Turning Gadflies into Allies - The Case for Nurturing a Culture of Corporate-NGO Commonality

Many influential NGOs are now being led by sober-minded and well-educated professionals. The latter often pursue more moderate agendas, and show far greater willingness to confer and negotiate with representatives from the multinationals they want to sway. Michael Yaziji, former Visiting Fellow at INSEAD, ponders the wisdom of the still-prevailing view in many corporate boardrooms of NGOs being, at best, barely tolerable pests. The author cites five primary benefits for a spirit of closer cooperation - but is also quick to point out some of the potential risks.

by Michael Yaziji
Last Updated: 23 Jul 2013

Against a backdrop of intensifying globalisation, and as a result of perceptions of widespread market and regulatory failures, there has been remarkable growth in both the sophistication and the effectiveness of many NGOs in addressing these matters. This has typically come through campaigns against, or sometimes cooperation with, the most powerful drivers of globalisation - major multinationals.

Major NGO-led campaigns have often cost major corporations dearly in recent years by affecting market size, market share, employee morale, and the regulatory environment. While radical street demonstrators and other more strident activists may garner more media attention, many internationally influential NGOs are now being led by sober-minded and well-educated professionals. The latter often pursue more moderate agendas, and show far greater willingness to confer and negotiate with MNC representatives.

Michael Yaziji, former Visiting Fellow at INSEAD and founder of its Business and Society Forum, ponders the wisdom of the prevailing view in many corporate boardrooms: NGOs are overwhelmingly barely tolerable nuisances at best, and sources of real and lasting harm at worst. In any event, there are far too few areas of commonality even to attempt to foster a greater general culture of compromise.

Yaziji views this mentality as fundamentally short-sightedshortsighted and counterproductive. "[The more conciliatory influential NGOs] have the skills, resources, insights and depths of popular support that make it unwise for companies to confront them head on. Citing the recent debacles involving "Big Pharma" firms in South Africa and the Brent Spar oil platform flap that so sullied Royal Dutch Shell's reputation, he makes a sound case for reconsideration on the part of MNCs for a far more pro-cooperative mentality towards NGOs in general.*

Yaziji argues that from a strategic perspective, the often multiple challenges that NGOs can generate for firms - the "social risks"-are very different from those of market competition with respect to issues, dynamics and effects. Non-governmental organisations have "four strengths that corporations would be well served to heed…. legitimacy, awareness of social forces, distinct networks, and specialised technical expertise". For MNCs choosing to make determined and sustained efforts to fostering better cooperation with NGOs - even including, in many cases, forging various types of formal partnerships - Yaziji cites five primary benefits.

· Head off trouble: Many NGOs are now appreciating that negotiations with MNCs are often far more effective overall than direct action campaigns. Firms may benefit enormously from initiating dialogue as soon as the first stirrings of concerted discontent become evident, (i.e., petitions, picketing, etc.). Royal Dutch Shell has clearly benefited from its recent change in tactics in this respect.

· Accelerate innovation: When not subject to direct competitive threat, most firms are happy to make improvements incrementally. But NGOs "are able to demand more of an enterprise than it sometimes demands of itself. The result can be radical [innovation]".

· Foresee shifts in demand: NGOs can be very adept at detecting "latent, but burgeoning concern about an issue". Changing norms and values often radically alter consumer choices. Engaging directly with NGOs can provide a first-rate early warning system.

· Shape legislation: Governments are usually the primary non-market forces shaping industries. NGOs "have access to likeminded lawmakers and regulators that even the best-connected corporate lobbyists might not know well". Moreover, some NGOs are formidable lobbying organisations in their own right.

· Set industry standards: Industry and NGOs together are much more effective in drafting and lobbying for better legislation than either in isolation.

However, Yaziji is also quick to point out and describe some of the risks of private sector partnerings with NGOs - when, indeed, these are possible. He acknowledges that such associations generally require "nothing less than a change in mentality" regarding core issues, especially of primary long-term interests. But reconsideration of values will overwhelmingly enable top decision-makers to be better prepared "when NGOs, invited or not, appear on their doorsteps".

<em>* For more on the famous South African lawsuit, click on the 'Big Pharma's Days in Court' link on the right hand menu</em>

Harvard Business Review, February 2004

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