To limit their conflicts with local communities, managers of multinational corporations (MNCs) must consider three interrelated factors: power inequality, perception gaps and cultural context. When these factors are properly managed, they can reduce tensions between MNCs and their neighbouring communities, thereby reducing opportunities for conflict. The author applies community engagement literature to identify managerial trends that can reduce conflict.
Although the globalization of the 1990s has led to reduced tensions between multinational corporations (MNCs) and national governments, local communities are emerging as the main opponents to MNC activities.
Increasing media coverage of conflicts between MNCs and neighbouring communities can have financial and reputational consequences for MNCs.
A lack of understanding of the causes of conflict can hinder an MNC’s attempts to engage with local communities.
This study proposes a framework for understanding MNC and community conflict and describes ways communities can increase their leverage in conflict situations.
The main drivers of conflict are power inequality, perception gaps, and cultural context
Managers can reduce tensions by viewing local communities as strategic partners, rather than sources of cheap labour.
Communities can adopt less confrontational approaches by pursuing specific strategies for involving both parties, such as by introducing community-driven regulations and initiating open communication.
Corporations usually have a dominant status because of their power and their ability to organize resources.
Implications for Managers
The proposed framework can help managers by identifying the underlying causes of conflicts with local communities. Corporate engagement programs can effectively address conflicts by empowering local communities and by increasing managers’ awareness of community perspectives. Managers also need to understand key community strategies (e.g. protests, blockades, and other media-grabbing tactics) when managing conflicts.
Implications for Researchers
Conflicts between MNCs and local communities have been studied in a limited way. The author provides a pioneering framework to understand the drivers of conflicts. Future work should test the framework’s explanatory power. In light of the qualitative nature of the work, additional empirical studies are needed to address the effectiveness of each of the drivers and strategies.
The study was based on a critical analysis of the literature regarding community engagement. The author defined the key concepts relevant to the analysis and structured the discussions around the three main factors that contribute to conflict.
Calvano, L. 2008. Multinational Corporations and Local Communities: A Critical Analysis of Conflict.Journal of Business Ethics, 82, 793-805.