trading diamons responsibly

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Trading Diamonds Responsibly: Institutional Explanations for Corporate Social Responsibility Franziska Bieri 1 and John Boli 2 This article identifies factors that led to a comprehensive regulatory regime for the global diamond trade, the Kimberley Process Certification Scheme (KPCS), established through negotiations among NGOs, states, and the industry. The conflict diamonds case provides important insights into the processes by which global norms redefine how corporations are expected to conduct business. First, we show that global corporate social responsibility (CSR) norms rooted in the construct of world citizenship facilitated the rapid progress of the conflict diamonds campaign. Second, we detail how these norms became institutionalized in the KPCS, stressing the importance of the legitimacy of NGOs as bearers of corporate world citizenship models and the role of moral leaders within the diamond industry itself. We consider two theoretical perspectives on CSR development: management theories, which are strong on practitioner issues but mute regarding the content and authority of CSR ideology, and institutional theories, which offer better frameworks for understanding the impact of cultural and institutional environments on company responses to the moral claims advanced by NGOs. We use the conflict diamonds case to draw conclusions about how NGOs can effectively define new social responsi- bilities that companies come to see as obligations they must heed as responsible world citizens. KEY WORDS: conflict diamonds; corporate social responsibility; global governance; global norms; nongovernment organizations; world citizenship. INTRODUCTION This article advances our theoretical understanding of corporate social responsibility (CSR) by identifying factors that facilitated the emergence of new norms and the implementation of regulations in the global diamond trade. The diamond business has seen tremendous changes in the past decade, moving from a highly unregulated industry to what likely is the most far- reaching trade regulation regime instituted in recent decades. This sweeping change was initiated by a set of carefully documented reports by NGOs and the United Nations about the role of diamonds in financing brutal civil wars in West Africa in the 1990s. Diamonds were no longer glittering symbols of 1 Department of Sociology, University of Maryland University College Europe, ImBosseldorn 30, 69126 Heidelberg, Germany; e-mail: [email protected]. 2 Department of Sociology, Emory University, Atlanta, Georgia, 30322. Sociological Forum, Vol. 26, No. 3, September 2011 DOI: 10.1111/j.1573-7861.2011.01260.x 501 Ó 2011 Eastern Sociological Society

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  • Trading Diamonds Responsibly: InstitutionalExplanations for Corporate Social Responsibility

    Franziska Bieri1 and John Boli2

    This article identies factors that led to a comprehensive regulatory regime for the global diamond

    trade, the Kimberley Process Certication Scheme (KPCS), established through negotiations among

    NGOs, states, and the industry. The conict diamonds case provides important insights into the

    processes by which global norms redene how corporations are expected to conduct business. First,

    we show that global corporate social responsibility (CSR) norms rooted in the construct of world

    citizenship facilitated the rapid progress of the conict diamonds campaign. Second, we detail how

    these norms became institutionalized in the KPCS, stressing the importance of the legitimacy of

    NGOs as bearers of corporate world citizenship models and the role of moral leaders within the diamond

    industry itself. We consider two theoretical perspectives on CSR development: management theories,

    which are strong on practitioner issues but mute regarding the content and authority of CSR ideology,

    and institutional theories, which offer better frameworks for understanding the impact of cultural and

    institutional environments on company responses to the moral claims advanced by NGOs. We use the

    conict diamonds case to draw conclusions about how NGOs can effectively dene new social responsi-

    bilities that companies come to see as obligations they must heed as responsible world citizens.

    KEY WORDS: conict diamonds; corporate social responsibility; global governance; globalnorms; nongovernment organizations; world citizenship.

    INTRODUCTION

    This article advances our theoretical understanding of corporate socialresponsibility (CSR) by identifying factors that facilitated the emergence ofnew norms and the implementation of regulations in the global diamondtrade. The diamond business has seen tremendous changes in the past decade,moving from a highly unregulated industry to what likely is the most far-reaching trade regulation regime instituted in recent decades. This sweepingchange was initiated by a set of carefully documented reports by NGOs andthe United Nations about the role of diamonds in nancing brutal civil warsin West Africa in the 1990s. Diamonds were no longer glittering symbols of

    1 Department of Sociology, University of Maryland University College Europe, ImBosseldorn 30,69126 Heidelberg, Germany; e-mail: [email protected].

    2 Department of Sociology, Emory University, Atlanta, Georgia, 30322.

    Sociological Forum, Vol. 26, No. 3, September 2011

    DOI: 10.1111/j.1573-7861.2011.01260.x

    501

    2011 Eastern Sociological Society

  • love; they became conict diamonds or blood diamonds, linked to villagemassacres, chopped-off limbs, and massive refugee emergencies. As a state-ment in 2001 by De Beers, the dominant global diamond company, put it,once conict diamonds had become a prominent global issue: It is appallingthat a product which is the ultimate symbol of enduring love and purity andall that is best in mankind should be linked in any way with the obscenity ofwar and the suffering of the innocent (De Beers Group, 2001:14). Inresponse, states, NGOs, and the industry created the Kimberley Process Certi-cation Scheme (KPCS), a voluntary international agreement regulating thediamond trade. Designed and implemented with remarkable speed, the KPCShas restructured the way diamonds are traded globally. It is a striking exampleof the practical implications of CSR concerns. Amid continuing debates sur-rounding the motives for and effects of CSR, the conict diamonds campaignmanaged to extend the reach of CSR principles into the diamond industry,which had been isolated from and largely immune to CSR culture. The KPCStranslated CSR rhetoric into concrete actions enforced by a regulatory certi-cation system.

    Adopted in 2003, the KPCS controls the trade in rough diamonds.Today, 75 countries participate, accounting for about 99% of the global roughdiamond trade. In this formally voluntary scheme, all member states have for-mally adopted domestic legislation in accordance with the minimum criteriaset out by the KPCS, which require the establishment of comprehensive con-trol systems and the issuance of KP certicates for all rough diamonds. In theUnited States, for instance, the KPCS was implemented via the passage of theClean Diamond Trade Act in July 2003, writing into law specic diamondtrade requirements regarding record keeping, oversight, customs operations,and penalties for violations. In addition, diamond-producing states in the KPmust put internal control systems in place to track rough diamonds all theway from the mine to the nished gem, a journey that often crosses multipleborders. The KPCS has in essence become compulsory for any state seekingto trade in diamonds because countries in the KPCS must agree to trade onlywith other KPCS members. High levels of participation in the agreement leaveoutsiders without trading partners. Private industry entities in any KP memberstate must follow the legally binding requirements, trading only those dia-monds that are accompanied by KPCS certicates verifying their conict-freeorigins. CSR principles on diamond trading have become legally codied withthe passing of national legislation in many countries. The KPCS is thereforemuch more far reaching than a voluntary code of conduct, which could merelyserve the preemptive function of avoiding stringent state regulation. Such isnot the case here: the KPCS is enforced via the KPs membership criteria andmandatory state legislation and implementation.

