JOINT VENTURES ASSESSMENT FRAMEWORK Doug Brubacher (1998) has - - PDF document

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JOINT VENTURES ASSESSMENT FRAMEWORK Doug Brubacher (1998) has developed a framework for assessing joint ventures In Brubacher’s framework, for each partner, there are a series of criteria to assess. These include:

• Context.
• Objectives.
• Accountability.
• Contribution.
• Risks

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Context.

• This involves examining the social and economic situations of the partners, as

well as other significant issues in the community or region.

• Some contextual issues related to First Nation communities typically include:
• social and economic indicators such as employment levels,
• demographic trends,
• human resource needs and the availability of training opportunities,
• community debate regarding appropriate use of the land,
• access to capital, and entrepreneurial capacity.
• legal issues surrounding Aboriginal land claims and Aboriginal legal

interest in the forest resource base.

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Objectives.

• The objectives of each party will depend upon the context in which each partner

finds itself.

• For the corporate partner it seems likely that sustainable and predictable access

to timber resources over the long term will be important. Relatedly, developing models for cooperation with First Nations communities may also be an objective.

• The objectives of Aboriginal development corporations are often focussed on

undertaking business activities in order to achieve multiple community objectives. These may include:

• building equity through the establishment of solid, profitable businesses;
• creating local employment opportunities;
• generating revenues for community social and economic development;
• gaining a tangible role in regional resource utilization and management,
• generating expertise amongst Band members in specific industry sectors or

in business generally.

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Accountability.

• Another criteria for assessment is understanding the accountabilities and

constraints under which the partners operate when making decisions relevant to the joint venture.

• Brubacher notes that this is of particular relevance in the context of many

Aboriginal business ventures carried out through Band-owned development corporations or their subsidiaries.

• The directors of private sector companies are accountable to company share-

holders and subject to legal obligations and constraints.

• According to Brubacher, this generally translates into the “bottom-line” concern

about profits, but also more recently to concerns about the environment as well.

• Brubacher notes that while First Nation-owned corporations are frequently

established with accountability mechanisms designed to keep business decisions arm’s-length from other community processes, the corporations frequently have social and development objectives as parts of their mandates.

• Thus in addition to being concerned with profits, the directors of First Nation-
• wned corporations are often accountable for environmental, cultural, and social

“bottom-lines” as well.

• Brubacher notes that informal accountabilities, arising from expectations of

community members who may see themselves as “owners” in the corporation, may also exist alongside the formal structures.

• First Nation corporations are often perceived by local politicians and other

community members to be accountable to the community and to community

• bjectives.

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Contributions.

• Each partner contributes something to the venture.
• Some potential contributions include:
• experience
• business savvy
• technical expertise
• a ready and willing local labour force
• assets
• capital
• access to the forest resource
• social capital (good will, trust)

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Risks. In joint ventures new elements of risk are often introduced. Each partner introduces their own dimensions of risk.

• Brubacher suggests that some risk may be related to an inadequate understanding
• f the factors identified earlier (e.g., objectives, accountability)
• Another risk might include additional time requirements introduced by a more

complex decision-making structure.

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THE COSTS AND BENEFITS OF ABORIGINAL COMMUNITY-FORESTRY COMPANY JOINT VENTURES. BENEFITS: Decreased conflict. Conflict can take a variety of forms including legal challenges and direct action (e.g., road blockades). If an Aboriginal communities becomes involved in a joint venture it seems likely that conflict over resource harvesting and management will decrease. (But this depends on the degree of cohesion within the community.) Increased certainty. For corporations, reduced conflict achieved through a joint venture is one factor in producing increase certainty of access to a natural resource. (And increased certainty facilitates business planning, and is a factor in encouraging investment.) Increased involvement in decision making for Aboriginals. Compared to the status quo, participation in joint-ventures will mean that Aboriginal communities will have increased involvement in decision making. Increased influence in decision making means a greater likelihood that Aboriginal interests can be managed for.

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Increased employment for Aboriginals. Many (if not most) aboriginal communities suffer from chronic levels of high

• unemployment. In many instances Aboriginal community participation in joint

ventures will be associated with increased employment opportunities for Aboriginal community members. Access to forests — that might not otherwise have been accessible For a variety of reasons (reduced conflict, issuing of new licenses, opening up of reserve land) joint ventures may provide access to forests that were previously unaccessible to private sector timber companies. Greater Cultural Awareness. It seems likely that joint ventures will increase cross-cultural awareness. Non- aboriginal directors and workers may increase their awareness of Aboriginal

• culture. It may also be the case that Aboriginal directors become more familiar

with business culture. Economic benefits to local economy Many (perhaps most) aboriginal communities are not presently benefitting from timber harvesting on their traditional territories. Thus in many instances joint ventures will bring economic benefits to the local economy through revenues generated, and through (increased) employment of community members.

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Higher probability of management for cultural values (Non-timber values). In conventional forestry operations management for cultural/non-timber values of First Nations receives very little emphasis. Joint ventures provide an opportunity for increased attention to be paid to managing for cultural/non-timber values. Good public relations for the private sector company. As Brubacher notes, corporate involvement in a joint venture with an Aboriginal community can be good public relations for the company. (Brubacher 1998:355 states “Many firms recognize that retaining market share requires public recognition of good corporate citizenship.”) Involvement of Aboriginals in forest management planning, and accommodating Aboriginal interests, are also issues in forest certification. Training, skill development. Members of aboriginal communities are more likely to experience unemployment;

• ne reason for this is that they often do not have the education and skills that

would provide them with employment opportunities. When joint ventures are structured to involve Aboriginal workers it seems likely that this will be associated with increased training and skill development

• pportunities.

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COSTS Some loss of control for both parties. There will be some loss of control for both parties. For First Nations this potentially means less control over what happens on their traditional territory (compared to a situation where they had tenure, and managed it – but not compared to the status quo in many areas). For private sector timber companies this means less control over their business. Big financial costs for capital investment and training. Private sector companies will probably face substantial start up costs for capital investment and training. Time consuming. Setting up the joint venture is time consuming. Decision making structures tend to be more complex and thus decision making also tends to be more time consuming.

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Complex decision making. As noted above, joint ventures tend to have complex decision making structures. Besides the cost associated with time, such complexities can sometimes lead to misunderstandings about the partner’s objectives, and accountability. Decreased harvest levels (short term cost to companies). For a variety of reasons it seems likely that in the short term there will be decreased harvest levels. This might be a cost for the private sector partner. Decreased harvest levels may be associated with delays from complex decision making processes, from managing for cultural/non-timber values, and from meeting other First Nations’

• bjectives.

Potential job loss for non-Aboriginals. In areas where a private sector forestry company was previously operating using mostly non-Aboriginal employees, it may be the case that there will be a reduction in employment opportunities for non-Aboriginals.

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Uncertainty regarding the outcome of the treaty process makes joint ventures risky, but on the other hand, joint ventures gives companies “a foot in the door”. There is some uncertainty when the Aboriginal partner is involved in the treaty process because it is unknown what resources the Aboriginal partner will eventually end up with. However, many non-Aboriginal forestry companies who are interested in joint ventures assume that Aboriginal communities are going to end up with some degree of forest land tenure, and they assume that establishing a cooperative business relationship prior to the settlement of a treaty will give them “a foot in the door” to do business later on.