A discussion moderated by Raymond Gilpin,U.S. Institute of Peace

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What does the latest research on corporate risk in conflict zones?
Corporations face serious issues when they decide to operate in conflict-sensitive zones. This session focuses on the managerial issues associated with engaging in such business from a perspective of risk and decision-making.

Research on Corporate Risk in Conflict Zones
Watch the three videos and join the discussion with presenters below.


Kathleen A. Getz, Senior Associate Dean for Academic Affairs and Jennifer M. Oetzel, Associate Professor of International Business American University

"Responses to Violent Conflict: CSR, Risk Management, or Something Else? Some Empirical Evidence"(7:46)

Charles Koerber, Doctoral Candidate, Department of Strategic Management & Public Policy, George Washington University

"Corporate Responsibility Instruments and Guidelines: Current Implications and Future Possibilities for Peace Through Commerce"(4:12)


Liesl Riddle, Associate Professor of International Business and International Affairs
and Tjai Nielsen, Assistant Professor
George Washington University

"Diaspora Investment Motivations in Post-Conflict Countries"(2:47)


Discussion: How can corporations mitigate the risks associated with doing business in conflict or post-conflict areas?
1. Do the costs of operating in high-risk, conflict environments make it less likely for corporations to be socially responsible?
2. What practical steps could corporations take to help promote peace in the fragile environments?
3. Is corporate social responsibility an additional cost for businesses? How could these costs be mitigated?
4. Does investing in corporate social responsibility help reduce business risk?

Views: 367

Replies to This Discussion

Interesting and important points. How we define CSR is important. I would be interested in hearing more about the difference between CSR and a more enlightened approach as you see it. Take corporate initiatives such as the building of water systems and pipes, providing medical care to workers and their families, and providing education to communities in countries and regions where these are lacking. Are these CSR activities? Are they strategic and crucial to the firm’s operations (e.g., the need for water for irrigation, the need for healthy workers)? Or are they result of firms attempting to fulfill what they see as their ethical duty to help when they see suffering and have the ability to help? You mention similar projects near the top of your comments and suggest they are problematic. But wouldn’t they also fall under the enlightened approach to management that you suggest based on ethics and strategic management?
I recently attended a lecture that focused on finding a job internationally. One of the points that was made was that we should no longer view the world as a series of individual isolated countries, but instead as a series of integrated countries whose actions, conflicts, resources, and prosperity all largely effect one another. I think the current financial crisis is a primary example of this. Due to increasing global integration, more and more companies are going to have to deal with and rely on, not only the countries they operate in, but on all countries worldwide. It is therefore necessary that corporations (especially MNCs) work to mitigate conflicts and bring peace to conflict environments. Business in this global environment is cyclical and bringing peace to a single area of conflict could end up effecting and bringing opportunities to a number of countries and companies worldwide.

Solomon Brayant Mpapale argues that CSR in conflict areas is an additional (but necessary) cost to business. I would argue that CSR, if implemented correctly, might actually prove to be more cost effect (at least in the long run). As stated by many before, in order to make CSR effective for both business and conflict regions, the CSR undertaken by the business must align with the business’s core competencies and strategy. Simply throwing money will not prove to be sustainable in the long run.

In terms of investing in CSR, I absolutely do think that it can help reduce a company’s risk. Global stakeholders’ voices, influence, and power are getting stronger and stronger, media is getting faster and more accessible, and accessing information is getting easier each day. A company that does not practice CSR runs the risk of upsetting any or all of these groups as well as creating a conflict within a country that then (through globalization) has the potential to spread to other countries. This is a huge risk to undertake, and can be reduced or even mitigated through socially responsible actions.
Participants have made excellent points about the effectiveness and/or potential profitablilty of CSR. Any further thoughts or examples of how CSR could help promote peace?
In regards to CSR and its link to promoting peace, I feel as though companies with operations in foreign countries have a moral obligation to use their resources (financial, human, etc.) in order to help those in need. Not only will this benefit the citizens of the country but it benefit the country as a whole, and possibly set an example for the government to change its ways (should the running of the government be unethical). Moreover, initiatives taken on by the foreign company can help to promote peace by eliminating issues of concern in the country that could be the root cause of the violence.
Dear Eric;
Your thoughts and insighs while noble have an inbeded assumption that MNC's interference is welcomed.
In light of the recent US financial firms fiasco and total diregard for CSR we might want to start at home. If we are talking about US MNCs the "moral obligation" must be considered at the source state.
It is good to have high expectations and standards.A large number of MNCs have a poor record in LDC

Why do we define CSR as the strategy for operating in high-risk conflict environments? To me that signals it not embedded in corporate strategy, or essential to the effectiveness of the firm.
Combining this question with your previous question, I would like to have my say on the topic.