    The KPCS has been largely successful in curbing the trade of diamondsfrom conict regions in western and central Africa, with the notable excep-tions of Cote dIvoire and the Democratic Republic of Congo. U.N. sanctionsprohibit the export of rough diamonds from Cote dIvoire, but rebel groups

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  • smuggle diamonds into the KP pipeline via neighboring countries, particularlyMali and Ghana, both of which are KP members. Conict diamonds are alsosmuggled from the eastern DRC, where ghting continues. Still, the prevailingestimate is that conict diamonds now account for less than 1% of the totaldiamond trade, a dramatic reduction from some 515% in the 1990s. A sec-ond concern is illegitimate trading by a few KP member countries. Mostrecently, the KP has come under re for failing to take vigorous action withrespect to Zimbabwe, despite mounting evidence that KPCS standards arebeing violated.3

    States are the formal implementers of the KPCS, but nonstate actors havewell-dened roles within this global regulatory framework. The diamondindustry is represented at the KP by the World Diamond Council (WDC), anindustry organization that was created in 2000 in response to growing globalpressure to take action regarding conict diamonds. NGOs have observerstatus in the KP, but this designation understates their importance in the orga-nization, as we show below. The two NGOs that have consistently representedglobal civil society at the KP are Global Witness and Partnership Africa Can-ada (PAC). In initial KP proceedings, they were joined by other, more promi-nent civil society groups, including representatives from ActionAid, AmnestyInternational, and Oxfam International. The door to early KP engagementwas wide open, and neither states nor the industry preselected NGO partici-pants to keep more radical voices away from the negotiating table. However,consistent representation of African NGOs at the KP was restricted due to thehigh costs associated with attendance at frequent KP meetings around theglobe. Over time, resource constraints and the increasingly bureaucratic natureof implementation also led several of the more campaign-oriented NGOs likeAmnesty and Oxfam to leave their seats at the KP table.

    NGO and industry representation at the KP extends to key areas of deci-sion making and global implementation of the KPCS. The KPs workinggroup system mechanism is tripartite in nature. In the absence of a centralsecretariat, most of the tasks are accomplished in seven working groups.Nonstate actors are involved in all activities of these groups, including settingrequirements for the submission of trade data by member states, monitoringcompliance, and deciding how to handle noncompliance. These and other keydecisions are made within the working groups, while the biannual plenarymeetings, with all KP participants and observers present, usually involve mererubber-stamping of working group recommendations. Thus, thanks to the tri-partite nature of the working group system, NGO and industry inuence isremarkably extensive.

    3 Zimbabwe has been criticized for massive human rights violations and widespread violence inthe Marange diamond area, much of which is attributable to Mugabes military and policeforces (PAC, 2009, 2010). The KP has been considering suspending Zimbabwe for some timebut has yet to do so. While illegitimate, diamonds exported from Zimbabwe are not conict dia-monds, which the KP denes as rough diamonds traded by rebel groups to nance their warefforts. Repressive governments that derive revenues from diamond exports cannot be heldaccountable under the KP.

    Institutional Explanations for Corporate Social Responsibility 503

  • The new norms that were created during the conict diamonds cam-paigndening the trade in conict diamonds as immoral, socially irresponsi-ble, and unacceptablehave been institutionalized in the KPs organizationalstructure. Through the working group system, the KPs participation criteria,and its mandatory minimum standards, the KP has redened legitimate dia-mond trading practices. Seen more broadly, the conict diamonds case pro-vides important lessons about the processes by which global norms redenehow corporations are expected to do business. We focus on two key processesat work in this case. First, global-level CSR norms shaped industry responsesto the conict diamonds campaign, facilitating rapid progress in developingnew business practices driven by moral or normative considerations. Diffusenorms about corporate responsibilities prompted the diamond industry to bemore responsive to the moral exhortations of the NGOs behind the conictdiamonds campaign. While CSR norms were not yet rmly rooted in thesecretive industry of diamond trading prior to this campaign, several excep-tionally CSR-oriented industry actors helped set the tone for others. Led byDe Beers, the dominant player in the diamond trade, the industry came toaccept both the legitimacy of its NGO critics and the compelling nature oftheir concerns. Ignoring the problems or disavowing responsibility for thembecame untenable propositions.

    Second, the Kimberley Process reveals mechanisms by which normativeframeworks become institutionalized in concrete social responsibility practices,that is, the process that matches action to words. Small, low-budget NGOswere crucial participants and, often, the driving force in the regulation of theinternational diamond trade. Their efforts were reinforced by progressiveleaders in the industry and by proactive state representativessome drivenprincipally by moral considerations, others perhaps more nancially or politi-cally motivated.4 Initial normative claims about the unacceptability of conictdiamonds were quickly matched by formal state regulatory mechanisms; newdiamond trade norms diffused via national implementation. The KP demon-strates how multistakeholder engagement can produce cooperative relationsthat achieve tangible and largely effective results despite great power dispari-ties among the participants. We identify the mechanisms and factors that ledto a positive outcome. Inversely, our analysis also helps us understand whyother instances of global negotiations may fail when they lack the favorableconditions present in the conict diamonds case.

    Two ndings regarding the institutionalization of global norms stand out.First, NGOs were able to push the diamond industry and diamond tradingstates to redene how they think and act. NGOs were inuential in all stages

    4 Major diamond producers, such as South Africa, Botswana, and Namibia, and major diamondtrading states, such as Israel, Britain, and Belgium, had a clear material interest in resolving theconict diamonds issue. South Africa also saw an opportunity to show leadership on globalhumanitarian matters during its rst postapartheid decade. Mixed motives account for Canadasdeep engagement: an emerging diamond industry and a strong commitment to humanitarianforeign relations policies.

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  • of the norm development process, from norm innovation to maturation: theycatapulted this previously ignored issue onto the world stage, they helpedshape a global institution charged with enforcing newly created rules, and theycried foul when other actors failed to deliver. Invoking CSR principles, NGOsexpanded the frontier of norms about corporate behavior. Such social move-ment efforts involving intense negotiations between NGOs, states, and corpo-rations are a key mechanism whereby global CSR norms encompass an evergreater number of industries and reach ever more rms around the world. Sec-ond, global cultural norms can spread despite ongoing contestation regardingtheir validity and merits. When vague CSR principles are transformed intoconcrete policies like the KPCSa sign of norm maturation in itselfcontes-tation and debate about the validity of the underlying principles dies out. Thatdiamond trading states and the industry must act ethically by not tradingblood diamonds becomes taken for granted: publicly proclaiming the contrarywould beand has beensanctioned. The fundamental raison detre of theKP stands undisputed, though this by no means implies that the organizationis conict free. Thus, we observe the expansion of CSR norms in terms ofboth breadth and depth: new principles regarding ethical diamond trading,rooted in CSR logic, expanded to previously unaffected market segments and,via tripartite negotiations, reached a threshold of taken-for-grantedness thatmade the principles essentially obligatory for companies and states engaged inthe diamond trade.

    THEORIZING CORPORATE SOCIAL RESPONSIBILITY

    The literature on corporate social responsibility is vast but theoreticalwork explaining the global growth of CSR norms is sparse. For the most part,the CSR literature is practitioner-oriented, describing CSR behavior or pro-moting CSR norms and practices. Most CSR studies focus on one or moremainly practical themes: dening CSR or assessing how social or responsi-ble CSR practices really are (Shamir, 2004; Vogel, 2005), charting the extentof CSR practices by rms or industries (see, on Coca-Cola, Fortun andFortun, 2007; on Chiquita, Taylor and Scharlin, 2004; on the apparel industry,Cavanagh, 1997 and DeWinter, 2001), identifying the societal benets ordrawbacks of CSR (Henderson, 2001; Kyle and Ruggie, 2005; Porter andKramer, 2006; Reich, 2007; Robinson, 2002), or studying the effects of CSRon nancial performance (Barnett, 2007; Cochran and Wood, 1984). Someresearch analyzes social movement efforts to increase responsible practices bybusiness and industry (e.g., Pellow, 2001 on the environment; Tarrow, 2005 onantineoliberalism). More generally, scholars explore the extra-institutionalinuencesmaterial and symbolic in natureexerted by social movements inattempts to change dominant institutions and to pressure companies and statesto alter their behavior (Armstrong and Bernstein, 2008; King and Soule,2007). In a study of anticorporate protests in the United States, Soule (2009)

    Institutional Explanations for Corporate Social Responsibility 505

  • shows how social movement campaigns for social change and justice can pres-sure corporations and the state simultaneously. King and Soule (2007) trackthe effects of social movement protest activities on stock price returns, ndingthat greater media coverage of protest events, as well as of the rm as such,mediates the relationship. Other social movement studies have examinedglobal anticorporate campaigns (Cavanagh, 1997; DeWinter, 2001; Taylorand Scharlin, 2004). However, such studies focus not on CSR norms but onrelationships between social movements and states or industries. Little workhas been done on how social movements use CSR norms strategically, on howmovements participate in the CSR norm creation process, or on howmovements engage in the implementation of new corporate social normsallof which are foci of our study.

