Metodología Experimental

During the few last decades, national economic markets have become increas- ingly a part of an international market. This has been stimulated by the emergence of the European Union (EU) and other regional economic free trade unions.1 Pressure to open up domestic markets has also been exerted by international organisations such as the World Trade Organisation (WTO), the World Bank and the International Monetary Fund (IMF).2 In general, politi- cians in most countries support the concept of free trade on an international scale and free competition between companies from any part of the world.

Indeed, today, local shops in India, Ghana, Argentina and the Netherlands evidence the fact that we live in a truly international market place: all of them stock foreign products or products produced from foreign ingredients. Not only is Nutricia baby milk powder widely available, also rice and mobile telephones move around the world, as does waste. Financial markets are also heavily interwoven, e.g. Chinese sovereign funds back the American deficit, the

1. The surge in regional free-trade agreements (RTA) has continued unabated since the early 1990s. Some 462 RTAs have been notified to the GATT/WTO up to February 2010. On that same date, 271 agreements were in force. See: at http://www.wto.org/english/tratop_ e/region_e/region_e.htm, accessed on 2 June 2010. Besides the EU, among the best known RTAs are: The European Free Trade Association (EFTA), The North American Free Trade Agreement (NAFTA), The Southern Common Market (MERCOSUR), The Association of Southeast Asian Nations (ASEAN) Free Trade Area (AFTA), and The Common Market of Eastern and Southern Africa (COMESA).

2. J. Stiglitz, Globalisation and its discontents (Penguin Group: London 2002); R. Peet,

Unholy trinity. The IMF, World Bank and WTO(Zed Books: London 2003); J. De Kort,

‘What’s in it for us? Globalisation, international institutions and the less developed countries’ and T.E. Lambooy,‘Sustainability Reporting by Companies is Necessary for Sustainable Globalisation’ (pp. 215-237), both in: E. Nieuwenhuys (ed.), Neo-Liberal Globalism and Social Sustainable Globalisation(Brill: Leiden/Boston 2006).

EURONEXT and NYSE stock exchanges have merged, and Dutch banks finance the diamond industry in Africa and are involved in Greek state bonds. The financial crisis which started in 2008 is only one of the features of international financial entanglement.

The internationalisation of markets has been supported by technical devel- opments in transport and communication. As air transport became faster and cheaper, it has become feasible to order fruit and flowers in Africa and sell them as ‘fresh’ products in Europe. The rapid emergence of the online world has facilitated companies in placing orders abroad. Hence, cargo volumes travelling by air, sea, road or railways have increased exponentially. Within the same framework, outsourcing has become a trend.

International competition between private actors has also increased because of privatisation, which has proved to be a persistent phenomenon. Electricity generation and distribution in Europe, airports in Africa, State companies in China and Russia, telecom in Indonesia, prisons in the United States and corporate private security forces everywhere, all have been sold off to private parties. Companies from everywhere have stepped into areas of activities that used to be locally managed.3

Globalisation incites the drive for companies to merge with foreign companies,e.g.to get an easy introduction into a new market, or to bring the products closer to the buyers. In the last century, European banks, insurance companies and food companies acquired large retail chains in the United States (US).4 Oil and gas and mining companies such as Exxon, Rio Tinto and Chinese State companies absorbed local companies in many of the world’s countries in order to get closer to their resources. Google set foot in China. Mergers and acquisitions of an international dimension also included the takeovers by the Indian companies TATA and Mittal of the European steel companies Arcelor and Corus. Investments also come from all parts of the world: Middle-Eastern sovereign wealth funds hold stakes in the German car industry and some European banks.5 On an international scale we see that

3. T.E. Lambooy, supra note 2, pp. 216-217; S.H. Safri Nugraha, Privatisation of state enterprises in the 20th century a step forwards or backwards? A comparative analysis of privatisation schemes in selected welfare states (2002). This study compares certain privatisation processes in the United Kingdom, the US and Indonesia, http://irs.ub.rug.nl/ ppn/241140757, accessed on 26 June 2010.

