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Hi everyone i have this assignment so i did it and i got the fead from my instructor and i want from you to fix it and give it to me in the first file the assignment and the feedback in the red highlight you ar not allowing to get any resource from outside only from the file that i attached also no plagiarism so You only allowed to take from the File attached which is harverd floder and Class reading 5 :

this is the police of the assessment

Please use the Harvard Business School citation style, that i attach Please use the Harvard Business School citation style, that i attach Please use the Harvard Business School citation style, that i attach

*** For this assignment you will need the readings for Class 5-Part // ***

For the response paper, please answer the following questions in one coherent essay:

1. In your opinion, what societal role do NGOs fulfill? Do you see their activities as beneficial for society or detrimental? Why?

2. What is your view on the activities of IRN against the Bujagali Dam project? Do you think IRN's opposition to the project is legitimate and justified? Please explain your answer in detail.

3. Do you think that the Bujagali Dam project would be good for Uganda? Why? Should the project be implemented? Is it a good investment for AES?

Please follow the following guidelines for the paper:

Please use the document template provided on Blackboard to write-up your answer.

-The paper should be 2 pages single-spaced (1 inch margins, 12 point Times New Roman font) no more then 2

- Please submit the paper as MS Word document online on Blackboard.

-The paper should be one coherent essay that contains the answers to the questions outlined above (i.e. do not answer each question in different segments separately).

-Papers will be graded based on content (e.g. strength of arguments, reasoning etc.), on writing style and on formal aspects (e.g. correct grammar etc.). Collaboration for the paper is not permitted. Citations and references:

O You are only allowed to use readings from our course and for Class 5 to write the

response paper

O Please include references to any sources you use from our readings (the paper will be

checked for plagiarism!) (the paper will be checked for plagiarism!) (the paper will be checked for plagiarism!)Direct quotes always have to be identified as such (also from readings we have covered

