Good Intentions Gone Awry: Government Intervention and Multistakeholder Engagement in a Frontier Market

Abstract

How to achieve sustainable communities with decent work and economic growth without negative environmental impact, is at the heart of the United Nations Sustainable Development Goals and a top priority of many governments around the world. This article critically explores the role of government intervention for achieving sustainable local prosperity in frontier markets of developing countries, where such advancement is especially crucial. More specifically, we explore by an in-depth case study how multiple stakeholders cooperate to enhance local development and export from firms in the leather and leather products industry in Ethiopia. From a multistakeholder engagement perspective, including representatives of local businesses, United Nations, Ministry of Trade and Industry, and other development partners, we analyze how government interventions have resulted in unintended outcomes despite their good intention. We contribute with a new understanding of why development initiatives in frontier markets struggle with stakeholder integration, caused by power asymmetry and lack of institutional trust which prevents the achievements of sustainable development goals. Contextualized implications for firms, government, and non-governmental actors on how to improve collaboration are provided, and policy implications are proposed.

Sustainability Development Goals Initiatives of Multinational firms: Empirical Evidence from Emerging Economy

“…SDG research predominantly concentrates on macro-level elements, investigating the impact of government interventions and foreign direct investment on sustainable development in both the domestic and foreign realms (Segaro and Haag, 2022;Dunning & Fortanier, 2007). Segaro and Haag (2022) find that government interventions in local development and to increase exports in a frontier market (Ethiopia) have positive effects that lead firms to engage in SDGs at a higher level.…”

“…SDG research predominantly concentrates on macro-level elements, investigating the impact of government interventions and foreign direct investment on sustainable development in both the domestic and foreign realms (Segaro and Haag, 2022;Dunning & Fortanier, 2007). Segaro and Haag (2022) find that government interventions in local development and to increase exports in a frontier market (Ethiopia) have positive effects that lead firms to engage in SDGs at a higher level. Using the context of COVID-19, Stephenson et al (2021) suggest that digital transformation can help governments achieve SDGs in a vulnerable environment through five actions: providing resources for technical assistance to increase private-public sector collaboration, endorsing sustainable investment framework, adopting inward FDI encouraging policies, facilitate technology investment to build economic resilience, and develop industry-based coalitions to operationalize government efforts.…”