    Empirical research usually positions CSR as an independent variable,investigating its effects on nancial performance (Rowley and Berman, 2000;Walsh et al., 2003). Walsh et al. (2003) report that scholarly articles publishedfrom 1972 to 2002 treated CSR as a dependent variable just 15% of the timeand, in most such articles, only nancial variables were studied. Managementresearch revolves primarily around the issue of nancial incentives for corpo-rations to act responsibly (e.g., Margolis et al., 2007; Porter and Kramer,2006; Smith, 1990), and proponents of CSR frequently cite research thatshows how responsible practices have positive effects on the bottom line(Reich, 2007; Robinson, 2002; Yaziji, 2004). Other management studiesdevelop the view that companies may benet from socially responsible behav-ior due to the insurance-like protection it provides (Godfrey, 2005; Kyleand Ruggie, 2005). Essentially, CSR endows companies with a positive imageamong consumers, shareholders, or the general public, which in times of crisiscan become an asset for the company. On the distaff side, some studies claim,far from conclusively, that CSR engagement has negative effects on the bot-tom line (Henderson, 2001; Vogel, 2005). At best, CSR practices appear tohave only moderately positive nancial effects (Margolis and Elfenbein, 2008),and effects vary greatly across industry sectors and rms (Vogel, 2005). In anycase, these nancially oriented studies invariably fail to address the theoreticalpuzzle that they implicitly identify: Why do so many companies and managersconsider adopting CSR practices when much of the evidence points to few ifany nancial benets of doing so?

    One theoretical approach, the stakeholder perspective, investigates theactions of particular stakeholders, notably consumers, shareholders, andemployees, and company responses to them (Freeman, 1984). Stakeholdersare persons or groups that have, or claim, ownership, rights, or interests in acorporation and its activities, past, present, or future (Clarkson, 1995:106).Primary stakeholders, who are crucial for the basic survival and operation ofthe company, include employees, investors, consumers, suppliers, and thebroader political unit or community that provides key infrastructure. Second-ary stakeholders, such as the mass media and various interest and social move-ment groups, are not directly involved in company transactions but can be

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  • relevant to its operations by, for example, shaping public opinion (Clarkson,1995; McAdam et al., 2010).

    The stakeholder literature is mainly of two sorts: descriptive, identifyingthe stakeholders involved, the claims they make, and the outcomes of disputes;or prescriptive, urging management to heed activist stakeholders or implementparticular policies. However, stakeholder research ignores such fundamentalissues as why NGOs are seen as legitimate stakeholders, why their moralclaims take the forms that they do, or why consumers or shareholders wouldvalue and reward responsible companies.

    Such questions are discussed by a second theoretical approach, institu-tional theories, which attempt to gain purchase on the issue of the generallegitimacy and diffusion of CSR ideology and practices. The basic idea here issimple: companies embedded in environments favorable to or promoting CSRnorms are more likely to act responsibly (Galaskiewicz, 1991; Levy and Kolk,2002). Campbell (2006, 2007) proposes that companies are induced to adoptCSR practices by the following institutional factors: systems of well-organizedstate or industry self-regulation; monitoring by NGOs and the media; institu-tionalized CSR expectations in business education, publications, and associa-tions; membership in business associations that are supportive of CSR; andinstitutionalized dialogue with various stakeholders pushing CSR principles.Both carrots and sticks are used to encourage responsible behavior and punishor threaten to punish irresponsible behavior. Frequently, the focus is on expli-cit rewards and sanctions carried by formal (legislative or regulatory) enforce-ment agencies (Campbell, 2006).

    Other institutional approaches, strongly cultural in emphasis, addressthe more fundamental questions of where CSR ideology is rooted, why ithas become so prevalent, and why it has such expansive mobilizational capac-ity. The world-polity or world-society perspective stresses the role of globalframes and norms in constituting actors, shaping their identities, and offeringlegitimated models of behavior (Boli, 2005; Boli and Thomas, 1999; Franket al., 2000; Meyer et al., 1997; Ramirez and McEneaney, 1997; Scott andChristensen, 1995).

    In this perspective, the foundation of CSR ideology is located in broadcultural principles grounded in the global moral order. Most relevant here arethe principles involved in the construct of world citizenship. World citizenshipentails a model of the rights and duties of all individuals by virtue of their sta-tus as members of humanity (Boli, 1999). Rights are expressed in human rightsdoctrines, now strongly institutionalized globally and much studied. World cit-izenship duties are much less studied, but they are crucial with regard to socialresponsibility. To be a responsible, conscientious world citizen, in the ideologyof world culture, the individual must care for the natural environment, con-sume sustainably, ght injustice, aid the suffering, and so on. This legitimatedmodel draws on deeper principles of the global moral order, such as thesacredness of the person, the imperative of justice, and the interdependence ofnature and humanity.

    Institutional Explanations for Corporate Social Responsibility 507

  • Corporations are also subject to world citizenship ideology. They are notcitizens in the same sense as individuals so their rights are more circumscribed,but as important actors in world society they must accept similar obligations.Their inveterate tendency to serve only the interests of management or share-holders is unacceptably narrow because it can and does lead to great harm;they are often seen as having a persistent tendency to violate human rights,heighten inequality, undermine local cultures, and so on. As world citizens ofa sort, the world-cultural model insists, companies must become sociallyresponsible and minimize the damage they do, whether intended or not. Inshort, they too must become morally upright and engaged actors attuned tohuman suffering and concerned about a highly varied array of violations ofsacred entities.

    When NGOs urge companies to adopt CSR principles and practices, then,they are activating the global moral order and the world citizenship model itsupports. That they are not simply ignored, derided, or repressed is a tributeto the extraordinary legitimacy NGOs absorb by rooting their claims in themoral order. That they can shame companies into making changes in theirpolicies and practices testies to the authoritative character of that moralorder. NGOs promote models of the responsible individual, corporation, andstate as universally applicable and increasingly imperative (Keck and Sikkink,1998; Khagram, 2004; Willetts, 1996). In Campbells terms, the global culturalenvironment is ever more favorable toindeed, insistent uponthe adoptionof CSR practices by corporations. This global cultural shift has been graduallyintensifying over the past several decades.

    Hence, the spread of world-cultural principles and the penetration of glo-bal models of the responsible world citizen have made CSR an ever clearermoral obligation. Other forces have also contributed to the growing promi-nence of CSR, above all the increasingly transnational character of companies,company operations, and knowledge about the impact of those operations(Vogel, 2005), much of which is generated by globally oriented NGOs. Notinfrequently, negotiations between NGOs, states, and industry actors result ininstitutional settlements implementing CSR logic for particular industries (e.g.,timber) or regarding particular norm violations, such as child labor (Bartley,2007). Carrots and sticks are again at work: NGOs and other moral entrepre-neurs offer praise and legitimacy when companies do the right thing, butthey also wield a rather powerful club of potential de-legitimation via shamingand negative publicity if companies do not conform to the global model of thesocially responsible actor (Keck and Sikkink, 1998; Khagram et al., 2002).Once rms have adopted CSR policies, NGOs are wont to monitor them forfailures to live up to the policies. The charge of hypocrisy is not easilydeected, and what companies may originally have seen as inconsequentialrhetorical conformity tends to become increasingly problematic when therhetoric is not matched by action, a process that is analyzed in detail in normdiffusion studies (Finnemore and Sikkink, 1998; Risse et al., 1999).

