This article is based on joint research by ESADE, the University of Victoria and ESAN University Daniel Arenas Associate Professor, Department of Social Sciences Critics claim that firms' efforts at corporate social responsibility in less developed countries do more harm than good for local communities. They argue that these actions are merely attempts to legitimize the exploitation of resources to benefit shareholders in developed countries. Is it wishful thinking to believe that local communities can influence firms in order to improve their well-being? Our research demonstrates that, even in situations of exclusion or marginalization, local communities are not completely devoid of influence capacity. Our study addressed a question that research on local communities tends to neglect: Why, under similar circumstances, do some groups show greater capacity than others to influence powerful corporations? We believe that local communities can influence a firm's behavior in their favor We believe that local communities, despite difficulties and challenges, can come together to drive positive change and influence a firm's behavior in their favor. To test our hypothesis, we undertook field research to study two rural communities in the Peruvian highlands affected by a large mining project. To be economically viable, the mine needed to expand to such a degree that the entire town of Morococha would need to be relocated. This required the negotiation of agreements with the Pucará and Yauli native rural communities, whose lands were needed for mine operations. Both communities faced the same challenges regarding the mining project and possessed a similar ability to reject the project and make demands in the negotiation process. One of them succeeded in its demands and the other one did not. What made one succeed and the other one fail? The power of influence tactics Throughout the process, one of the communities, Pucará, employed a mix of five different resistance tactics to try to influence the corporation's actions and decisions: they launched several media campaigns to condemn the expropriation of land; they sought support from respected politicians; they worked closely with NGOs; they rejected agreements; and they took legal action several times. One of the keys to the community's success was that the tactics used to gain media attention and take legal action were employed at crucial moments in the negotiation processes to maximize leverage over the corporation. In addition to resistance tactics, Pucará was also willing to engage in negotiation tactics with the company. Wishing to reach a conclusion to the negotiations and avoid public backlash, the mining company accepted Pucará's demands for 500,000 shares of the company's stock, 1,056 hectares of agricultural land to replace land being sold for mining, the construction of a soccer field, a radio station and a new water treatment system. As part of the deal, the company also offered the local community other services such as job training, school meal programs and healthcare systems. After considerable internal deliberation, the community agreed to drop their legal action and accept the corporation's offer. The second rural community, Yauli, failed in its negotiations because it only used a single tactic - legal action - and did so ineffectively. The legal action occurred after negotiations had already concluded (six months after 90% of the Yauli community members had already agreed to sell 1,288 hectares of land to the corporation). Our field work shows that if communities want to gain influence over firms, they need to use a variety of resistance and negotiation tactics. This comparison shows that even under similar situations and conditions, the use of several resistance and negotiation tactics holds potential for communities to exert an influence over firms. About the author Daniel Arenas is Associate Professor of the Department of Social Sciences at ESADE Business School, where he is also the Head of Research of the Institute for Social Innovation. He teaches courses on Sociology, Business Ethics and Corporate Social Responsibility. His research interests focus in the area of business ethics and corporate social responsibility, and has published also in the fields of political theory and aesthetics.

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Can local communities influence powerful corporations to improve their well-being?

04/2019

This article is based on joint research by ESADE, the University of Victoria and ESAN University




Daniel Arenas


Associate Professor, Department of Social Sciences




Critics claim that firms' efforts at corporate social responsibility in less developed countries do more harm than good for local communities. They argue that these actions are merely attempts to legitimize the exploitation of resources to benefit shareholders in developed countries.


Is it wishful thinking to believe that local communities can influence firms in order to improve their well-being? Our research demonstrates that, even in situations of exclusion or marginalization, local communities are not completely devoid of influence capacity.


Our study addressed a question that research on local communities tends to neglect: Why, under similar circumstances, do some groups show greater capacity than others to influence powerful corporations?


We believe that local communities can influence a firm's behavior in their favor


We believe that local communities, despite difficulties and challenges, can come together to drive positive change and influence a firm's behavior in their favor.


To test our hypothesis, we undertook field research to study two rural communities in the Peruvian highlands affected by a large mining project. To be economically viable, the mine needed to expand to such a degree that the entire town of Morococha would need to be relocated. This required the negotiation of agreements with the Pucará and Yauli native rural communities, whose lands were needed for mine operations.



Both communities faced the same challenges regarding the mining project and possessed a similar ability to reject the project and make demands in the negotiation process. One of them succeeded in its demands and the other one did not. What made one succeed and the other one fail?


The power of influence tactics


Throughout the process, one of the communities, Pucará, employed a mix of five different resistance tactics to try to influence the corporation's actions and decisions: they launched several media campaigns to condemn the expropriation of land; they sought support from respected politicians; they worked closely with NGOs; they rejected agreements; and they took legal action several times.



One of the keys to the community's success was that the tactics used to gain media attention and take legal action were employed at crucial moments in the negotiation processes to maximize leverage over the corporation. In addition to resistance tactics, Pucará was also willing to engage in negotiation tactics with the company.


Wishing to reach a conclusion to the negotiations and avoid public backlash, the mining company accepted Pucará's demands for 500,000 shares of the company's stock, 1,056 hectares of agricultural land to replace land being sold for mining, the construction of a soccer field, a radio station and a new water treatment system.


As part of the deal, the company also offered the local community other services such as job training, school meal programs and healthcare systems. After considerable internal deliberation, the community agreed to drop their legal action and accept the corporation's offer.


The second rural community, Yauli, failed in its negotiations because it only used a single tactic - legal action - and did so ineffectively. The legal action occurred after negotiations had already concluded (six months after 90% of the Yauli community members had already agreed to sell 1,288 hectares of land to the corporation).


Our field work shows that if communities want to gain influence over firms, they need to use a variety of resistance and negotiation tactics.


This comparison shows that even under similar situations and conditions, the use of several resistance and negotiation tactics holds potential for communities to exert an influence over firms.


About the author


Daniel Arenas is Associate Professor of the Department of Social Sciences at ESADE Business School, where he is also the Head of Research of the Institute for Social Innovation. He teaches courses on Sociology, Business Ethics and Corporate Social Responsibility. His research interests focus in the area of business ethics and corporate social responsibility, and has published also in the fields of political theory and aesthetics.

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