Tutorial 25 November 2013

FACULTY OF ENTRENEURSHIP AND BUSINESS (FKP) BACHELORS DEGREE IN COMMERCE ENTREPRENEURSHIP ACS4083 Issues in Commerce Individual Assignment NGOs and Corporation: Conflict and Collaboration.
LECTURER: TUTOR: NAME: GROUP: MATRIK No.: SUBMISSION DATE: PROF. MADYA DR. MOHD RAFI BIN YAACOB MISS NOORUL AZWIN BINTI MD NASIR LIM WEE KIAT L1T3 A10A249 25TH NOV 2013

Tutorial 25 November 2013 Based on a book entitled NGOs and Corporation: Conflict and Collaboration. Read Chapter 7 Corporate-NGO engagement: from conflict to collaboration on pp. 123-142 and answer the following.

Questions: 1. What are benefits gained by businesses to engage with NGOs? The benefits gained by businesses to engage with NGOs are vast and beneficial for the development of the world via the collaboration between businesses and NGOs. For NGOs, partnerships with corporations may yield financial, human resource and reputation benefits. There are four particularly important NGO strengths that can provide benefits to corporations in the context of a collaborative relationship. They are legitimacy, awareness of social forces, distinct networks and specialized technical expertise. The public bestows the first, and the second is a function of the NGOs mission. The latter two refer to competences that NGOs have developed by venturing where corporations usually do not go. For corporate partners, relationships with NGOs provide access to skills, competencies and capabilities that support their CSR efforts and are otherwise unavailable within their organizations or from alliances with for-profit firms. These combinative capabilities have the potential to provide both partners with discernable benefits. There are five primarily benefits to be accrued through the engagement of businesses with NGOs including to: (1) head off trouble, (2) accelerate innovation, (3) foresee shifts in demand, (4) shape legislation and (5) set industry standards. Head of trouble means that NGOs are known for engineering confrontations, the more established NGOs increasingly recognize that negotiating directly with companies is more efficient than putting on a negative campaign in hopes that the public will then pressure government officials or the companies themselves to correct the situation they have created. From the companies standpoint as well, the involvement of motivated experts in place of committed adversaries makes negotiation a more promising alternative. Accelerate innovation refers to the focus on the wider effects of companies practices rather than on their costs or profitability, NGOs are able to demand more of an enterprise than it sometimes demands of itself. The result can be radical solutions that improve some aspect of society or the environment while also increasing competitiveness. Foresee shifts in demand by NGOs is often seen them as the social movements leaders. They detect latent but burgeoning concern about an issue, which they then amplify. New norms and values emerge that will, eventually, influence consumers tastes. Ultimately, they can endanger entire industries. For example, the nuclear energy and genetically

Tutorial 25 November 2013 modified food industries have become embattled and shrunken at least in part because of NGO-sponsored campaigns highlighting the dangers they pose. Such movements can also direct consumers to substitutes that become the basis of new growth industries. NGOs are good at sensing shifts in taste and values. They should be, since they are usually born during one of those shifts and depend for their survival on keeping up with them. But NGOs do not simply respond to those shifts. In a positive feedback loop, they help redirect and control them. By staying close to groups that are expert at following and shaping public opinion, companies maintain an advantage, either in their product development or their marketing. Shape legislation refers to the NGOs having the access to governmental tax policies, regulation of competition, grants of patent protection and promulgation of labour and environmental standards legislators and regulators that even the best-connected corporate lobbyists may not know well. Often, NGOs hear of behind-the-scenes manoeuvring or legislative initiatives brewing long before they reach the committee level, and they are sometimes willing to report these two companies they trust. The result is usually betterinformed legislation. Thus by working with NGOs, companies can have a greater impact on future legislation than they would if they were speaking strictly on behalf of their own economic interests and in opposition to what may be societys wellbeing. NGOs are able to set industry standards by cooperating with companies that gives companies a chance not only to avoid various kinds of trouble but also to reshape their industry, sometimes for their own benefit. Establishing new technology standards is one of it in which at certain points in time these technology standards can become the basis of new labour or environmental standards, which are enforced either by government mandate or market preference. Furthermore, NGOs and any companies involved can also contribute in the development of precise standards for responsible and sustainable business practices. NGOs are always striving in being the first movers that allow a firm to generate standards that are rational, practicable and uniform. When markets fall into line behind such standards, they reduce the danger that more than one jurisdiction or regulatory body, each with its own idiosyncratic notions, will step in.

