Geo 324 - Master class in Globalisation and corporate strategies

1. Grounding of global business – the case of
Norwegian companies in Indonesia
Tarje I. Wanvik

2. Background
!
1990s: mobilisation within humanitarian student organisation
!
2000s: Head of advocacy division: campaign activist with
speciality within CSR and corporate conduct in poor countries:
" Coffee, water, sugar, agriculture
" Weapon production, export and marking/tracing
" Textile
" Trade rules and regulations, foreign debt,
!
2008-2010: private business, focus på CSR consulting and
strategy development communication and fund raising.
!
2011-2013: Master in Geography: CSR and Norwegian
companies in Indonesia

3. Filling the gap
Activism
Consulting
Research

4. “Anything can be located anywhere”

5. “Every firm, every economic function is –
quite literally, grounded in specific locations”

6. Motivation
Access to (cheap) semi
skilled / skilled labour
Access to cheap unskilled
labour
Access to Indonesian /
South East Asian consumer
market
Access to natural resources
Profitable regulatory
framework

7. “Localised” risks
0%
Corruption
Bureaucracy
Political instability
Economic instability
Regulatory issues
Safety issues
Environmental issues
Workers rights' issues
Competition issues
Other
20%
40%
60%
80%
100%
120%

8. “Localised” risks
0%
Corruption
Bureaucracy
Political instability
Economic instability
Regulatory issues
Safety issues
Environmental issues
Workers rights' issues
Competition issues
Other
20%
40%
60%
80%
100%
120%

9. Presentation, part 1
!
Research questions
!
Empirical and theoretical sources and definitions
Part 2
!
What do I see? (CSR law, CSR practice)
!
Why do I see this? (motivation, target groups,
objectives)
!
Discussion: attachment versus detachment forces
and strategies and grounding effects.

10. Research question
Can Corporate Social Responsibility work as
a catalyst for grounding foreign companies to
local communities in Indonesia?

11. Empirical sources
1.
CSR law of 2007, article 74
2.
9 Norwegian companies and their CSR activities
3.
Stakeholders and other relevant actors
4.
Documents: web pages, articles, internal presentations,
strategy papers, evaluations etc.

12. Theoretical entry points
! Theories
of place and globalisation
! Network
and power theory
! CSR
and stakeholder theory

13. What is place?
!
Three-part definition of place (Agnew)
" Location (where; longitude, latitude, relative)
" Locale (what; material context of social life:
buildings, roads, parks, fields, social relations)
" Sense of place: (how; the way in which place is
given meaning)
!
Place interweaves all three realms and
cannot be reduced to any of them (Sack)

14. Community = place
! Many
spatial corresponding
characteristics:
" Tolerance (Walzer 1997)
" Reciprocity (Putnam 2000)
" Trust (Grimen 2009)
! Closely
linked to Social Capital
(Bourdieu 1991):
" Networks, norms and trust facilitate
cooperation

15. Space vs Place
! Investing
in a place (Tuan)

16. Assemblages
! Assemblages
(DeLanda 2006)
" Material, immaterial and representational
" Components brought together
" Product of historical process
" Unique and singular individuals
(communities, organisations, atoms,
species, ecosystems etc.)
" Own capacities and tendencies: new parts
can enter, assemblage can constitute new
relations

17. Assemblages
Connects material to expressive
! Connects territorialisation with deterritorialisation
! Places have
!
" Material aspects (topography, texture)
" Expressive aspects (sense of place)
" Territorial aspects (political boundaries, labelling,
mapping, place promotion, naming etc.)
" De-territorial aspects (capital flight,
communication tech, mobility)

18. Harmony VS Conflict
! Putnam
criticised
! Place is ”saturated with notions of
power” (Cresswell 2011, Amin 2002)
! A zero sum-geography: centre-periphery
(Ong, Massey)

19. What is power?
! Reward
power
! Coercive power
! Legitimate power
" Position
" Reciprocity
" Equity
" Responsibility
! Referent
/ Expert power

20. Power as potential
! Possessed
by virtue, by role or
organisation (Norwegian companies by
default in Indonesia)
! Zero-Sum games and spatial division of
power (Massey, Allen)
! Scales (Global vs local)
! Not all places can be winners

