business conflict linkages

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Business-Conflict Linkages: Revisiting

MNCs, CSR, and Conflict

Dima Jamali

Ramez Mirshak

ABSTRACT. Heightened interest in business-conflict

linkages has materialized with the advent of globalization

and the rise of multinational corporations (MNCs). We

examine business-conflict linkages in this article both the-

oretically and empirically. Theoretically, we examine three

streams of the relevant academic literature: the academic

business and society literature, the practitioner business and

society literature, and the international business political

behavior literature and argue that there is room and indeed

need for their cross fertilization and integration in research

on business-conflict linkages. We then consolidate the

three streams into a matrix that reconciles relevant dimen-

sions and which can serve as a typology of intervention

strategies of business firms in conflict zones. Empirically,

the article makes useof the integrative matrix in the context

of an interpretive research methodology to examine the

perceptions and behavioral orientations of a sample of

MNCs in Lebanon in an actual conflict context.

KEY WORDS: corporate social responsibility, business-

conflict linkages, multinational corporations, developing

countries, Lebanon

Introduction

Multinational corporations (MNCs) have expanded

the scope of their reach and influence with the advent

of globalization and recent waves of liberalization andprivatization in developing countries. They now

spread into every corner of the globe (Banfield et al.,

2003), and are specifically attracted by the prospects of

higher returns on investment in developing countries

(Goulbourne, 2003; Mehmet, 1999). While few

companies with competitive aspirations can ignore

the opportunities that developing markets provide

(Haufler, 1997), MNCs also frequently face chal-

lenges and risks of sustaining efficiency, legitimacy,

and operations in conflict prone (developing) regions.

Aside from challenges, it has been argued that MNCs

face more importantly associated responsibilities

relating to channeling their efforts in these contexts in

the service of conflict mitigation and peace building

(Bennett, 2002; Gerson, 2001).Globalization is certainly a potent force in the

changing relationship between business and society

and in the rise of MNCs (Koerber and Fort, 2008).

Globalization it seems has re-directed attention to

MNCs and the positive and negative consequences of

their global operations (Korten, 2001; Strike et al.,

2006), intensifying calls for corporate citizenship

(CC), and corporate social responsibility (CSR)

(Mohan, 2006; Scherer and Palazzo, 2008). Global-

ization has also catalyzed a renewed focus on the links

between MNCs and conflict mitigation around the

world, given the growing number of conflicts

occurring in regions where these MNCs operate

(Campbell, 2002). Notions of peace through com-

merce (Koerber and Fort, 2008) and corporate

security responsibility (Wolf et al., 2007) thus con-

stitute recent infiltrations of global management

vocabulary.

Within the contextual framework of globaliza-

tion, recent debates have been raging regarding the

social and political responsibilities of MNCs on one

hand, and the nature and determinants of their

corporate political strategies/involvement on theother hand. These debates, however, have been

largely compartmentalized in three streams of liter-

ature, namely, the academic business and society

literature, the practitioner business and society lit-

erature, and the international business political

behavior literature, and only marginally related or

connected to issues of military conflict management

and mitigation. We argue in this article that a better

understanding of the role of MNCs in conflict prone

Journal of Business Ethics (2010) 93:443464 Springer 2009

DOI 10.1007/s10551-009-0232-8


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regions requires the cross fertilization of those liter-

atures in pursuit of greater theoretical rigor, depth,

and fresh empirical findings. Each literature offers

unique insights which can be combined synergisti-

cally in enhancing our understanding of the roles ofMNCs in conflict zones.

Capitalizing on those three streams of the litera-

ture, we thus seek in this article to shed light on the

multidimensional role that MNCs can play in con-

flict prone areas. We start by providing an overview

of the main streams of the literature that cover

business-conflict linkages and attempt to synthesize

such streams into a new typology that can guide

future research and practice relating to conflict res-

olution. We also use this typology to study a sample

of companies in a conflict situation in the Leba-nese context and derive relevant empirical insights

and implications. In other words, we are seeking to

explore questions relating to the circumstances

under which MNCs may be expected, willing and

motivated to contribute to a specific public gover-

nance function, namely, peace and security. This is a

very important question that to date has not been

addressed systematically in academic research

(Koerber and Fort, 2008; Oetzel et al., 2007; Wolf

et al., 2007), despite receiving some attention in

policy circles, particularly with the recent UN

Global Compact Dialogue convened in March 2001around the role of business in zones of conflict.

In addressing these questions, we feel that there is

need for more careful consideration of the different

literatures reflected in the parallel streams of CSR

and conflict management. In relation to the topic of

MNCs involvement in conflict zones, there is

indeed growing convergence among the CSR and

political behavior literatures, which to date has not

been systematically explored or leveraged. There are

also untapped complementarities and room for

interdisciplinary borrowing in helping account forthe circumstances under which MNCs may be

expected to contribute to conflict mitigation and

peace building. Various authors have indeed hinted

in this respect to a knowledge gap in relation to the

understanding of the role of business in conflict

mitigation and peace building (Koerber and Fort,

2008; Wolf et al., 2007) and the need for more

systematic research on the topic (Oetzel et al., 2007).

Drawing on the business and society literature, we

wish to highlight how the involvement of MNCs in

conflict mitigation and peace building is a logical

extension to the evolving CSR agenda. Capitalizing

on the international business and political behavior

literature, we identify in turn specific political

strategies that MNCs can deploy in conflict proneregions and factors that could mitigate their inte-

gration and mobilization. We complement the lit-

erature review by presenting an exploratory

empirical investigation of business-conflict linkages

in a developing country context. The empirical part

draws on the literature review and supplements it

through in-depth interviews with a sample of MNC

managers operating in Lebanon to gauge their per-

ceptions of business-conflict linkages and factors

affecting their deployment of specific engagement

strategies in conflict situations. The originality of thisarticle indeed lies in the new typology of interven-

tion strategies proposed as well as the empirical

component, given the dearth (virtual absence) of

empirical investigations of business-conflict linkages

in actual conflict situations. We leverage the findings

presented to accentuate theoretical and practical

considerations relevant to future research on MNC

involvement in zones of conflict.

Literature review

A constellation of factors increasingly discussed in

academic circles has recently served to accentuate

attention to business-conflict linkages. The first

relates to the unprecedented prominence of the

corporation in the context of globalization, with the

international business firm recently acknowledged as

the most powerful social construct in the present era

(Andriof and McIntosh, 2001). Corporations have

indeed expanded their global reach either directly

through investment or indirectly through supplier

relations with local firms (Banfield et al., 2003). Therevenues of some MNCs (e.g., ExxonMobil) exceed

the annual GDP of the small developing states in

which they set operations (Adler, 2008; Gerson,

2001; Koerber and Fort, 2008). This process has

caused companies to gain more influence and visi-

bility in the world and gradually become more

politically relevant (Gerson, 2001; Solomon, 1994).

Second, the prominence, expansion and increas-

ing visibility of global corporations has been associ-

ated with escalating pressures and expectations of

444 Dima Jamali and Ramez Mirshak


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social responsibility across the spectrum of their

operations (Eweje, 2006; Mohan, 2006). This is

particularly true in developing countries, where

MNCs are increasingly expected to fill in gaps of

defunct or nonexistent governments (Scherer andPalazzo, 2008). Even on a broader scale, there is a

growing tendency to consider corporations as solu-

tions to global regulation and public goods problems

(Matten and Crane, 2005; Scherer and Palazzo,

2008). This trend is intricately related to what has

been described as the erosion of national gover-

nance, the ascendancy of a postnational form of

governance suffering of void and legal abstraction,

and an overall reconfiguration of the balance

between institutions that together make up both

national and global governance constellations(Habisch and Jonker, 2005; Scherer and Palazzo,

2008; Willke and Willke, 2008).

