How To Maximize Benefits When Making NGOs Commerce Essay

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Abstract: The aim of this study was to determine the possible ways to maximize the benefits when doing partnering between NGO's or Public entities and Private companies. A case study and empirical data from several publications were studied and analyzed. Some figures were also analyzed and added in order to demonstrate that the amount of these partnering practices is small. The data indicates that following some specifics procedures the objective should be accomplished. As a conclusion, the procedures plus innovation, adaptability, the fact of being a good partner and not to loose the fundamental direction should accomplish the objective.

1. Introduction.

The world changes every day, and our society does the same. Economy around the world depends on political decisions, and political decisions depends on social affairs, and social affairs depends on natural disasters, and natural disasters depends on climate change, and climate change depends on our own laws and regulations, and our laws and regulations depends on political decisions, and so on. It can be easily notice that every activity is somehow related to the other one and that the results of changing some parameters of one of these will affect any other one.

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It is a fact that as the world is directly involved with our lives we are directly involved with what happens to the world and is one of our main objectives to be responsible for this.

Non-governmental organizations and public entities are recognized for their constant effort on trying to solve or act as a defender of social problems, environmental affairs, humanitarian issues, sustainable development and so on.

Private sector is mainly know for its efforts on making the major quantity of profits possible in monetary terms and this is one of the main problems to solve because many times companies go beyond limits for achieving this goal. The limits that they trespass are usually the ones affecting the environment and also the ones including work regulations that finally affect the people involved, taking advantage of them, resulting in social problems.

These kinds of companies are supposedly the ones related with industrialization and natural resources exploitation. Also international ones that go abroad in order to avoid their own countries regulations and have more profits and benefits with the use of some legal vacuums, mainly know as "loopholes" or by simply using the laws and regulations from the country that they choose because they can reach better results compared to the ones they can achieve in their own country. This last point is the result of the development difference between them due to geographical characteristics, governments, wars, poverty conditions and so on.

When companies go in partnership with non-governmental organization there should be a synergy effect and the winnings should go in direct benefit of the problems mentioned before because of two simple reasons. First able, non-governmental organizations will gain the economic support of these "big enterprises" having, by this, more resources for their causes and not just that but also they will learn maybe better organizational skills and a better use or resources from the people that is making money out of it, also they will earn rewards for the environmental, social and governance (ESG) researches (The Global Compact, 2004). Then we have the "big companies" that will probably gain knowledge of the damage they could be causing, direct consultancy by the NGO providing objective ESG information (The Global Compact, 2004), a better look in the eyes of people just because of the fact of being in a contributing relationship with a NGO and all the benefits coming from this and maybe more profits because of the state aids that they could receive or simply because they can make a better use of the resources that they are depleting.

But is difficult to find documentation about this kind of practices so maybe this is not an usual one. The only known intention to do such thing is the one taken by the United Nations (UN) that will be revised in the following chapters.

The publication by The National Association of State Chief Information Officers (NASCIO) (2006) states that "Effective public - private sector collaboration is often born out of necessity". How can we revert this and not only implement these practices when the problem has reached to an urgent solution?

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"Every corporation is under intense pressure to create ever-increasing shareholder value. Enhancing environmental and social performance are enormous business opportunities to do just that." Gary M. Pfeiffer (The Global Compact, 2004).

This paper tries to show how to maximize the benefits between the NGO's or public entities and the private companies in order to encourage both sides to do it and by this, maybe, give better solutions to the problems that are affecting our society and the world nowadays.

2. Literature Study.

The purpose of this section is to give a look of how the partnership between NGO's, public and private entities is right now, in order to prove that this is not a common practice worldwide.

As it was said before, there is a small amount of information about this subject but the UN has developed a strategic policy for those who are committed to try to reach their objectives also being cooperatives with areas like human rights, labor, environment and anti-corruption called the UN Global Compact by following these following ten principles:

"Human Rights

Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and

Principle 2: make sure that they are not complicit in human rights abuses.   

