converge with the self-interest of businesses with a long-term objective. The private sector, international and local, has the ability to contribute in at least two rather different ways: by conducting its core business and by actively promoting certain elements of peacebuilding.
Taking years of practical experience from private sector development in complex environments as point of departure, the authors argue that through conscious engagement and active dialogue promotion business can – and does – take on an important role for both economic development and peacebuilding in fragile contexts.
While potentially highly profitable, fragile or complex environments present a multitude of challenges for an international company. This risk-opportunity balance must be carefully managed to cater for long-term success. Weak formal institutions, opaque power structures, commercial and political interdependencies and ethnic tension are some examples of particular challenges of the fragile context the company needs to navigate.
The private sector’s main contribution to developing economies and societies stems from its core activity; its ability to offer products and services meeting local demand, and the related effects on job creation and economic growth. In their interaction with suppliers, consumers, employees and governments and institutions, companies may transfer know-how, promote peaceful tools of conflict management and good governance through their core business conduct. Herein lie both the inherent challenge and opportunity. A company’s ability to steer towards sustainably successful business models rather than short-sighted and exploitative practices is pivotal.
However, in order to be successful, companies can’t go about doing ‘business as usual’. In complex or fragile environments, operations and products need to contribute to a virtuous rather than vicious circle of economic and societal development. If implementing conflict sensitive approaches in strategies and operations, companies can facilitate economic development while also contributing to establishing essential conditions for peacebuilding.
A context-sensitive governance model, including means of ensuring local compliance with the corporate code of conduct, is required, but key to implementing such approaches is leadership. Leaders’ ability to navigate complex environments – harvesting opportunity and managing risk – determines if a business can successfully provide benefit to stakeholders, employees and society. In order to do this, leaders need to incorporate an attitude of attentiveness to any aspects in the local context that may influence the company’s operations. The key attribute of such an attitude is inquisitiveness, continuously striving to understand the environment in which the company operates. The method is further developed in the concept ‘Management in Complex Environments: Questions for Leaders’ (Ganson, 2013).
This approach helps business leaders anticipate and manage the way the company influences the local context, positively or negatively. Moreover, and equally important, it supports the management’s grasp on how the local context, for instance its conflict dynamics, affects the company and its ability to meet the wide range of requirements – financial, reputational, legal etc. – placed on international firms.
In addition to conducting business sustainably and responsibly, private sector actors (individual companies, multinational or local, as well as organised business) may offer channels and methods for trust-building outside the traditional arenas. This potential can be manifested bya well-functioning labour market dialogue or improved interaction between private sector and policymakers. The ability of individual employers or that of business organisations to contribute to conflict resolution, either at the workplace level or in society at large, may be decisive in establishing a dialogue-centred rather than conflict-oriented interaction.
The fact that companies often have an acute awareness of the challenges facing citizens in local communities is sometimes overlooked. Organised business on local and national level, meanwhile, can have an important role to play in holding governments and public institutions accountable. The achievements of the 2015 Nobel Peace Prize laureates, the Tunisian Quartet, clearly demonstrate how business and labour market parties, when engaged in broad cooperation, were able to provide“an alternative, peaceful political process at a time when the country was on the brink of civil war” (Nobel Peace Prize 2015, Press release 10 October 2015).
A well-functioning labour market dialogue has the potential to contribute to a society where dialogue is a known and utilised tool for furthering differing views and mandates instead of violent conflict, as well recognized by the International Labour Organization.
One example from a fragile environment is the joint initiative by business and trade unions, supported by local and international organisations and donors, to increase cooperation between labour market parties in Colombia. Through the initiative, the ‘Labour Market Dialogue’, relations and trust between Colombian trade unions and employer organisations have been strengthened. Local organisations arebuilding a Colombian negotiation model based on domestic and international experience. International actors, in this case Swedish organisations and companies, can act as norm entrepreneurs as local business partners are influenced through policies and applications of standards. The local partners subsequently establish new norms and practices that can have consolidating effects and spread the use of conflict management mechanisms (Fort, 2007, p.59).
One of the world’s most enduring conflicts, the Israel-Palestine conflict, presents another example where businesses have a stake in finding alternative ways for conflict resolution. In a unique joint attempt to provide a mechanism for business disputes, Israeli and Palestinian businesses came together to form the Jerusalem Arbitration Centre. Itconstitutes a potent platform for conflict resolution that, despite negative developments in the local security context, is able to facilitate dialogue between businesses from both sides.
Lack of employment opportunities is a potential driver for conflict and instability. Similarly, lack of skilled employees hampers the business potential for local and international companies. As such, initiatives to support job creation are in the interest of both society and business and even more so in conflict-prone or post-conflict environments, where the issue of re-integrating ex-combatants is a priority.
There is ample opportunity for the private sector to contribute through innovative solutions; companies address the lack of qualified labour and vulnerable groups benefit through the chance of a stable job, alternative economic incomes and improved quality of life. In vocational training conducted by Swedish companies in Colombia, the selected participants all represented vulnerable populations: teenagers at risk of recruitment by organised crime; former paramilitary and guerrilla combatants in the process of reintegration. A majority of the participants were either employed by the participating companies or referred to other employers after finalising the training.
The cases show how the private sector in distinctly different fragile local contexts, by catering for its own interests, can lead the way for innovative practical solutions. Further, by engaging in joint efforts, the multi-stakeholder approach in itself supports trust building.
Business should be viewed – and view itself – as a stakeholder in sustainable development, even though a company’s status as a commercial entity may render it difficult to engage in far-reaching development work as such. The interests, capacity and mandate of companies and business associations need to be acknowledged if business actors’ potential in building resilient, prosperous societies is to be efficiently utilised.
The world has a unique opportunity to make use of the Sustainable Development Goals (SDGs) as a framework to include private sector actors as parties to the development agenda, aligning long-term business goals with global sustainability goals. In fragile and conflict-ridden environments, where the SDGs are likely to meet with the greatest challenges, the participation of business will be vital.
We argue that sustainable, responsible business practices and values are not complementary features of long-term successful business, but a pre-requisite. As such, the core business and the way it is conducted is the major contribution of a company – not only as a source of financing, innovation, job creation and growth – but through its impact on stability and governance issues, including anti-corruption, peace and security and the rule of law.
Fort, L Timothy (2007), Business, integrity and peace – Beyond Geopolitical and Disciplinary Boundaries, Cambridge University Press, Cambridge.
Ganson, Brian ed. (2013), Management in Complex Environments: Questions for Leaders. Stockholm: NIR.
About the authors
Sofia Birkestad Svingby is Director Operations and specialist on private sector development in complex environments at NIR.
Jonas Borglin is CEO at NIR, International Council of Swedish Industry. Representing Swedish business in complex markets and a member of the UN Global Compact Business for Peace.
Photo: Bralima brewery, Democratic Republic of the Congo, owned by Heineken International.
This article was published in GREAT Insights Volume 5, Issue 1 (February 2016).
Sofia Birkestad Svingby