Within the contemporary Globalisation debate, and in this era of hypermobile capital and footloose firms, there has been a widespread notion that “anything can be located anywhere”
(Jones, 2010:120). Naturally, geographers have been heavily engaged in this debate, as a considerable portion of the discussions revolves around the transformation of spaces and places: Anthony Giddens and his “space - time compression” (1990, 1999), Manuel Castells
“space of flows” (2003), de Landa’s “de-territorialisation and dis-embedding” of human activities (2006), David Held’s stretching, deepening and speeding-up of social interactions (Held and McGrew 2007), etc. (in Jones 2010). Sometimes, one might get the feeling that space and place are becoming irrelevant as categories altogether, and many spatially fixed institutions with them: the nation state, the local community, cornerstone businesses, etc.
In Bergen, Norway, my family and I live in the old industrial village Alvøen, where industry and community once were symbiotic and interdependent: Back in the 18.th and 19.th century and all the way up to the early 1980s, the factory employed almost everybody in the
community, and it founded and ran the bank, the school, grocery store etc. The factory built and rented out housing facilities for the workers and their families. One can assume that there was a significant transfer of private capital from the factory to the local community through multiple channels, that ensured reciprocity between company and community, relative prosperity and a certain local development and social security (Haugrønning 2006:60-63).
Within the globalization discourse, it may seem as if the history of this place is the point zero of the transformations that Held, Giddens, Castells and many more hold globalization
responsible for; the ancient place where the local community and the business was one.
On the other side of the scale, one might claim to find the modern state of Indonesia, which is the spatial framework of this thesis. It grew by unprecedented figures during the dictatorship of the late President Suharto and his vast de-regularisation of finance and trade in the 1980s.
The Indonesian territory became easy accessible for transnational companies, with trade barriers lifted and government involvement minimalized (Drake 2007). The extractive
industries and labour intensive factories exploited the rich soils of Indonesia, shipped the raw materials out for processing elsewhere, and sold the processed goods to yet other destinations.
This production network could be described as dis-embedded and de-territorialised in as much as the friction of space and time was minimalized by few government interventions, low transportation costs and unregulated access to cheap labour.
However, some proclaim that contrary to the hyper globalisation enthusiasts’ notions, places still continue to play a substantial part in human interaction in general, and in global
economic activities more specifically. Production remains territorially embedded. Every firm, every economic function is – quite literally, grounded in specific locations (Dicken 2010).
This grounding is physical, in form of buildings, infrastructure, etc., and social, as human labour, competences etc. (Sassen in Jones 2010, see also Ong 2006, Massey 1995), but also deeply influenced by the concrete socio-political, institutional and cultural contexts within which they are embedded, produced and reproduced (Dicken 2010).
On both sides of this empirical and theoretical divide there is evidence of processes and tendencies leading to both more and less embedding or grounding of human activities in general and, more specifically, business activities across the globe. Today the stories of globalisation continue to lure companies operating with high costs and small margins in the richer part of the world. Norwegian companies are no exception, and they have in recent years increasingly been considering the global market, including Indonesia, for their operations and investments. At the same time, geographical hindrances stand in the way of the same
investments, and may be the reason why so few Norwegian companies actually take the great leap out of its own comfort zone.
On the other hand, Indonesia is feeling the heat of growing domestic demand for better infrastructure, better services and better social security among its increasingly wealthy
population. Now the country is considering how to re-gain control over its abundant resources in order to harvest more of its yield. A wide range of tools are being put into action by the Indonesian state in order to increase it’s revenues from foreign investments: from export tax on selected unprocessed minerals and forced nationalisation of foreign firms, to compulsory competence transfer from foreign companies to local work force.
From a geographical perspective, one effort in particular is interesting in the power play between transnational companies and Indonesia and the efforts to re-territorialise economic activities: Investment law #40 and its article #74 on corporate social responsibility (CSR) of 2007. Article 74 states that all companies within extractive industries or connected to natural resources will have to spend a percentage of their profits on social development locally.
Indonesia is the first country ever to introduce such a law on direct investments within its borders. Potentially, it puts foreign companies in direct contact with local Indonesian social development agenda, attaching Norwegian companies to the Indonesian environment. An investigation of the motivation behind the law, its wider consequences and the practical implications and the “grounding effects” caused by foreign companies’ CSR activities and stakeholder management, seems therefore intriguing from a geographical perspective.
CSR becomes a truly geographical concept, providing companies with corporate citizenship and correspondingly a corporate sense of place.
Excerpt, Chapter 2.3.3
1.1.1 Research questions
I will propose the following research questions for this thesis: Can Corporate Social
Responsibility work as a catalyst for grounding foreign companies to local communities in an ever-globalising world? And is the CSR law of Indonesia part of a “re-territorialisation”
tendency?
My outset is to find answers to this question by investigating the motivation behind article 74 in the 2007 Investment Law, its practical use and wider consequences, looking for potential “geographical grounding effects” for Norwegian companies operating in Indonesia.
This calls for a multi-dimensional theoretical approach to the subject at hand. First, I need to look into the geographies of globalisation and its current influence on geography. Second, I need to elaborate on CSR theories in general and stakeholder theory more specifically, and how the Indonesian CSR law, its implementation and the companies’ responses fit into this picture. I want to discuss CSR theories from a geographical point of view and look at the various geographical dimensions of the different theoretical approaches. Finally, I need to
elaborate on theories of power and network in order to understand the logics of the stakeholder management and its consequences for the CSR activities of Norwegian companies in Indonesia. I paint with broad strokes, covering several deeply influential theories within geography, power and networks, without digging too deep into their technicalities. In my work with this thesis, I have found theories of place and human interactions both very abstract and distinctively concrete, and I would argue this calls for openness to interpretation and variety of entry-points to understanding the geographies of place. By exploiting a broad fan of theories, I will try to honour this openness and colourful source of understandings.
Empirically, I first need to look into a) the development of the law, the motivations behind it and its current status. Second, I need to explore the different CSR activities and stakeholder management of the Norwegian companies by looking at: a) how is CSR treated and motivated within the companies and b) who are the main target groups for the companies’ CSR
activities and how do the companies interact and communicate with these, and c) are there substantial differences between companies within the catchment area of the law and those which fall outside its field of influence?
I will try to combine the theoretical approaches with my empirical findings in order to analyse how Norwegian companies in Indonesia and its stakeholders struggle to exploit and adapt to the transformational nature of globalisation. And the final, obvious question has to be asked:
has the world really changed? My village outside Bergen was actually run by Dutch
immigrants, just like Indonesia, coming from the Netherlands with competence and modern way of life of Europe, to exploit the fertile soils of my backward, colonised hometown in the fringes of the European continent, some four hundred years ago, about the same time as the Dutch colonised the Indies. In this way, I have an even stronger relation to the subject at hand.
Maybe the factors leading to the heavy involvement in the local community back then can be said to be the same forces influencing Norwegian companies in Indonesia today?