Benefits and the Pitfalls of Partnerships between Development NGO's and the Private Sector - Term Paper Example

Benefits and the pitfalls of partnerships between development NGO's and the private Introduction Non-governmental Organizations (NGOs) refers to legal organizations that aim at affecting decisions and distributions of government and business resources basing on their missions and goals (Bryant, 2001). They are only organizations that aim at pursuing the agenda of public interest, as opposed to commercial interests. They initiate to the general public strategic changes through public awareness and opinion leaders. More often than not, most NGOs go against the government and initiate ideas and projects that the government may not be willing to take. They may be formed indirectly or directly by the companies or the government, though they are not merely independent (University Consortium on the Environment, 2008). However, they are seen in protecting people’s rights and creating awareness while supporting government and business practices. Above all, NGOs have been seen to have greater influence in business set ups due to their strong actions. Companies, more so, the private sectors, which partner with non-governmental organizations gains fame and prestige internationally due to new ideas and supports. Most of the private business entities value NGOs and their views and they dominantly incorporate them in their developments. On the other hand, the NGOs believe that these private sectors are key factors of economic and social development (Hany & Kindornay, 2013). Benefits Image and credibility According to Stevenson (2010) and Hoebink (2009), reputation of the company is no doubt an important factor to both consumers and the investors. The impact of the company on the stakeholders is an emergent benchmark of commercial performance because the stakeholders have begun to ask what the companies can do to the general public (society) and not what the general public can do to the company. Trust is a driver for partnership between the private sectors and the NGOs since the members of the public put more trust in NGOs than the private companies (Fredrik & Ian, 2003). Therefore, in order to establish stable relations with the customers, companies have no option, but to partner with the NGOs to upgrade their trust. In one of the articles entitled “Collaborating with Activists: How the Starbucks works with NGOs,” it is evident that its global success has been attributed mostly to partnership with NGOs. This is because the company has gained fame and its services supported by other private investors. Consequently, in the public opinion, the Non-Governmental Organizations are more trustworthy than organizations in term of helping the society. Any organization that works with any NGO may be seen as a trustworthy organization and is more credible in its efforts at corporate social responsibility through this partnership (Tsai, 2007). Sustaining trust between the NGOs and the private sectors is the only reason that NGOs should not only be playing role of endorsement with corporations, but also working with them critically. Financial sustainability: venturing into new markets and maximizing long-term gains Both the corporate and market citizenship need not to be in opposition. If a society is healthy, it will prosper economically and socially, in turn, the businesses will also benefit through improved consumerism and reduced overdependence on social programs (Bongers, 2004). When corporate sustainability and long term economic goals are put into consideration, then there is a scope for marketing oriented philanthropy that contributes to the society and the bottom line. Essentially, long-term profitability necessitates foreseeing the demands and the needs of the consumers in the near future as well as working to creating conducive environments for business activities. Nevertheless, failure for the firms to adopt CSR is attributed to the distribution of benefits and costs (Michael, 2004). Because of this, companies should adopt a long term vision especially considering the costs of taking more responsible approach towards their activities. Even though it is hard to achieve precise calculations due to variance across various industries and sectors, in the long run, the socially networked firms might outperform those that are not. Therefore, corporate strategy takes into consideration the long term objectives that are beneficial when partnerships are put into consideration. NGOs facilitates corporation’s approach to both production and local consumption market. Better understanding of the market demands is a benefit of working with the international organizations especially those that are equipped with valuable knowledge on onsite conditions. According to the reports from public relation firms, most of the organizations that faced financial and market constraints were due to disengagement with internal corporations like NGOs to help them capture new markets and provide support during the financial crises (Plummer, 2013). To take part in global businesses, there is need for collective ownership among the NGOs and other MNCs. Therefore, effective cooperation among the actors is a necessity when dealing with people from different backgrounds. These will help the company to maintain as well as expanding its competitive edge. Companies aiming to expand their markets should tap isolated-profitable markets by working with other partners. However, most successful strategies that companies use those from the nontraditional partners like the NGOs and the community groups. Working with NGOs, therefore, promotes the organizational activities because their focus is beyond the focus of the customers (Organisation for Economic Co-operation and Development, 2002). Better policies of CSR as part of the corporate strategy According to Mahidhara (2002), both Partnerships play a critical role in increasing the quality of the policies of the company. Corporations remain the only organizations with enough resources to achieving sustainability. They switch their CSR focus from mere charitable donations to involvement in community development. Many organizations have realized that successful involvement in community work is by working with NGOs. This is because NGOs are equipped with qualified expertise, can identify the community needs easily and have access to the locals (Jennings, 2001). As oppose to public sectors, private sectors have few restrictions in their operations. In most cases, managers (corporate) find the development NGOs having the capacity to suggest innovative techniques of solving social problems that are very significant to company’s operations. Due to their vast experience and expertise community based organizations, NGOs are trusted better by the locals, in that they act as a bridge between the communities and the business partners (Natalia & Wang, 2009). In fact, several corporate partakers maintain that working with NGOs is a fundamental element of improving corporate governance and promoting self-identity in the society. The success of the business should not be centered only to the amount of profits accrued but through the accomplishment of the mission through corporate social responsibilities. This means that the success of the company is measured by how it has given