Tutorial 25 November 2013 2. What are risks could be encountered by businesses when they collaborate with NGOs?

There are risks involved when partnerships are made between NGOs and businesses. First, if a company interacts with NGOs, it is likely providing them, and by extension its competitors and regulators, with sensitive information. Knowledge of R&D projects, strategic plans and internal audits may help NGOs be better partners, but it might also make them dangerous ones. Just as companies have disclosure policies for joint ventures, they should have strict guidelines for partnerships with NGOs. Second, partnering with NGOs, and advertising it, can draw stricter scrutiny from the public, the press, regulators and so on than a company formerly received. A lapse that earlier would not have been noteworthy will suddenly call into question a companys sincerity, making further cooperation with NGOs difficult. Worse, cynics are likely to accuse a company of being interested exclusively in image building. CorpWatch, a corporate watchdog, gives out so-called Greenwash Awards to corporations that put more money, time, and energy into slick PR campaigns aimed at promoting their eco-friendly images than they do in actually protecting the environment. In short, an overriding interest in good public relations can have the perverse result of actually damaging a companys reputation. Finally, researchers identified several mis-es that characterize six predictable problems in corporateNGO collaborations: misunderstandings, misallocation of costs and benefits, mismatches of power, mismatched partners, misfortunes of time and mistrust.

Tutorial 25 November 2013 3. In your opinion, what level of engagement of businesses in Malaysia with NGOs (high or low) and give your reasons why you say so. In my opinion, the level of engagement of businesses in Malaysia with NGOs is still low. This is because even though CorporateNGO exchanges are becoming increasingly complex, variegated and fluid; indeed, the given relationship between a firm and NGO may evolve or devolve depending on context, the respective strategies of the stakeholders and other conditions. Thus in the Malaysian context, it is still clear that the businesses are not taking any serious efforts to be engaging with the NGOs in which they have established their foot holds in Malaysia for quite some time now. For instance, the World Wildlife Fund (WWF), PETA, and so on are mostly neglected by big corporations as well as SMEs in Malaysia. This is because, most of them think that joining with the NGOs in doing business is a waste of money, time and effort while they are more focussed in generating better profits rather than involving themselves with peace-making effort with the environment and the people. Furthermore, cases of deforestation of tropical rain forest has been rampant in the race for generating profits through palm oil and rubber plantation in the current status quo has led to the destruction of wildlife and natural habitat in which flora and fauna are threatened with the risks of extinction. Hence forth, it is very sad to see that Malaysias engagement between the businesses and the NGOs is soon declining. Without the active roles from the NGOs and the government, it is predicted that Malaysias rainforest will be destroyed completely due to development and economic growth purpose without any considerations for the environment and its people. But even so, there are still hopes for avoiding that worst case scenario from happening and to provide a bit of light to the dilemma. There are certain companies who are still involved in the efforts to preserve the well-being and livelihood of the flora and faunas with the people surrounding the environment to balance up a healthy ecosystem among them. For instance, SOL24/7, Tandem Fund, Elevyn and so on are the so called social entrepreneurs that are actively involved in the efforts of protecting the underprivileged by helping them generate their own business without harming the environment to instil a collaborative win-win relationship for the positive impartment of values, actions, and awareness to the public in taking into deep consideration of the Three Bottom Line approach that is to look into the well-being of the planet, people and lastly profit.