DAX-Firms and Human Rights: Understanding Institutional and Stakeholder Pressures along the Value Chain PDF
Preview DAX-Firms and Human Rights: Understanding Institutional and Stakeholder Pressures along the Value Chain
Carlo Manuel Drauth DAX-Firms and Human Rights Understanding Institutional and Stakeholder Pressures along the Value Chain DAX-Firms and Human Rights Carlo Manuel Drauth DAX-Firms and Human Rights Understanding Institutional and Stakeholder Pressures along the Value Chain Carlo Manuel Drauth Berlin, Germany Dissertation Hertie School of Governance, Berlin, Germany, 2017 ISBN 978-3-658-19882-4 ISBN 978-3-658-19883-1 (eBook) https://doi.org/10.1007/978-3-658-19883-1 Library of Congress Control Number: 2017955537 Springer VS © Springer Fachmedien Wiesbaden GmbH 2018 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Printed on acid-free paper This Springer VS imprint is published by Springer Nature The registered company is Springer Fachmedien Wiesbaden GmbH The registered company address is: Abraham-Lincoln-Str. 46, 65189 Wiesbaden, Germany Acknowledgements Research and writing is often a solitary endeavour, but this dissertation would not have been possible without the encouragement and support of many people. First, I would like to express my sincere appreciation and gratitude to my ad- visors Prof. Dr. Anke Hassel and Prof. Dr. Andreas Rasche for their excellent guidance during this project. You always found the time to give me valuable feedback and advice when I needed it. In addition, Prof. Dr. Sarah Jastram and Dr. Nicole Helmerich deserve special thanks, as my thesis committee members and advisors. So do friends and col- leagues like Fabian, Thomas, Dennis, Ingo and Steffi for reading and comment- ing on chapter drafts. Thanks also goes to the Hertie School of Governance and the many people I have come to know there since I first set foot on campus as a young master stu- dent in 2007. I am very grateful to Fabian and Udo who I consider family: Fabian for un- derstanding me best not only as a fellow PhD, but more importantly as my best friend from whom I have learned so much. Udo for being an essential part of our family life for so many years already, showing us what true friendship means. My deepest gratitude goes to Belén for her daily support during these past three years. You have been the best partner anyone can ask for, helping me get through the at times difficult research and writing, be it with your continual en- couragement, your intelligent advice, your unique sense of humour – or simply with your love. Words cannot describe what you mean to me. Finally, my greatest gratitude to my mother, my father, and my brother for their unconditional love, help and support. In fact, this dissertation is the work of all of us, of our entire family, which did not start in 2013, but in 1983. The feel- ing that I cannot fall deeper than into your arms has provided me with the strength to, amongst others, start and finish this dissertation. Mama, Papa, Marco: Thank you, you are everything to me. Carlo Manuel Drauth Abstract Under which conditions do multinational enterprises systematically manage hu- man rights risks with a view to preventing human rights abuses across their oper- ations? Using a multi-method research design combining qualitative comparative analysis (QCA) and process tracing case studies (PT-CS), this study of the 30 largest German companies finds that it is neither institutional forces nor stake- holder pressures alone, but their combined effect that leads to a systematic hu- man rights management at the firm-level: That is, stakeholders (e.g. NGOs) as more proximate actors act on and transmit existing institutional pressures (e.g. social expectations) to firms, while institutions provide stakeholders with the le- gitimacy necessary to successfully influence corporate behaviour. This conjunc- tional effect implies that a systematic approach to human rights is more likely to be found among firms with consumer proximity. Why? It is a firm’s position in the value chain that determines the concrete configuration of institutional and stakeholder pressures for a company: Downstream the value chain in the B2C business, where institutional and stakeholder pressures are generally high due to greater public exposure, most companies systematically address human rights is- sues: These B2C firms are exposed to an institutional environment, where firms are not only socialised into newly-emerging CSR-topics like human rights through institutional learning in CSR initiatives like the UNGC, but also con- stantly monitored by civil society actors like NGOs whether they walk the talk (i.e. 1st path to a systematic human rights management). Upstream the value chain in the B2B business, where institutional and stakeholder pressures are gen- erally low due to no or limited public exposure, most companies do not system- atically address human rights issues or, at the most, only symbolically. Having said that, there is a smaller subset of B2B firms with concrete human rights risks working in B2C-dominated value chains that systematically address human rights issues: These B2B firms are passed on pressure from business clients via the supply chain and, thereby, enter a similar institutional environment, where firms are also socialised into newly-emerging CSR-topics like human rights through institutional learning in CSR initiatives like the UNGC, while the moni- toring here is not done by civil society actors like NGOs, but by their own busi- ness clients eager not to be involved in reputation-damaging human rights scan- dals (2nd path to a systematic human rights management). VIII Abstract What follows from the above is that the 1st path and 2nd path to a systematic human rights management are not independent from each other, but firms in the former can (directly or indirectly) influence the behaviour of the latter. That is to say: B2C firms under institutional and stakeholder pressure (i.e. 1st path) pass on their pressure to B2B firms (i.e. 2nd path) via the supply chain, but not to all of them, just to the ones with concrete human rights risks in B2C-dominated value chains. This implies that the source of pressure to act on human rights changes as you move along the value chain: Civil society actors like NGOs are powerful downstream in the B2C world, whereas business clients can be powerful up- stream in the B2B world. However, since pressure to act on human rights is not passed on in every (industry) supply chain, a significant subset of firms in the of- ten risk-prone B2B business is under no or only limited pressure and thus often inactive in terms of human rights. This blend of institutional and stakeholder theory while taking an explicit value chain perspective constitutes a new approach to the study of CSR in gen- eral and human rights in particular, which reflects the varying realities B2C and B2B companies are subject to in practice. Table of Contents List of Abbreviations ........................................................................................ XI List of Tables .................................................................................................. XIII List of Figures .................................................................................................. XV 1. Introduction ................................................................................................... 1 2. Introduction to Topic and Research Question ........................................... 11 2.1. Global Reach of MNEs and Human Rights Abuses ..............................11 2.2. Global Governance Gaps and Multifaceted Governance Response ............................................................................................... 20 2.3. Research Question and its Relevance ................................................... 27 3. Literature Review ........................................................................................ 31 3.1. Literature on Business and Human Rights ............................................ 32 3.2. Literature on CSR ................................................................................. 36 3.3. Research Gap ........................................................................................ 47 4. Theoretical Framework .............................................................................. 49 4.1. Institutional Theory .............................................................................. 49 4.2. Stakeholder Theory ............................................................................... 54 4.3. Synthesis of Theories ............................................................................ 57 4.4. Theoretical Framework ......................................................................... 62 4.5. Hypotheses............................................................................................ 71 5. Methods ........................................................................................................ 75 5.1. Multi-Method Research ........................................................................ 75 5.2. QCA ...................................................................................................... 76 5.2.1 Delineation of the Population of Cases ..................................... 79 5.2.2 Choice of all Relevant Conditions to Explain Outcome ............ 79 5.2.3 Calibration of Conditions and Outcome .................................... 80 5.2.4 The Analytical Moment of the QCA ......................................... 82 5.2.5 Consistency and Coverage Measures ........................................ 87 5.2.6 Discussion of QCA Results ....................................................... 88 X Table of Contents 5.3. Process Tracing Case Studies ............................................................... 88 5.4. Strengths of Proposed Research Design ............................................... 91 6. QCA Analysis on DAX 30 ........................................................................... 93 6.1. Delineation of Population ..................................................................... 93 6.2. Choice of Conditions and Outcome ...................................................... 95 6.3. Calibration of Conditions and Outcome ............................................... 99 6.4. QCA Analysis ......................................................................................114 6.5. Results ................................................................................................ 139 7. Case Studies ............................................................................................... 141 7.1. Methods of Data Collection and Analysis .......................................... 141 7.2. Case Study I: 1st Path to a Systematic Human Rights Management ............................................................... 146 7.3. Case Study II: 2nd Path to a Systematic Human Rights Management ............................................................... 178 8. Findings and Discussion ........................................................................... 203 8.1. Results ................................................................................................ 203 8.2. Main Argument ................................................................................... 204 8.3. Contributions ...................................................................................... 207 8.4. Further Research ................................................................................. 215 References ........................................................................................................ 217 List of Abbreviations B2B Business-to-Business B2C Business-to-Consumer CEO Chief Executive Officer CR Corporate Responsibility CSR Corporate Social Responsibility DAX Deutscher Aktienindex (German Stock Index) DGCN Deutsches Global Compact Netzwerk (German Global Compact Network) ESG Environment, Social and Governance EU European Union FDI Foreign Direct Investment fs fuzzy set FTSE 100 Financial Times Stock Exchange 100 GBP Great Britain Pound GeSI Global e-Sustainability Initiative GRI Global Reporting Initiative ICT Information and Communications Techonolgy ILO International Labour Organization ILO CLS ILO Core Labour Standards MNE Multinational Enterprise NAP Nationaler Aktionsplan Wirtschaft und Menschenrech- te (National Action Plan on Business and Human Rights) NGO Non-Governmental Organisation OECD Organisation for Economic Cooperation and Devel- opment PT-CS Process Tracing Case Studies QCA Qualitative Comparative Analysis SA 8000 Social Accountability 8000 TfS Together for Sustainability Initiative UDHR Universal Declaration of Human Rights UN United Nations
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