4. E.g. ABNAmro, Aegon, Ahold, respectively, a Dutch based bank, insurer and a food company. By 2010 parts of the US retail chains have been sold.

5. In August 2009, the state of Qatar’- Qatar Holding LLC has invested in the German automotive companies Volkswagen AG and Porsche SE (it owns 17 per cent of the ordinary shares). It also owns 7 per cent of Barclays Bank and Harrods in London. See Volkswagen’s Annual Report 2009, at http://annualreport2009.volkswagenag.com/ managementreport/sharesandbonds/sharepricedevelopment.html; and Zawya Business Development, ‘Qatar Holding signs MoU with VW and Porsche’, 16 March 2010, at http://www.zawya.com/Story.cfm/sidZAWYA20100316042211/Qatar%20Holding% !

mammoth conglomerates have come into existence. International merger waves alternate with periods in which forces dominate to break up companies and to sell off non-core business parts. Economists have identified five merger waves during the last century, of which the last one took place between 1995-2000. Each subsequent one appeared to lead to bigger corporate conglomerates.6

The resulting extensive international corporate networks and supply chains necessitate international tax planning. Tax specialists advise companies on how to structure their conglomerates in order to reduce their overall tax burden. This often leads to the incorporation of new corporate entities in tax free zones or low tax regions via which money flows circulate around the world. For outsiders, transnational corporate structures have become very impossible to understand.7As companies operating internationally tend to become bigger and bigger, and to operate virtually in any country of the world, they are commonly referred to as‘multinational companies’(MNCs).

Statistics evidence that many MNCs can be ranked alongside States in the top 100 largest economies.8 These MNCs encompass large international net- works with very strong economic bargaining power,9 and are consequentially capable of influencing local economies and even politics. MNCs use their

20signs%20MoU%20with%20VW%20and%20Porsche%20; Beurs.nl, ‘Barclays onder druk door verkoop aandelen Qatar Holding’, 20 October 2009, at http://www.beurs.nl/ nieuws/buitenland/3014462/barclays-onder-druk-door-verkoop-aandelen-qatar-holding; sites visited on 2 June 2010.

6. H. Schenk, ‘Mergers and concentration policies’, in: Patrizio Bianchi, Sandrine Labory,

International handbook on industrial policy (Edward Elgar Publishing: Northampton, Mass., 2006), pp. 153-155.

7. See e.g.F. Weyzig and M. van Dijk, Tax Haven and Incoherence in Dutch Government Policies? Stichting Onderzoek Multinationale Ondernemingen (SOMO), Centre for Re- search on Multinational Corporations, (Amsterdam, 2007), at: www.somo.nl, accessed on 4 June 2010.

8. Research carried out in 2000 showed that of the world’s 100 largest economic entities, 51 are corporations and 49 are countries. The figures were based on the following sources: Sales: Fortune, 31 July 2000; GDP: World Bank, World Development Report 2000. See S. Anderson and J. Cavanagh, Report on the Top 200 corporations (Institute for Policy Studies 2000), at http://s3.amazonaws.com/corpwatch.org/downloads/top200.pdf, visited on 2 June 2010.

9. Seee.g.W. Robinson and J. Harris,‘Towards A Global Ruling Class? Globalisation and the Transnational Capitalist Class’,Science & Society, Vol. 64, No. 1, Spring 2000, 11-5411. Based on information by the ILO, they point out that the increased flows of direct investment have been accompanied by the growth of globally integrated production systems characterised by the rapid expansion of intra-firm trade in intermediate products and of subcontracting, licensing and franchising arrangements, including new forms of outsourcing of work across national frontiers. This phenomenal spread since the late 1970s is linked to diverse new economic arrangements, such as outsourcing, subcontracting, transnational inter-corporate alliances, licensing agreements, local representation, mergers and acquisitions. This resulted in vast transnational production chains and complex webs of vertical and horizontal integration across the globe.

economic power to sway local legislative powers (through lobbyists) and the administration, e.g. for obtaining an operational licence or agreeing on a favourable tax regime.