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  • The conict diamonds campaign forcefully invoked responsibilities ofworld citizenship with respect to the diamond industry, which was transformedby a combination of moral teaching and encouragement, shaming and de-legit-imizing efforts by NGOs, and formal enforcement mechanisms enacted bystates and given effectiveness by market forces.

    IN-DEPTH CASE STUDY DATA

    This article relies on an intensive, up-close-and-personal study of theconict diamonds campaign and the Kimberley Process. Bieri conducted 24in-depth interviews, most of them face to face, with prominent NGO cam-paigners, state ofcials (including the former U.S. Special Negotiator on Con-ict Diamonds, a former KP chairman from Canadas Department of ForeignAffairs, and several chairs of KP working groups), and industry executives(key personnel at De Beers, the Diamond High Council in Belgium, and theWorld Diamond Council, the industry organization created to address theconict diamonds issue), between May 2005 and July 2006. In addition, docu-ments covering events related to conict diamonds, the campaign, and the KPwere analyzed. Documents came from the industry (De Beers, the World Dia-mond Council, Rapaport News, and National Jeweler Magazine), NGOs,states, the KP itself, the United Nations, think tanks (e.g., the Global PolicyInstitute and the World Peace Foundation), and governments (e.g., transcriptsof the U.S. Congressional Hearings on Conict Diamonds), along with innu-merable news reports obtained from the Lexis-Nexis database and generalonline searches.

    Like any particular case, the diamond industry and the campaign againstconict diamonds have distinctive properties. Three such properties led toespecially rapid changes in the diamond business. First, diamonds are specialgifts of lasting signicance. The industry has gone to great lengths to enhancethe symbolic value of diamonds by tying them to courtship, love, and mar-riage. By the same token, such deeply rooted social meanings and traditions,like the practice in the United States of presenting a diamond engagementring, are not easily disturbed by consumer campaigns. Still, this socially con-structed meaning made diamonds particularly vulnerable to association withimages of severe suffering and deprivation. Other products like oil and copperhave been implicated in savage struggles for power, but as industrial necessi-ties lacking links to sacred institutions or mythic ideologies, they are muchharder targets for moral activists.

    Second, the centralization of the diamond industry gave the conict dia-monds campaign two obvious targets: the dominant company, De Beers, andthe dominant trading center, Antwerp. But centralization is a two-edged swordbecause the obvious targets are extremely powerful; De Beers has dominatedthe diamond trade like no company in virtually any other industry. Thekey issue here, then, is how NGOs were able to steer the massive De Beers

    Institutional Explanations for Corporate Social Responsibility 509

  • juggernaut down a road not of its own choosing. Part of the answer lies in thethird distinctive characteristic: the conict diamonds problem involved excep-tionally severe moral violations, far worse than abuses publicized in manyother campaigns. Failure to clean up the diamond trade could be construed asharshly callous behavior by villainous corporate giants.

    Despite these distinct properties, the conict diamonds case offers impor-tant general insights into how NGOs can translate CSR norms into moreresponsible business practices for an entire global industry. We return to thesegeneral insights after presenting some of the details of the conict diamondscampaign and the Kimberley Process.

    UNCOVERING MORAL VIOLATIONS: THE CONFLICT DIAMONDSCAMPAIGN

    Conict or blood diamonds are rough diamonds used by rebel move-ments or their allies to nance armed conict aimed at undermining legitimategovernments5 (Kimberley Process Secretariat, 2008). Conict diamonds havefueled calamitous civil wars in Angola, Sierra Leone, Liberia, the DemocraticRepublic of Congo, and Cote DIvoire. For most of the 1990s, the conictdiamonds issue went unnoticed. In 19981999, however, parallel efforts by afew NGOs and the United Nations catapulted the issue onto the global stage.The result was the Kimberley Process, a series of negotiations involving states,NGOs, and industry but not the United Nations itself. With surprising speed,the KP generated the KPCS to regulate the diamond trade by certifying thatdiamonds are conict-free. Two and a half years is lightning speed by inter-national negotiating standards (Smillie, 2006). Although the road to successwas by no means straight, the conict diamonds campaign moved unusuallyquickly from raising concern about the problem to establishing a global mech-anism to solve it.

    At the heart of the campaign were accusations that De Beers and theAntwerp trading center bore culpability for the brutal civil wars fueled by thediamond trade. NGOs made these powerful actors aware of a new globalsocial problem and redened long-standing business practices as unacceptable.That they were able to engage the industry and states relatively quickly was areection of the growing legitimacy and value of NGOs as moral guides;industries worldwide were recognizing that it was better to engage with thanto ght NGOs.

    The campaign efforts were facilitated by the general legitimacy of CSRideology, which increased greatly in the 1990s. The growth and pervasiveness

    5 Of course, most rebel movements challenge the legitimacy of the governments they oppose, butthe KP singled out nonstate actors as the illegitimate culprits responsible for the blood dia-monds problem, leaving aside the abusive use of diamond revenues by governments. As such,the KPs denition of conict diamonds is an indication of the legitimacy of the nation-stateform, reinforcing and protecting state sovereignty and legitimacy.

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  • of CSR ideology in recent times has been documented by various scholars(Aspen Institute, 2002; Rondinelli and London, 2003; Vogel, 2005). Vogel(2005:5) gives striking evidence of widespread interest in and acceptance ofCSR norms.

    A recent search on Google for corporate social responsibility found more than30,000 sites. More than 15 million pages on the World Wide Web address dimensionsof corporate social responsibility, including more than 100,000 pages on corporatewebsites. Amazon lists 600 books on the subject. More than 1,000 corporations havedeveloped or signed codes of conduct governing dimensions of their social, environmen-tal, and human rights practices, and more than 2,000 rms now issue reports on theirCSR practices.

    Many global organizations institutionalize CSR principles, such as theU.N. Global Compact, the International Business Leaders Forum, and SocialAccountability International and its SA 8000 standards. In addition, a pleth-ora of surveys have found evidence of growing CSR expectations among con-sumers (Rondinelli and London, 2003). Obviously, opposition to CSR persists,particularly among neoliberal economists (e.g., Booth, 2009); in the earlystages of norm construction, contestation is often high (Finnemore andSikkink, 1998; Risse et al., 1999), but norms can be powerful even whencontested, and their power is normally directly correlated with the prevalenceof violations brought to public attention. For CSR norms, violation reportingis increasingly widespread and intense.

    In a general sense, growing acceptance of CSR norms is due to economicand cultural forces of globalization (Vogel, 2005). States are deemed increas-ingly unable to police transnational corporations effectively. At the same time,companies have become more vulnerable to civil-society campaigns, especiallythose companies that have high-prole global brands. Coupled with the emer-gence of world citizenship obligations that expand the responsibilities of com-panies and NGOs, these factors have produced a fertile breeding ground forthe global expansion of CSR norms.

