#02 Business
Simone Klein

Developing New Models

Partnerships between Multinational Enterprises (MNEs) and International Non-Governmental Organisations (NGOs)

Introduction

In the past, interactions between NGOs and MNEs were characterized by big public relations actions, such as calls for consumer boycotts, mostly intended to put pressure on international companies. Today a new type of interaction is increasingly observed: MNEs are cooperating with NGOs (Nike with the Fair Labour Association, Chiquita with the Rainforest Alliance and Ikea with Save the Children). NGOs have become important stakeholders for companies and vice versa. This process of emerging alliances is quite noticeable. Partnerships between NGOs and enterprises are not a new phenomenon, but the size, shape and quality has changed in recent years, leading to a new era in relationships. It seems like both parties have chosen different paths, forming diverse cooperative models of interaction. The old archetype of the "good" NGO and the "bad" multinational company no longer holds true, and both actors have to redefine their roles, particularly regarding their interaction with each other. There are a variety of factors critical to making MNE-NGO partnerships work.

Explaining the development

Due to globalisation, the local and global responsibilities of corporations and global social and ecological issues are increasingly the topics of research and discussion (e.g. Crane/Matten 2007, Backhaus-Maul et al 2010). Solving challenges like climate change, poverty reduction, global education and global health requires partnerships among all sectors. Companies and NGOs are therefore implementing partnerships and alliances to achieve joint goals on both a local and a global level. In addition to global development, international discussion about corporate social responsibility (CSR) has supported the rise of business-NGO partnerships as well. Pressure from civil society has pushed the business sector toward more responsible economic behaviour and intersectional partnerships are employed to meet this rising demand for CSR. (Seitanidi/Crane 2008). While the business sector is being confronted with social demands, the role of NGOs has also been changing. Their influence and power on global political, social and business platforms has increased in recent years (Franz/Martens 2006). This demonstrates that no kind of organization is independent of its environment and that all require resources to survive (Pfeffer/Salancik 1978). Both business organizations and non-business organizations, like NGOs, depend on exchange and transactions with external partners. The following table shows some of the advantages each party is seeking and that the other might bring to the partnership.

Drivers behind partnerships:

For companies

  • Reputation/Confidence
  • Legitimacy
  • Access to new markets
  • Expert knowledge
  • Lobbying
  • Stakeholder management
  • Risk management

For NGOs

  1. Financial resources
  2. Brand awareness
  3. Access to new networks
  4. Management know-how
  5. Agenda setting
  6. Information policy and monitoring

Types of cooperative relationships

Relationships between corporations and NGOs are multidimensional, conflicting, cooperative and multi-facetted. In practice the type of partnership may vary widely, addressing areas such as cause-related marketing, corporate volunteering or joint research and development projects. The great variety of partnerships has been described using different typologies. Austin (2000) makes a major distinction by defining philanthropic, transactional and integrative cooperative relationships with regard to the degree of involvement of companies. Donations are an example of the philanthropic stage, whereas cause-related marketing activities (like the WWF rainforest project and Krombacher) are part of the transactional stage. The integrative stage involves a multitude of resources and a high level of engagement. Austin emphasizes the idea of a "collaboration" continuum, where the partnership evolves over time, starting with donations and evolving into integrative models.

Partnerships in practice – insight into the German perspective

A recent study of German NGOs and companies provides insight into their perspectives on MNE-NGO partnerships. For the "Situations and Perspectives of Partnerships between Companies and NGOs" study (credibility.wegewerk/ medienfabrik Gütersloh 2010) almost 80 semi-structured interviews were carried out with employees from NGOs and companies. Two results of the survey were as follows:

  • Partnerships are still donation driven, but with demand for more impact The study shows that many partnerships are still donation driven. For NGOs donations are the most frequent form of cooperation, followed by issue-driven relationships and sponsoring. Companies mentioned issue-focused partnerships and donations as the most common partnership form. Correspondingly NGOs' objectives for cooperation focus primarily on financial resources followed by raising public awareness for an issue and joint problem solving. MNEs are looking to enhance their reputation first, followed by problem solving and better public relations. These results also identify a gap between the demand for more impact-driven partnerships and the marketing approaches that still dominate today.
  • Partnerships are growing increasingly professional and sustainable Partnerships are generally designed for the long-term, and both partners report an increasingly professional management style. Finding common objectives and goals is one of the main challenges facing the management process. The issues each partner brings to partnership differ; whereas companies focus primarily on environmental issues, NGOs prioritise social topics. Recent assertions that the economic crisis might result in the cutting of partnership budgets could not be confirmed. The majority of interviewees did not expect an impact on their partnerships, and for some the crisis will help foster opportunities for new credible partnerships.

