B型企業的興起: 台灣與尼加拉瓜B型企業之比較 - 政大學術集成

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(1)國立政治大學商學院國際經營管理英語碩士學位學程 International MBA Program College of Commerce National Chengchi University. 碩士論文政治. 大. 立Master’s Thesis. ‧. ‧ 國. 學 sit. y. Nat. B型企業的興起: 台灣與尼加拉瓜B型企業之比較 er. io. “The rise of B Corps as a new way of doing business: A. n. v l CB Corps in Taiwan comparative studyaof n i and Nicaragua” hengchi U. Student: Noel Adolfo Tinoco Alonso Advisor: David Chang. 中華民國一○七年六月 June 2018. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(2) B型企業的興起: 台灣與尼加拉瓜B型企業之比較 “The rise of B Corps as a new way of doing business: A comparative study of B Corps in Taiwan and Nicaragua”. 研究生：杜廷諾. Student: Noel Tinoco. 指導教授：張大為. 國立政治大學. 學. ‧ 國. 立. Advisor: David Chang 治政大. 商學院國際經營管理英語碩士學位學程. ‧. 碩士論文. n. a. er. io. sit. y. Nat A Thesis. v. i l to Submitted C International MBAnProgram. i U. h. e n g c hUniversity National Chengchi. in partial fulfillment of the Requirements for the degree of Master in Business Administration. 中華民國一○七年六月 June 2018. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(3) Abstract “The rise of B Corps as a new way of doing business: A comparative study of B Corps in Taiwan and Nicaragua” By Noel Tinoco. 政治大. “B Corps” is a global concept that was born in U.S.A. in 2007 with one clear objective: redefine. 立. the success in business. What will happen if companies start to compete not to be the best. ‧ 國. 學. company of the world, but to be the best company for the world. These are companies that, voluntarily, meet rigorous standards of social and environmental performance, transparency and. ‧. accountability; aspects that will lead them to create benefit not only for shareholders, but also. y. Nat. sit. for all stakeholders (community, workers and environment). This is done through a B. er. io. Certification offered by the regulating non-profit organization B Lab.. al. n. v i n Cmotivated The most important reasons that to seek certification in Taiwan were h e n g Bc Corps hi U “Attract and engage talent”, “Benchmark CSR Performance” and “Protect Mission”, whereas in Nicaragua were “Benchmark CSR Performance”, “Differentiate from pretenders” and “Partner with peers”. The least important reasons that motivated B Corps to seek certification were the same in both Taiwan and Nicaragua, these being, “Lead a movement”, “Attract investors” and “Save money / access network services”. The impact of the B Certification on the organizations’ financial performance is the same in both Taiwan and Nicaragua, which seems to be having absolutely “no impact” on all variables except for “expenses per year” which shows a “negative impact” due to the mandatory i. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(4) certification fees payable per year. The impact of the B Certification on the organizations’ nonfinancial performance seems to be either “positive” or “null” on many of the non-financial variables in both countries. No “negative impact” was recorded by the respondents in Taiwan and Nicaragua.. The main challenges of becoming a certified B Corp are “Language” and “Consumer lack of awareness about B Corps” in Taiwan; “Making the proper organizational restructuration” in. 政治大. Nicaragua; and “Required data collection” and “time devoted to the B Certification” in both. 立. countries.. ‧ 國. 學. Already certified B Corps suggest “being aware of the effort and commitment the certification requires”, “spread the word about the B Movement”, “just start doing what you have to do to. ‧. get certified without overthinking to much” and “have the right attitude toward acquiring the B. y. Nat. al. er. io. sit. Certification” to further escalate the B Movement in Asia and Latin-America. n. Keywords: B Corps, Nicaragua, Taiwan, B Certification, Motivation, Impact. Ch. engchi. i n U. v. ii. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(5) TABLE OF CONTENTS 1. INTRODUCTION ................................................................................................................ 1 2. PROBLEM STATEMENT .................................................................................................. 4 2.1. Justification .................................................................................................................... 4 2.2. Research Questions........................................................................................................ 5. 政治大. 3. RESEARCH OBJECTIVES: .............................................................................................. 7. 立. 3.1. General Objective:......................................................................................................... 7. ‧ 國. 學. 3.2. Specific Objectives:........................................................................................................ 7. ‧. 4. METHODOLOGICAL DESIGN ........................................................................................ 8. y. Nat. al. er. io. sit. 4.1. Research Techniques: .................................................................................................. 11. v. n. 4.1.1. Stage 1: Theoretical Framework Review ............................................................. 11. Ch. engchi. i n U. 4.1.2. Stage 2: Collection of data.................................................................................... 11 4.1.3. Stage 3: Data Analysis .......................................................................................... 19 4.2. Hypothesis Development ............................................................................................. 20 5. THEORETICAL FRAMEWORK .................................................................................... 23 5.1. Taiwan vs Nicaragua ................................................................................................... 