    Moreover, companies have come to believe that doing good can meandoing well, however dubious that connection may be empirically. Accordingto Vogel (2005), 70% of business executives think that CSR is benecial to thebottom line, as a result of three processes. First, claims about the virtues ofthe triple bottom line have been widely disseminated in books, popularmedia treatments, and ofcial documents, such as the European UnionsWhite Paper on CSR (Meozzi, 2002). Second, managers who have struggledwith conicting norms regarding prots and philanthropy nd that the triplebottom line principle allows them to resolve this conict. Third, managershave learned that CSR makes sense by observing the success of high-prolecompanies that have made responsibility a keystone of their operations, suchas the Body Shop and Ben and Jerrys.

    Apart from these general trends, two specic factors contributed cruciallyto the positive engagement of the diamond industry with the norms embeddedin the KPCS. These factors constitute concrete mechanisms by which the

    Institutional Explanations for Corporate Social Responsibility 511

  • diffuse principles of CSR as world-cultural ideology were brought home toroost in the diamond industry. First, social movement organizations in theconict diamonds campaign dened and pushed the new norms about theresponsibilities of the industry, dramatizing their position by publicizing vividimages associating diamonds with destruction. Second, some key industry andstate gures were particularly receptive to CSR thinking; as forward-lookingleaders, they pulled more reluctant industry and state players into the process.

    Global CSR Norms: Opportunities for the Conict Diamonds Campaign

    CSR ideology provided a favorable climate in which the conict dia-monds issue could ourish. Several key developments lead to this conclusion.The rst NGO report that sought to put conict diamonds on the globalagenda, A Rough Trade (Global Witness, 1998), accused De Beers of buyingconict diamonds in violation of U.N. Security Council Resolution 1173,which had been passed in June 1998. A Rough Trade framed Angolan conictdiamonds squarely in terms of unacceptable corporate conduct rather than asan international relations or Angolan peace issue. It portrayed De Beers asirresponsible, nontransparent, and unethical. Global Witness, the tiny, low-budget NGO that prepared the report, exhorted De Beers to heed its owncode of conduct, which could readily be interpreted as disallowing the trade inconict diamonds. De Beers was singled out as the dominant rm and stan-dard-setter in the industry. It is time that a business which operates in anarcane way, like a family business, re-assess its operation and accepts that cor-porate accountability is now an important factor in international business.The South African-British group De Beers and its Central Selling Organisation(CSO), as the major player in the diamonds trade, must assume signicantresponsibility for this (Global Witness, 1998:2). The report concludes that itis encouraging to note that De Beers do have pre-existing corporate statementson ethics and transparency, and so Global Witness challenges De Beers totackle this complicated and necessary process of change to drag the diamondbusiness into the next century and ensure that key issues of concern such aspublic scrutiny, accountability and ethical consideration are put in place(Global Witness, 1998:15). Global Witness thus invoked global CSR principlesand shamed De Beers for not abiding by them. De Beers was behind thetimesit was not keeping up with the world-cultural model of the responsiblecorporate citizen. Precisely because De Beers had previously portrayed itself asa progressive and responsible leader in the industry and had formally commit-ted itself to CSR practices, it was an obvious target for NGOs pushing newnormative concerns.

    Meanwhile, the consumer-oriented arm of the campaign developed rap-idly. Put together by a coalition of mostly small NGOs under the name FatalTransactions, the campaign focused on the consumers right to know, thustargeting diamond retailers. Fatal Transactions was not the rst such effort;

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  • previous consumer awareness campaigns had targeted furs, the hunting ofbaby seals, and so on. Consumer awareness campaigns, including boycotts,had become an important political tool, despite uncertainty about the effectsof such activism on corporate behavior (Davidson et al., 1995; Evans, 2000;Micheletti, 2003; Smith, 1990). Precisely because many consumers were alreadysensitized to care, NGOs efforts to recast the symbolism of the industrywere not likely to be ignored. Such symbolic de-legitimation was clearly linkedto potential material consequences: declining sales and falling prots. In theconict diamonds case, however, a boycott was not pursued due to concernabout the negative effects on diamond miners.6 The goal was not to reducesales but to prompt prospective customers to accept only conict-free dia-monds. Of course, heightened consumer awareness may seem tantamount to aboycott, particularly when no alternative products or brands are available, butmost of the NGOs activities targeted policymakers and industry ofcialsrather than consumers. The primary purpose of the consumer awareness cam-paign was to keep governments and industry worried about a potential dropin demand.

    The strategy seems to have worked. While the vast majority of consumersremained completely ignorant, De Beers became gravely concerned about thepossibility of a boycott. As the companys Head of Public Affairs, AndrewBone (2005), recalled: We were concerned that the way the NGOs were put-ting it at the time was that this was a consumer awareness campaign. Now weknew that with the complexity of the issue, it was too complex for a messageto get across to the public in a way that would not alarm them, and thereforeinstigate a boycott.

    That the rupture regarding the symbolic character of diamonds was deepand wide is indicated by the extreme violations of sacred entities (individuals,groups, peoples) publicized by the campaign. The civil wars involved indis-criminate rape, mutilation, and massacre of civilians, particularly women andchildren, and the forced soldiering of children. Many human rights and princi-ples of law were severely transgressed, and the Fatal Transactions campaigndepicted companies and states engaged in the diamond industry as aiding andabetting the transgressors. The Sierra Leone war was especially vicious, magni-fying the moral responsibilities of the industry. Firsthand observation of thebrutal realities of the war prompted some politicians and industry leaders tourge industry action. Martin Rapaport, perhaps the biggest name in U.S. jew-elry diamonds, was sufciently moved by a trip to Sierra Leone to become akey proponent of change. Most telling about Rapaports reaction is that, inthe article he published after that journey, Guilt Trip (Rapaport, 2000), heargued not only that the industry must cooperate fully with states and theUnited Nations to address the problem, but also that the industry was respon-sible for ending the war regardless of the cost. Rapaports trip was prompted

    6 A small number of NGOs favored a boycott, but the main NGO coalitions, Fatal Transactionsin Europe and the Campaign to Eliminate Conict Diamonds in the United States, explicitlydistanced themselves from an outright boycott.

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  • by the concerns raised by NGOs and it had the best outcome they could havehoped for: his willing embrace of the industrys social responsibility to endgreat harm. Winning over Rapaport helped the NGOs greatly in their effortsto bring pressure to bear on more reluctant parties.

    Early initial support from proactive state representatives was also crucialto the search for a solution to the conict diamonds problem. These govern-mental allies of the NGO campaign, including Canadian Ambassador BobFowler at the United Nations, House of Representatives member Tony Hallin the United States, U.S. Special Negotiator for Conict Diamonds J. D.Bindenagel, and the European Unions Kim Eling, helped create a sense ofurgency about conict diamonds. Numerous other state representatives in theKP were essential to the success of the negotiations, particularly the rst twochairmen of the KP, Abbey Chikane of South Africa and Tim Martin ofCanada. Notwithstanding the importance of such gures, it appears thatgovernments largely were impelled by nonstate actors to address the issue ofconict diamonds. A key case in point is U.S. involvement. Ian Smillie of thesmall NGO Partnership Africa Canada, the man who is often described asthe key architect of the KP, put it this way: It was really because theAmerican jewelry industry was so scared of what would happen if there wasntan agreement that they pushed the government to do the right thing. NGOspushed the industry. Industry pushed the government (Smillie, 2006).

    Judging by the response of De Beers, the NGOs, though annoying andpotentially harmful, were not seen as illegitimate interlopers imposing mis-guided morality on the industry. Their cultural authority is further evident inthe fact that De Beers decided not to launch a counterattack on the NGOs asbeing uninformed, incapable, or simply wrong. One of the authors of a reporton Sierra Leone, Heart of the Matter (Partnership Africa Canada, 2000), lateracknowledged that several claims in the report were inaccurate. De Beers hadpreviously sued other groups for disseminating damaging or false information,but it refrained from litigation regarding the conict diamonds reports and noevidence suggests that it even seriously considered this option. De Beers diddispute some facts, such as the estimate that conict diamonds were 20% ofthe trade, but it never tried to vilify or de-legitimate these groups.