Labour Standards

Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

Principle 4: the elimination of all forms of forced and compulsory labour;

Principle 5: the effective abolition of child labour; and

Principle 6: the elimination of discrimination in respect of employment and occupation.  

Environment

Principle 7: Businesses should support a precautionary approach to environmental challenges;

Principle 8: undertake initiatives to promote greater environmental responsibility; and

Principle 9: encourage the development and diffusion of environmentally friendly technologies.    

Anti-Corruption

Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery."

This data can be revised in http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html.  

"There is over 7700 corporate participants and stakeholders from over 130 countries" states the mentioned web site and out of these 7700, over sixty five percent have partnering relationships with NGO's and the UN (UN Global Compact and Dalberg Global Development Advisors, 2007)

This is the also know Partnerships for Development program that tries to align the private sector internal operations and strategies with the public or NGO's goals.

"Partnerships are commonly defined as voluntary and collaborative relationships between various parties, both State and non-State, in which all participants agree to work together to achieve a common purpose or undertake a specific task and to share risks, responsibilities, resources, competencies and benefits." (http://www.unglobalcompact.org/Issues/partnerships/index.html).

The basis of this concept lies in reaching a win-win relationship in the different treated areas such as poverty reduction or community development by identifying common problems and possibilities to improve and work as a team, sharing knowledge, skills and competences (http://www.unglobalcompact.org/Issues/partnerships/index.html).

By doing this companies and public sector can truly overcome issues that are not possible to address alone, they can also achieve better results and work in innovative ways (http://www.unglobalcompact.org/Issues/partnerships/index.html).

"Business and civil society can bring key resources to partnerships - knowledge, expertise, access and reach - that are often critical for successful problem solving" (Witte & Reinicke, 2005).

According to the UN there are three broad types of partnerships:

"In advocacy and awareness raising partnerships, the private sector partners with other stakeholders to take a leadership role in championing, advocating for, and contributing to resolving different issues. Companies can partner with governments and regulatory bodies, and participate in legitimate dialogues and collective action with stakeholders from diverse sectors of the economy.

In social investment and philanthropy partnerships, the private sector provides financial support, contribute volunteers or expertise, or make in-kind contributions, including product donations.

In core business partnerships, partners collaborate to create employment and foster entrepreneurship, contribute to economic growth, generate tax revenues, implement social, environmental or ethical standards and provide appropriate and affordable goods and services."

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3. Empirical Data.

The purpose of this section is to show some numbers that let us know how the sector looks like, the reasons why companies should take the partnering with the public sector way, an example of a good practice in public-private partnering and how to obtain more incomes out of it.

Making some simple numbers we can easily notice that we are far away from having a "big movement" in what NGO's, public and private partnering concerns.

It was said that sixty five percent of 7700 companies related to the UN have partnering relationships with some non-private organization, that's 5005 companies. Then if we take the total number of companies with an important yearly income, let's say, a company with over 100 employees only in the USA we are going to have 123602 firms (http://www.census.gov/epcd/www/smallbus.html). Then we divide 5005 out of 123602 and the figure is 0,041, that should mean there's a 4,1% of companies that are in partnering relationship with a non-private organism, a small figure, but the comparison is made only within the USA sector so the number should be much smaller than that.

If we add to this number some other example like Spain with a number of 12747 private companies with more than 100 employees our number changes to a total of 136349 privates companies (http://www.ine.es/jaxiBD/tabla.do?per=12&type=db&divi=DIR&idtab=1). Then we divide our 5005 out of 136349 and we obtain a 3,7 %. Spain has approximately 16% of United States of America population so is easy to think what should happen if we add to these numbers the private companies from China for example with a population of over 1.300 millions.

Figure 1: Percentage of cross-sector partnerships.

Source: The Global Compact, 2007.

This graph shows the results from "Global Compact Implementation Survey" which gives us a look of what the UN has reached into their efforts. Over the entire group of companies included in the Global Compact a seventy five percent of them said that they have been related to some cross-sector partnering project some time. This shows us the great initiative that these companies have but still is only a small part of the whole cake.