1.1.2 Globalisation as a societal phenomenon and its consequences

Economic globalisation has made some believe that the Earth is flat, meaning that through economic development we all want the same and follow the same path.10History has been there before. Gray disputed the reflections of Friedman and brought his readers back to the scientific notion that the world is round.11 Indeed, except for the fact that Coca-Cola and Shell products are available nearly everywhere, and that aircraft bring us around the globe in a night and a day, local economies and cultures are still very different. Islamic bankers make different calculations than Western bankers due to different underlying values, Chinese businessmen attach other values to written contracts than American businessmen. Local education varies greatly as is the level on which people resort to corruption.12 Environmental ethics and social legal standards diverge enormously and so do doctors’and religious’prescriptions.

10. The concept is from T. Friedman,The world is flat. The globalized world in the twenty-first century, (Penguin Group: London, England, 2005).

11. J. Gray,‘The world is round’, inThe New York Review of Books, Vol. 52, no.13, 2005. 12. See: the country overviews provided by the NGO Transparency International at http://www.

As pointed out above, the Internet is one of the key factors through which economic globalisation took place at an ever increasing speed because it connects people on a global scale. However, it has also created global transparency regarding government and corporate conduct. It made visible that standards and norms vary,e.g.that the salary level of a Dutch employee differs substantially from that of a Vietnamese employee. Undeniably, differ- ences in the cost of labour have always been one of the very reasons for outsourcing production. To a certain extent these differences can be explained by pointing to the fact that also the cost of living differs greatly. Nonetheless, the international emailing societies incubated by non-governmental organisa- tions (NGOs) have made it clear that – besides paying different levels of salaries – MNCs also apply different standards in respect of personnel safety measures, environmental precautionary standards and the compliance with law including anti-corruption laws.13The dissemination of this type of information produced quite some turbulence among consumers in Western markets. Through signing campaigns petitions and boycotting certain products, con- sumers have made it clear that they want their favourite brands to behave ‘well’.14

Not only did NGOs circulate information about social wrong doings, they also engaged with companies. Firstly, to denounce abuses in an anecdotal way, later to collaborate with the corporate sector in order to find structural solutions.15 This has led to the emergence of the terms‘stakeholder manage- ment’ and ‘multi-stakeholder initiatives’ (MSIs). Companies have been chal- lenged to take into consideration not only the concerns of in-company stakeholders such as employees, shareholders and – to a certain extent – creditors, but also those of outside stakeholders. This group includes people

13. Seee.g.http://www.business-humanrights.org/ and www.somo.nl, an NGO which publishes overviews of controversial business practices concerning some large listed Dutch compa- nies, in collaboration with the Vereniging van Beleggers voor Duurzame Ontwikkeling (VBDO), Association of Investors for Sustainable Development; seee.g.their overviews published in May 2010; Greenpeace International,‘Greenpeace protests against Nestle’s double standards on genetically engineered food. World’s largest food producer must change ways’, 6 June 2002, at: http://www.greenpeace.org/international/en/news/features/nestle- double-standards/;‘Exporting Pollution: Double Standards in UK Energy Exports’, Green- peace, Canonbury Villas, London: 2002, at www.greenpeace.org.uk, visited on 2 June 2010. 14. R. van Tulder and A. van der Zwart,International Business-Society Management–Linking Corporate Responsibility and Globalisation(Routledge: Abingdon, UK 2006). This study analyses societal interface management and provides rich case examples (Nike, Shell, Triumph International, GlaxoSmithKline, ExxonMobil). It investigates the conflicts sur- rounding Burma, blood diamonds, child labour, oil spills, food safety, patents on HIV/AIDS medication and labour rights. See also the accompanying website: www.ib-sm.org. 15. Examples of collaborative certification of production processes concern FSC timber, MSC

fish, Round Tables on Soy and Palm Oil, Voluntary Principles on Security and Human Rights, Social Accounting 8000.

who do not participate in the corporate activities but are impacted by them, and organisations representing the‘common goods’such as nature conservation and human rights defenders.

