IDEAS home Printed from https://ideas.repec.org/a/eee/iburev/v33y2024i2s0969593123001002.html
   My bibliography  Save this article

Investor state dispute settlement (ISDS) and the social licence to operate of international business: An analysis of controversial cases

Author

Listed:
  • Curran, Louise

Abstract

This paper analyses how the challenging of regulation by multinational enterprises through the investor state dispute settlement (ISDS) process impacts the social licence to operate (SLO) of international business (IB). Drawing on the analyses of controversial ISDS cases, it makes four key contributions. First, it proposes a framework for better understanding SLO and presents strong evidence that the use of ISDS has undermined SLO, not only of the involved companies, but also of IB more widely. Second, it extends the literature on corporate political activity (CPA) by drawing attention to the importance of litigation strategies, largely ignored in prior research. Third, it contributes to the literature on the externalities of CPA by exploring how certain tactics can undermine public trust and SLO. Last, it expands our understanding of the ‘dark side’ of CPA beyond illegal activities and government capture, to ethically questionable strategies.

Suggested Citation

  • Curran, Louise, 2024. "Investor state dispute settlement (ISDS) and the social licence to operate of international business: An analysis of controversial cases," International Business Review, Elsevier, vol. 33(2).
    • Handle: RePEc:eee:iburev:v:33:y:2024:i:2:s0969593123001002
    DOI: 10.1016/j.ibusrev.2023.102200
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969593123001002
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ibusrev.2023.102200?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Filip Alexandrescu, 2011. "GOLD AND DISPLACEMENT IN EASTERN EUROPE: RISKS AND UNCERTAINTY AT ROŞIA MONTANĂ (English version)," Revista Romana de Sociologie, Revista Romana de Sociologie - actualizata si mentinuta de Editura Lumen/ Romanian Journal of Sociology, vol. 1, pages 78-107.
    2. Thomas Lawton & Steven Mcguire & Tazeeb Rajwani, 2013. "Corporate Political Activity : A Literature Review and Research Agenda," Post-Print hal-02312913, HAL.
    3. Anna Clare Bull & Jagjit Plahe & Lachlan Gregory, 2021. "International Investment Agreements and the Escalation of Private Power in the Global Agri-Food System," Journal of Business Ethics, Springer, vol. 170(3), pages 519-533, May.
    4. Nicolas Dahan, 2005. "Can There Be a Resource-Based View of Politics?," International Studies of Management & Organization, Taylor & Francis Journals, vol. 35(2), pages 8-27, January.
    5. Thomas Dietz & Marius Dotzauer & Edward S. Cohen, 2019. "The legitimacy crisis of investor-state arbitration and the new EU investment court system," Review of International Political Economy, Taylor & Francis Journals, vol. 26(4), pages 749-772, July.
    6. John Ruggie, 2008. "Protect, Respect and Remedy: A Framework for Business and Human Rights," Innovations: Technology, Governance, Globalization, MIT Press, vol. 3(2), pages 189-212, April.
    7. Lawton Thomas C & Lindeque Johan P. & McGuire Steven M, 2009. "Multilateralism and the Multinational Enterprise," Business and Politics, De Gruyter, vol. 11(2), pages 1-28, August.
    8. Eckhard Janeba, 2019. "Regulatory chill and the effect of investor state dispute settlements," Review of International Economics, Wiley Blackwell, vol. 27(4), pages 1172-1198, September.
    9. Go, Sun & Lindert, Peter, 2010. "The Uneven Rise of American Public Schools to 1850," The Journal of Economic History, Cambridge University Press, vol. 70(1), pages 1-26, March.
    10. Fletcher, Margaret & Zhao, Yang & Plakoyiannaki, Emmanuella & Buck, Trevor, 2018. "Three Pathways to Case Selection in International Business: A Twenty–Year Review, Analysis and Synthesis," International Business Review, Elsevier, vol. 27(4), pages 755-766.
    11. Doh, Jonathan P. & Teegen, Hildy, 2002. "Nongovernmental organizations as institutional actors in international business: theory and implications," International Business Review, Elsevier, vol. 11(6), pages 665-684, December.
    12. Simon Hartmann & Thomas Lindner & Jakob Müllner & Jonas Puck, 2022. "Beyond the nation-state: Anchoring supranational institutions in international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(6), pages 1282-1306, August.
    13. Geels, Frank W. & Penna, Caetano C.R., 2015. "Societal problems and industry reorientation: Elaborating the Dialectic Issue LifeCycle (DILC) model and a case study of car safety in the USA (1900–1995)," Research Policy, Elsevier, vol. 44(1), pages 67-82.