21. Power as mobilising of resources
! Power
is a resource to achieving diverse
ends (Allen, Giddens, Thrift)
! Power to, not power over
! Pooling of resources
! Power as a fluid medium
! Power as a networked concept (Amin
and Thrift 1994)

22. What is a stakeholder?
! critical
to the company's goals, either
directly or indirectly
! directly or indirectly affected by the
company’s operations, and
! form the social and geographical
framework that companies operate
within.
! Critical issue: power relation between
stakeholder and company

23. An example
Governments
Local
Community
Organizations
Owners
Consumer
Advocates
Suppliers
Firm
Environmentalists
Customers
Competitors
SIG
Employees
Media
Figure 3 Stakeholder view of firm (Freeman 1984, p.25)

24. Primary or secondary
has been drawn according to Freeman to show that there are no possible linkages by
arrows between external stakeholders and a “firm” (Fassin 2008).
Governments
Environmentalists
Local
Community
Organizations
Environmentalists
Owners
NGOs
Suppliers
Financiers
Consumer
Advocates
Suppliers
Suppliers
Employees
Financiers
Governments
NGOs
Firm
Firm
Environmentalists
Governments
Employees
Customers
Company
using
CSR
Customers
Customers
Competitors
SIG
Employees
Media
Figure 3 Stakeholder view of firm (Freeman 1984, p.25)
Critics
Communities
Media
Communities
Critics
Others
Others
Figure 4 Freemans adapted version of the stakeholder
model from 2003 (Fassin 2008, p.115)
According to Freeman (1984) the aim of the stakeholder theory is to improve the
nderstanding and relationship between a company and its stakeholders. If aCarroll (Nygaard & Bengtsson 2002) among others (Grafstöm et al 2008) divide a
compacompany’s stakeholders into primary and secondary groups, whereas the primary
y is successful with satisfying their closest stakeholders, the company can gain
ong-term economical benefit as well as competitive advantages.
stakeholder can be seen as vital for a company’s survival, usually customers, employees, owners and suppliers. According to Carroll (Nygaard & Bengtsson 2002)
.5.1 Refined Stakeholder Theory
categorizing stakeholders into primary and secondary groups will make it possible
takeholders making increasing demands on a company, and companies have differfor a company to aim its strategic actions towards the stakeholder and be able to fulnt kind of responsibilities towards its stakeholders and its action affects thefill that particular stakeholder’s demand. If a company fails to satisfy these demands,
surounding environment. The theory is a useful guide when a company is to identify et al (2008) argue that the company will not survive.
Grafström
aluable stakeholders who might be of importance for a company’s CSR perfor-
Media
Figure 5 CSR-company and Stakeholders Model (authors own
version 2009), based on Freemans adapted version of the stakeholder model from 2003 (Fassin 2008, p.115)
3.5.3 Primary stakeholders
Communities
Communities can be described as the surrounding society wherein a company performs its CSR activities. The community often expects something in return from the
company in order to accept and give them legitimacy. Generally in developing countries companies give something back by employing local people in remote and rural
areas (Carroll 1998; Garriga & Melé 2004; Porter & Kramer 2006).

25. Stakeholder network relations
Community
Employ
ees
Media
Owners
Corp.
Selskap
Suppliers
NGOs
Customers
Subcon
tractors

26. Stakeholder differenciation
1. Dormant stakeholder
POWER
2. Discretionary stakeholder
1
5
URGENCY
3
7
6
3. Demanding stakeholder
4. Dormant stakeholder
4
5. Dangerous stakeholder
LEGITIMACY
2
6. Dependent stakeholder
7. Definitive stakeholder

27. What is CSR?
! CSR
is the commitment of businesses to
behave ethically and to contribute to
sustainable economic development by
working with all relevant stakeholders to
improve their lives in ways that are good
for business, the sustainable
development agenda, and society at
large

28. Methodology
1.
Document analysis
2.
Interviews
3.
Key informants
4.
Field visits
5.
Survey
6.
Participatory observation

29. Presentation, part 2
!
Research questions
!
Empirical and theoretical sources and definitions
Part 2
!
What do I see? (CSR law, CSR practice)
!
Why do I see this? (motivation, target groups,
objectives)
!
Discussion: attachment versus detachment forces
and strategies and grounding effects.