Figure 2: Percentages of cross-sector partnership by level and type.

Source: The Global Compact, 2007.

This graph shows the kind of partnership made separating them also in the size of project.

Is shown that local partnerships has an eighteen percent over the global partnership which can be understood by the local interests that companies usually have in their geographic zone of work, the easier way to contact with these companies from the local NGO's and maybe just because the number of smaller companies is much higher than the big ones and they can do much more for those local efforts than for the large ones.

Advocacy and awareness is the smallest type of partnering relationship between the three of them maybe because of the incomes that they produce. These incomes are much lower than the ones that a strategic philanthropy & social investment can give because the first one is almost a pure philanthropic action with sometimes losses for the company involved because they have to put their resources in, administrating and taking in charge of the project and this means time and money. On the other hand strategic philanthropy can give some incomes to the company involved just because of the fact of being a helpful entity, helping with technical expertise, making donations and so on, which sometimes can be a great marketing strategy more than a pure philanthropic action.

Even though some of these practices are not the best ones these are still talking about partnering between public and private sectors in which them both get benefits so we just have to find a way to incite companies to do it.

But why partner? The small amount of public and private entities going into partnering, as it's been demonstrated before, is not a reason to believe that this practice ends in failure; however, it also doesn't mean success.

Some companies and NGO's have discovered several reasons to go in partnering between them:

Partnering can become in reduced costs and risks, with new markets development and adding value to a specific brand by reducing the environmental impacts of the product line, supply chain and operations, which makes it profitable and environmentally friendly (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

There is also a great effect on this because the new technologies or innovations that this kind of projects can develop usually creates new policies and standards which then the other companies have to reach creating a competitive ambient on developing excellence. This encourages companies on investing in this kind of projects (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

NGO's and the privates end up learning more things from each other by sharing their specific knowledge. This increases the entity value in a tremendous way because they end up having what it could be named as "classified information" (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

After succeeding in a project companies and NGO's improve their image and credibility (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

Just with the fact of having a NGO involved in a project gives it the correspondent validation in terms of environment, social benefit or any other subject in which the NGO is related to (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

Companies usually have long term goals and visions but there is always a preoccupation on the short term issues which can be modified by a partnering relationship when trying to address a long term problem which then turns into long term goals (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

There are some good practices of public-private partnering.

One of them is the case of FedEx and Environmental Defense Fund, on one side a big private company dedicated to transportation and logistics of packages and, on the other side, a non-profit environmental organization.

The project was to develop Hybrid Diesel-Electric Delivery Trucks.

Diesel vehicles are much known for their contribution to the air pollution in which are included the greenhouse gases so, in 2000, these two entities formed and alliance with the goal of creating a truck that decreases the emissions while increasing fuel economy.

Some of the qualities that this partnership gave for a successful project were:

"The team members shared a common vision and objectives and each brought necessary skills."

FedEx, with its 30000-vehicle truck fleet, had the purchasing clout to attract manufacturers and the expertise to test and evaluate the advanced trucks."

"Environmental Defense Fund provided the metrics for environmental performance and was the catalyst in developing a competitive process for manufacturers to meet these standards."

Finally the project succeeded delivering new trucks for deliveries that operate and perform like a normal one but using hybrid electric technology in order to achieve the environmental standards required. These trucks increased the distance per gallon up to fifty percent compared to a conventional truck with an approximately thirty percent reduction of greenhouse gases emission. They emit sixty five percent less smog-causing pollution and ninety percent less soot. All the goals stated at the beginning of this project in terms of environment and performance were met or exceeded, however, the cost goals haven't been met due to the small amount of the product till this date.

The business benefits of this project were the establishment of leadership in terms of clean truck technology, an enhanced brand value and a reduction of the risks associated to diesel fuel usage and the correspondent emissions.

The environmental and social benefits were the reduction of air pollutants emitted by these trucks, an increment on these trucks fuel efficiency and a transformation of the clean truck technology market across the industry (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

This initiative shows how two entities can align their interests and produce an example of a project by carrying out a serious and responsible way of working.