Third is the changing global approach to conflict

resolution which has seen a move away from zero

sum orientations as weapons have become increas-

ingly sophisticated (Oetzel et al., 2007). This change

has been attributed to globalization, the advancement

of destructive military technology, and an increas-

ingly engaged international community (Gerson,

2001; Kaldor, 2001). Even the most deep rooted,

intransigent and violent conflicts based on issues of

identity, ethnicity, and access to resources haveattested to the shortsightedness of the use of force and

the critical need for negotiation and cooperation. A

good example is the most recent Israel-Gaza conflict

which eventually migrated toward negotiation and

negative peace (deterrence of violence) even in the

absence of true resolution. The increasing rates of

wars in regions where MNCs operate, coupled with

growing international appreciation of the value

added of positive peace and proactive conflict miti-

gation make the topic of this research both timely and

extremely relevant.We adopt in this article the Banfield et al. (2003,

p. 15) definition of conflict prone regions as com-

prising those countries [that are] in, emerging from,

or at risk of violent conflict, being expressed either as

civil war or at more localized levels. We define

CSR as a mode of business engagement and value

creation (Luetkenhorst, 2004) or in simple terms as

the obligation of the firm to use its resources in ways

to benefit society (Snider et al., 2003). We argue

that MNCs in conflict prone regions have political

mandates and responsibilities that have so far not

been systematically considered and integrated within

an expanded CSR agenda, through the deployment

of what has been referred to in the international

business literature as cooperative or relational polit-ical behavior strategies. We leverage and draw sys-

tematically on three streams of literature academic

business and society literature, practitioner business

and society literature, and international business

political behavior literature in support of our argu-

ments. We also identify factors that could mitigate

the deployment of specific corporate engagement

strategies in conflict zones.

Academic business society literature

There has been an astounding proliferation of

writings in the business and society field, addressing

the role of business in society, particularly in the

context of globalization. There are many views,

arguments and counterarguments presented regard-

ing the role of business in society, ranging from the

traditional neo-classical view associated with Fried-

man (1970) and contending that the business of

business is business and hence profit maximization

(Jensen, 2002; Margolis and Walsh, 2001; Walsh

et al., 2003), to a more progressive view advocatingthe active provision of goods and filling of various

governance gaps within an expanded social respon-

sibility agenda (Matten and Crane, 2005; Scherer

and Palazzo, 2008). One thing worth noting is that

answers to this perennial question have traditionally

been detached from the cultural, political, and eco-

nomic constellations of society in which corpora-

tions operate. However, as aptly noted by Palazzo

and Scherer (2008), whenever societal constellations

change, the role of business in society will also have

to change.In this context while societal constellations revol-

ving around governance gaps, human rights abuses,

and erosion of powers of governments particularly in

developing countries have attracted attention in the

business and society literature, societal constellations

involving conflict prone-ness have been less system-

atically integrated in the CSR debate. The CSR

literature has generally revolved around voluntary

self-commitments of private corporations in fields

such as the environment, health, education, or human

445Business-Conflict Linkages: Revisiting MNCs, CSR, and Conflict


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rights (Wolf et al., 2007). Within this literature,

business-conflict linkages have been only marginally

addressed mostly in relation to instances of complicity

of corporations in violence or human rights abuses

(Ballentine and Nitzschke, 2004). However, we havewitnessed recently the splintering of calls for broad-

ening the CSR agenda (Warhurst, 2005) to include

also issues relating to investment in responsible busi-

ness-conflict prevention, peace building, and post-

conflict reconstruction (Bennett, 2002; Wolf et al.,

2007).

We believe that conflict mitigation constitutes a

logical extension for the CSR agenda. The con-

temporary CSR discourse, in fact, invites businesses

not only to comply with the laws of the countries in

which they operate but also to embrace voluntarycommitments that reflect specific societal norms and

expectations (Switzer and Ward, 2004). We argue

that in conflict prone societal constellations, social

norms and expectations may dictate a more active

involvement of business in conflict mitigation and

prevention, and that this may constitute a logical

contextually tailored adaptation or extension of the

CSR agenda. This argument is consistent with

recent writings in the business and society literature

positing the politicization of the business firm as

unavoidable in a globalizing world and noting

growing uncertainty both in practice and in scholarlydebates on where the limits of responsibility may lie

for global corporations (Palazzo and Scherer, 2008).

According to Palazzo and Scherer (2006, p. 76),

for a corporation to deal with changing societal

demands in a reasonable way, it must replace implicit

compliance with assumed societal roles and expec-

tations with explicit participation in processes of

political will formation.

The business and society community has thus been

flirting with the idea of extending the scope of

research on CSR and CC to areas of conflict mitiga-tion and security. One clear example is a recent

framework by Wolf et al. (2007) exploring different

forms of corporate engagement in conflict zones,

including a take advantage strategy, withdrawal

strategy, business as usual strategy and proactive

engagement strategy (Table I). The determinants of

these various orientations, however, are not explored

systematically and presented in the form of tentative

conjectures or hypotheses. The authors indeed admit

that none of these strategies have been systematically

tested with regard to their impact and effectiveness, orthe conditions under which they work (Wolf et al.,

2007). Proactive engagement is also the only effective

conflict mitigation intervention identified, but it is

conceptualizedin this framework in the broadest sense

with illustrations provided including good gover-

nance, fighting corruption, nourishing a local sense of

community, in-kind donations, humanitarian relief,

strategic philanthropy, and the pursuit of active con-

flict mediation (two-track diplomacy).

Practitioner business society literature

There has been vibrant practitioner activity sur-

rounding business and conflict/peace. These efforts

started with the UN Agenda for Peace in 1992, in

which Secretary General Boutros Ghali directed

attention to the need for the UN to transform itself

and go beyond missions of peace enforcement and

peace keeping. In his Millennium Report in 2000,

Kofi Anan declared that conflict prevention, post-

conflict peace building, humanitarian assistance, and

development policies need to become more effec-tively integrated, and that the role of business in this

endeavor is crucial, for good and for ill (UN

Secretary General, 2004). The message was that

more systematic efforts were needed to identify

fruitful ways to harness business capacity in the ser-

vice of peace.

Accordingly, we have witnessed the proliferation

of writings in the practitioner literature outlining

factors affecting MNC decision-making in conflict

areas and the various political risks associated with

TABLE I

Forms of business engagement in conflict zones (Wolf

et al., 2007)

Form ofengagement

Description

Take advantage Taking advantage of the economic

temptations of war

Withdrawal Disengagement from a conflict zone

Business as usual Mere compliance with local

regulatory stipulations

Proactive

engagement

Intentional corporate contributions

to public security



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such operations. These are outlined in Table II. These

writings highlight that the investment and operational

decisions of MNCs in conflict zones are influenced by

various risk factors, including the geographic impact

of theconflict, the severity of theconflict, the attitudes

and policies of the government and the opposition,

the industrial sector of the MNC, and the investment

structure established by the MNC. Generic business

costs/risks which companies need to consider when

operating in or planning investment in conflict prone

countries are also addressed in this literature, com-prising political, security, reputation, legal, and eco-

nomic risks and implications (Table II).

Strategies for corporate engagement in conflict

zones have also been considered in this literature, with

a seminal report onthe topic byNelson(2000) entitled

The Business of Peace: The Private Sector as a Partner in

Conflict Prevention and Resolution. In this report, Nel-

son (2000) basically outlines three modes or strategies

of engagement of businesses in conflict areas, namely,

a compliance strategy, a risk minimization or do no

harm strategy, and a value creation or peace building

strategy. These are highlighted in Figure 1. While this

model constituted a significant advance in terms of

mapping out potential modes of business involvement

in conflict zones, it failed to clarify the determinants of

different engagement strategies, a limitation that is

shared with the model proposed by Wolf et al. (2007).

We believe, however, that these limitations can be

potentially addressed through consideration of the

international business political behavior literature.

