A Role for Business in Post-Conflict Societies

Which actors contribute to the stabilization of post-conflict societies—and how—is a question of utmost importance. Scholars and practitioners alike have argued that economic interdependencies and economic well-being is a beneficial factor in stabilizing a post-violent region, and in aiding a process of reconciliation.[1] After all, if people experience that peace is worthwhile, conflict seems less likely to be a viable option. Peace is worthwhile if people see prospects for a future in their home country. Jobs, economic growth, and prosperity for the majority of the population are key ingredients.

Yet, when it comes to actors and their activities in post-conflict transitions, the focus of attention falls on governments and NGOs, excluding businesses. The general argument is that the motive of business actors is profit and therefore business should be excluded from the equation. This is a somewhat myopic view. The Anglo-Saxon model of laissez-faire economics which stresses shareholder-value in particular seems to dodge responsibility as any funds diverted to activities other than profit-making defies the purpose of its very business model. Business actors, i.e., companies in all legal variations, however, consist of people, and people are not guided by profit motives alone. A healthier, more sustainable stakeholder approach to business would be one which would include a multitude of considerations including workers’ interests, the environment, the state, shareholders, business partners, customers, as well as the stability of the region in which businesses operate. In short, a long-term commitment to the companies’ surrounding world at large is needed, which ultimately would also benefit the company itself.

However, how can companies, especially foreign investors, be more involved in stabilizing post-violent regions? In such settings, businesses often struggle with the lack of rule of law, legal uncertainty, security issues, endemic corruption, and “informal economics,” and therefore would not be more eager to invest if another set of rules and regulations would impose further conditions. Nevertheless, recognizing that getting involved also helps to promote the companies’ brand, many big corporations are already involved at the local level by, for example, supporting specific projects (I do not wish to single out any companies here). The funds dedicated, however, are usually droplets compared to global profits generated, or compared to the dividends paid out to shareholders or obscene bonuses to CEOs. Moreover companies can tackle other issues that do not require money. They can, for example, pressure governments to do more against corruption, or by simply do business in an ethical way. Critics of the last point will retort that companies need to play “the local game” in order to secure contracts and stay in business, but if this is used as an excuse nothing will ever change. The race to the bottom of ethical standards and responsibility can only be broken by collective action.

The U.S. and Germany as major economies, together with their companies as major investors, could set an example for others to follow by, for example, committing a set percentage of profits to nonprofit local projects that are developed in conjunction with local authorities and NGOs. A global well-regarded league table of companies who act ethically would also give an incentive for companies to promote their image. “Naming,” or lauding, and “shaming” if covered in widespread media would certainly help.

Does this post sound like utopia or wishful thinking? Perhaps on first glance, but if capitalism will not transform beyond sheer profit-maximizing goals, more economic and political crises will follow the once we have witnessed in the last ten years.

[1] There has been some research on the topic on the example of Kosovo, e.g., KIPRED paper: http://www.kipred.org/repository/docs/GRASS-ROOT_APPROACHES_TO_INTER-ETHNIC_RECONCILIATION_IN_THE_NORTHERN_PART_OF_KOSOVO_628494.pdf See also blog entry by Ivan Seifert (2015): http://auc-kosovo.blogspot.co.uk/2015/06/reconciliation-through-business.html ).

The views expressed are those of the author(s) alone. They do not necessarily reflect the views of the American Institute for Contemporary German Studies.

Alexander Wochnik

Alexander Wochnik holds a PhD in Politics and International Relations from Aston University, UK. His research focuses on German foreign policy, Polish foreign policy, and Polish-German relations. He was a Harry & Helen Gray/AICGS Reconciliation Fellow in the summer of 2012; a Japanese Society for the Promotion of Sciences (JSPS) Postdoctoral Researcher at Hitotsubashi University in Tokyo in 2014; a Research Fellow at Manchester University, UK (2013-14); and in 2016 a DAAD/AICGS research fellow assessing German multilateralism through security relationships: German-U.S. Cooperation in Afghanistan. Alexander has published in the international peer-reviewed journals Geoforum, German Politics, West European Politics, and East European Politics and Societies.

He is a 2016-2017 participant in AICGS’ project “A German-American Dialogue of the Next Generation: Global Responsibility, Joint Engagement,” sponsored by the Transatlantik-Programm der Bundesrepublik Deutschland aus Mitteln des European Recovery Program (ERP) des Bundesministeriums für Wirtschaft und Energie (BMWi).