23 5.2. Taiwan Overview ......................................................................................................... 25 5.2.1. Taiwan’s economy [12] ........................................................................................ 25 iii. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(6) 5.2.2. Taiwan’s Organization of the Market and Competition [12]................................ 26 5.3. Nicaragua Overview .................................................................................................... 29 5.3.1. Nicaragua’s economy [13].................................................................................... 30 5.3.2. Nicaragua’s Organization of the Market and Competition [13] ........................... 31 5.4. Corporate Social Responsibility ................................................................................. 36. 政治大 CSR in Nicaragua 立................................................................................................. 38. 5.4.1. CSR in Taiwan ...................................................................................................... 37. 學. ‧ 國. 5.4.2.. 5.5. The traditional “Three Sectors” of businesses .......................................................... 39. ‧. 5.5.1. CSR of the first sector .......................................................................................... 40. sit. y. Nat. 5.6. Hybrid Companies....................................................................................................... 41. n. al. er. io. 5.6.1. Non-profit with Income Generating Activities ..................................................... 44. Ch. i n U. v. 5.6.2. Social Enterprise ................................................................................................... 45. engchi. 5.6.3. Socially Responsible Business ............................................................................. 45 5.6.4. Corporation Practicing Social Responsibility....................................................... 46 5.7. About “B Corps”.......................................................................................................... 47 5.7.1. B Corps vs Benefit Corporations .......................................................................... 49 5.7.2. History of B Corps ................................................................................................ 52 5.8. B Lab and the B Corps Certification ......................................................................... 54. iv. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(7) 5.8.1. The procedure to become a certified B Corp [24] ................................................ 56 5.8.2. The B Impact Assessment (BIA) .......................................................................... 60 6. FINDINGS ........................................................................................................................... 67 6.1. Overall happiness and//or satisfaction with the B Certification ............................. 67 6.2. Failed attempts at obtaining the B Certification ...................................................... 67. 政治大. 6.3. B Certification process time........................................................................................ 68. 立. 6.4. Part 1: Motivation for seeking B Certification ......................................................... 69. ‧ 國. 學. 6.5. Part 2: Impact of B Certification on Financial and Non-Financial performance . 72. ‧. 6.5.1. Impact on Financial Performance ......................................................................... 72. sit. y. Nat. 6.5.2. Impact on Non-Financial Performance................................................................. 73. n. al. er. io. 6.6. Part 3: Escalating the B movement ............................................................................ 76. Ch. i n U. v. 6.6.1. Challenges faced by B Corps................................................................................ 76. engchi. 6.6.2. Advice and/or suggestions from Taiwanese and Nicaraguan B Corps to escalate the B Movement ..................................................................................................................... 79 7. CONCLUSIONS AND RECOMMENDATIONS ............................................................ 81 7.1. Research Question #1 .................................................................................................. 81 7.1.1. Hypothesis #1 analysis: ........................................................................................ 81 7.2. Research Question #2: ................................................................................................. 82. v. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(8) 7.2.1. Hypothesis #2 analysis ......................................................................................... 82 7.3. Research question # 3: ................................................................................................. 83 References................................................................................................................................ 84 Appendix ................................................................................................................................. 88. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. vi. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(9) List of Figures and Tables Figure 1: Research Study roadmap ........................................................................................ 9 Figure 2: The procedure to become a certified B Corp....................................................... 56 Figure 3: The B Impact Assessment ...................................................................................... 61 Figure 4: Happiness / satisfaction with the B Certification in Taiwan and Nicaragua .... 67. 