30. Law 40 / 2007, article 74
1.
Limited liability companies in natural resource sectors (or
connected with natural resources) are obliged to
implement Corporate Social and Environmental
Responsibility.
2.
Corporate Social and Environmental Responsibility,
represents a responsibility of a limited liability company that
is budgeted for and calculated as an expense of that
company,
3.
Limited liability companies that do not implement their
obligation will incur sanctions in accordance with the
provisions of legislative regulation.
4.
Further provisions will be laid down in a Government
Regulation (Peraturan Pemerintah).

31. “The intention of the law is to create a
relationship between companies and the
environment, values, norms, and culture of
local communities that is harmonious,
balanced and appropriate”
Elucidation to art. 74, law 40/2007

32. CSR activities
Do your company engage in CSR activities? (N=9)
Yes
No

33. CSR activities
0%
Rights promotion
Labour union facilitation
Environmental projects
Educational projects
Health projects
Other social projects
Other
10%
20%
30%
40%
50%
60%
70%
80%
90%

34. “It is only the local people and the local
communities that are the target groups of
our CSR work. Local government is not a
target”.
“Concerning stakeholders, we are looking
for the ones that are the needy” (CEO,
Company B)

35. Stakeholders
0%
Owners
Workers
Shareholders
Subsidiaries
Under-subsidiaries
Indonesian media
International media
Norwegian media
Local NGOs
International NGOs
Norwegian NGOs
Local government
Regional government
National government
Norwegian authorities, including
Customers
Indonesian consumer market
International consumermarket
Norwegian consumer market
Other
20%
40%
60%
80%
100%
Primary
stakeholders
All
stakeholders

36. Stakeholders
0%
Owners
Workers
Shareholders
Subsidiaries
Under-subsidiaries
Indonesian media
International media
Norwegian media
Local NGOs
International NGOs
Norwegian NGOs
Local government
Regional government
National government
Norwegian authorities, including
Customers
Indonesian consumer market
International consumermarket
Norwegian consumer market
Other
20%
40%
60%
80%
100%
Primary
stakeholders
All
stakeholders
Local
communities

37. Stakeholders
0%
Owners
Workers
Shareholders
Subsidiaries
Under-subsidiaries
Indonesian media
International media
Norwegian media
Local NGOs
International NGOs
Norwegian NGOs
Local government
Regional government
National government
Norwegian authorities, including
Customers
Indonesian consumer market
International consumermarket
Norwegian consumer market
Other
20%
40%
60%
80%
100%
Government
Primary
stakeholders
All
stakeholders

38. “It is not easy to do business in Indonesia
now. Before, Suharto and his inner circles
were the only real stakeholders. Today,
there are so many more stakeholders, and
they are not easy to please. But you need
their signature”.
(Publish What You Pay Indonesia)

39. “We have very little contact with the
Indonesian authorities, and quite frankly
we try to avoid it as much as possible”
(CEO, Company H)

40. Stakeholder management
CSR
Company B
Local
Government
Local
Community
BP Migas
National
government
GLOBAL
LOCAL

41. “Sub district head and local government
give positive feedback on projects, and
refers to our company as “best practice” in
meeting with both the local communities
and other stakeholders in the area”
(CSR adviser, Company B)

42. Triangulation Company B
Local
Government
BP Migas
Local Local
Community
community
National
Government

43. Stakeholder management C
CSR
Company C
CSR
Workers
Local
government
Local
Community

44. “ Our workers are by far the most
important stakeholder of this company,
together with the surrounding
communities. Our proactive relation to our
workers and their communities gives us
leverage in the re-occurring
demonstrations towards this industrial
estate. Protests have made us proactive”
(CEO, Company C)

45. “We do CSR projects, and we like to see
our name on the project. This is
documented in our tenders, and that is
very important. CSR is part of the tender
selection of the government”
(CEO, Company A)

46. “Local government bodies are very worried
about community impact. Unrest is the last
thing they want. There is a strong pressure
that we conduct various levels of
socialisation”
(CEO, Company F)

47. Eksternal and internal influence
Attachment forces (external)
Detachment forces (external)
Attachment strategies (internal)
Detachment strategies (internal)