It is an example of a win-win situation where the two entities have reached their goals both together and separately taking the knowledge from each other that maybe would be to difficult to reach alone, because of the lack of knowledge that each one of them has on the specific subject that the other knows.

In the case of FedEx, they have the technology, expertise and the contacts in order to develop this hybrid truck and, in the case of the Environmental Defense Fund, they have the knowledge on environmental issues and policies in terms of emissions rates and all the related subjects to this.

This success is reached by taking some really important procedures and practices.

First of all comes the project selection. This is a key point in order to continue with the following steps because is not just the starting point but also the one when we have to be really clear about our needs and advantages and disadvantages that it can bring to us.

Is time to think in the environmental impacts the project will involve and if these are going to mean significant results or not (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

Will the project provide benefits in terms of money and would these benefits be significant? The project should also bring intangible business value (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

Can the project be developed? Even though it could be a good project, maybe the resources and skills are not sufficient in order to address it. A feasibility study should be developed (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

Will the project provide an important change or will it mean a measurable improvement in terms of image, education, innovation and so on? (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

Is the project a good alternative for both private and NGO entities? The project should bring added value to the two entities and not only provide it to one of them and also, it should turn both entities excited about it (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

After having realized that the project is convenient there comes the identification of the partner.

Finding a good partner is one of the fundamental issues when talking about partnering because is what will complement the other part in order to be one. If that other part is not good enough or does not have the sufficient skills or resources, the sum will be less than one and the idea is become one or even better, more than one, what is called synergy ("the combined power of a group of things when they are working together which is greater than the total power achieved by each working separately", Cambridge Dictionary).

In order to identify a good partner and achieve what was recently mentioned, some issues should be clarified.

Both NGO and private company should be able to realize the partner priorities and motivations. With this both sides know what the other has in mind and they can figure out if they will strive on the same goals not leaving the other in the middle of the project alone (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

To achieve this, the private company must understand how the NGO view business and, on the other hand, the NGO must understand how the private company views the environment (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008). If there are some differences between each other they will be on time to fix it or just to choose some other partner because is an starting stage of the project, but, if they figure it out during the project execution the differences will probably grow strongly and maybe the project will not have the expected closure.

It is also good to know the partner style of making decisions. With this both sides and probably more, the NGO, will be prepared to understand the procedures of the other one. This will ensure that, in the future, decisions and leadership issues will not be taken separately and, even more; these will not be overtaken for one or the other side.

Knowing the company or NGO background is also a great issue. In some cases a partner can be really similar to ones characteristics and so on, but, it could be that the partner has a bad background in some specific subject due to internal accommodation or structural changes that have been equivocate during some periods. In fact, this can be due to several reasons but the partner should be able to find information about some characteristics that he is looking forward to fulfill.

There are some particular questions that can easily give an idea of this (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008):

Is the potential partner "publicity-shy"? Is it risk averse?

Does it desire to become an environmental leader?

Is it innovative and open to leading practices?

Is it financially sound?

Is it viewed favorably by its own employees and key stakeholders?

It is probable that the company will revise the NGO's way of treating the business relationships because it is the main goal of the company and vice versa, the NGO will probably check the way that the company treats environmental, social or health issues because it is the NGO's main activity (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

Does the partner have the necessary expertise and capabilities? It is really important to realize if both company and NGO or public entities have the proper expertise and capability to accomplish the project and not just that but also to realize if there is some differences between them in order to take a correct decision when choosing the right partner because, this can cause the project failure due to the excessive amount of work that one have to take to compensate the other one capabilities.

After choosing a partner, have built relationships and a good idea of the following relationship a written agreement should be written in order to ensure and establish the ground rules and clarify the goals and expectations of the project.

This written agreement will have similar conditions as a contract.

The following areas should be considered:

Goals and objectives: This must be defined clearly and hopefully with measurable goals (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

Scope of the work: This "clarifies the expectations of both partners from the start" (Global Environmental Management Initiative (GEMI) and Environmental Defense Fund, 2008).