back to the society (Fredrik & Ian, 2003). Likewise, the company’s dedication to CSR is a full collaboration with NGOs. Management skills for better efficiency The potential gains of business partnerships with NGOs go beyond the financial gains. Although the private sectors lack sensitivity towards the needs of the poor in the society, NGOs have a lot to offer in the fields of financial management and planning. People working in the private sectors are equipped with insight management and business skills that help them achieve their results (Michael, 2004). On the other hand, the non-governmental organizations have perfect management styles due to their involvement in various activities. It may be seen by the private sectors that their operational management practices are “perfect” due to their limited operation. Like any other saying, “you think your mother is the best cook, try mine," private sectors should try external skills and they could perform better. The NGOs incorporate efficiency skills to the organizations since they operate in more than one field. This is because they capitalize on the expertise and skills of various people and encourage board participation (Tsai, 2007). Furthermore, NGOs provide easy access to various research resources in marketing and distribution of services. Because of their large area of operation, they have excellent management skills to market and distribute services that the other private sectors can adopt. In most occasion, NGOs are non-profit organizations, thus they are not after exploiting the organizations they partner with (University Consortium on the Environment, 2008). They offer executive assistance on how to manage their resources for better service. Promoting democracy Most of the organizations worldwide undermine their workers due to their defects to information. Workers are driven by their employers and are compelled to follow their seniors without question. They have little knowledge on their rights. With the emergence of privatization, several companies have begun to empower workers to know their obligations. NGO is one such organization that has helped to shape and implement the participatory democracy. However, NGOs may not be effective alone, unless it colludes with other parastatals and organizations. Interestingly, the credibility of both NGOs and the private sectors lie in the constructive and responsible role they play to the people in the society (Mahidhara, 2002). Specifically, the private sectors have been recognized as the most appropriate organizations capable of reaching the people in the grassroots without strict limitations. The private sectors, therefore, have a duty of executing the desired duties to maintain their reputations and confirm their partnership with the NGOs. To achieve this level, they have to be transparent in their operation and promote democracy. Pitfalls Unequal responsibility One of the challenges facing the NGO-private sector partnership is the imbalanced distribution of responsibilities. Practically, no two executives can occupy the same position, unless one is under the other. In the same way, NGOs want to rule over the private sector, while the private sector wants to dictate the powers of NGOs. Ultimately, one has to carry out more responsibilities than the other. For instance, when there is sparse distribution of resources e.g. between the private and public sector in the health sector, the NGOs may undermine the whole infrastructure of public health thus weakening the public health system (Natalia & Wang, 2009). In the same manner, an NGO wishing to start a rehabilitation centre may wish to involve the community through community groups. When the project is completed, the question rises “who should manage?” The NGO may need to manage the facility because they initiated the idea, whereas the community groups may need to take over because they implemented the idea. This conflict undermines the entire operations of the company and limits any future growth (Organisation for Economic Co-operation and Development, 2002). Lack of transparency and accountability Both the NGOs and the private organizations have their own ways of accountability and mechanisms of assuring their partners responsible. In the private sector, for instance, the managers and the administrators are answerable to the shareholders of the company whereas, in the NGOs, they are answerable to their board. Each body is a structure of accounting its operations. Accountability within the private sectors is a bit straightforward since the distance between the managers and the shareholders is minimal. Every action can be accounted easily because the administrators are in contact with the shareholders. On the contrary, NGOs have a long string of managers who foresee the entire unit. The structure is complex since it involves long chains of management. The downward-upward accountability is extremely weak due to long distances between the senior management team and the junior staff. Provided that accountability is proportional to the objectives, the private sectors can account for their actions better than the NGOs. If they work together, there will be a possibility of constraints since they are subjected into different accountability levels. The NGOs may undermine the private sectors due to the economy of resources while the private sector accuses the NGOs of extravagance (Plummer, 2013). After all, none of them will be accountable for the other. Influence on codes of conduct Private sectors have their own codes of conduct, most of which originated from the corporate while some from the external organizations like the NGOs. Although some codes are universal, some may cash from one organization to another. For instance, the private sectors have a duty of respecting the rights of their workers and avoiding ecological harm to them. However, some codes of conduct are prudently constructed in such a way that they should be read and understood by the worker while others are more of legal barriers than self-defense mechanisms (Bongers, 2004). The non-universal codes may be a barrier to partnering parties because one party may infringe the rights of the other. When NGOs come in place, there are certain codes that they consider unworthy regarding the implementation of certain development projects while the company values them. For instance, the NGOs may value the reputation of the community towards the company, and so the society should be licensed to foresee company operations. It may be a violation of the company because it is an independent body. This may bring about ideological differences this limiting effective cooperation. In more occasions, most private sectors sideline the NGOs due to their big influence on the organization and the community, which the company may be seen ineffective. Before the codes of conduct of the two parties are harmonized, it will have cost the company its identity (Michael, 2004). Conclusion Having all said and done, private sectors working with NGOs have significant impacts. Although it is a tricky procedure to combine their efforts, partnership is more beneficial to the society, the company itself and the government. Limitations are there, but it is better working together than working independently. References Bongers, P., 2004. 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