Explaining the human rights strategy of transnational corporations : a social constructivist perspective

The departure point of this thesis is the desire to investigate why TNCs incorporate human rights in their business strategy. To explain this, the ambition has been to identify the context in which TNC changes in human rights strategy take place, to identify the dominant actors who influence this process, and to identify the mechanisms of the process itself. As social constructivist theories capture these elements through their account of norms influence, especially in the context of human rights norms, I have argued that a social constructivist approach to the TNC/human rights issue provides the necessary tools to build a comprehensive and valid explanation. Three ideal type strategies TNCs may have when addressing human rights – from reactive via cautious to proactive – have been identified, indicating a company’s progressive acceptance of the validity of human rights. To answer why companies pursue different strategies and how these strategies might change, I have operationalized these strategies through Risse & Sikkink’s (1999) ‘Spiral Model’, which is a causal model explaining the variation in the extent to which an agent moves along the path toward improvement of human rights conditions. This has provided a framework with propositions and indicators to make possible the identification of the aforementioned context, actors and interaction modes typical of the different strategies. As this model is originally applied to states, I have further developed the model to capture TNC specific conditions and traits, an adaptation which has been both theoretically and pragmatically founded. The basic argument has been that though TNCs cannot be equated with states, they display some of the same traits as states and are faced with some of the same dilemmas as states when it comes to human rights. Further, social constructivist theories are inherently eclectic and pragmatic in their scope and are applied to organizations and individual policy makers as well as states. On a practical level, the translation of the Spiral Model has required making some adjustments and introducing some preconditions. On the contextual level, it has been necessary to establish the growth of a norm which ascribes responsibility for human rights directly to TNCs, as international human rights has not yet captured TNCs. Other contextual factors identified are the differing human rights climates concerning TNCs and social issues in the TNC’s country of origin and the countries in which they operate. This also includes the strength of human rights NGOs in these countries. On a company specific level, I have argued that the structure and management of the company needs to be taken into account. This means identifying the TNCs ownership structure in different countries, looking at how exposed they are to environments where human rights abuses takes place, and how profiled and recognizable a TNC is globally. Finally, I have argued that the management structure of a company will condition how values spread throughout a TNC’s group of companies. My analysis of Shell showed that as the norm of TNC human rights responsibility gained strength in the mid-1990s, Shell was seen as an accomplice to, and responsible for human rights violations in the Niger Delta through the company’s joint venture with the Nigerian government. When the Ogoni minority started targeting Shell directly ‘from below’ this led to the mobilization of international human rights organizations and the creation of a transnational advocacy network pressuring ‘from above’. As Shell uses its brand extensively throughout all parts its operations to add value and credibility, this makes the company especially vulnerable to reputational damage. Moreover, Shell is based in countries with a strong human rights climate and strong human rights NGOs. This made the targeting of Shell most effective. As Shell already was trying to convey an image of operating in a ‘socially responsible way’ and Shell’s practices in the first half of the 90s did not match the new expectations which had emerged from society at this time, Shell was now in need to regain the confidence of employees, consumers and society in general. My analysis shows that NGOs have been crucial in the early phases of this process through campaigns and pressure and eventually dialogue. As human rights responsibility has been a norm increasingly accepted by the company, human rights have become a part of Shell’s identity and new organizational forms and management systems have been developed. As Shell has pursued a proactive human rights strategy, management and a wide range of stakeholders are now the driving forces moving the process ahead. In line with its universal orientation, Shell is developing human rights control mechanisms that not only are generally applicable, but also pay attention to the special conditions of different countries. Through this process, actors ranging from international human rights organizations to local communities are involved