Timeline: This will be a useful tool in order to have an organized project and also to determinate the correspondence between the different tasks.

Roles and responsibilities: This will determine the actual work that each of the partners should do and which are the measures to take over any problem.

Shared information: Both sides should agree on certain communication issues in order to notice any change produced during the project and to avoid any problems due to a bad communications chain.

Some of these issues can be taken as obvious and just like a waste of time but, is always necessary to achieve success and further more, to avoid any kind of problem during the whole process that the project requires.

The project execution process will also have important measures to be taken and, first of all, one of the main issues to be solved, the selection of the team.

When choosing a project team it has to be realized that the members of any kind of task or work, the human resources, are one of the most important parts. Without this is almost impossible to have a good project development. It should be necessary to have a perfect chain of procedures and processes without any other purpose than making a specific product or task in order to avoid the necessity of people and that is improbable. Even if having this, people are needed to materialize the tasks, procedures and so on, and also to check it.

The chosen ones should have enough capacities and experience in order to face the project.

Every single project has different characteristics and specifications due to its type, place, weather conditions, country's laws and regulations and so on so, the selection process should be able to recognize those who have the most affinities and experience with the project characteristics.

In this process, one of the most important parts to be selected is the called project champion. This is the one person that will inspire the organizations into participation and not only that, but also he will be the one that will take the project to a successful closure.

When the project team has been chose, a project plan must be developed.

The project plan is probably the most important part of the whole process due to the importance of organization.

The development of the project plan has to be done by the people involved in the work but not anyone, because experience in this case is one of the main issues. The team must be constituted by a cross functional selection of people, taking into account the different and main activities to be accomplished.

When selected, this team should be able to relate each task and to manage how to join them in order to have a coordinated net in which time and effort must be the main issues. They also have to be able to think and predict the future and this is one of the most difficult and important things to do in a project plan process; this will determine if the project will have too many changes in the execution process and probably will also determine if the project will have a successful or unsuccessful ending.

Even though there are some great examples of collaboration between privates and NGO's or public entities the figures showed before makes us realize the lack of enthusiasm that there exists on this kind of practices.

4. Analysis.

This chapter analyses the example mentioned before by taking some ideas shown in the literature study chapter, shows some interesting points of viewing a public-private partnering relationship and also shows some specific ways that can solve the problem formulated at the introduction chapter.

The case studied before shows us a good example of a big company which goals are achieved by using transportation, one of the most pollutant activities for the air, joining efforts with an organization which main goal is to take care of the environment.

This could be a case of a philanthropic action, as it was explained in the literature study, from the part of the company due to the non existing profits shown after the project execution. But this can be also due to the implementation characteristics of it. The point is that, no matter the financial results of this project, the company took it as a success and not as a failure and this is an example of a good practice.

It was already said that every business or private company's goal is to have as much profits as possible but, in this case, even if there was no income for the company, maybe the possibilities of reaching to some new technology and renew or change the market characteristics are even better in the long term.

There is also a marketing opportunity in what the company's image is concern because, just by the fact of being involved in an environmental project gives to the company a better image in front of the customers.

Another point is the government aids that could be reached with these kinds of projects or practices. As governments have to deal with finding the best for their people, these projects are good ideas in order to achieve such thing, so it is probable that the companies involved with these projects will gain some kind of governmental aid for it or maybe some help from the government that makes bureaucracy issues not as bad as usual.

There are also great results for the NGO's or public entities in terms of dealing directly with the companies involved in the main problems that they deal with. By working together and achieving these kinds of results NGO's and public entities do reach their goals.

As it can be seen, there is a lot of ways to think that public-private partnering is a good idea.

But how can we actually maximize this?

Theoretically, by following the steps and practices mentioned before. These steps have been followed by several NGO's, public entities and private companies that have ended with successful results and they can always be improved.

But there are some other things to add to this.