International business political behavior

literature

The international business and political behavior

literature recognizes that it is critical for firms to

develop political strategies as part of their overall

strategy (Baron, 1995; Oberman, 1993) and that the

success of business in the public policy arena is not

less important than business success in the economic

TABLE II

Factors and risks relevant to MNC decision-making in conflict areas (Berman, 2000; Ballentine and Nitzschke, 2004;

Campbell, 2001)

Salient factorsGeographic impact of conflict Localized/contained versus spread throughout the country

Severity of conflict Territorial, incursional, or terroristic conflict

Attitude and policies of

government and opposition

Business-friendly regulatory environment, close communication

of policies, and government support (e.g., economic incentives

and military activities)

Ideology of opposition groups, hostility towards foreigners and

private ownership of property, attacks on infrastructure that

affect MNC operations

Sector of industry Essential versus discretionary products, technology stability,

supply or market potential

Investment structure Low risk ventures and gradual move to equity investment;

political risk insuranceSalient risks

Political risks Political unrest and/or legal uncertainties

Change of government regime

Expropriation

Security risks Asset damage and personnel wellbeing threatened

Reputation risks Perception or reality of company being involved in moral

and human rights violations

Damaged consumer relations and lower stock prices

Legal risks Legal action against companies claimed to be involved in human

rights abuses or other unethical behavior

Economic risks Extra costs involved in political, security, reputation, and legal risks



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arena (Hillman and Hitt, 1999). There is growing

consensus that firms have been generally expanding

their efforts to affect public policy decisions (Hillman

and Hitt, 1999) and that competent change agents

such as global MNCs constantly seek to shape the

political and social conditions under which they

thrive (Luo, 2006). As per Weidenbaum (1980,

p. 46), public policy is no longer a spectator sport

for business and firms must be proactive to achieve

the objectives and potential benefits from politicalbehavior. The expression political behavior is used in

this literature to emphasize particular ways of relat-

ing to targets located in the nonmarket environment

of firms (Boddewyn, 1988).

Naturally, the overall objective of political

behavior is to produce public policy outcomes that

are favorable to the firms economic survival and

success (Baysinger, 1984). However, firms seek

through political behavior various other related

objectives including increasing overall market size,

increasing their bargaining power, and preemptingthreats (Hillman and Hitt, 1999). Boddewyn and

Brewer (1994) recognize in this respect that political

behavior does not constitute an end in itself for

business firms, although it is an important comple-

ment to economic behavior. For MNCs, political

behavior constitutes an intrinsic part of international

business behavior because political processes inter-

fere everywhere with the allocation of scarce eco-

nomic resources (Boddewyn and Brewer, 1994).

Political behavior is thus increasingly posited in this

literature not as a second best substitute for eco-

nomic behavior but rather an alternative means in

resource allocation/appropriation given that business

firms function at all times as both economic and

political actors (Boddewyn, 1988).

The specific political behaviors that firms can

pursue in the public policy process have received

more systematic attention in this literature.

Weidenbaum (1980) for example, outlines three

general business responses to public policy com-prising (1) passive reaction, (2) positive anticipation,

and (3) public policy shaping. In passive reaction,

firms react post hoc to new legislation but make no

attempt to assume a role in policy formulation or

implementation. Positive anticipation involves fac-

toring government policy into the planning process

of a firm; although this strategy does not include

active participation in the public policy process, it

does denote a more active stance toward it. Public

policy shaping on the other hand entails proactive

behavior undertaken by firms to achieve specificpolitical objectives. Boddewyn and Brewer (1994)

similarly make reference to a portfolio of relevant

corporate political strategies including compliance,

negotiation, evasion, cooperation, coalition build-

ing, and cooptation.

Other studies suggest that an MNCs political

response to public policy signals is made through

either a structural approach (arms length bargaining)

or a social approach (social connections), or both

(Luo, 2006). Hillman and Hitt (1999) similarly

Value Creation /

Peace Building

Risk Minimization /

Do No Harm

Compliance

At the very minimum,

companies should aim to

comply with national

regulations and where

applicable international

laws and standards

Beyond compliance,

companies should aim

to minimize risks/harm

from their operations

Ultimately, firms should aim to

proactively create societal value added

Figure 1. Strategies for managing conflict (Nelson, 2000).



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propose transaction and relational approaches to

political strategy. In their scheme, a transactional

approach is a relatively short-term exchange rela-

tionship or interaction, where firms await the

development of an important public policy issuebefore building a strategy to affect it, whereas a

relational approach denotes a long-term exchange

relationship, where firms attempt to build relation-

ships across issues and over time so that when public

policy issues arise that affect their operations, the

contacts and resources needed to influence this

policy are already in place. For Hillman and Hitt

(1999, p. 829), a relational approach to political

strategies is akin to the development of social capital

that is embedded in continued exchange relation-

ships between parties. Hillman and Hitt (1999) alsodocument the growing use of a relational approach

by both domestic and multinational firms.

Gladwin and Walter (1980) use a particular

framework in describing how social conflicts are

managed by MNCs. This framework consists of two

core dimensions, namely, assertiveness or the extent

to which an MNC deals with policy issues on its

own initiative, influences other parties based on its

bargaining power, and gains control during negoti-

ations and cooperativeness or the extent to which an

MNC interdependently and complementarily works

with others to create an improved environment inwhich business can operate. On the basis of the

intersection of these two dimensions, they outline

five political responses (illustrated in Figure 2)

including collaborative (integration), competitive

(domination), compromise (sharing), accommoda-

tion (appeasement), and avoidance (neglect). They

suggest that only collaboration/integration and

compromise/sharing involve conflict resolution in

the sense that both opposing parties in a social

conflict obtain satisfaction. In practice, collaboration,

however, clearly represents the best form of conflictresolution in the sense of combining high coopera-

tion/assertiveness while fostering tangible winwin

outcomes for all concerned.

Gladwin and Walter (1980) also outline various

factors that affect firm political behavior strategies,

and their inclination to participate in conflict reso-

lution and commit effort and resources. Assertiveness

according to this model is influenced by two such

factors, namely, the stakes placed on outcomes and

the relative power or leverage of the enterprise in

the conflict situation. The authors recognize that

outcome stakes are directly influenced by managerial

perceptions, firm strategy, financial condition, and

urgency (relating to timing of the conflict) and that

management wants to avoid conflicts that damage a

firms distinctive competencies, degree of control, or

unique capabilities. Stakes alone, however, do not

go very far toward suggesting appropriate conflict

strategies without power. The ingredient of powergenerally relates to a firms size, financial base,

human resources, expertise, leadership quality,

prestige, communication and persuasion skills, access

to the media, prior experience in dealing with

conflicts, intensity of commitment, degree of trust

and legitimacy, and risk-taking ability. Relative

power is also affected by the formation of coalitions

with protagonists having complementary objectives.

Cooperation on the other hand depends first on the

interdependence of interests between the multi-

national and its local environment. A cooperativegoal situation is one where the various parties sink or

swim together. One possible source of diverging

interests according to the authors is the incompati-

bility between the global views of management and

national perspectives as well as incompatibility of

goals and means. MNCs are most motivated to

behave in a collaborative manner in situations where

goals and means are positively interdependent.

Effective collaboration is also directly affected by the

quality of relationships fostered by the firm, whereby

Uncooperative Cooperative

BehaviorUnassertive

Assertive

Behavior

Competitive

(Domination)

Avoidant

(Neglect)

Collaborative

(Integration)

Accommodation

(Appeasement)

Compromise

(Sharing)

RelativePowe

r

Low

High

OutcomeStak

es

Low

High

Low HighRelationship Quality

Low HighInterest Interdependence

Figure 2. Determinants of appropriate conflict behavior

(Gladwin and Walter, 1980).



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positive relationships will tend to engender mutual

trust, recognition of the legitimacy of others inter-

ests, open communications, and an increased will-

ingness to respond favorably to the others needs.