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Private Politics David P. Baron Graduate School of Business, 518 Memorial Way Stanford University, Stanford, CA 94305-5015 baron This paper introduces the subject of private politics, presents a research agenda, and provides an example involving activists and a firm. Private politics addresses situations of conflict and their resolution without reliance on the law or government. It encompasses the political competition over entitlements in the status quo, the direct competition for support from the public, bargaining over the resolution of the conflict, and the maintenance of the agreed-to private ordering. The term private means that the parties do not rely on public order, i.e., lawmaking or the courts. The term politics refers to individual and collective action in situations in which people attempt to further their interests by imposing their will on others. Four models of private politics are discussed: (1) informational competition between an activist and a firm for support from the public, (2) decisions by citizen consumers regarding a boycott, (3) bargaining to resolve the boycott, and (4) the choice of an equilibrium private ordering to govern the ongoing conflicting interests of the activist and the firm. 1. Introduction The problem of social order lies at the heart of human interaction. Concerned with recurring civil conflict, Hobbes (1651, pp. 185–186) argued that without a “common Power” society would be in a “warre, as is every man, against every man.” The result would be a life “solitary, poore, nasty, brutish, and short.” Hobbes’s solution was the state, a Leviathan, to provide public order. In contrast, Nozick (1974) argued that people would voluntarily form associations to provide social order, and those associations would be alone in their authority to coerce people. The social order would then be privately provided An earlier version of this paper was presented as the Nancy L. Schwartz Lecture, Kellogg Graduate School of Management, Northwestern University, April 25, 2001. This research has been supported by NSF grants SBR-9869177 and SES-0111729. I would like to thank Robert Inman, Keith Krehbiel, Thomas Lyon, Roger Myerson, Eric Rasmussen, Alan Rugman, and two anonymous referees for their helpful comments. © 2003 The Massachusetts Institute of Technology. Journal of Economics & Management Strategy, Volume 12, Number 1, Spring 2003, 31–66 32 Journal of Economics & Management Strategy and endogenously determined through voluntary participation in the associations. This essay is concerned with endogenous private order as a resolution of conflicts among individuals and with the private politics surrounding it. The objective is to examine selected aspects of private politics, identify a set of research questions, and identify factors relevant to those questions. Coase (1960) advanced the analysis of social order by observing that in the absence of transaction costs individuals would bargain to a Pareto-efficient resolution of disputes and, if transfers could be made, to a welfare-maximizing outcome. Moreover, this efficiency would be achieved regardless of how initial entitlements or property rights were allocated among the parties. The role of the state in achieving social efficiency then would simply be to assign and enforce property rights. If transaction costs were high, however, bargaining among the parties to a dispute could be inefficient. Moreover, even if there were no transaction costs, the distributive consequences of the assignment of property rights would create incentives for political competition over the assignment of entitlements. Calabresi and Melamed (1972) took Coase’s perspective two steps further. First, they argued that in the absence of transaction costs not only could entitlements be assigned arbitrarily and efficiency attained, but those entitlements could be protected by either a property rule or a liability rule. Second, in the presence of transaction costs a liability rule could be more efficient than a property rule. The protection of entitlements then should depend on the relative costs associated with alternative forms of public order, e.g., reliance on the courts or regulation. Ellickson (1991) argued that the cost of public order—i.e., government-provided social order, such as relying on the courts to resolve disputes—could be high. It is costly to establish rules, enforce them, and revise them in light of new developments. When the costs of accessing the institutions of public order are high, individuals may provide private rather than public order. Ellickson argued that norms supported by repeated interactions provide the basis for private dispute resolution, and although such norms are sustained in the shadow of the institutions of public order, those institutions need not be accessed. He referred to this set of norms as a private ordering and supported his perspective with a detailed study of how residents of Shasta County, California, resolved disputes arising from wayward cattle. The resolution of those disputes, he argued, seldom depended on the applicable public law. The resolution of disputes has obvious distributive consequences, and settlements depend on the status quo and the alternatives available to the individuals involved. Private Politics 33 The status quo is thus the subject of politics; thus, ranchers and homeowners sought to define the status quo in a manner favorable to their interests. McMillan and Woodruff (2001) identified a continuum of “order” in economic and social interactions extending from the private orderings studied by Ellickson to state-supported order through regulation and the courts. They focused on “private-order organizations,” such as trade associations, that facilitate economic exchange by providing information and coordination for their members. The law merchant (Milgrom et al., 1990), trading companies, clearinghouses, and arbitration systems are examples of private-order organizations. These organizations typically have as members either trading partners or firms participating in an industry. Private politics focuses instead on private orderings formed by opposing interests, not all of whom need participate in economic transactions. This essay focuses on situations of conflict among individuals and the resolution of that conflict without reliance on the law. It extends the study of private orderings by taking both a step backward and a step forward. The step backward is to consider the origin of the conflict and the politics associated with it, and the