The fact of being adaptable is one of the best characteristics in order to achieve success because this gives us the opportunity to reach different type of projects and to develop them well. So is probable to gain more out of this if public-private partnering can be more adaptable in order to face any kind of project achieving good results.

Also innovation is a great plus over these projects and mostly on anything. By being innovative the solutions to problems multiplied them selves giving more and more ways to solve them and, when there is a lot of solutions for one problem the probabilities of having a better one grows and also the probabilities of solving that specific problem because of the quantity of alternatives that finally can be taken. This goes also really bounded with being adaptable.

Being aware, conscious and responsible of the important principles that this kind of projects try to meet as human rights, environmental issues, social affairs, anti corruption, labor standards and so on should also be an important point because it keeps us in the right way in order to achieve the desired goals.

5. Conclusion.

This paper's objective, as it was written in the beginning, is to show how to maximize the benefits between the NGO's or public entities and the private sector in order to encourage both sides to do it and the following conclusions explains how to do this.

Being a good partner is an obvious good way in order to reach a good partnering relationship and, further more, is a good way to reach a good result so, when partnering, both public and private sectors should compromise them selves on building a trust, committed and respectful relationship.

By mixing the mentioned steps with being adaptable and innovative plus not loosing the correct way that it is been tried to reach with determination and real commitment, and finally, adding to all of this the idea of being a "good partner", the results of a public-private partnering relationship should maximize the benefits as high as possible and maybe improve the results achieved by other companies that have reached good results.

6. Putting Into Perspective.

The solution given in the conclusion part should encourage public and private entities, by making them think in the objective possibilities of success already discussed, to take the partnering way.

One of today's major problems worldwide are environmental and social issues. Everybody should take care about these problems and this includes single persons, entities, governments, private companies, countries and so on.

It is an actual fact that these are going to be major issues and that, in what business or projects is concern, it has to be taken into consideration so, first of all we now that partnering between NGO's or public sector and private companies is a good practice when talking about this problems because of the experience and characteristics that each entity has over the specifics subject concerned on it and, second able, is an obvious way to think, that both sides of these public private partnering relationships will want the best results over what they are doing or on the projects that they are facing together so, they should take the conclusions showed here into consideration in order to achieve the best possible results by maximizing the resulting benefits.

7. Literature Review.

Global Environmental Management Initiative (GEMI) and Environmental Defense Fund. 2008. Guide to Successful Corporate-NGO Partnerships. (?). s.l.:s.n.

Instituto Nacional de Estadística, España. 2009. Directorio central de Empresas. [Online] Instituto Nacional de Estadística. Available at: http://www.ine.es/jaxiBD/tabla.do?per=12&type=db&divi=DIR&idtab=1 [Accessed 20 January 2010].

The Global Compact. 2004. Who Cares Wins: Connecting Financial Markets to a Changing World, (?), United Nations Department of Public Information.

The Global Compact. 2007. UN GLOBAL COMPACT ANNUAL REVIEW, (?) s.l.: United Nations Compact Office.

The National Association of State Chief Information Officers (NASCIO). 2006. Keys to Collaboration: Building Effective Public-Private Partnerships, (?), s.l.:s.n.

UN Global Compact and Dalberg Global Development Advisors. 2007. Business guide to partnering with NGOs and the United Nations, (?), Denmark: PrinfoDenmark.

United Nations Global Compact, ?. Partnerships for Development. [Online] United Nations Global Compact. Available at: http://www.unglobalcompact.org/Issues/partnerships/index.html [Accessed 20 January 2010].

United Nations Global Compact, ?. The Ten Principles. [Online] United Nations Global Compact. Available at: http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html [Accessed 20 January 2010].

US Census Bureau. 2002. Statistics about Business Size (Including Small Business). [Online] US Census Bureau. Available at: http://www.census.gov/epcd/www/smallbus.html [Accessed 20 January 2010].

Witte & Reinicke, 2005. Business Unusual: FACILITATING UNITED NATIONS REFORM THROUGH PARTNERSHIPS, United Nations Global Compact Office.