These observations are supported by recent researchsuggesting that cooperative corporate behaviors

often arise when interest interdependence is high,

and relationships are positive (Luo, 2006).

Therefore, according to this model, in any given

conflict situation, four critical situational variables

determine the appropriate mix of assertiveness and

cooperativeness and ultimately mould the mode of

firm engagement in conflict management, including

outcome stakes, relative power, interest interde-

pendence, and relationship quality (Table III). The

model of Gladwin and Walter (1980) offers a veryuseful initial step toward fleshing out relevant situ-

ational variables that are likely to determine the

nature of business intervention in social conflict.

Despite their broad conceptualization, we believe

that those situational variables are indeed easily

transferable and readily relevant to discussions of

MNC engagement behaviors in military conflict

zones, and can go a long way in answering questions

and addressing gaps that the business and society

(both academic and practitioner) literature has been

grappling with for some time now. Drawing on this

model, it becomes clear for example that inducingcollaboration or integration of businesses in conflict

zones requires high stakes and power, coupled with

high interest interdependence and positive relations.

We turn attention in the next section to a system-

atic consideration of how the three streams of litera-

ture presented above can be effectively integrated to

help in mapping the array of possible interventions

of business firms in conflict zones. We then use the

framework proposed and the situational variables

fleshed out to examine the nature and expression of

the political involvement strategies of a sample ofMNCs in an actual conflict situation.

Combining the three streams of literature

a proposed framework

Reflecting on the three streams of literature presented

earlier, it becomes clear that there are many com-

monalities and complementarities that can be effec-

tively leveraged to enhance our understanding of the

array of potential business firm interventions in con-flict situations. Our proposed matrix (Figure 3)

therefore attempts to integrate the main typologies of

business engagement in conflict zones on offer in the

academic business society literature (e.g., Wolf et al.,

2007), the practitioner business and society literature

(e.g., Nelson, 2000), and the international business

political behavior literature (e.g., Gladwin and

Walter, 1980; Weidenbaum, 1980).

The horizontal axis of the matrix depicts the CSR

and peace building orientation of business firms,

outlining a low CSR and peace building orientation

(or coping strategy) at one end of the CSR con-tinuum and a high CSR and peace building orien-

tation (or conflict resolution strategy) at the other

end. These orientations correspond in turn to the

various response strategies and forms of engagement

identified in the three literatures examined: Factors 1

and 2 represent the responses identified in the

TABLE III

Critical determinants of corporate engagement in conflict situations (Gladwin and Walter, 1980)

Form ofengagement

Critical situationalvariables

Influenced by

Assertiveness Outcome stakes Managerial perceptions, timing, strategic considerations,

financial condition

Firm relative power and

leverage

Firm size, financial base, human resources, leadership quality,

communication skills, and formation of coalitions

Cooperativeness Interdependence of interests Congruence of goals, compatibility of goals and means,

compatibility of views

Relationship quality Elements of trust, recognition of legitimacy of others interests,

open communications, and willingness to help



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international business political behavior literature,

Factor 3 reflects the response strategies identified in

the practitioner business society literature, and Fac-

tor 4 captures the main forms of engagement iden-

tified in the academic business society literature. At

quick glance, the strong affinities and potential

overlap between the different streams become

readily apparent, particularly Factors 1 and 4.Laying out the factors in this way therefore brings

out the strong parallelism between them, and suggests

that these factors can indeed be used synergistically to

assess the response behaviors of companies operating

in conflict zones. Unlike Factors 24 which have

been presented in the literature to date as tentative

strategies with no antecedent determinants, Factor 1

(conflict behavior) at the top of Figure 3 builds on

two dimensions, namely, assertiveness a function of

outcome stakes and relative power and coopera-

tiveness a function of relationship quality andinterest interdependence. Integrating this factor, and

drawing parallelism from there to the other streams

thus constitutes a step forward in enhancing our

understanding of relevant antecedents of specific

CSR and conflict resolution strategies which have

not been systematically considered in the business

and society literature (academic and practitioner).

In sum, three plausible types of CSR and peace

building orientations (low, moderate and high) are

synthesized in Figure 3 drawing on the relevant

literature. While this constitutes a significant advance-

ment, in practice, the classification process should be

treated with care, given the fluidity of firm responses

in conflict zones, and the difficulty relating to neat

categorizations. For example, a passive reaction

strategy in relation to Factor 2 may correspond to a

business as usual strategy in relation to Factor 4.

Similarly, the accommodation, competitive, andcompromise strategies captured in the middle dashed

boxes of Figure 3 all constitute a moderate CSR and

peace building orientation and distinctions in relation

to their relative intensity are certainly tricky. As per

the original conception of Gladwin and Walter

(1980), compromise was depicted, however, as a

slightly more progressive form of CSR and peace

building orientation because it involves elements of

both cooperation and assertiveness.

Nevertheless, the proposed matrix is likely to be a

useful consolidation with important implications forboth theory and practice. Theoretically, it makes it

clear that better integration of insights from different

streams of literature and more systematic consider-

ation of relevant antecedents are relevant and timely.

The matrix moreover highlights the importance of

consideration of different business firm response

strategies in conflict zones specifically in terms of

their implications for CSR and peace building. At a

more practical level the typology can help firms in

mapping their current strategy/orientation while

1-Relative Power Low Low High Moderate High

hgiHwoLwoLsekatSemoctuO-2 Moderate High

woLhgiHwoLytilauQpihsnoitaleR-3 Moderate High

4-Interest Interdependence woLhgiHwoL Moderate High

Low CSR and Peace Building

Orientation- Coping

High CSR and Peace Building Orientation-

Conflict Resolution (Win-Win)

Moderate CSR and Peace Building

Compromise

Proactive

Engagement

Collaboration

Public Policy

Shaping

Value Creation

4- Forms of

Engagement

3- Strategies of

Managing Conflict

2- Response to Public

Policy

1- Conflict Behavior

Take Advantage/

Withdrawal

Avoidant

Passive Reaction

Compliance

Business as Usual

Accommodation Competitive

Positive

Anticipation

Risk

Minimization

Compromise

Figure 3. Business-conflict linkages: MNC strategies, CSR, and conflict matrix.



10/22

also visualizing the potential range of strategies at

their disposal. The matrix is therefore likely to be

useful for business firms but also policy makers,

practitioners, and the full range of actors that are

involved in conflict resolution activities. In order tosimplify the use of this matrix by practitioners a

summary description of the key conflict reaction

strategies on offer is presented in Table IV.

Background information about Lebanon

Lebanon is a small country located along the eastern

shore of the Mediterranean sea bounded on the

north and east by Syria and on the south by Israel(Figure 4), with a total area of 10,452 square kilo-

meters and a population of around 4 million

inhabitants. Lebanon qualifies as a parliamentary

TABLE IV

Summary description of key conflict reaction strategies

1. Conflict

behavior

Avoidance: Entails ignoring a

conflict situation, exhibiting

low cooperativeness and

low assertiveness

Compromise: Entails trying

to share the burden,

exhibiting moderate

cooperativeness and

moderate assertiveness

Competitive: Entails trying to

dominate in a conflict situation

involving high assertiveness

and low cooperativeness

Accommodation: Entails attempts

at appeasement involving

high cooperativeness and

low assertiveness

Collaboration: Entails a real conflict

resolution strategy involving high

cooperativeness and high assertiveness

2. Response to

public policy

Passive reaction: Entails post

hoc reactions to conflict

with no attempt to assume

role in policy formulation

Positive anticipation: Entails

factoring conflict and

conflict resolution into

the planning process

Public policy shaping: Entails

proactive behavior to anticipate

conflict and mitigate its

occurrence

3. Strategies for

managing

conflict

Compliance: Entails compliance

with national regulations and

where applicable internationallaws and standards

Risk minimization: Entails

seeking to minimize

risks/harms from firmoperations

Value creation: Entails proactively

seeking conflict resolution and

creating societal value added

4. Forms of

engagement

Take advantage: Entails profiting

from economic temptation of war

Business as usual: Entails

compliance with local

regulatory stipulations

Proactive engagement: Entails

intentional corporate

contributions to public

security

Withdrawal: Entails disengagement

from a conflict zone

Figure 4. Lebanons location in the middle east.