step forward is to consider how a private ordering addresses future as well as current disputes. This perspective takes both Hobbes’s view that social order provides benefits to individuals and Nozick’s view that individuals voluntarily form private orderings to govern their own conduct. The costs associated with private and public order are not explicitly considered here, but often the situations are ones in which rights and entitlements are not well defined and jurisdictions may not be clear. For example, a dispute may cross the borders of countries. The Coasean view that private bargaining can resolve disputes is central to this perspective, but transaction costs of various forms are present. More importantly, the status quo, which serves as the starting point for Coase and for Calabresi and Melamed, may be endogenous to the economic and political strategies of the participants in the conflict. Private politics encompasses strategic competition over entitlements in the status quo, direct competition for support from the public, bargaining over the resolution of the conflict, and maintenance of the agreed-to private ordering. The term private means that the parties do not rely on the law or public order; i.e., on lawmaking or law enforcement, although both may be available. The term politics refers to individual and collective action in situations in which people attempt to further their interests by imposing their will on others. In public politics this generally involves a rule that allows a majority to impose its will on a minority. The private politics considered here 34 Journal of Economics & Management Strategy does not involve voting but does involve the public. The public is not viewed as a unitary actor but instead as individuals whose actions are voluntary and may or may not be similar. The resolution of the conflict, if there is one, is by mutual agreement, but collective action by the public determines the threat point and hence the resolution of the conflict. The result can be a private ordering established by opponents and designed to maintain order given the continuing conflicting interests of the parties. 2. Changing Strategies To provide focus and narrow the scope of this essay, the emphasis will be on issues initiated by individuals and groups and directed at the policies and practices of firms. The initiators will be referred to as activists, and their interests are assumed to conflict with the profit objectives of firms. The strategy of the activists to achieve changes in the firm’s practices may involve government, as in the case of regulation or new legislation, or it may involve private politics. A private-politics campaign could have as components the selection of the target, direct action against the firm, communication with the public, initiation of a boycott, and bargaining. The choice between public and private politics is strategic, and activists may increasingly be choosing private politics. Commenting on the boycott campaign against Exxon Mobil for its stance on global climate change, Paul Gilding, former head of Greenpeace, said, The smart activists are now saying, “O.K., you want to play markets—let’s play.” [Lobbying government] takes forever and can easily be counter-lobbied by corporations. No, no, no. They start with consumers at the pump, get them to pressure the gas stations, get the station owners to pressure the companies and the companies to pressure governments. After all, consumers do have choices where they buy their gas, and there are differences now. Shell and BP Amoco (which is also the world’s biggest solar company) both withdrew from the oil industry lobby that has been dismissing climate change.1 Technological change may have contributed to this change in strategy, with the Internet enabling private politics on a worldwide scale. Carol Browner, former head of the Environmental Protection 1 The New York Times, June 2, 2001. Private Politics 35 Agency (EPA) said, “Environmental groups have become truly sophisticated in using the Web to move information to millions of people literally overnight, and to attack companies on a global scale.”2 For example, an important strategy of environmental groups is to release information about pollution at the local level. Environmentalist seek the release of information about local pollution as a means of mobilizing local groups to take action directly against polluters. In the US environmentalists were successful in obtaining legislation directing the EPA to collect and make public information on the release of chemicals that might be carcinogenic. The annual publication of the Toxic Releases Inventory is a major event used by environmentalists to mobilize local citizens. At the global level Rugman and Verbeke (2002) discuss the impact of what they refer to as “internet anarchy.” In the effort within the OECD to develop a Multilateral Agreement on Investment (MAI), activists obtained a copy of a working draft and released it on the Internet. The objective of the activists was to release information that local-interest groups and NGOs could use to conduct local politics in their country. The local politics caused some countries to back away form the MAI, causing it to be abandoned.3 Characterizing the actions, Kobrin (1998) stated, “Much of the anti-MAI sentiment on the Internet presents barely credible worst-case scenarios as fact. As the OECD discovered, much to its chagrin, there are no controls on the Net over who can ‘publish’ or what they can say.” These examples also indicate the importance of viewing the public as a collection of dispersed individuals with local information. Private orderings to govern the conduct of firms are not new. One of the best known was the Sullivan Principles for conducting business in South Africa during the apartheid period. The use of private orderings as a resolution of the conflict between activists and firms, however, appears to have grown over the past decade as a result of private politics. For example, privacy in electronic commerce is supported by private institutions, such as TRUSTe, which certify the privacy policies of Web sites. The government also has begun to rely on such private institutions, as in the case of using TRUSTe as part of the Safe Harbor for ensuring adequate protection for the transfer of personally identifiable information from the European Union, as required by its data protection directive.4 2 The New York Times, September 9, 2001. 3 As Rugman and Verbeke indicate, the MAI also may have failed as much because of a weakening of support by the US. 4 See the case The European Union Data Protection Directive in Baron (2003, pp. 545– 547). 