Norwegian experiences in indonesia

Adaptions to Indonesian expectations

Tarje I. Wanvik

“Anything can be located anywhere”

“Every firm, every economic function is – quite literally, grounded in specific locations”

Motivation Access to (cheap) semi skilled / skilled labour

Access to cheap unskilled labour

Access to Indonesian / South East Asian consumer market Access to natural resources

Profitable regulatory framework

“Localised” risks identified 0 % 20 % 40 % 60 % 80 % 100 % 120 %

Corruption

Bureaucracy

Political instability

Economic instability

Regulatory issues

Safety issues

Environmental issues

Workers rights' issues

Competition issues

Other

“Localised” risks identified 0 % 20 % 40 % 60 % 80 % 100 % 120 %

Corruption

Bureaucracy

Political instability

Economic instability

Regulatory issues

Safety issues

Environmental issues

Workers rights' issues

Competition issues

Other

Talking points

�  The CSR law – Law 40/2007 and its implications

� Attitudes towards CSR among Norwegian companies in Indonesia

� Stakeholder identification � Actual Corporate Social Responsibility

activities � Concluding remarks

Responsibility triangle

Do as the stakeholders requires

Ethical  

Economic  

Legal  

Be legal

Be profitable

Be ethical

Do as the stakeholders desire

Do as the stakeholders requires

Do as the stakeholders expect

Philanthropic  

Be a good corporate citizen

Carroll (2004)

Law 40 / 2007, article 74 1.  Limited liability companies in natural resource sectors (or

connected with natural resources) are obliged to implement Corporate Social and Environmental Responsibility.

2.  Corporate Social and Environmental Responsibility, represents a responsibility of a limited liability company that is budgeted for and calculated as an expense of that company,

3.  Limited liability companies that do not implement their obligation will incur sanctions in accordance with the provisions of legislative regulation.

4.  Further provisions will be laid down in a Government Regulation (Peraturan Pemerintah).

“Sleepwalking” Law

� No regulation yet, but… �  Long tradition of social expectations �  Tender processes �  Standard Operational Procedures �  Licence to Operate

“Sleepwalking Law”

� No regulation yet �  Long tradition of social expectations �  Tender processes �  Standard Operational Procedures �  Licence to Operate

“Sleepwalking Law”

� No regulation yet �  Long tradition of social expectations �  Tender processes �  Standard Operational Procedures �  Licence to Operate

“We do CSR projects, and we like to see our name on the project. This is documented in our tenders, and that is very important. CSR is part of the tender selection of the government” (CEO, Company A)

“Sleepwalking Law”

� No regulation yet �  Long tradition of social expectations �  Tender processes �  Standard Operational Procedures �  Licence to Operate

“Sleepwalking Law”

� No regulation yet �  Long tradition of social expectations �  Tender processes �  Standard Operational Procedures �  Licence to Operate

“The Mayor constantly refers to our company as the best operator in the area” (CSR adviser Company B)

Blinded by the right

�  The recognisable Norwegian �  Looking good � Doing good �  Being good

Blinded by the right

�  The recognisable Other �  Looking poor � Doing poor �  Being poor

”CSR? Isn’t that only a result of the naïve Norwegian regime of goodness” (Employee, Company B)

“A presentation of CSR components and other social and environmental issues is superfluous, because the bigger narrative about the “Norwegian way of doing things”, also involves strong social and environmental implications” (CEO, Company B)

Stakeholder identification

� Who are our primary stakeholders �  Strong state � Corruption issues � Weak NGOs �  Lack of experience of negative attention

Stakeholders identified 0 % 20 % 40 % 60 % 80 % 100 %

Owners Workers

Shareholders Subsidiaries

Under-subsidiaries Indonesian media

International media Norwegian media

Local NGOs International NGOs

Norwegian NGOs Local government

Regional government National government

Norwegian authorities, including Customers

Indonesian consumer market International consumermarket Norwegian consumer market

Other

Primary stakeholders All stakeholders

Stakeholders identified 0 % 20 % 40 % 60 % 80 % 100 %

Owners Workers

Shareholders Subsidiaries

Under-subsidiaries Indonesian media

International media Norwegian media

Local NGOs International NGOs

Norwegian NGOs Local government

Regional government National government

Norwegian authorities, including Customers

Indonesian consumer market International consumermarket Norwegian consumer market

Other

Primary stakeholders All stakeholders

Government

“It is not easy to do business in Indonesia now. Before, Suharto and his inner circles were the only real stakeholders. Today, there are so many more stakeholders, and they are not easy to please. But you need their signature”. (Publish What You Pay Indonesia)