    14. Gustafsson,Björn A. & Shi,Li & Sicular,Terry (ed.), 2010. "Inequality and Public Policy in China," Cambridge Books, Cambridge University Press, number 9780521159050, January.
    15. Williams, Christopher & Lukoianova (Vashchilko), Tatiana & Martinez, Candace A., 2017. "The moderating effect of bilateral investment treaty stringency on the relationship between political instability and subsidiary ownership choice," International Business Review, Elsevier, vol. 26(1), pages 1-11.
    16. Eckhardt, Jappe & De Bièvre, Dirk, 2015. "Boomerangs over Lac Léman: Transnational Lobbying and Foreign Venue Shopping in WTO Dispute Settlement," World Trade Review, Cambridge University Press, vol. 14(3), pages 507-530, July.
    17. Bаlаstryk L., 2010. "Macro and microeconomic determinants of public sector," Bulletin of Taras Shevchenko National University of Kyiv. Economics. Вісник Киiвського нацiонального унiверситету iм. Тараса Шевченка. Серiя: Економiка, CyberLeninka;Издательско-полиграфический центр «Киевский университет», issue 117, pages 30-33.
    18. Thomas J. Chemmanur & Shan He & Debarshi K. Nandy, 2010. "The Going-Public Decision and the Product Market," The Review of Financial Studies, Society for Financial Studies, vol. 23(5), pages 1855-1908.
    19. Srividya Jandhyala & Robert J Weiner, 2014. "Institutions sans frontières: International agreements and foreign investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 45(6), pages 649-669, August.
    20. Oana Mihaela Apostol, 2015. "A project for Romania? The role of the civil society’s counter-accounts in facilitating democratic change in society," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 28(2), pages 210-241, February.
    21. Pia Eberhardt & Cecilia Olivet, 2018. "Modern Pirates: How Arbitration Lawyers Help Corporations Seize National Assets and Limit State Autonomy," American Journal of Economics and Sociology, Wiley Blackwell, vol. 77(2), pages 279-329, March.
    22. Curran, Louise & Eckhardt, Jappe, 2018. "Influencing trade policy in a multi-level system—understanding corporate political activity in the context of global value chains and regime complexity†," Business and Politics, Cambridge University Press, vol. 20(1), pages 132-164, March.
    23. Curran, Giorel, 2017. "Social licence, corporate social responsibility and coal seam gas: framing the new political dynamics of contestation," Energy Policy, Elsevier, vol. 101(C), pages 427-435.
    24. Daniel J. Blake & Caterina Moschieri, 2017. "Policy risk, strategic decisions and contagion effects: Firm‐specific considerations," Strategic Management Journal, Wiley Blackwell, vol. 38(3), pages 732-750, March.
    25. Frank Hond & Kathleen A. Rehbein & Frank G. A. Bakker & Hilde Kooijmans-van Lankveld, 2014. "Playing on Two Chessboards: Reputation Effects between Corporate Social Responsibility (CSR) and Corporate Political Activity (CPA)," Journal of Management Studies, Wiley Blackwell, vol. 51(5), pages 790-813, July.
    26. Moffat, Kieren & Zhang, Airong, 2014. "The paths to social licence to operate: An integrative model explaining community acceptance of mining," Resources Policy, Elsevier, vol. 39(C), pages 61-70.
    27. Shawn Nichols, 2018. "Expanding property rights under investor-state dispute settlement (ISDS): class struggle in the era of transnational capital," Review of International Political Economy, Taylor & Francis Journals, vol. 25(2), pages 243-269, March.
    28. Simona Giorgi & Massimo Maoret & Edward J. Zajac, 2019. "On the Relationship Between Firms and Their Legal Environment: The Role of Cultural Consonance," Organization Science, INFORMS, vol. 30(4), pages 803-830, July.
    29. Lawton, Thomas C. & Lindeque, Johan P. & McGuire, Steven M., 2009. "Multilateralism and the Multinational Enterprise," Business and Politics, Cambridge University Press, vol. 11(2), pages 1-26, August.
    30. Katherine E Smith & Gary Fooks & Jeff Collin & Heide Weishaar & Sema Mandal & Anna B Gilmore, 2010. "“Working the System”—British American Tobacco's Influence on the European Union Treaty and Its Implications for Policy: An Analysis of Internal Tobacco Industry Documents," PLOS Medicine, Public Library of Science, vol. 7(1), pages 1-17, January.
    31. Karam Kang, 2016. "Policy Influence and Private Returns from Lobbying in the Energy Sector," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(1), pages 269-305.