Firstly, I believe defining CSR as part of the strategy and in fact trying to bring the understanding CSR to conflict environments can be labeled as the first steps of a paradigm shift. How we name the new paradigm changes. Walter Robb on the first week's discussion used the term ecological capitalism, Charles Koerber sees the new paradigm as part of the (new) code of conducts. At the end of the day, business is expected to take care of its social environment, too.

I will try to object to your point about CSR undermining the governance in conflict areas because of the contextual difference. In my humble opinion, - as you mentioned - when there is a corrupt, inexperienced, inadequate government and uneducated publics, multi-national companies with a CSR understanding can also lead the way for a better governance. They will be setting an example, for instance as Charles Koerber introduces the understanding of transparency as part of their code of conduct. With the financial and infrastructural improvements that come along with the business volume, I believe a way to better governance is paved rather than undermining the governance. - Though this is only my personal opinion.

Another point is I believe CSR should not be discussed in a cost/benefit analysis understanding though obviously sometimes corporations are in a situation to do so. I tried to summarize what I think about CSR in conflict areas above, thus I would bluntly claim that these attempts will be beneficial for business as they aim to normalize the conflict area, mitigating any possible costs/risks.

And finally thank you very much for this incredible discussion. I wasn't able to contribute to the discussion before, however reading through all these great views and posts was a great pleasure!

One fo the questions that may need to be addressed is whether developing countries with impoverished populations should be using their very limited resources to promote CSR?
I do not think we define CSR primarily as the "strategy" for operating in high risk environments so much as well incorporate as the corse of many firms' strategy in unfamiliar competitive landscape. CSR can play an integral role in both ingratiating a firm into a specific market and cultivating the workforce and community to play a vital role in the ultimate success of the company. Whether or not it is embedded in corporate strategy - to me - remains unclear.

Recently, I read an article about mining gold in conflict zones such as Congo, which has high pollution and many human rights problems. Since many conflict zones still have a very poor human rights record and their laws and regulations are very weak, the mining companies in conflict zones have used forced labor in their attempt to control the gold mining trade, and the local people have not received much compensation. Moreover, some companies pollute the water sources in conflict areas, and people are foreced to drink this water which could cause many health problems. Even though human rights groups have tried to protect human rights in these countries, it has been difficult to improve the living conditions of people affected by the mining, because the mining laws in conflict zones are still designed to attract only foreign investors, not to protect the local people's rights. Moreover, I strongly believe that CSR in these areas is needed to protect their human rights. Practicing CSR will be beneficial to these mining companies in social and commercial ways because they not only could have a better public image, but could be more profitable in the long run.
I agree. I remember reading about Chinese miners who were trapped in an illegal mine. It also reminds me of the situation of the mine that collapsed in American not too long ago. The fact is, and perhaps it is cynical or perhaps it is realistic, that some people will always be inherently greedy. It costs money to comply with mining laws, to control pollution, and to practice sustainable efforts. Even the more perfect laws will always be skirted by some unscrupulous individuals. However, I am encouraged by the activity in this conference, in the activities and accomplishments of human right activists, and the trend of the markets to reward good behavior. Maybe the banks will learn their lessons this time, but I also do believe that people have incredibly short memories.

In conclusion, altruism will never beat out economic incentives for responsible behavior. Hopefully the markets will evolve in such a way that irresponsible companies are punished more by the markets than they would gain from short sighted, irresponsible profits.
1. Resposne to question can be found collectively in Kathleen and Jenniffer's work and the video discussion presentation.
The question itself however, is too generic to lend itself to a set of specific response(s). For example High/low risk defined
As indicated by kathy "Conflict environments" vary depending on the stagge of the conflict, duration and level/intensity of it
In my view (Without significant emperical evidence) at this time , firm risk management in conflict zones is tied to industry
As literature review/references cited in Kathy and Jenniffer's work indicate the nature of the activity of firms is of relevance
2. It depends on the firm adding value to its stakeholder while at the same time managing and promoting peace in a region
3. It is unreasonable to expect "Corporations" to include peace making in to their performance agenda.They lack experties
Thanks for the opprtunity to participate in the discussion to benefit greatly from the contributions made by all include Liesl.
Would be interested in your thoughts.


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