政治大. Figure 5: Failed attempts at obtaining the B Certification in Taiwan and Nicaragua ..... 67. 立. Figure 6: B Certification process time in Taiwan and Nicaragua ...................................... 68. ‧ 國. 學. Figure 7: Main reasons that motivate B Corps to get certified in Taiwan ........................ 69. ‧. Figure 8: Main reasons that motivate B Corps to get certified in Nicaragua ................... 69. y. Nat. io. sit. Figure 9: B Certification impact on Financial Performance in Taiwan ............................ 72. er. Figure 10: B Certification impact on Financial Performance in Nicaragua ..................... 72. al. n. v i n C hon Non-Financial U Figure 11: B Certification impact e n g c h i Performance in Taiwan (part 1) .... 73 Figure 12: B Certification impact on Non-Financial Performance in Nicaragua (Part 1) .......................................................................................................................................... 74 Figure 13: B Certification impact on Non-Financial Performance in Taiwan (part 2) .... 74 Figure 14: B Certification impact on Non-Financial Performance in Nicaragua (Part 2) .......................................................................................................................................... 75 Figure 15: Challenges faced by B Corps in Taiwan and Nicaragua .................................. 76. vii. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(10) Table 1: Methodological Design Overview ........................................................................... 10 Table 2: Explanation of values in the Analytic Hierarchy Process .................................... 13 Table 3: Example of Analytic Hierarchy Process data collection ....................................... 15 Table 4: Taiwan vs Nicaragua Fact sheet ............................................................................. 23 Table 5: The Spectrum of Hybrid Companies [20].............................................................. 42. 政治大 Table 7: Difference between 立B Corps and Benefit Corporations [24] ............................... 51 Table 6: Spectrum of Practitioners according to Alter [20] ................................................ 46. ‧ 國. 學. Table 8: B Lab Certification fees ........................................................................................... 59. ‧. Table 16: Motivation for seeking B Certification, comparison between Taiwan and Nicaragua ........................................................................................................................ 70. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. viii. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(11) 1. INTRODUCTION The world is becoming aware every day, and it is no longer enough for companies to satisfy the needs of their customers with their products and / or services, now it is also a fundamental part to generate positive impacts both in social and environmental matters. Since 2008 much of the world has spun into a major economic crisis. Largely due to corporate ethics, stakeholders have begun to hold companies to higher social, ethical, and environmental. 政治大. standards. The paradigm of ‘greed’ has been exposed for its huge negative consequences,. 立. leading to increased mistrust and critical judgment towards corporations.. ‧ 國. 學. Many stakeholders called for increased Corporate Social Responsibility and higher. ‧. transparency and accountability. However, in order to address these concerns, many companies didn’t radically change their business, but they simply improved their corporate communication,. y. Nat. io. sit. engaging in the so-called ‘greenwashing’, portraying themselves as sustainable even if they are. n. al. er. not. At the same time, no-profit organizations have failed to deliver systemic change in the way business is done.. Ch. engchi. i n U. v. “B Corps” is a global concept that was born in U.S.A. in 2007 with one clear objective: redefine the success in business. What will happen if companies start to compete not to be the best company of the world, but to be the best company for the world. These are companies that, voluntarily, meet rigorous standards of social and environmental performance, transparency and accountability; aspects that will lead them to create benefit not only for shareholders, but also for all stakeholders (community, workers and environment). These new models take the concept, already known in recent years, of sustainability. As defined for the first time in the World Commission on Environment and Development of the United 1. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(12) Nations: "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts: the concept of 'needs', in particular the essential needs of the world's poor, to which overriding priority should be given; and the idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs." [1] Currently, a new application of this concept arises when using it to establish a new economic. 治政 paradigm in which profit is not an end but a means to solve 大 social or environmental problems. 立 Under this new paradigm is the creation of triple impact business types: economic, social and ‧ 國. 學. environmental.. ‧. Some people say, this new approach to business is reminiscent of the fight for civil rights for. sit. y. Nat. blacks or voting rights for women; unpopular ideas that took hold and changed the world. Why?. io. er. The traditional way of doing business today is known by everyone. Basically, a company is. al. created to make profit for their shareholders, and a lot of them don’t care much about the whole. n. v i n Ch chain of stakeholders that have participation i Uday’s process of that company. [2] e n gincthehevery. This thesis is an exploratory study of B Corps and their role as hybrid companies in the corporate social responsibility movement. the objective is to analyze Certified B Corps in Taiwan and Nicaragua, assessing their organization and evaluating whether the certification has produced some impact in their business. We will begin with an overview of the B Corp idea, clarifying what it is about, how it works, the difference between Certified B Corps and Benefit Corporations, the controversial points and the organizational impacts identified by different authors. Then we will look at the B movement,. 2. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(13) exploring the similarities and the differences between the Asian and the Latin American context, finding out the main motivations which lead companies to seek the certification and the main organizational consequences. By investigating these aspects of B Corps and B Certification, this research gathers hard data and evidence from current B Corps to help potential applicants in hopes of escalating the new business model in Asia and Latin America. In highlighting benefits and identifying challenges of B Certification, this research suggests opportunities to grow the B Corp movement.. 政治大 This thesis intends to compare cases, identifying common trends and differences, and making 立. ‧ 國. 學. conclusions on all the points which emerge from the collected data and the literature reviewed. As highlighted in Bridges Ventures’ 2015 article “To B or Not to B”, this ‘profit with purpose’. n. al. er. io. sit. Nat. genuinely create more valuable, more sustainable businesses. [3]. y. ‧. movement is going to succeed and scale, only if investors are persuaded that this approach can. Ch. engchi. i n U. v. 3. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(14) 2. PROBLEM STATEMENT 2.1. Justification Today there is a widespread concern about issues of social, ecological and environmental interest, which generates impact on the actions of both daily life and the immediate action of the companies. The past two decades have seen an increase in research centered on business and social responsibility, highlighting the importance of reintegrating ethics and values into the. 政治大. world of business. Scholars have explored corporate social responsibility initiatives and hybrid. 立. business models that employ market tactics to address social and environmental issues,. ‧ 國. 學. recognizing that society may be better served by an alternative corporate form. The B Corp, praised as holistic and concrete, has the potential to do just that.. ‧. Despite the rapid growth of the movement, much of the research on B Corps has remained. y. Nat. io. sit. sparse and scattered, especially in specific areas like in Asia or Latin America. Several issues. n. al. er. remain open and these include measures of social giving, legal barriers regarding stockholder. Ch. i n U. v. rights and lobbying, and consumer/investor responses. Furthermore, few articles specifically. engchi. focus on the role B Corps play in the larger corporate social responsibility movement. In order to contribute to the study of B Corps, it was deemed necessary to analyze B corps under two different environments, those being a big developed Asian economy like Taiwan and a small Latin American society in ways of development such as Nicaragua. This will aggregate current research surrounding social corporate responsibility, social enterprises, and their relationship in the context of B Corps. Second, it will share insight of the impact, vision, experiences, problems and potential solutions from a number of companies’ and executives that have a hand in leading the corporate social responsibility movement and designing the B Corp. 4. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(15) model. Finally, it will shed personal insight and solutions to advancing the social movement. With this in mind, the core of this thesis has been titled: “The rise of B Corps as a new way of doing business: A comparative study of B Corps in Taiwan and Nicaragua” … which as the statement implies, will have a cohesive overlook at B Corps in different scenarios, identifying common trends and differences, and making conclusions on all the points. 政治大. which emerge from the collected data and the literature reviewed.. 立. 2.2. Research Questions. ‧ 國. 學. From the formulation of the problem, it is possible to pose directing questions in order to guide. ‧. the investigation as presented below:. sit. y. Nat. 1. What are the most important reasons that motivated B Corps to seek certification in. n. al. er. io. Taiwan and Nicaragua?. i n U. v. 2. What is the impact of the B Certification on the organizations’ financial and non-. Ch. engchi. financial performance in both Taiwan and Nicaragua? 3. How to further escalate this new way of doing business in context like Asia and LatinAmerica based on the experience of already certified B Corps in Taiwan and Nicaragua? These three questions give a good Before, During and After of actual B Corps that will gather valuable data for understanding and better accepting this new kind of business model in today’s society. Question # 1 intends to know and analyze the most important reasons that motivated the company to acquire the B Certification in the first place, in order to understand how these B 5. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(16) Corps in both Taiwan and Nicaragua came to be from the beginning and how their intentions of becoming a B Corp came about and what a clear picture of the “What so?” when it comes to examine and compare. Question # 2 intends to dig deeper into their current situation and assess how the actual certification has impacted their Financial and Non-financial performance. From different aspects of the business continuity, the study aims to determine whether the B Certification acquired has had an impact or not, and if it has been positive or negative. This question gives a. 治政 clear picture of the “So What?” of becoming certified. 