Academic journal article
By Sulzer, Alessandra
Harvard International Review , Vol. 23, No. 2
Semiconductor Industry--Joint Ventures
Cereal Products Industry--Joint Ventures
Barilla Alimentare S.p.A.--Joint ventures
Siemens Data Communication Ltd.--Joint ventures
PeaceWorks Inc.--Joint ventures
Peace and Profit through Joint Ventures
The idea of using trade to create political stability is not a new one. It took the form of imperialism into the late 19th century, when colonies helped the governments of industrializing countries handle social unrest at home. After centuries of change, the fundamental principle remains the same, though with a shift in focus. Now, private companies rather than mercantilist governments are attempting to foster peace between groups in conflict by involving them in cooperative business ventures. David Lubetsky, CEO of one such company, PeaceWorks, says, "The more companies operate and profit together, the more they will gain a vested interest in preserving and cementing those bonds...and hopefully someday, prosperity will make stability prevail." This movement takes the socially conscious business practices of the last quarter century one step further; rather than just promoting donations, this new theory gives businesses an incentive to become involved in creating peace by establishing commercial and personal links between groups in conflict.
The need for socially conscious enterprise was initially recognized in the 1980s, when organizations like the Social Venture Network sought to create a network of entrepreneurs who would design and implement innovative ways in which business could be used to benefit society. Until recently, this agenda meant that companies gave away a certain percentage of their pretax earnings to a worthy cause or organization and supported projects for social change, which benefited children, families, disadvantaged groups, and the environment. Since the 1990s, however, this original philosophy has evolved further.
Entrepreneurs for Peace
Several companies have conceived of a new type of enterprise that forms tangible links between cultures in conflict-ridden regions around the world. In this vision, social benefits do not come from donations but, instead, from self-sustainable economic ventures. These enterprises build a good reputation for the companies involved through trade and complementary comparative advantage, or the combination of the best quality component products of each company in order to form one composite product of greatest value. Essentially, businesses have realized that creating a highly profitable venture does not require a single-minded focus on boosting returns; businesses can simultaneously create profit and foster long-term economic stability and peace in their countries of operation.
One such company is Barilla Alimentare. Founded in 1877 by an Italian family, it is now one of the largest producers of pasta in the world. Recently, it launched a subsidiary in the Middle East with the joint cooperation of Egypt, Jordan, the Palestinian Authority, and the Israel-based Peres Center for Peace. This agricultural venture will create a new strain of wheat that will be used to make pasta for local consumption and export, providing employment and technology to local producers and fostering links between Israel and the Arab states.
Siemens Data Communications (SDC), an Israel-based electrical-engineering company, has similar goals. Since the early 1990s, many companies such as Motorola, Microsoft, Intel, and IBM had created branches in Israel, in five years increasing Israel's foreign investment figures from US$400 million to almost US$4 billion per year. In October 1998, SDC and a Palestinian engineering company signed a pioneering joint venture in which SDC agreed to hire, train, and integrate Palestinian engineers into company projects. This contract neatly solved two problems: first, it lowered the high rates of unemployment among Palestinian engineers; and second, it filled the gaps in the Israeli labor market. As for the success of this joint venture, An Ben-Zichri, the head of research and development at SDC, noted, "During the training period at SDC there was no animosity of any kind," even though "[many of the Israeli employees] were in the army and helped to put down the uprisings in Ramallah. …