“Local government bodies are very worried about community impact. Unrest is the last thing they want. There is a strong pressure that we conduct various levels of socialisation” (CEO, Company F)

“We have very little contact with the Indonesian authorities, and quite frankly we try to avoid it as much as possible” (CEO, Company H)

Stakeholders identified 0 % 20 % 40 % 60 % 80 % 100 %

Owners Workers

Shareholders Subsidiaries

Under-subsidiaries Indonesian media

International media Norwegian media

Local NGOs International NGOs

Norwegian NGOs Local government

Regional government National government

Norwegian authorities, including Customers

Indonesian consumer market International consumermarket Norwegian consumer market

Other

Primary stakeholders All stakeholders

NGOs

“NGOs have a profit seeking motive, and serve as catalysts of generating problems. We do our (CSR) work primarily through local government” (CEO, Company G)

Stakeholders identified 0 % 20 % 40 % 60 % 80 % 100 %

Owners Workers

Shareholders Subsidiaries

Under-subsidiaries Indonesian media

International media Norwegian media

Local NGOs International NGOs

Norwegian NGOs Local government

Regional government National government

Norwegian authorities, including Customers

Indonesian consumer market International consumermarket Norwegian consumer market

Other

Primary stakeholders All stakeholders

Subsidiaries

Consumer markets

Actual CSR activities Do your company engage in CSR activities?

Yes No

CSR Activities 0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 %

Rights promotion

Labour union facilitation

Environmental projects

Educational projects

Health projects

Other social projects

Other

“It is only the local people and the local communities that are the target groups of our CSR work. Local government is not a target”. “Concerning stakeholders, we are looking for the ones that are the needy. In our area, these are children, local fisher and farmer communities and small-scale business” (CEO, Company B)

“Sub district head and local government give positive feedback on projects, and refers to our company as “best practice” in meeting with both the local communities and other stakeholders in the area” (CSR adviser, Company B)

Stakeholder management

Company B

BP Migas

Local government

Local community

National government

Local Government

Local community

Local Government

Local community

Stakeholder management

Company B

BP Migas

Local government

Local community

National government

Local Government

Local community

Local Government

Local community

Common interest

Stakeholder management

Company B

BP Migas

Local government

Local community

National government

Local Government

Local community

Local Government

Local community

Common denominator

Triangulation Company B

Local Community Local community

National Government

Local Government BP Migas

Stakeholder management

Company C

Workers

Local community

Local community

Common interest

“ Our workers are by far the most important stakeholder of this company, together with the surrounding communities. Our proactive relation to our workers and their communities gives us leverage in the re-occurring demonstrations towards this industrial estate. Protests have made us proactive” (CEO, Company C)

(“The Paradoxes in Communicating Corporate Social Responsibility,” Sandra Waddock and Bradley K. Googins in “The Handbook of Communication and Corporate Social Responsibiliy” – Øivind Ihnen, Jennifer L. Bartlett and Steve May [eds.], 2011)

Stages of Corporate Citizenship

Elementary Engaged Innovative Integrated Transforming

B C A E G H D I F

“ A culture of “the charitable corporation” definitely seems to exist in Indonesia today. If you are rich or influential, you are expected to give (back) more to the local community than others” (CEO, Company C)

Passive Altruism

Active Self- interest

Integrated

Elementary

Carefully selected programs in order to contribute in the most efficient way for the benefactors

Carefully selected programs in line with core activities in order to manage relevant stakeholders

Randomly selected projects or partners to avoid attention, often international NGOs.

Randomly selected projects in order to please close stakeholders

Passive Altruism

Active Self- interest

Integrated

Elementary

Carefully selected programs in order to contribute in the most efficient way for the benefactors

Carefully selected programs in line with core activities in order to manage relevant stakeholders

Randomly selected projects or partners to avoid attention, often international NGOs.

Randomly selected projects in order to please close stakeholders

F

B

E

D

H G

A C

I

Responsibility triangle revisited

Do as stakeholders expect Ethical  

Economic  

Legal  

Be legal

Be profitable

Be ethical

Do as stakeholders demand

Do as stakeholders require

Do as stakeholders desire Philanthropic  

Be a good corporate citizen

Based on Carroll (2004)

Thank you for your attention! Tarje I. Wanvik tarje@hotmail.com +62 (0)812 8659 0724 (Indonesia) +47 97070987 (Norway)