Past studies revealed only the different sustainability practices of foreign direct investors in developing countries, while the motives that influenced their sustainability practices remain underexplored. This study investigates how...
morePast studies revealed only the different sustainability practices of foreign direct investors in developing countries, while the motives that influenced their sustainability practices remain underexplored. This study investigates how civil society organizations (CSOs) influence the sustainability practices of foreign investors in the Cambodian agricultural sector. It focuses in particular on interactions between civil society and government, drawing new links between existing theoretical debates concerning influencing strategies of civil society on companies, government strategies of regulatory enforcement and the political nexus between the government and corporations. Two cases of foreign joint venture investments (one rubber and one sugar plantation) in the agro-industry were selected for observation. Both qualitative and quantitative data were collected and analysed. This study used a process tracing method to analyse observable causes and outcomes within case causal mechanism processes through which CSOs influence corporate sustainability practices. The causal mechanism refers to CSO mobilisation and the outcome is company sustainability practices.
Results revealed that CSOs employed a variety of influencing strategies, incorporating institutional and non-institutional tactics, in an attempt to influence government and foreign joint venture companies. However, these tactics did not necessarily influence foreign joint venture companies to behave in a more sustainable way. Rather, whether or not CSOs were able to influence the government, companies or both, they relied heavily on the political nexus between the government and the two companies in the two cases. For instance, CSOs were more effective in influencing the rubber company to behave more sustainably than CSOs targeting the sugar company. The sustainability assessment unveiled that the rubber company went to great effort to ensure sustainability and long-term investment after facing contention with indigenous communities, whereas the sugar company was more likely to neglect the sophisticated mobilisation approaches of the CSOs. In so doing, the sugar company caused negative outcomes for the communities.
The different sustainability practices of the two joint venture companies were determined by the different intensities of the client-patron networks between the foreign companies and government officials. The different intensity of networking tends to induce different capture of government (regulatory) institutions. Strong relationships between the foreign companies and government officials tended to influence government institutions, whilst weak relationships resulted in less influence. While strong network restricts CSOs’ ability to ensure sustainable practices, the weak network avails the CSOs to influence the company to attain better sustainability impacts. In this instance, the rubber company, due to its weak network between the government and local partner, which resulted in weak influence on government institutions, strives to perform well to deal with the concerns of indigenous communities and to ensure sustainable development. Meanwhile, the sugar company, having possessed a strong network between the government and local partner constitutes strong capture of regulatory institution not to enforce sustainability related regulations, resists the CSOs’ strategic influence. In contrast, the strong network of the sugar company tended to suppress the CSOs’ tactics. With these, failure or success of the CSOs to influence the government and the foreign joint venture companies to ensure sustainability in or surrounding the investment area is more often than not mediated and undermined by the political nexus between the government and the foreign joint venture companies. Not only this, corporate relationships with government negate CSO influence. To a certain degree, CSOs’ mobilisation, however, leverages a certain influence not only on the government but also shapes the behaviour of the foreign joint venture companies operating in a host country with lax regulatory enforcement and uncertain business environment.