    Remarkably enough, De Beers perceived the NGOs as potential and cred-ible threats. Consider the paradox: a rm that had tightly controlled the dia-mond industry for decades felt unable to ignore a handful of small NGOspublishing reports that were not even widely disseminated in the popularmedia at the time. The consumer awareness campaign, meanwhile, was gaininglittle traction; customers were not habitually asking jewelers about the linkbetween diamonds and village massacres in Sierra Leone. The threat that theymight do so was real enough, however, and the combination of the consumerawareness campaign and the moral exhortation of the NGOs, backed by care-ful documentation of horrors that could be laid at the door of the diamondindustry, impelled positive engagement by the industry. The NGOs were den-ing a new form of irresponsibility relative to the diamond trade and, thus, a

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  • new social responsibility to be met by diamond companies as morallyobligated world citizens.

    Business Associations and Conict Diamonds

    Some researchers suggest that business associations, such as chambers ofcommerce, promote the spread of CSR (Campbell, 2006; Galaskiewicz, 1991;Levy and Kolk, 2002). Firms that are more heavily involved in business asso-ciations and interact more frequently with their peers are more likely toengage positively with CSR. Moreover, even if individual companies remainskeptical that social responsibility adds to the bottom line, business associa-tions and inuential companies within a sector can create a pro-CSR environ-ment at the industry level. This was certainly true in the conict diamondscase. The diamond trade is characterized by tightly knit networks and frequentmeetings around the world. The meetings of two industry associationstheInternational Diamond Manufacturers Association and the World Federationof Diamond Boursesprovided institutional opportunities for educating theindustry about conict diamonds and the importance of the Kimberley Pro-cess. Through these two bodies and a third association, the World DiamondCouncil (WDC), which was created by the two industry organizations in 2000expressly to deal with the conict diamonds issue, De Beers and other leadersput considerable pressure on other companies to take action. Nicky Oppenhei-mer, chairman of De Beers, delivered a key speech to the WDC in 2002,stressing corporate responsibility and the moral rectitude of swift action. Wemust continue our efforts to help bring the trade in conict diamonds to anend. Not just because it has the potential to damage our industry and theintegrity of diamonds, but because it is right to do so. We are the leaders ofthe industry and have a clear duty to the societies in which we operate to act,and act effectively (Oppenheimer, 2002).

    De Beers motivations were shaped by several forces. As the diamondindustry leader, it had the most to lose from a drop in demand, so fending offa damaging public awareness campaign or boycott was essential. In addition,De Beers had been singled out by NGOs for public shaming; the NGOsdecried the mismatch between the companys CSR promises and its inactionregarding conict diamonds. De Beers internal corporate strategy alsoaffected its response to the campaign. Growing competition in the 1990s fromdiamond mining operations in Russia, Australia, and Canada had undercutthe once rock-solid domination De Beers enjoyed in the global market. DeBeers therefore was suspected of supporting the KPCS as a way of reestablish-ing its domination. However, its market share continued to decline even afterthe KPCS came into effect (Royal Bank of Canada, 2009), and there is no evi-dence that the KPCS has been disproportionately benecial for De Beers.More likely, a less conspiratorial process was at work. Partly in response to itsdeclining market share, at around the time of the campaign and the initiation

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  • of the KP, De Beers began restructuring its business operations to enter theretail market, which impelled it to give more attention to brand name recogni-tion and reputation among consumers. Reputational risk was increasing, soregulatory certication of virtue was more attractive.

    The World Diamond Councils push for greater transparency, responsibil-ity, and regulation of the diamond trade was not an easy sell in an industrythat had long operated with practically no regulation. The president of theWDC, Eli Izhakoff, discussed the difculty of having one organization repre-sent the entire industry on matters of conict diamonds.

    Very, very difcult but because of the aim and the purpose we managed to bring every-one together because basically everybody realized that its in their interest to stick withone voice it was initially a little bit more difcult because people werent aware ofwhat we are talking about and they said diamonds dont kill. A lot of people say whatdo you want from us? What have we done bad? Why dont you go out after thearms dealers? Why dont you go after the timber or whatever? So we, of course, had todo explaining but once we explained I think everybody came on board. (Izhakoff 2005)

    Mark van Bockstael, the representative of the Antwerp Diamond HighCouncil in the KP, had this to say about how NGO campaign pressureshelped prompt the industry to unite within the WDC:

    Well, you should not forget that people in the industry were extremely afraid that theNGOs were actually going to take their campaign to fruition or something. And thatwould have destroyed the livelihood of quite a number of people that are active in thediamond business. So these [industry] people they didnt object to anything at all. Theonly objective that they had was make sure that the NGOs are not going to launchtheir campaign. Thats it. And that was a very simple thing and we, to be honest wegot a, and Im not saying that we got a carte blanche or something, thats much of it,but all the big players obviously, that means De Beers, HRD, Rio Tinto, the big miningorganization also the diamond banks, all of these said you have to do this. (VanBockstael, 2005)

    Lending support to institutional theories of corporate social responsibility(Bartley, 2003; Campbell, 2006; Galaskiewicz, 1991), the conict diamondscase shows that the growth in CSR practices was affected by both a bottom-up social movement campaign and a densely organized, pro-CSR industryenvironment promoted by the key business associations and facilitated by theleadership of De Beers. The key factor in the latter development, however,was not industry leaders per se but the NGOs who brought the companiesunimpeachable evidence of moral violations occurring in parts of Africa wherediamond resources were at stake.

    TRANSLATING NORMS INTO PRACTICE: THE KIMBERLEYPROCESS

    Ever since its inception, the Kimberley Process has been a fully tripartiteendeavor, engaging states, NGOs, and the industry. This multistakeholderarrangement is not a facade obscuring behind-the-scenes domination by the

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  • industry or major states. NGOs have participated vigorously in all aspects ofthe KP, including plenary meetings, working groups, and country review visits.Their inuenceand often leading rolein the process is well documented byBieri (2010).

    The issue of legitimacy is crucial in explaining the willingness of statesand the industry to allow nongovernmental actors to become so heavilyengaged in the KP. Practical considerations helped: the NGOs came to be seenas valuable experts in KP working groups, and in many ways they have pro-ven themselves more knowledgeable about the conict diamonds issue thanany other party. But states have also learned that a formal role for NGOslends the Kimberley Process Certication Scheme greater legitimacy andenhanced moral standing, as a quote from the former KP Chairman illus-trates.

    I think it [NGO and industry participation] is essential to the functioning of the Kim-berley Process system and I think this is a characteristic of the new diplomacy thatwell see with respect to emerging international challenges . Something else I wouldadd, and I dont think is always recognized but we see this in the operations of theKimberley Process, is that Partnership Africa Canada and Global Witness have deepunderstanding, knowledge, and bring a lot of technical and analytical assets to theKimberley Process. So its not a situation where its, were being impelled by civilsociety affecting public opinionalthough it does that, and thats healthybut civilsociety participates in an integrated, informed, professional, technical way as well.(Martin, 2005)

    Even reluctant states understand that the Schemes reputation as a mecha-nism that effectively curbs the trade in conict diamonds is crucial to assureconsumers that diamonds are clean. Obviously, the NGOs inuence in theKP far exceeds their material resources, and their involvement has been notonly tolerated but welcomed, not least because they have shown such deepcommitment to the success of the KP by devoting themselves so wholeheart-edly to it.