Challenges and critical success factors

Overcoming path dependencies
Despite increasing numbers of cross-sectoral partnerships, the people involved in NGOs and business people still entertain prejudices. Nevertheless conflicts can often be a starting point for cooperation (Bendell 2000). At first glance trust seems to be a precarious construct in the cooperative relationships between NGOs and MNEs. There are many well-know cases of interaction based on conflict where NGOs put tremendous pressure on MNEs to change or stop their business operations (Brent Spar, Nestle, Monsanto). Initially there can be distrust, and to overcome negative common history both sides need to have a certain amount of openness, respect, honesty and transparency to be able to work together successfully.

Partner selection and ensuring the fit
Whether it is a business-business alliance or NGO-NGO cooperation, it is never easy to find the right partner. The partner selection process requires resources and time. But making the right choice is important for the success of a partnership. NGOs in particular risk damage to their reputation if they enter an alliance with the "wrong" business partner and must therefore act very carefully (Marschall 2010). Sometimes partnerships are criticised and regarded as an instrument of "green washing". This makes it very important to clearly formulate the objectives and common goals, and even talk about exit strategies for possible future scenarios. It is equally important to inform the public in a transparent way.

Learning cycles
Managing this constellation of partners is quite challenging. Both sides are unaccustomed to having the other as a partner and are entering completely new territory. The characteristics and competencies of MNEs and NGOs differ a great deal. But these differences can be explored as the basis for learning; they can provide "fuel for learning" (Inkpen 1995:77). NGOs and MNEs can develop competitive advantages through organizational learning while exploiting their differences. Every stage of their developing relationship offers potential opportunities for organizational learning as each learn about and from the other. Factors like trust and the balance of power must be borne in mind to foster a successful learning process. Both sides must regard the partnership as a process requiring shared resources and time.

Conclusion
Business-NGO partnerships are very complex and multidimensional. They are characterized by different objectives, cultures and norms. Managing these partnerships requires a reframing of the current models, not an easy process, and promoters and best practices are needed. In the end, however, these cross-sectoral partnerships benefit both of the parties involved as well as society as a whole.

References

  • Austin, J. E. (2000): The Collaboration Challenge. How Nonprofits and Businesses Succeed Through Strategic Alliances, San Francisco.
  • Backhaus-Maul, H./ Biedermann, C./ Nährlich, S./ Polterauer, J. (2010): Corporate Citizenship in Deutschland. Bilanz und Perspektiven. 2. Auflage, Wiesbaden, VS Verlag.
  • Bendell. Jem (2000): Terms for Endearment. Business. NGOs and sustainable development. Sheffield: Greenleaf Publishing.
  • Crane, A./ Matten, D. (2007): Business Ethics. Managing Corporate Citizenship and Sustainabiltiy in the Age of Globalization, 2nd edition, Oxford.
  • Credibility.wegewerk/ medienfabrik Gütersloh: Situation und Perspektiven von Partnerschaften zwischen Unternehmen und NGOs. März 2010, Bonn.
  • Franz, Christiane/Martens, Kerstin (2006): Nichtregierungsorganisationen (NGOs). Wiesbaden: VS Verlag.
  • Inkpen, Andrew C. (1995): The management of international joint ventures: an organizational learning perspective. London: Routledge.
  • Klein, S./Siegmund, K. (2010): Partnerschaften von NGOs und Unternehmen, Chancen und Herausforderungen. Wiesbaden, VS Verlag.
  • Pfeffer, J./ Salancik, G. R. (1978): The External Control of Organizations : a Resource Dependence Perspective, New York.
  • Marschall, T. (2010): Advocate, Stakeholder, Fundraiser. Partnerschaften zwischen NGOs und Unternehmen im Spannungsfeld zwischen entwicklungspolitischen Forderungen und Fundraising. In: Klein, S./Siegmund, K. (2010): Partnerschaften von NGOs und Unternehmen, Chancen und Herausforderungen. Wiesbaden, VS Verlag.
  • Seitanidi, M. M./ Crane, A. (2008): Implementing CSR Through Partnerships: Understanding the Selection, Design and Institutionalisation of Nonprofit-Business Partnerships. In: Journal of Business Ethics, Vol. 85, Supplement 2, 413-429.