Chapter Six - Partnering and Cooperating
In Chapter 2, we talked about some of the pitfalls for companies that find themselves directly involved in development and, in particular, the dangers of trying to implement projects when you don’t have the competencies or incentives to do them properly. One of the obvious ways to overcome this problem is by partnering or co-operating with local organisations that can supplement your business skills with experience in economic and development issues plus local knowledge and connections.
Much of the work in this field has focussed on how partnerships can be formed in order to implement a development project unconnected to the core business. The incentives for a business to be involved in such work tend to be based on corporate social responsibility or ‘licence to operate’ arguments, for example when implementing community initiatives around a major oil or mining project. These partnerships and projects may be essential for maintaining reputation or creating a secure environment, but they do not draw on many of the company’s real skills and what looks like a partnership may in fact be a simple question of outsourcing social responsibilities to an NGO. There is nothing wrong in this development partnership approach and, given our concerns about companies attempting ill-informed and uncoordinated development on their own, then outsourcing should be welcomed. But as our main interest is in using the core business we will not spend much time on it here.
Of more interest is the case when companies want to extend their business to areas or people that may not be currently profitable and need the help of a non-profit organisation to achieve it.
There are several reasons why a company might want to partner with a non-profit organisation to serve a non-profitable sector. In some cases, unprofitable activities are an explicit part of a government contract; for example, water supply contracts for cities often include a coverage provision that forces companies to supply both rich and poor areas and, in effect, part of the profit from the rich areas is used to cross-subsidise operations for the poor. In other cases, there is no explicit contractual condition but companies feel they are more likely to win contracts or secure licences if they can guarantee widespread service provision. Sometimes companies may want to benefit from a non-profit organisation’s contacts, experience and influence in order to carry out their main business, and so have to demonstrate that part of their proposal has development benefit and could not be achieved by the profit motive alone.
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Chapter 6 – links and resources
The Business Partners for Development (BPD) project developed concrete advice for managing different types of partnership between business, Government and NGOs. It has several good examples of productive partnerships, particularly in the water and extractive industries.
The Prince of Wales’ International Business Leaders’ Forum (IBLF) (www.iblf.org ) offers advice and support to companies that want to do more in their local community, and will often facilitate collective action by companies and ngos.
The World Business Council for Sustainable Development (WBSCD) (www.wbcsd.org ) is a consortium of businesses interested in development and environmental issues. It also supports a network of national-level Business Councils for Sustainable Development.
INSEAD business school have an excellent case study of the partnership between Telenor and Grameen Bank in Bangladesh to form GrameenPhone. Danone Grameen is a good example of combining a multinational's core skills with a microfinance organisation's delivery mechanisms and local networks.
In Make Poverty Business we discuss the surprising lack of support from the UN for multinational corporations who wish to contribute to poverty alleviation, and we analyse the underlying political reasons. Craig Wilson's other book, "A Corporate Solution to Global Poverty" explores this in more detail. The UN Global Compact is a rare example of cooperation between multinational corporations and UN bodies, but tends to be about what companies will not do rather than containing any positive view of what they will do. Another small-scale initiative is the UNDP's Commission on the Private Sector and Development