48. Eksternal and internal influence
Attachment forces (external)
Detachment forces (external)
CSR Law
Standard Operational Prosedure
Tenders
Competence transfer
Attachment strategies (internal)
Detachment strategies (internal)

49. Eksternal and internal influence
Attachment forces (external)
Detachment forces (external)
CSR Law
Standard Operational Prosedure
Tenders
Competence transfer
Attachment strategies (internal)
Profile reports, CSRrecommendations
Local staff handling CSR and
Government relations**
Local recruiting
CSR reports
Detachment strategies (internal)

50. Eksternal and internal influence
Attachment forces (external)
Detachment forces (external)
CSR Law
Corruption*
Standard Operational Prosedure
(Protectionism)
Tenders
(Bureaucracy)
Competence transfer
Attachment strategies (internal)
Profile reports, CSRrecommendations
Local staff handling CSR and
Government relations**
Local recruiting
CSR reports
Detachment strategies (internal)

51. Eksternal and internal influence
Attachment forces (external)
Detachment forces (external)
CSR Law
Corruption*
Standard Operational Prosedure
(Protectionism)
Tenders
(Bureaucracy)
Competence transfer
Attachment strategies (internal)
Detachment strategies (internal)
Profile reports, CSRrecommendations
Lack of CSR strategies and plans
Local staff handling CSR and
Government relations**
Weak ownership to CSR internally
Local recruiting
Absence of vital stakeholders
CSR reports
Negative sentiments towards
locals
Local staff handling CSR and
Government relations**

52. Eksternal and internal influence
Attachment forces (external)
Detachment forces (external)
CSR Law
Corruption*
Standard Operational Prosedure
(Protectionism)
Tenders
(Bureaucracy)
Competence transfer
Attachment strategies (internal)
Detachment strategies (internal)
Profile reports, CSRrecommendations
Lack of CSR strategies and plans
Local staff handling CSR and
Government relations**
Weak ownership to CSR internally
Local recruiting
Absence of vital stakeholders
CSR reports
Negative sentiments towards
locals
Local staff handling CSR and
Government relations**

53. Stages of Corporate Citizenship
Elementary
Engaged
Innovative
Integrated
Transforming
B
C
A
E
G
H
D
I
F
(“The Paradoxes in Communicating Corporate Social Responsibility,” Sandra Waddock and Bradley K. Googins in “The Handbook of Communication and Corporate
Social Responsibiliy” – Øivind Ihnen, Jennifer L. Bartlett and Steve May [eds.], 2011)

54. Integrated
Carefully selected
programs in order to
contribute in the most
efficient way for the
benefactors
Carefully selected
programs in line with
core activities in order to
manage relevant
stakeholders
Passive
Altruism
Active Selfinterest
Randomly selected
projects or partners to
avoid attention, often
international NGOs.
Randomly selected
projects in order to
please close
stakeholders
Elementary

55. Integrated
Carefully selected
programs in line with
core activities in order to
manage relevant
stakeholders
Carefully selected
programs in order to
contribute in the most
efficient way for the
benefactors
B
Passive
Altruism
A
Randomly selected
projects or partners to
avoid attention, often
international NGOs.
C
Randomly selected
projects in order to
please close
stakeholders
E
Active Selfinterest
G
H
F
I
Elementary
D

56. CSR law and its consequences
Law
Sanctions
Stakeholder
mapping
Plan &
budget
Resource
transfer
Tenders
Contact
SOP
Expectation
CSR activity
CSR reporting
Corruption
Grounding

57. “To us, CSR is a social investment strategy”
“I would claim that CSR curb inquiries of
bribes and other forms of corrupt practices”.
(CEO, Company B)

58. Research questions
Can Corporate Social Responsibility work
as a catalyst for grounding foreign
companies to local communities in
Indonesia?

59. “CSR ties our company to the local
communities. And vice versa. We build
common trust and tolerance of each
other’s different roles and responsibilities.
It is like with friends: you have to get to
know them before you can do something
together”
(CEO, Company B)

60. Thank you for your attention!
Tarje I. Wanvik
tarje.wanvik@geog.uib.no
+47 970 70 987