Why would companies take nature conservation into account? The reason is that companies are discovering that their very livelihood depends on the well- functioning of biodiversity and ecosystem services. For instance, without a healthy fish stock, the market for fish products disappears. Were it not because of the services of bees, apple juice would not exist. And Coca-Cola is based 100 per cent based on water.16 Over the years, companies, side by side with governments and individuals, have been polluting eco-systems and overusing ecosystem services such as water and timber. Furthermore, mainly due to land conversion, biodiversity has dramatically decreased. Natural regions are often sacrificed for the development of economic activities, even high-biodiversity or protected areas frequently face this destiny. For all of these reasons, conserva- tion NGOs currently actively engage with the business sector to find mutually beneficial solutions.17

How could companies be involved in human rights intrusions? Companies often pursue business for which cooperation with the local authorities is necessary, e.g. in obtaining a licence for exploration or the exploitation of natural resources, to buy or lease land, to build roads or ports, or to sell products to governments including weapons. If local authorities do not protect human rights, or even worse, transgress those rights, the chances are high that a company collaborating with such authorities will become caught up in spiteful situations. To make companies aware of these risks, NGOs and knowledge institutes have developed so-called ‘Human Rights Impact Assessments’ (HRIAs), targeted at clarifying corporate impact on human rights.18

Globalisation and outsourcing have also contributed to employment oppor- tunities in many developing countries. People in Indonesia and Bangladesh are now making T-shirts and skiwear for famous American or Italian brands, whereas no more than one or two decades ago these products were produced in Europe and the United States, on the doorstep of the users of those products. Producing cotton as the raw product for textiles was the only service deployed in Pakistan and India. Because of the transfer of the production process from Europe and North America to this region, textile manufacturing processes were

16. P. Senge,‘Unconventional Allies: Coke and WWF Partner for Sustainable Water’, in:The Necessary Revolution. How Individuals and Organisations are Working Together to Create a Sustainable World(Doubleday: NY 2008), pp. 77-95.

17. Idem. Senge. See also: IUCN– Shell Relationship, http://www.iucn.org/about/work/pro- grammes/business/bbp_our_work/bbp_shell/; Key Features of the Agreement between Shell and IUCN, Signed on October 05, 2007, at http://liveassets.iucn.getunik.net/downloads/ shell_iucn_agreement_key_features.pdf, sites visited on 2 June 2010. See also chapter 13 on Investments in pro-biodiversity business.

set up which contribute extra economic value to the local communities. Mangos and papayas were not common products in the Northern hemisphere markets; now they are. Tropical fruit growers in Africa have found new export markets. Consumer choices have expanded tremendously.

A consequence however, is that the increase in transport implies an extra burden for the environment: shrimp are flown in from Thailand to the Nether- lands, Dutch shrimp are transported to Morocco for the peeling process, and back to the Netherlands from where they are transported by road throughout Europe; The Dutch are flown into Thailand for two weeks of sunbathing on the Thai beaches or fly to Morocco to see their families; potatoes are harvested in the North of Italy and are carried by van to the South of Italy where they are mashed, and then transported back to the North from where distribution starts around Europe.19 The increased transportation in cargo and people transport adds to the climate change resulting from an ever increasing world population, a rapidly computerising economy, and an increasing standard of living. Con- sidering the faster pace in which forests and other natural areas ubiquitously are converted into areas put to economical use, the mounting economic globalisa- tion will make it even more difficult to reduce the effects of climate change.

1.2

Corporate Social Responsibility (CSR)