11/22

republic with a multireligious/multiparty govern-

ment. Its quasidemocratic political system is based on

power sharing between the countrys confessional

groups with representatives of the three largest reli-

gious sects forming a ruling troika (The EconomistIntelligence Unit, 2007). The grouping of people by

religion plays a critical role in Lebanons political and

social life and has given rise to Lebanons most

persistent/bitter conflicts.

Since its independence from French rule in 1943,

Lebanon has been characterized by large public

freedoms, which have given it a distinctive position

that made it a haven in the region, a place where

different ideas, currents, and trends can thrive and

interact. Peaceful multicultural coexistence, how-

ever, collapsed into violent warfare in the years19751989. The conclusion of the Taef Accord of

1989 led to the reinstatement of security and a

decade of stability and prosperity for a war-weary

nation. However, the political situation has deteri-

orated in recent years, and Lebanon has been the

scene of a wave of violent conflicts, including the

July 2006 war on Lebanon and the 2007 Nahr Al

Bared conflict in North Lebanon.

The July 2006 war, known in Lebanon as the July

War, was a 34-day military conflict between Hez-

bollah paramilitary factions and Israel. The conflict

started on July 12, 2006 and continued until a UNbrokered ceasefire went into effect on August 14,

2006. The conflict began when Hezbollah kidnapped

two Israeli soldiers who were patrolling the Israeli side

of the border fence. Israel responded with massive air-

strikes and heavy artillery fire on targets in Lebanon,

an air and naval blockade, coupled with a ground

invasion of Southern Lebanon. The war which

Lebanon endured killed more than a thousand peo-

ple, most of whom were innocent civilians, displaced

around a million Lebanese, and severely damaged

civilian infrastructure, including ports and airport.Lebanon has equally endured a contained conflict

in 2007, known as the Nahr Al Bared conflict,

which erupted in May 2007 between Fatah Al Islam,

an Islamist militant organization associated with

Al-Kaida, and Lebanese armed forces in the Nahr Al

Bared, an UNRWA Palestinian refugee camp in

North Lebanon. Fatah Al Islam is alleged to have been

planning a plot against the Lebanese army, using the

Palestinian camp as a base and subsequently as a siege.

This was a violent yet contained conflict which

continued unabated until early September, with the

Lebanese armed forces taking full control of the camp,

eradicating remaining terrorist pockets, and declaring

victory.

Aside from those two conflicts, Lebanon haswitnessed a very tense political climate in recent

years and a serious political stalemate. The fer-

menting of this stalemate started with the assassina-

tion of former Prime Minister Rafik Hariri in

February 2005 and the assassination in 2006/2007 of

other key political figures and cabinet ministers, who

share in common an anti-Syrian orientation. A

deepening political schism that polarized the Leba-

nese society and heightened its political sensitivity

has subsequently evolved. It is in the context of this

turmoil and instability that the research presentedhere should be understood and framed. We con-

ducted our interviews in the months of MayJune

2007 in the aftermath of those two conflicts (one

internal and one external) and the wave of political

assassinations and scattered bombings. We tried to

explore the conception of a select sample of MNCs

operating in the country of various facets of busi-

ness-conflict linkages, as well as their assessment of

the critical situational variables integrated into our

matrix. The research methodology is presented,

followed by the main findings and their implications.

Research methodology

The empirical component of this article capitalizes

on in-depth interviews with managers of seven

multinational companies operating in Lebanon to

gauge their perceptions of business-conflict rela-

tionships and their actions prior to, during, and

postconflict situations. A special emphasis was

accorded to the latest conflict/war that took place in

Lebanon in summer 2006 as a consequence of theIsraeli attack on Lebanon. A purposeful sampling

approach was thus adopted involving contacting

leading MNCs who have some documented CSR

orientation or community involvement and were

also operating in the country during the recent

conflict. We aimed at industry leaders from different

lines of business to represent the sector they operate

in. Given that Lebanons most important area of

economic activity has historically been services

(Economist Intelligence Unit, 2007), we decided to



12/22

focus on the service sector. As such, 12 MNCs were

initially contacted and 7 agreed to take part in the

research. The studied sample thus came to consist ofseven MNCs, operating in the banking, logistics/

shipping, telecommunications, hospitality, advertis-

ing, and fast food sectors, respectively (Table V).

According to Strauss (1990) elite interviews are

particularly appropriate when the research objective

is to understand complex interactions, diffuse pro-

cesses, perceptions, beliefs, and values that are tacit.

Our research sample fits the description of an elite

sample, given that we targeted key informants or

opinion leaders representing MNCs in their

respective sectors. Elite interviews are designed to

ascertain how decision makers understand phe-nomena in question, their meaning to them, and

what they consider relevant and important (Strauss,

1990). They generally draw on semi-structured

interviews to elicit narratives that are particularly

useful when one cannot be sure about the code,

norm, affect, or interpretation that are guiding actors

in their decision-making process (Strauss, 1990).

As we contacted MNCs by phone, we inquired

about the key informant responsible for CSR within

the company. A formal introductory letter high-

lighting the aims of the research and its queries wassent to the designated informants. An in-depth

interview was then scheduled with each manager or

key informant and conducted by the authors during

the months of May and June 2007. The managers

interviewed occupied mostly positions of commu-

nications officers and managing/business directors

(Table VI). None of the companies had a dedicated

CSR official or a CSR office and the interviewees

positions clearly reveal that CSR in Lebanon is still

confined in the sphere of top management and

corporate communications without infiltrating

extensively in companies organizational structures

(Jamali and Mirshak, 2007).The interviews were conducted in English, con-

sumed 2 h on average, and were tape-recorded and

transcribed. Follow-up phone calls were made in

some cases to clarify pending points or to collect

specific additional data. The research made use of

semi-structured interviews whereby an interview

guide was prepared based on the literature review

and designed to elicit prompts to broad themes or

questions. Specifically, we sought to inquire in our

interviews about three broad areas (Table VII),

namely, (1) perceptions of risk factors and risk

management approach as important backgroundinformation (Table II), (2) the perceived salience of

the four critical situational variables outlined in the

literature review as determinants of conflict behavior

orientations (Table III; Figure 3), and (3) MNC-

specific actions and behaviors prior to, during, and

postconflict situations. This allows drawing pre-

liminary correlations between perceptions of situa-

tional variables or antecedents and actual business

TABLE V

Sample profile

Company Reach Industry/Activity

HSBC International Banking and financial services

Citibank International Banking and financial services

Maersk International Logistics and shipping

MTC International Telecommunications/Mobile communication operator

Movenpick Resort International Hotel/Hospitality

McDonalds International Franchise Fast food

Memac Ogilvy International Advertising

TABLE VI

Interviewee position

Company Interviewee position

HSBC Senior Communications Officer

Citibank General Manager

Mearsk Human Resources Manager

MTC Corporate Communications Officer

Movenpick Resort Resident Manager

McDonalds Managing Director/Partner

Memac Ogilvy Business Director



13/22

firm strategies in conflict situations as proposed in

our typology (Figure 3).

The themes illustrated in Table VII therefore

provided a common stimulus around which inter-pretive comparisons could be made, with the option

available to explore in more depth areas of signifi-

cance to particular interviewees. While some of the

questions yielded factual information (e.g., actual

behaviors and responses in conflict situations), others

allowed significant room for interpretation (e.g.,

perceptions of salience of various situational vari-

ables). The interviews involved open and candid

discussions, despite the reluctance, apprehension,

and unease of managers in addressing some ques-

tions, which is understandable given the sensitivity

of the topic and the charged political milieu. It is

important to point out in this respect that in some

cases, some managers expressed a preference or

desire not to answer specific questions which was

also reluctantly accommodated.

