How multinational enterprises and civil society groups interact can have important consequences for everyone involved. These relationships can influence companies’ internationalisation, market entry and exit and other strategies, such as corporate social responsibility initiatives. A research team including Panikos Georgallis, João Albino-Pimentel and Arno Kourula reviewed more than three decades of research and draw practical lessons for business leaders, policymakers and civil society organisations.
The relationships between multinational enterprises and non-governmental and civil society organisations (NGOs), local grassroots groups and broader social movements, play a critical role in shaping the economic and social landscape across the world.
These interactions can lead to a wide range of outcomes, from corporate strategies to societal well-being. Our recent article reviews more than three decades of research (166 studies) on how multinationals and civil society engage with each other, the contexts in which these interactions occur and the outcomes they produce. We look at research on both conflictual interactions, such as protests and boycotts, and cooperative ones, like partnerships and corporate social responsibility initiatives.
Conflictual interactions can present significant challenges for multinationals. For example, during the apartheid era in South Africa, Royal Dutch Shell faced intense pressure from civil society, leading to a major campaign for the company to divest. Similar protest campaigns can profoundly affect a company’s operations and reputation, especially in industries where social and environmental concerns are prominent.
Conversely, collaborative interactions often aim to create value. With the Ethical Trading Initiative (ETI), companies like Tesco and The Body Shop collaborate with NGOs and trade unions to improve working conditions across their supply chains. This partnership not only helps companies avoid reputational damage, but also contributes to broader social goals, such as enhancing labour rights globally.
One of our key findings is that most research has studied interactions between multinationals and civil society in resource-intensive industries. This is natural, as civil society activism is pronounced in these industries due to their significant social or environmental impacts. For instance, as seen in intense battles against gold mining operations in Guatemala and similar cases in the mining industry, companies frequently face opposition from local communities and NGOs over environmental concerns.
However, multinationals interact with civil society groups in myriad ways in other industries, and we know less about the triggers of conflict and collaboration in many of them. What we do know is that these interactions are often consequential. Evidence shows that they can significantly influence companies’ internationalisation strategies, including decisions on market entry and exit, and their nonmarket strategies, such as corporate social responsibility initiatives. Given the critical nature of these relationships, what practical lessons can be drawn for business leaders, policymakers and civil society organisations?
Practical insights for decision-makers
One critical insight is that multinationals must proactively engage with civil society, particularly in regions or industries where their operations have substantial social or environmental impacts. By working together with local NGOs before launching operations in a new country, companies can better understand local concerns and mitigate potential conflicts.
In India, for instance, Coca-Cola faced severe backlash over water usage, which was perceived as harmful to local communities. The company responded by investing in water replenishment projects, aligning its operations more closely with local needs and expectations. Being proactive and tailoring strategies to the specific cultural and political contexts in which they operate can help multinationals avoid conflicts with local communities.
Research has shown that collaborations with NGOs can reduce conflict and public criticism against the firm. Companies operating in politically unstable regions can work with local NGOs to monitor human rights conditions and ensure that their operations do not contribute to conflicts or exacerbate social tensions. They can also build strategic partnerships with civil society to enable joint value creation. Unilever’s partnership with the World Wildlife Fund (WWF) in promoting sustainable palm oil sourcing has helped the company align its business practices with global sustainability standards, enhancing its brand reputation and opening up new market opportunities. These partnerships can also provide access to local knowledge, which is crucial for navigating complex social and environmental issues.
Multinational corporations have also leveraged relationships with civil society to facilitate market entry. For instance, when entering base-of-the-pyramid markets, companies have collaborated with local NGOs that already have established relationships within communities. But research suggests that multinationals should view these interactions as long-term commitments rather than one-off engagements. For example, Patagonia’s long-standing commitment to the environment, including its support for grassroots environmental activists, has bolstered its brand and its position as a leader in sustainable business practices.
From the perspective of NGOs and other civil society actors, interactions continue to play a critical role in holding multinationals accountable for their social and environmental impacts. By leveraging public campaigns and media attention, they can pressure companies to adopt more sustainable practices. These interactions can be opportunities to raise awareness about broader systemic issues, turning corporate engagements into platforms for social change. Openness to selected strategic partnerships represent powerful opportunities to influence corporate behaviour and advance social and environmental goals. As corporations and civil society groups often rely on complementary knowledge bases and expertise, collaborations between them are crucial for driving meaningful change in efforts to build more sustainable markets in sectors ranging from renewable energy to plant-based meat alternatives and from ethical fashion to fair-trade coffee.
Finally, policymakers must also recognise the potential of collaborations between multinationals and civil society to drive positive social change. They can foster a conducive environment by creating platforms for dialogue, offering tax incentives for social impact programs or supporting capacity-building initiatives for local NGOs. However, governments must remain attentive to the limits of voluntary collaborations, as they may lead to cooptation and companies may use them simply to build a better image. When necessary, policymakers should step in with regulation or public incentives to ensure that corporate actions align with broader societal goals.
Looking ahead
Our study also highlights several areas where future research and practical action could be valuable. Two of these areas stand out. First, we have relatively limited knowledge on interactions between multinationals and civil society in certain regions, such as Africa and Latin America. These regions may offer unique insights and present different dynamics than those typically studied. For practitioners, this means that opportunities for collaboration or conflict may differ based on country characteristics. Understanding these nuances is critical for successful engagement. Cultural factors such as values related to uncertainty avoidance, egalitarianism or environmental protection play a significant role in shaping this type of interaction. Strategies that prove effective in one cultural context may fail in another, highlighting the need for a tailored approach.
Second, while much social science research focuses on outcomes for multinationals, more attention is needed to understand the societal outcomes of these interactions, especially the long-term net benefits or costs to local communities. Understanding how cross-sector collaborations affect broader social issues such as environmental sustainability and human rights requires the identification of appropriate tools to measure their impacts. Business leaders must integrate social impact assessments into strategic planning processes to ensure that their operations contribute positively to the communities they engage with.
Interactions between multinationals and civil society are a prominent feature of the global business landscape. While these actors have different agendas and are often studied as they engage in conflict, we suggest that understanding how to enable effective collaboration between these parties is at least as crucial. It is only through collective action between actors from multiple sectors that some of the greatest challenges of our time can be addressed. Leveraging the potential of interactions is thus necessary for achieving positive societal and economic transformation.
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- This blog post is based on MNE–civil society interactions: a systematic review and research agenda, by Kayleigh Bruijn, Panikos Georgallis, João Albino-Pimentel, Arno Kourula and Hildy Teegen, in the Journal of International Business Studies.
- The post represents the views of the author(s), not the position of LSE Business Review or the London School of Economics and Political Science.
- Featured image provided by Shutterstock
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