    32. Joao Albino‐Pimentel & Pierre Dussauge & J. Myles Shaver, 2018. "Firm non‐market capabilities and the effect of supranational institutional safeguards on the location choice of international investments," Strategic Management Journal, Wiley Blackwell, vol. 39(10), pages 2770-2793, October.
    33. Doh, Jonathan P. & Dahan, Nicolas M. & Casario, Michelle, 2022. "MNEs and the practice of international business diplomacy," International Business Review, Elsevier, vol. 31(1).
    34. Andreas Georg Scherer & Guido Palazzo, 2011. "The New Political Role of Business in a Globalized World: A Review of a New Perspective on CSR and its Implications for the Firm, Governance, and Democracy," Journal of Management Studies, Wiley Blackwell, vol. 48(4), pages 899-931, June.
    35. De Meijer, Carlo R.W. & Spinhoven, Friso, 2010. "Public administrations and SEPA: A win–win situation," Journal of Payments Strategy & Systems, Henry Stewart Publications, vol. 4(1), pages 86-92, March.
    36. Greg Anderson, 2017. "How did investor-state dispute settlement get a bad rap? Blame it on NAFTA, of course," The World Economy, Wiley Blackwell, vol. 40(12), pages 2937-2965, December.
    37. Tahiru Azaaviele Liedong & Daniel Aghanya & Tazeeb Rajwani, 2020. "Corporate Political Strategies in Weak Institutional Environments: A Break from Conventions," Journal of Business Ethics, Springer, vol. 161(4), pages 855-876, February.
    38. Geert Demuijnck & Björn Fasterling, 2016. "The Social License to Operate," Journal of Business Ethics, Springer, vol. 136(4), pages 675-685, July.
    39. Tahiru Azaaviele Liedong, 2021. "Responsible Firm Behaviour in Political Markets: Judging the Ethicality of Corporate Political Activity in Weak Institutional Environments," Journal of Business Ethics, Springer, vol. 172(2), pages 325-345, August.
    40. Julian Donaubauer & Peter Nunnenkamp, 2018. "International arbitration of investment disputes: are poor and badly governed respondent states more likely to lose?," Applied Economics Letters, Taylor & Francis Journals, vol. 25(5), pages 321-325, March.
    41. Ole Jonny Klakegg & Nils O.E. Olsson, 2010. "An empirical illustration of public project ownership," International Journal of Project Organisation and Management, Inderscience Enterprises Ltd, vol. 2(1), pages 16-39.
    42. Cesar Saenz, 2018. "The Context in Mining Projects Influences the Corporate Social Responsibility Strategy to Earn a Social Licence to Operate: A Case Study in Peru," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(4), pages 554-564, July.
    43. Thompson, Alexander & Broude, Tomer & Haftel, Yoram Z., 2019. "Once Bitten, Twice Shy? Investment Disputes, State Sovereignty, and Change in Treaty Design," International Organization, Cambridge University Press, vol. 73(4), pages 859-880, October.
    44. Pei Sun & Jonathan P. Doh & Tazeeb Rajwani & Donald Siegel, 2021. "Navigating cross-border institutional complexity: A review and assessment of multinational nonmarket strategy research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(9), pages 1818-1853, December.
    45. Louise Curran & Jappe Eckhardt, 2017. "Smoke screen? The globalization of production, transnational lobbying and the international political economy of plain tobacco packaging," Review of International Political Economy, Taylor & Francis Journals, vol. 24(1), pages 87-118, January.
    46. Santiago, Ana Lúcia & Demajorovic, Jacques & Rossetto, Dennys Eduardo & Luke, Hanabeth, 2021. "Understanding the fundamentals of the Social Licence to Operate: Its evolution, current state of development and future avenues for research," Resources Policy, Elsevier, vol. 70(C).
    47. Jouke de Vries, 2010. "Is New Public Management Really Dead?," OECD Journal on Budgeting, OECD Publishing, vol. 10(1), pages 1-5.
    48. Kent Jones, 2018. "Patterns of Investor-State Dispute Settlement Decisions," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 24(1), pages 79-96, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shirodkar, Vikrant & Liedong, Tahiru Azaaviele & Rajwani, Tazeeb & Lawton, Thomas C., 2024. "MNE nonmarket strategy in a changing world: Complexities, varieties, and a values-based approach," International Business Review, Elsevier, vol. 33(2).
    2. Shuna Shu Ham Ho & Chang Hoon Oh & Daniel Shapiro, 2024. "Can Corporate Social Responsibility Lead to Social License? A Sentiment and Emotion Analysis," Journal of Management Studies, Wiley Blackwell, vol. 61(2), pages 445-476, March.
    3. Yamlaksira S. Getachew & Roger Fon & Elie Chrysostome, 2023. "On the location choices of African multinational enterprises: Do supranational economic institutions matter?," Journal of International Business Policy, Palgrave Macmillan, vol. 6(4), pages 453-490, December.