Following the transcription of the interviews and

the compilation of a case study relating to each com-

pany, a separate analytical effort involving each author

focused on detecting commonalities or patterns of

agreement/convergencein the statements providedin

relation to the basic dimensions outlined in Table VII;

areas of divergence were equally noted, debated andhighlighted. The analysis of the data collected

regarding perceptions of the importance of various

situational variables and actual behaviors and

responses followed an iterative analytical process,

involving cycles of deductive and inductive theory

testing and a comparison of the data with theory

(presented in our models) throughout the data col-

lection/analysis process. Theory helped direct atten-

tion to important dimensions with the actual data

collected helping to shed light simultaneously on the

theorys suitability in light of the new data.

The research is, of course, prone to the standard

methodological limitations of qualitative fieldwork,

although every effort was made to mitigate theireffects. Subjectivity in interpretation is inherent to

qualitative analysis (Patton, 2002). This was miti-

gated in part by having independent analysis

undertaken by the two authors and subsequent

agreement on areas of substantive significance.

Nevertheless, we realize that some inherent limita-

tions cannot be alleviated stemming from the single

country investigation and the small sample size. The

small sample size can be somewhat justified by the

sensitivity of the topic and the timing of the research

which implied that many companies were notencouraged to participate. Nonetheless, the small

size of the sample is compensated for by the superior

choice of the participating companies which are

industry leaders and could be used as a good infer-

ence and benchmark. In addition, it is worth noting

that the small sample size is justified by Lebanons

relatively small economic sector (Economist Intelli-

gence Unit, 2007) which is by far smaller than other

regional markets like Egypt or Turkey for example.

Empirical evidence derived even from a small sample

size is likely added value and to have wider impli-

cations given the scarcity (virtual absence) ofempirical research relating to the topic.

Research findings

This section portrays and analyzes the information

gathered from the organizations along the three core

dimensions illustrated in Table VII to derive a better

understanding of the multidimensional role of MNCs

in conflict zones and their perceptions of business-

conflict linkages. The findings are aggregated wherefeasible, with convergence/divergence highlighted at

every turn, and direct quotations used as appropriate

to illustrate important points in the exact words of the

managers, but the identities of the managers are con-

cealed for anonymity reasons. As illustrated below, the

interviews provided interesting and fruitful insights

regarding perceptions of business-conflict linkages as

well as perceptions of viable conflict management

strategies and their determinants.

TABLE VII

Dimensions studied

1. Analysis of factors and risks affecting MNC decision-

making2. Perceptions of salience of situational variables relating

to stakes, power, interest interdependence and nature of

relations

3. Actual behavior and responses to conflict and strategies

of corporate engagement



14/22

Analysis of risk factors

In terms of risk analysis, in almost all cases, companies

performed annual business planning in which they

incorporated the risks of the unstable political situa-tion in Lebanon and the region. However, a war

scenario was considered farfetched by all companies.

According to one of the interviewees, we use a

structured scenario planning risk analysis model, yet

we considered the possibility of war at that specific

juncture as remote at best. Some companies had crisis

or emergency guidelines yet found themselves ill-

prepared when the conflict erupted. According to one

manager we have a crisis manual but did not feel

prepared as the war started. Therefore, all businesses

were admittedly taken by surprise by the July 2006war. While better analysis of risk is warranted, the lack

of preparation in this case is not surprising, given the

rapid deterioration of the situation, with the kidnap-

ping of two Israeli soldiers by Hezbollah on July 10

and the Israeli attack on Lebanon breaking out full

fledged within 2 days.

The three main factors affecting decision-making

in conflict prone areas as cited by therespondents were

the geographic impact of conflict, severity of the

conflict, and the sector of the business/industry. The

geographic impact and severity of the conflict in

question were emphasized by many participants.Several managers aptly pointed out, however, that

even the less severe/more localized conflicts like those

that took place very recently in the Nahr Al Bared

Palestinian Camp in the North of Lebanon between

the Lebanese army and terrorist Al-Kaida factions

have an impact on the business climate due to the

overall skeptical mood they create in light of extensive

media coverage. According to one manager, all

conflicts whether localized or more extended distort

underlying political and economic dynamics. This

recent conflict although it was geographically distantfrom the commercial capital, Beirut was enough

according to managers to scare off tourists, undermine

confidence in the economy, and affect purchasing

patterns.

The sector/industry was also considered salient by

all managers. Although all businesses stated that the

overall economic downturn associated with conflict

negatively affected their operations, some were more

affected than others depending on their line of

business. Making reference to the recent July 2006

conflict, Memac Ogilvy claims to have been severely

affected because advertising budgets are immediately

cut when businesses come under pressure. The

Movenpick hotel was affected because of travel bans

to Lebanon, the closing of the Beirut InternationalAirport, and the disruption of the flow of tourists in

the peak summer season. Maersk has also been

directly affected in view of its line of business

relating to shipping and the closing off of the Beirut

port for the entire duration of the war (over a

month). Generally, all service provision was severely

disrupted and as articulated by one manager the war

no doubt affects the whole country but we were hit

hard as service providers.

Regarding risks associated with conflict, the

managers mentioned facing mainly economic, secu-rity and political risks, and costs. The economic

downturn prior to, during, and postwar had a major

impact on the revenues and profitability of most if

not all participating companies. McDonalds, for

example, had to shut down temporarily some of its

branches which were close to the war zones and

its overall revenues decreased. MTC transmission

equipment/stations were hit and the company lost

important physical assets. Maersk has also been di-

rectly affected in view of its line of business relating to

shipping and the closing of the Beirut port with this

temporary disruption considered as having seriousimplications for the bottom line. Citibank and HSBC

were less severely affected due to the nature of the

service they provide (banking); yet they also faced

loan payment defaults from their customers.

Despite perceptions of various risks, none of the

companies interviewed chose to exit the country.

Some managers attributed this to a sense of

responsibility vis a vis the country and its citizens.

According to one manager, we are one of the top

three hotels, and we seriously considered the kind of

vibe or message we would be sending if we shutdown. Other managers attributed the decision to

stay to their confidence in Lebanons postwar

recovery and future economic prospects. As put by

one manager, Lebanon has a special charm/cha-

risma in the Arab World that attracts investors and

tourists which leads to a speedy economic recovery

in post-conflict situations. One manager men-

tioned that Lebanon continues to be an attractive

market despite its risky profile and constant political

tensions, which reflects a vote of confidence in



15/22

Lebanons future and may have a ripple effect over

time in terms of bolstering stability.

Salience of situational variables

All companies perceived outcome stakes to be high,

particularly in the July 2006 war, and to pose threats

both directly and indirectly to their degree of control

and competitiveness and even their continued

operation and existence. As put by one manager,

we realize that violent conflict can pose a serious

threat to our profitability, survival and growth in

view of the manifold disruptions and complica-

tions. While stakes are also related to the financial

condition of the MNC and the timing of the con-flict, managers did not share detail regarding finan-

cial condition aside from pointing to the serious

financial repercussions of the conflict in question and

the untimely escalation of violence, in the midst of

the high peak summer season. It is clear, however,

that from a business perspective, stakes were con-

sidered high in the Lebanese context, considering

bottom line implications given that all MNCs in the

sample had been operating in the country for many

years and had moved toward high-risk investment

structures.

In terms of power position, most managersadmitted that their companies leveraged core power

ingredients, including strong financial base, human

resources, expertise, leadership quality, access to the

media, and strong communication and persuasion

skills. Several managers, however, pointed to a

perceived decline in their relative power positions in

times of violent conflict and their perceived help-

lessness as business actors to contribute effectively to

political debates and outcomes. This perceived low

bargaining power was attributed by some managers

to small subsidiary size but the majority of managersattributed this low perceived power to limited

experience with military conflict resolution and their

neutral, apolitical stance in their countries of oper-

ation. According to one manager, we are here, but

we dont have the jurisdiction to interfere with

politics or military conflict situations; we are a sep-

arate entity.