36 Journal of Economics & Management Strategy In the wake of protests against sweatshops in Asia, activists and footwear and apparel companies formed the Fair Labor Association to govern working conditions in suppliers’ factories. A private ordering has been established for fair-trade-certified coffee, cocoa production has come under a private ordering, and activists and diamond companies have established certification of conflict-free diamonds to stem violence in Sierra Leone financed by black-market diamonds. Thirdparty certification has also been established for milk from rGBH-free cows, Pacific tuna is now dolphin-safe, and activists and firms have formed a number of organizations to encourage voluntary efforts to address global warming. Activists, backed by boycotts of Home Depot and Lowe’s, reached an accord with timber companies to protect the Great Bear Rainforest in British Columbia. These private orderings resolve conflicts and govern future conduct through self-regulation by mitigating commitment, coordination, information, and free-rider problems. Some private orderings are simply public commitments to changes in practices. For example, Greenpeace organized a campaign against Coca-Cola in conjunction with the 2000 Olympics in Australia. Greenpeace sought the elimination of HFCs from soda vending machines and provided on the Internet downloadable pictures of Coca-Cola’s polar bears pacing on a melting iceberg. Using the Internet and other media, Greenpeace launched a communication program asking the public to download the pictures and tape them to Coca-Cola vending machines. Coca-Cola conceded and announced that it would eliminate HFCs by the time of the next Olympics. The examples of private politics we remember are generally the ones where the challenge has been successful, as in the cases of tuna, apparel and footwear, and coffee. If data were available on all attempts at private politics, however, most would probably be found to be failures. More important than either successful or failed attempts, however, may be the proactive measures adopted by many firms to avoid private politics. Just as one cannot infer the importance of the presidential veto by examining the small proportion of bills vetoed, one cannot infer the significance of private politics from the number of campaigns initiated. Congress anticipates the president’s veto and modifies its bills so they will withstand a veto, and thus the president vetoes few bills. Many firms attempt to avoid private politics by proactively adopting policies that reduce the likelihood that they will become a target. Some of these attempts are little more than public relations, but many represent real commitments to changes in policies and practices. The influence of private politics is thus greater than indicated by the number of observed conflicts. Private Politics 37 3. An Example of Private Politics Private politics pertains to a variety of goods, but particularly to credence goods whose characteristics cannot be discerned even through consumption and use.5 A consumer may not know the working conditions in the overseas factory that produced a pair of shoes or the pollution generated in conjunction with the production of a product. Similarly, a consumer may not know the uses to which revenue is put, as in the case of financing violence in Africa through the sale of conflict diamonds. When consumers and the public care about such unobservable characteristics, political action can arise to challenge the practices of firms. A quintessential example of private politics centered on work practices in apparel and footwear factories, particularly in Southeast Asia. The natural target was Nike, which not only was the largest company in this market segment but was also an aggressive competitor that was in the face of the public. Beginning in the early 1990s, activists and union organizers began calling attention to the working conditions in the “sweatshops” producing for the American market.6 The news media provided extensive coverage of the issue, and a number of widely publicized incidents of abusive practices and reports of low wages, long hours, and forced overtime provided ample fuel for the fire. The motivation for the protests was not just the working conditions. The Union of Needletrades, Industrial and Textile Employees (UNITE) sought to raise the costs in Asian factories to protect the jobs and wages of their members in the US. In the early years of the protests against its work practices Nike categorically rejected the allegations of the activists. Nike owned no factories, as a Nike spokeswoman explained: “We’re about sports, not manufacturing 101.” In Nike’s 1996 annual report CEO Phil Knight stated, “Yet no sooner had the great year ended than we were hit by a series of blasts from the media about our practices overseas.” Knight argued that not only were the factories of its suppliers not sweatshops, but that Nike provided badly needed jobs to people who were eager for them. He pointed to the experiences of Japan, South Korea, and Taiwan which transitioned from low wages and long hours to high per capita incomes. He explained, “When we started in Japan, factory labor there was making $4 a day, which is basically what is being paid in Indonesia and being so strongly criticized today. Nobody today is saying, ‘The poor old Japanese.’ We watched it happen all over again 5 See Feddersen and Gilligan (2001) for a signaling theory with credence goods. 6 See the case Nike in Southeast Asia in Baron (2003, pp. 113–116). 38 Journal of Economics & Management Strategy • Representation: —12 companies (e.g., Nike), 21 NGOs (six board seats for each group). —170 college and university affiliates (three seats). —Chair has one seat. —982 companies (university licensees) have applied to be affiliates. • Code governing workplace practices: [60 hour week; minimum wage/market wage (no living wage); children at least 15 unless host government allows 14; right to form unions; etc.]. • Procedures: supermajority to change code (both sides can block any changes); supermajority for selecting the chair. • Independent monitoring and inspection of factories: —Companies select the monitor from an FLA accredited list. —30% of factories for initial 2 to 3 years; 10% annually thereafter. —Companies are to monitor each facility annually. • Requires a plan to correct deficiencies. • Reports publicly on monitoring/inspectio ...
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