NGOs as Multinationals’ Value Creation Partners for Sustainability in Emerging Markets

Abstract

We analyze how multinationals implement sustainability projects in emerging markets to address the lack of provision of public goods by the government. In this theoretical paper, we propose a framework that explains how multinationals redefine their partnerships with nongovernmental organizations (NGOs) in emerging economies by embracing NGOs as value creation partners, helping multinationals internalize the externalities derived from their activities. Specifically, we suggest that foreign multinationals collaborate with the three types of NGOs (service, regulatory, and advocacy) to enhance the effectiveness of three types of value creation strategies (action, control, and information). Second, building on an extended resource-based view, we argue that relative balance between the multinational and the NGO in sustainability resources (expertise, credibility, and passion) drives the selection of three types of multinational-NGO partnerships (commissioning, co-developing, and sponsoring). In commissioning, the foreign multinational designs sustainability projects and employs NGOs to implement them. In co-developing, the foreign multinational collaborates with NGOs to co-design and co-implement sustainability projects. Finally, in sponsoring, the foreign multinational provides funds for sustainability projects designed and implemented by NGOs. These ideas can help guide research on this important and understudied mechanism for multinationals to improve the impact of their sustainability projects.