On the other hand, convergence of interests

between the MNCs and the government as well as

innocent Lebanese civilians was reported at face

value as high by most managers, in the sense that all the

parties were destined to sink or swim together in

violent conflict situations. Further probing however

clearly illustrated the perceived incompatibility of

goals and means in the sense that most MNCs con-ceived that the means and expertise available at

their disposal were not easily transferable to conflict

situations. According to one manager, we create

economic opportunities, employment, and are com-

mitted to philanthropic and humanitarian relief efforts

but find it inconceivable to interfere in any other

capacity. There was also a reported sense of absence

of a synergized collaborative approach to conflict

management by business firms, which acted as a fur-

ther deterrent to intervention. As expressed by one

manager unlike for the Tsunami for example, orunlike September 11, there was no synergized

approach and companies did not want to intervene or

help each other in addressing the evolving crisis.

Relationships with the government were described

in the majority of cases as positive, based on mutual

trust and respect, although this factor was not con-

ceived as very relevant given the perceived goals and

means incompatibility reported earlier. Various

managers pointed in this respect to the positive ori-

entation of the Lebanese government toward MNC

overtures and investments. However, several man-

agers also aptly pointed out that given the globalnature of their business, interference in conflict

negotiations may have implications for their opera-

tions in other countries. Hence, while they were keen

to maintain positive relationships with the Lebanese

government, most were explicit about their deter-

mination to refrain from taking sides given potential

global repercussions. We are a multinational with

global operations and therefore any stance or action in

conflict situations can be magnified and can have

serious implications. Concerns about the implica-

tions of taking action are another example of goals/means incompatibility.

These qualitative responses are compiled and tab-

ulated in Table VIII, which illustrates managerial

perceptions of the salience of the four critical situa-

tional variables identified. While it is difficult to assign

accurate values given the qualitative (and subjective)

answers derived, it was nevertheless possible to detect

ranges (e.g., moderate to high) based on the patterns

and direction of answers obtained. It is clear from

Table VIII that the MNCs in the sample are likely to



16/22

exhibit mostly moderate assertiveness and coopera-

tiveness behaviors given the qualitative assessment

provided in relation to the core situational variables.

We try to triangulate or corroborate these preliminary

observations by comparing against the actual

responses or behaviors of the companies in conflicttimes, which are fleshed out in the following section.

Actual behavior and responses

As mentioned earlier, the war scenario was an

unlikely one to most businesses and even to the

general public in spite of the political turmoil Leb-

anon has been experiencing in the past 3 years since

the assassination of Former Prime Minister Rafik

Hariri in 2005. Added to that, the boom in the

Lebanese stock exchange, construction sector, and

the growth in the tourism sector one of Lebanons

most important economic drivers made investors/

managers bullish about the countrys future. Hence,

the reactions of most if not all companies were rather

unplanned/improvised, matching the shock that

everyone felt when the war erupted. Day-to-day

decisions during the war were made by department

heads/managers in an emergency room setting in

most businesses. All firms introduced necessary

adjustments and measures and were back to business

as usual within few days even when it was not thatusual. According to one manager, it was more or

less regular business, even under the most unusual

circumstances entailing war, bombs and bullets.

None of the businesses chose to interfere or get

directly or even indirectly involved in the conflict.

Several respondents attributed thisneutral position and

explicit noninterference policy to their belief that

businessesby defaultare nonpolitical entitiesandhence

have no role to play as such in conflict situations.

As expressed by one of the managers interviewed,

business is a neutral actor, by definition. All

respondents also overtly expressed in the interviews

and made it a point todo so that they do not support

any political faction, not even the current investment-

oriented government. One manager expressed thefollowing please make note of it, we are neutral, non

politicalwhateveryou want to call it; we dont support

any political faction nor wish to be dragged into

political squabbles or discussions.

In terms of actual responses to conflict, all com-

panies with no single exception stressed that their

main focus and concern during the war was the

security/safety of employees. As such, some

employees worked from home, others were given

work space in safer areas within the country to

continue work or were relocated to other countries.

In some cases employees were given alternative

lodging to enable them to report to work. Accord-

ing to one manager, we provided many of our staff

members who live in the Dahye area, which was

heavily bombed, rooms in the hotel during the war

period. MTC gave its entire staff two salary

advance payments and housed many members of the

public from bombed areas who took refuge in a

nearby park.

That being said, the conception of the link between

MNC operation and war situations did not extend

beyond ensuring staff wellbeing and safety, providingthe business product/service reliably while perform-

ing some relief work in the community as appropriate.

The MTC manager highlighted the fact that during

the war they extended the validity for their prepaid

calling cards, postponed the payment deadline for

their postpaid customers, and added a service that

enabled relatives of customers to recharge the calling

cards of their relatives in Lebanon from abroad. Other

participants also shared examples related to their

TABLE VIII

Perceptions of critical determinants of corporate engagement in conflict zones

Form of engagement Perceptions of critical situational variables

Assertiveness Outcome stakes Moderate to high

Firm relative power and leverage Moderate to low

Cooperativeness Interdependence of interests Moderate to low

Relationship quality Moderate to high



17/22

businesses confirming limited gestures and interven-

tions.

Businesses thus clearly did not take proactive

measures in pursuit of conflict resolution. Yet, many

respondents stressed that their companies played anindirect role in conflict alleviation, through their

deliberate continuation of operations and payment of

salaries to employees during the war, which alleviated

economic and social distress. Hence, corporate con-

tributions to conflict mitigation were mostly con-

ceived through core business operations. Several

managers also emphasized their war management

activities directed toward employees, customers, and

in some cases the community as evidence of their

responsible inclination during conflict. Philanthropic

contributions, in the form of monetary and in-kinddonations, were also mentioned as important during

the postwar reconstruction phase.

It is also possible to classify these strategies in rela-

tion to various phases of the conflict. In the preconflict

stage, all managers emphasized that they have con-

tributed to conflict mitigation through their day-to-

day core business operations. During the conflict,

many companies stressed seeking to continue pro-

viding their service reliably in addition to the help

provided to employees and in some cases the local

community. In the postconflict stage, managers

highlighted their philanthropic programs and contri-butions, in terms of monetary and/or in-kind dona-

tions to the refugees or businesses that were directly

affected. For example, Citibank has provided mone-

tary assistance to some businesses affected by the warin

the South. MTC has initiated a fund raising campaign,

during which customers can donate money by send-

ing messages, and MTC would match these contri-

butions by equivalent donations.

Discussion of findings

The empirical part of this article makes it clear

that conflict situations have enormous detrimental

impacts for businesses, and that the costs and risks are

serious and have bottom line implications. The

MNCs included in this study were taken by surprise

by the recent July 2006 war and were ill-prepared in

terms of risk management/analysis. Most tried to

cope with the one-month evolving conflict through

improvisation, and priority attention was accorded

to the safety and security of employees, in addition

to intermittent measures to assist the local commu-

nity. In the postconflict stage, several companies

tried to contribute to postwar reconstruction efforts

through in-kind or monetary contributions. Asidefrom such philanthropic donations and humanitarian

relief, we noted no effort on the part of firms in this

sample to initiate reconciliation strategies to alleviate

the possibility of the outbreak of another wave of

violent conflict.