    NGO strengths include their legitimacy, dense networks, technical exper-tise, and knowledge of the issues (Yaziji, 2004). These strengths can benetcompanies and international organizations, like the KP, which associate them-selves with NGOs. The legitimacy of NGOs as the conscience of the world(Willetts, 1996) provides a favorable opportunity for companies faced withglobal campaigns criticizing their operations; developing partnerships withNGOs holds the promise of achieving a better social responsibility image.Companies can bask in the glow of NGOs moral legitimacy, which is rootedin world-cultural assumptions about the virtues of NGOs as global championsof the poor, the suffering, and the excluded. Through NGO links, companiescan show their commitment to universal rights and the rule of law. In turn, asself-appointed guardians promoting the universal protection of individualsfrom abuses, NGOs hold companies responsible for their commitments, whileat the same time questioning the sincerity of companies motivations. Thislegitimacy framework helps explain the striking growth of multistakeholderinitiatives.

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  • By the same token, a considerable body of skeptics questions the inten-tions, claims, and doings of NGOs. Some scholars focus on NGOs ineffective-ness in promoting their normative goals (Clark et al., 1998; Hulme andEdwards, 1997). Others question NGOs distinctiveness, depicting them asinterest groups pursuing not only moral principles but also objective interestsin much the same way that prot-oriented businesses do (Prakash and Sell,2004). Still others point to the absence of accountability mechanisms in theNGO sector (Brown and Moore, 2001; Jepson, 2005). Cooley and Ron (2002),for instance, viewing NGOs from a rational actor perspective, suggest that, farfrom contributing to the democratization and growth of global civil society,NGOs help create a dysfunctional global political environment characterizedby competition, insecurity, and uncertainty. Despite such critiques, NGOsremain the primary legitimation cloak to whose tails corporations and statescan cling as they seek to burnish their identities as responsible world citizensconcerned about world problems and open to civil society input (Rondinelliand London, 2003; Yaziji, 2004).

    The rising legitimacy of CSR as a world-cultural complex, documented bya range of scholars (Bartley, 2003; Campbell, 2007; Vogel, 2005), also providesopportunities to NGOs. They can latch on to progressive industry leaders toput pressure on less enthusiastic rms by claiming that socially responsibleactions make business sense, even if the claim is questionable. Several recentcollaborations between companies and NGOs show that dominant industryplayers (e.g., Nike, Coca-Cola) often feel obliged to match their leading rolein the market with leadership on CSR matters, setting the tone for the rest ofthe industry (Levi and Linton, 2003; Rondinelli and London, 2003; Taylorand Scharlin, 2004). However, research on the effects of CSR on protabilityyields mixed results: scholars continue to debate whether CSR adds to orharms the nancial bottom line of corporations and society at large (Hender-son, 2001; Kyle and Ruggie, 2005; Porter and Kramer, 2006; Reich, 2007;Robinson, 2002).

    Still, the notion that prots and social responsibility go hand-in-hand aidscampaigns in pitching their messages toward wider company audiences. Thelack of a clear negative effect of CSR commitments on prots means that, onthe one hand, NGOs can argue that they are not asking rms to sacrice byimproving their behavior. On the other hand, the lack of a clear positive effectmeans that NGOs can avoid engendering criticism from other NGOs for beingtoo close for comfort (Hulme and Edwards, 1997) by helping rms improvethe bottom line. NGOs can skeptically but honestly present the lack of cleareffects of CSR on protability as a way to bring companies on board whilealso preserving their legitimacy.

    In many cases, companies under re have had experience with NGOs onprevious occasions, which usually makes it easier for NGOs to engage themon new issues. Initial company reactions can be rather dire; they may seeNGOs as extremists and imagine worst-case scenarios that threaten their veryexistence. Once over this hurdle, however, they often nd that NGOs are

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  • highly professional, knowledgeable, and even constructive in their criticism. Inthe conict diamonds case, De Beers and progressive key gures such asRapaport and Izhakoff relatively early on detected NGO campaign effortsand, despite initial misgivings, soon engaged and pulled the rest of the indus-try in with them. The positive experience in the KP made the industry recep-tive to the follow-up campaign, the Diamond Development Initiative (DDI),though this initiative has far more ambitious goals and its progress is boundto be slow. The initiative seeks to address the severe poverty of artisanal dia-mond miners, a root cause of violence and conict in mining areas. The DDIis supported by various NGOs, including Global Witness and PAC; a range ofindustry players, notably De Beers, the Rapaport Group, Tiffany and Co.,Rio Tinto, and BHP Billiton; and the governments of Sweden and Canada, aswell as many of the diamond-producing states in central and western Africa.Overall, engagement with NGOs exposes rms and their leaders more fullyto global cultural principles of world citizenship that entail numerous con-cerns not directly related to prot making. NGOs thereby nourish CSRnorms both in breadth and in depth, initially by increasing the number ofactors committed to CSR principles and later by extending the normativestructure to include an ever more widely dened set of obligations, such asthe expansion of concern from blood diamonds to poverty diamonds. Aspiral of moral responsibility can unfold, opening up even more opportunitiesfor civil society input. On diamond trade matters, two moral spirals areunfolding, providing NGOs inroads to further shape industry and stateaction. First, in the wake of the industrys formal commitment to resolve theconict diamonds problem, NGOs began to press for improved working con-ditions in the diamond mines. Effective framing (Snow and Benford, 1988;Finnemore and Sikking, 1998; Tarrow, 2001) of this issue, as a matter ofconict resolution and sustainable peace, has facilitated this expansion ofmoral responsibility in the diamond industry. The question is whether theremay be a tipping point at which CSR-committed corporations experience abacklash from shareholders or management. At this point it is too early tospeculate where the spread of CSR norms may lead the private sector as awhole, but it does not appear that the diamond industry has reached such atipping point yet.

    The second spiral is the NGO effort to get all states in the KP to adoptand enforce morally responsible trading practices. Effective implementation atthe national level is most frequently hampered by weak technical capacity andincompetent or corrupt governance; this is particularly true in many of theformer conict-riddled areas of western Africa. Yet these states are responsiblefor KPCS implementation and must submit quarterly trade statistics andproduction data. When discrepancies are uncovered, NGOs are quick toshame the rulebreakers, reminding them that they have committed themselvesto making the regulatory regime watertight. But some KPCS violations aremore intentional: Zimbabwe and Venezuela have illegally mined and smuggleddiamonds into the KPCS pipeline for years, with few repercussions from

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  • fellow KP member states. Mirroring similar ndings in the norm diffusionliterature (Finnemore and Sikkink, 1998; Khagram et al., 2002), these statescannot be brought into compliance because their leaders, Robert Mugabe andHugo Chavez, explicitly do not seek global legitimacy. As a result, NGOshave begun to criticize other KP members for their complacency, urging themto exert pressure in a way similar to Keck and Sikkinks (1998) well-knownboomerang effect. NGOs have even threatened to de-legitimate the KP as awhole, should action against violators not be taken. Thus, while new normsabout ethical diamond trading have diffused globally via broad participationin the KP, implementation in local spaces is hardly perfect. Because of the(still rather rare) failures in domestic enforcement, normative pressures con-tinue to matter.