    4. Iiris Saittakari & Tiina Ritvala & Rebecca Piekkari & Perttu Kähäri & Sami Moisio & Tomas Hanell & Sjoerd Beugelsdijk, 2023. "A review of location, politics, and the multinational corporation: Bringing political geography into international business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(6), pages 969-995, August.
    5. Pei Sun & Jonathan P. Doh & Tazeeb Rajwani & Donald Siegel, 2021. "Navigating cross-border institutional complexity: A review and assessment of multinational nonmarket strategy research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(9), pages 1818-1853, December.
    6. Gammeltoft, Peter & Panibratov, Andrei, 2024. "Emerging market multinationals and the politics of internationalization," International Business Review, Elsevier, vol. 33(3).
    7. Daniel M. Shapiro & Carlos Vecino & Jing Li, 2018. "Exploring China’s state-led FDI model: Evidence from the extractive sectors in Latin America," Asia Pacific Journal of Management, Springer, vol. 35(1), pages 11-37, March.
    8. João Albino-Pimentel & Jennifer Oetzel & Chang Hoon Oh & Nicholas A. Poggioli, 2021. "Positive institutional changes through peace: The relative effects of peace agreements and non-market capabilities on FDI," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(7), pages 1256-1278, September.
    9. Andersen, Sophie Esmann & Johansen, Trine Susanne, 2021. "Corporate citizenship: Challenging the corporate centricity in corporate marketing," Journal of Business Research, Elsevier, vol. 131(C), pages 686-699.
    10. Nathaniel Boso & Joseph Amankwah-Amoah & Dominic Essuman & Oluwaseun E. Olabode & Patience Bruce & Magnus Hultman & James Kofi Kutsoati & Ogechi Adeola, 2023. "Configuring political relationships to navigate host-country institutional complexity: Insights from Anglophone sub-Saharan Africa," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(6), pages 1055-1089, August.
    11. Simon Hartmann & Thomas Lindner & Jakob Müllner & Jonas Puck, 2022. "Beyond the nation-state: Anchoring supranational institutions in international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(6), pages 1282-1306, August.
    12. Timothy M. Devinney & Christopher A. Hartwell & Jennifer Oetzel & Paul Vaaler, 2023. "Managing, theorizing, and policymaking in an age of sociopolitical uncertainty: Introduction to the special issue," Journal of International Business Policy, Palgrave Macmillan, vol. 6(2), pages 133-140, June.
    13. Francesca Colli & Johan Adriaensen, 2020. "Lobbying the state or the market? A framework to study civil society organizations’ strategic behavior," Regulation & Governance, John Wiley & Sons, vol. 14(3), pages 501-513, July.
    14. Yanyan Li & Yu Gao & Shanxing Gao, 2023. "Organizational slack, entrepreneurial orientation, and corporate political activity: From the behavioral theory of the firm," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-12, December.
    15. Greiner, Michael & Kim, Jaemin & Cordon Thor, Jennifer, 2023. "Narcissistic CEOs and their corporate political activity," Journal of Business Research, Elsevier, vol. 163(C).
    16. Ana Paula Pereira dos Passos & Jeferson Lana & Rosilene Marcon, 2023. "Social and political capabilities as nonmarket activities: What are they and how do firms develop them?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 2718-2730, November.
    17. Jonas Puck & Thomas Lawton & Alexander Mohr, 2018. "The Corporate Political Activity of MNCs: Taking Stock and Moving Forward," Management International Review, Springer, vol. 58(5), pages 663-673, October.
    18. Olivier Bertrand & Marie-Ann Betschinger, 2024. "Exploring the relationship between development aid and FDI from developed countries in developing countries: empirical insights from Japanese firm-level data," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 55(6), pages 782-795, August.
    19. Han, Xia & Lukoianove, Tatiana & Zhao, Shasha & Liu, Xiaohui, 2024. "International relations in international business research: A review and research agenda," Journal of Business Research, Elsevier, vol. 174(C).
    20. Bucheli, Marcelo & DeBerge, Thomas, 2024. "Multinational enterprises’ nonmarket strategies: Insights from History," International Business Review, Elsevier, vol. 33(2).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:iburev:v:33:y:2024:i:2:s0969593123001002. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/133/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.