Referring back to Figure 3, Factor 4, the MNCs

in the sample clearly refrained from a take advan-

tage strategy or withdrawal strategy, opting rather

mostly for a business as usual strategy. In-kind

donations and humanitarian relief efforts may be

considered as modest attempts at proactive engage-ment. In relation to Factor 3, all firms appear to have

opted for compliance and risk minimization/do

no harm strategies by adhering to the rules of the

country and abiding by the standards and values of

their companies as reflected in their policies, proce-

dures, and codes of conduct. There was no evidence

of any initiative, however, toward effective peace

building or value creation (involving, for example,

efforts at engaging in stakeholder consultation, policy

dialog, advocacy and civic institution building, or

collective action with other companies). In relation

to Factor 2, the findings suggest that MNCs in thesample exhibited political strategies which qualify

mostly as passive reaction or in some cases as

positive anticipation (as in more systematic at-

tempts in recent years by some of the companies at

risk assessment and management), but there was no

evidence of public policy shaping in relation to

conflict as in attempts to build relationships across

issues and over time and to have proactive precon-

ceived engagement strategies in place, despite Leba-

nons history of protracted and intermittent conflicts.

More insights can be derived, however, whenconsidering Factor 1 in Figure 3 relating to modes of

conflict management and the situational determi-

nants of conflict strategies. In relation to Factor 1, it is

clear that the behaviors of MNCs in the sample

materialized mostly in the form of compromise

(moderately assertive and moderately cooperative)

or what Gladwin and Walter (1980) refer to as

sharing strategies. These sharing strategies reflected

in business as usual in most cases, coupled with

moderate efforts at philanthropic and humanitarian



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relief in the context of the conflict situation

encountered. The selection of this compromise or

sharing strategy can, in turn, be justified or under-

stood when considering reported perceptions of the

relevant situational variables examined. Firmsreported in this respect mixes of positive and negative

reactions to dimensions of outcome stakes, power

advantage, interest interdependence, and quality of

relations, which translated into mostly compromise

or sharing political behavior strategies by the MNCs

and a moderate CSR and peace building orientation

as depicted on the horizontal axis in our matrix

(Figure 3).

It is worth noting in this respect that the assess-

ment of situational variables we obtained through

the empirical fieldwork points to an interesting newcombination of high outcome stakes, low relative

power, low interdependence, and high relationship

quality, corresponding in the aggregate to a com-

promise strategy, although it does not exactly rep-

licate the presentation of these four situational

variables as moderate in Factor 1/Figure 3. This is

very interesting, suggesting that different combina-

tions of these situational variables are also plausible

for this middle ground conflict response strategy

(i.e., compromise). It is also common sense sug-

gesting that the two components of the assertiveness

and cooperativeness dimensions are respectivelyaggregative. In other words, high outcome stakes

and low relative power translate when aggregated in

our case into moderate assertiveness and high rela-

tionship quality and low interdependence translate

when aggregated into moderate cooperativeness.

This is a possible iteration to the situational variables

in Factor 1 of our matrix, highlighting a range of

new scenarios and possibilities.

Dwelling further on these situational variables, it

becomes clear that perceptions of high outcome

stakes are not sufficient to induce MNC engage-ment/active collaboration or in other words a high

CSR and peace building orientation in Figure 3.

These have to be supplemented by perceptions of

strong bargaining power and congruence of ends and

means in the context of high interest interdepen-

dence. The MNCs interviewed perceived their

bargaining power to be low given their limited

experience with military conflict resolution. They

also considered in this respect that they did not have

the means to intervene, given the apolitical stance

adopted across the sample and legitimacy concerns

associated with taking action. Interestingly, percep-

tions of interest interdependence were low because

of incompatibility of goals and means but also be-

cause firms failed to take note of their own inter-dependent interests and collaboration potential.

According to Ballentine (2004), business is better

suited to competition but the culture of competition

needs to be reconciled with the imperative of

cooperation.

Reflecting further on the findings, it is clear that the

MNCs in the sample still conceive of themselves as

mostly exogenous to society and its dynamics, polit-

ical, or otherwise. Indeed, as reported by one of the

managers interviewed, we are a separate entity.

They stick therefore to their neutral stance, insistingthat firms should not get involved in politics. But

according to Schouten (2007, p. 19), companies can

not operate neutral. The very fact that a company

conducts activities within a political environment

makes it a political actor. It is also clear that MNC

subsidiaries mostly conceive CSR in terms of invest-

ment and income creation as well as various philan-

thropic gestures. All managers characterized CSR in

terms of providing jobs, creating wealth, good

employment practices to assure gender or ethnic

equity, and philanthropy to benefit victims of vio-

lence or support relief organizations. We detected inthis respect little appreciation of the broader meaning

of CSR and little consideration of the greater

responsibility expected from MNCs in terms of

mediation, reconciliation, and peace building in

conflict zones.

While operating in a zone of conflict is indeed a

special situation, business professionals need to be

more security conscious and to undertake roles

pertaining to peace building as an essential element

of successful business operations (Bennett, 2001).

This is because companies have the power andresources to pursue winwin outcomes and produce

situations of positive peace where violence is not

merely avoided but the causes of violence are actu-

ally mitigated (Oetzel et al., 2007). Larger firms

have the experience, the financial slack, and greater

access to human, technological, and organizational

resources. The findings suggest however that MNCs

failed to appreciate that economic power often

translates into significant bargaining power vis a vis

host country stakeholders. Reasoning along these



19/22

lines would therefore suggest that MNCs are indeed

relevant actors in conflict zones and that responding

constructively and proactively to violent conflict is

not only an appropriate risk management strategy

but also an opportunity for positive sum outcomesfor all stakeholders.

Various practical suggestions for business firms,

practitioners, and policy makers can therefore be

derived from this research. It is clear to begin with

that MNCs operating in conflict zones should con-

sciously focus at all times on issues which address

the root causes of conflict, including institution

building, anticorruption measures, poverty eradica-

tion, human rights promotion, and security sector

reforms. But aside from these activities, a broadened

conception of CSR would entail that MNCs oper-ating in conflict zones need to focus on conflict-

specific activities including an effort at understanding

the underlying drivers and structural causes of vio-

lence, monitoring conflicts, providing early warning

and insights into a particular conflict, carrying out

education/training for conflict resolution, and pav-

ing the way for reconciliation. Bennett (2001) out-

lines in this respect six basic principles through

which business can make a positive contribution to

conflict prevention, including (1) strategic commit-

ment, (2) risk and impact analysis, (3) dialog and

consultation, (4) partnership and collective action (5)evaluation, and (6) accountability.

It is also possible to classify plausible business firm

interventions in relation to the various stages of

conflict. In the preconflict stage, firms can focus on

preventive diplomacy, fact finding, and risk assess-

ment. This is a form of indirect involvement in-

tended to mitigate the root causes of conflict so that

a situation becomes less violence prone. Firms can

opt for direct or indirect action during a conflict

situation. Direct action would entail mobilizing

various networks and dependencies in an attempt tostop the violence, as for example, in direct negoti-

ation efforts or convening the adversarial parties in a

neutral setting. Less direct action would entail third-

party arbitration, mediation, negotiation, concilia-

tion, and problem solving. In the postconflict stage,

firms can support postconflict reconstruction and

reconciliation by participating in rebuilding infra-

structure and investing in key productive sectors,

thus contributing to fostering conditions of nor-

mality and macroeconomic stabilization.

It is also important to emphasize based on this

research the usefulness of multiactor conflict reso-

lution methodologies in the resolution of conflicts

and disputes. The findings suggest that firms in the

sample failed to take note of the fact that their rel-ative power could be increased through collective

action. However, as suggested by Ballentine (2004),

the culture of competition needs to be reconciled

with the imperative of cooperation. While taking

initial steps to identify partners may be challenging,

there is little doubt that negotiation, arbitration, and

mediation are more effective if carried out collabo-

ratively. By engaging a broader range of groups and

individuals, and mobilizing key networks and inter-

dependencies, pressure on official actors is magni-

fied and the likelihood of true conflict resolutionbecomes possible. On the basis of all the foregoing, it

is clear that there is ample room for more proactive

engagement of MNCs in conflict zones and f

business conflict linkages

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