    Regularly occurring multistakeholder dialogue facilitates the adoption ofCSR principles in several ways. As Campbell (2006:934, 935) explains:Changes in the deep-seated, taken-for-granted assumptions of managers inthe utility or appropriateness of socially responsible behavior may stem fromongoing forms of dialogue between managers and stakeholders in which theinterests of ordinarily antagonistic parties are often redened, andactorsincluding corporate managersbegin to expand what they believe tobe feasible environmentally responsible practices. Scholars have typicallystudied legal environments and institutions that mandate such dialogue (e.g.,Europes corporatism, Japans labor laws, or environmental regulation in theUnited States). We also see it at work in the KP meetings, where tripartitenegotiations emerged voluntarily. Both corporate managers and state ofcialsfound their interests being redened through dialogue with the NGOs. So,too, did the NGOs, who came to realize that the success of the KP dependedon total engagement, at the cost of other campaigns and goals and despitecriticism from civil society peers about cooptation.

    In contrast to Bartley (2003), who nds that social movements operatingwithin the institutional context of neoliberalism and free trade yielded privateself-regulatory schemes in the apparel and tropical timber industries, in theconict diamonds case we nd that world citizenship norms and expectationsabout responsible business practices led to a formal regulatory framework.Unlike apparel or timber, however, the diamond industry is highly concen-trated, thus making it much easier for the conict diamonds campaign totarget the entire industry. Unlike voluntary codes of conduct at the rmlevel, the KP undergirds CSR commitments with concrete enforcement mech-anisms. State regulation implies that companies cannot simply embrace ethi-cal principles; they are obligated to abide by national laws and KPstandards. Similarly, it became evident early on that the KP could not beused as an easy advertising tag for rogue states seeking an internationalhuman rights certicate. Recent developments regarding Zimbabwe, whereKPCS violations have brought yet another opportunity to highlight therepressive misdeeds of the Mugabe regime, suggest that KP membershipmay entail more rather than less human rights scrutiny. Given the heavy

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  • dependence on diamond production in some states, particularly Botswanaand the war-torn states themselves, a formalized, legislation-based schemecould nd backing relatively easily. Crucial, however, were small, lessdiamond-dependent states, above all Canada, that became strong moraladvocates. This rather unique combination of factors helped counter globalpressures favoring trade liberalization and the hands-off ideology that hasbeen prime economic wisdom in recent decades.

    In the KP, the diamond industry actively sought and helped design stateregulatory mechanisms; self-regulation is only a supplemental feature of thesystem. Key industry players, under pressure from NGOs, sought to bringstates into the negotiations as regulatory enforcers. State regulation was thusnot a last resort, coming only after self-regulation had failed while NGOoutrage persisted. Early on, the World Diamond Council believed that stateregulation was necessary to arrive at an effective solution so it did not seekto minimize costs or avoid stringent and independent oversight. These devel-opments are consistent with ndings in the literature on market regula-tioncompanies favor regulation when they expect to benet from it(Braithwaite and Drahos, 2000; Jenkins, 2001)but that view tells only partof the story. Beyond material motivations, a key driving force behind theeventual creation of the KPCS was the moral fervor of small, weak NGOsinsisting that world citizenship obligations applied fully to the diamondindustry.

    More recently, we nd similar evidence of NGO-industry alignment intheir calls for more state action. Specically, pressures are mounting, especiallyfrom the NGOs but also from several key voices in the industry, to suspendZimbabwe from the KP. NGOs reported in late 2008 that the Mugabe militaryhad murdered around 200 miners in the Marange mining area, and massiveviolence and human rights abuses in other diamond areas have been docu-mented as well. Two leading participants in the KP have left the process toprotest the KPs inability to deal effectively with Zimbabwe. NGO representa-tive Ian Smillie from PAC left the KP in June 2009, and Martin Rapaport,the prominent diamond trading gure, resigned from the WDC in February2010. Rapaport turned to social movement tactics by going on a hunger strikeduring the KP intersessional meeting in June 2010, to protest inaction regard-ing Zimbabwe. However, thus far the consensus principle, which requires aunanimous vote to suspend a KP member state, has prevented action withregard to Zimbabwe. Several states, most notably South Africa, Angola,Namibia, Brazil, and Russia, have come to Zimbabwes defense, while theUnited States, the European Union, and Canada want to require Zimbabweto undertake serious reforms. Despite the inability of nonstate actors to movethe KP to action on this matter, these developments show that NGOs andmoral leaders from both industry and states are maintaining pressure on theKP, reminding it that its moral legitimacy is in danger if it fails to enforcefully the new norms for global diamond trading that are the KPs very raisondetre.

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  • CONCLUSION

    Our analysis of the conict diamonds case suggests that corporate socialresponsibility has three main aspects. First, world-cultural ideology increas-ingly institutionalizes expectations for socially responsible behavior by compa-nies, especially prominent ones, through the construct of world citizenship.Second, having considerable moral legitimacy as champions of the downtrod-den and neglected, NGOs are a prime source of stimulus and guidance forCSR behavior. Third, to be effective, CSR campaigns must involve multistake-holder engagement; without the support of states, NGOs are not likely tomake much headway with global rms.

    Abiding by KPCS standards does not necessarily indicate strong CSRcommitment on the part of the industrythe KPCS is practically compulsorybecause participants may trade only with each otherbut KP certication iswell on its way to becoming a taken-for-granted obligation for companies andstates. The recent chorus of disapproval regarding the KPs inaction withrespect to Zimbabwe shows just that: even when not directly related to civilwar, KPCS noncompliance is deemed unethical and evokes reactions fromboth inside and outside the KP. The conict diamonds campaign and the KPthereby have produced a new social responsibility: avoiding even wholly unin-tentional and indirect nancing of rebel movements and civil wars. Peripheraloutsiders, the small NGOs that became stakeholders only because they feltthe moral imperative to act, became insiders in this previously impenetrablebusiness. The KPCS is all the more remarkable because it involved the indus-try in a mechanism that mandates national legislation and regular monitoringin which NGOs are fully engaged. In the end, coercive state regulation is theenforcement stick to ensure industry compliance, but the industry itself helpedcarve the stick and hand it over to states.

    As a tripartite regulatory framework, the KP displays two key featuresthat are conducive to socially responsible behavior by states and private dia-mond traders. Most important, CSR principles created through frank negotia-tions among multiple stakeholders enjoy greater credibility and are more likelyto affect company and state behavior. Second, reliable monitoring mechanismsare important to ensure compliance. The KP includes semi-independent moni-toring that allows NGOs to examine compliance through both internal mecha-nisms and externally generated reports on country violations. So far, NGOmonitoring has been quite effective in identifying compliance problems andengaging the industry and states to take action, but NGOs have also lamentedthe slow pace of progress and occasional lack of action, especially since 2007and in particular regarding the gridlock on Zimbabwe.

    On the other hand, the broader effectiveness of CSR commitments in thediamond industry is far from clear. De Beers has a comprehensive CSR pro-gram, expressing policies and describing actions to care for the environment,avoid corrupt practices, prevent child labor, and so on (De Beers Group,2007). However, other major players, such as Israeli diamond companies and

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  • the giant Russian producer Alrosa, indicate almost no social concern orengagement (Alrosas annual reports for 2006 and 2007 do not even mentionthe conict diamonds issue). National differences are considerable in manyCSR areas and they are not easily explained; this issue is more than ripe forsystematic research.

    The diamond industry may continue to ignore certain outsider stakehold-ers and the issues they present, but no company can claim ignorance aboutthe victims of blood diamonds. A well-articulated global normative environ-ment guides proper behavior and highly institutionalized processes ensurecompliance rather effectively. This result is a striking example of the operationof globally constituted moral authority articulated by NGOs and enacted bypowerful companies and states for whom CSR principles have much morethan mere rhetorical signicance. CSR is the articulation of the world citizen-ship obligations of companies, and both companies and states recognize thatthey ignore them at their own peril.

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