大立 ‧ 國. 學. Question # 3 intends to take the collected data and provide an analysis to determine the best practices and promote the creation of more B Corps in both the Asian and Latin American. ‧. context, thinking of a better future for the current issues the world is facing. This provides a. n. al. er. io. sit. y. Nat. clear picture of the “What Now?” in terms of escalating the movement in Taiwan and Nicaragua.. Ch. engchi. i n U. v. 6. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(17) 3. RESEARCH OBJECTIVES: 3.1. General Objective: Provide a comparative overview of Taiwanese and Nicaraguan B Corps based on their “before” (motivation to seek certification), “during” (impact of the certification in financial and nonfinancial performance) and “after” (how to help escalate the B Movement as a new way of performing business in Asia and Latin America.). 政治大. 3.2. Specific Objectives:. Review and understand the theoretical framework on Taiwan’s and Nicaragua’s. ‧ 國. 學. •. 立. business environment and on Hybrid Companies and B Corps. Collect data from 3 B-certified corporations in Taiwan and 3 B-certified corporations in. sit. y. Nat. Nicaragua.. n. al. er. Identify and compare the most important reasons that motivated Taiwanese and. io. •. ‧. •. Nicaraguan B Corps to seek certification. •. Ch. engchi. i n U. v. Assess and compare the impact of the B Certification at the selected Taiwanese and Nicaraguan B Corps in terms of Financial and Non-financial performance.. •. Analyze how to escalate the B Movement in Asia and Latin America based on reviewed literature and collected data.. 7. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(18) 4. METHODOLOGICAL DESIGN Quantitative researchers translate their observations into numbers and measurements. In the qualitative perspective (ethnography, case studies, in-depth interviews, participatory observation, etc.) the focus is on describing the observed facts to interpret and understand them within the global context in which they occur in order to explain the phenomena. With those concepts in mind, the present investigation follows the qualitative paradigm with some. 政治大. quantitative aspects to aid the results implemented in a comparative way between Taiwan and. 立. Nicaragua.. ‧ 國. 學. The type of study used here could be described as an exploratory comparative research study with both qualitative and quantitative aspects that help understand and resolve the research. ‧. questions set forth in this thesis paper.. y. Nat. io. sit. To address the proposed problem, an exploratory type of research was carried out, since it was. n. al. er. aimed at investigating the common elements and challenges of the companies that decided to. Ch. be certified as B corps in Taiwan and Nicaragua.. engchi. i n U. v. The following study seeks to gather valuable data for understanding B Corps in both Taiwan and Nicaragua, taking a cohesive look at the motivations that drive companies to get certified; how the actual certification has impacted different aspects of the company’s financial and nonfinancial performance and ultimately collect information on how to escalate the B Movement and better accept this new kind of business model in today’s society.. 8. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(19) 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. Figure 1: Research Study roadmap. 9. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(20) Table 1: Methodological Design Overview. METHODOLOGICAL DESIGN STUDY SUBJECTS. 3 B-certified companies in Taiwan. (Specific Objective #2). (14% of the B Corp population in Taiwan). STAGE 1. 3 B-certified companies in Nicaragua. (100% of the B Corp population in Nicaragua). THEORETICAL FRAMEWORK REVIEW. (Specific Objective #1). STAGE 2 PART 1. COLLECTION OF DATA PART 2. PART 3. (Specific Objective #3). (Specific Objective #4). Motivation for seeking B Certification. Impact of B Certification on Financial and Non-Financial performance. 立. (Specific Objective #5). 政治大. Escalating the B movement. Variables: Reasons that motivate companies to become certified B Corps. A. Lead a movement B. Partner with peers C. Benchmark CSR performance D. Save money and access network services E. Protect Mission F. Differentiate from pretenders G. Attract investors H. Generate press I. Attract and engage talent. Variables: Financial and Nonfinancial performance aspects of the company. Financial A. Revenue per year B. Expenses per year C. Taxes paid per year D. Debt E. Equity F. Overall Financial Performance Non-Financial G. Impact on Marketing Strategy H. Supply or distribution chains I. Markets served J. Products / services offered K. Socially responsible action L. Employee attraction and retention M. Organizational reputation N. Investor interest O. Benchmarking Performance P. Consumer and Press Brand Awareness Q. Knowledge sharing / Partnerships. y. sit. io. n. al. er. Nat. STAGE 3. Methodology: Open ended qualitative questions Variables: A. Certification Challenges B. Advice and suggestions for new certifications. ‧. ‧ 國. Methodology: Qualitative trichotomous response scale. 學. Methodology: Analytic Hierarchy Process. Ch. engchi. i n U. v. DATA ANALYSIS (Specific Objectives #3, #4 and #5). Findings comparison between B Corps in Taiwan and B Corps in Nicaragua. 10. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(21) 4.1. Research Techniques: 4.1.1. Stage 1: Theoretical Framework Review The first stage consisted in the development of a conceptual framework based on academic literature. First, the business environment in both Taiwan and Nicaragua is considered to understand the playground in which these B Corps develop their activities. Secondly, a focus on the emergence of hybrid or purposeful companies as a social phenomenon is studied, for. 政治大 related to this new way of business mode, but mainly on the emergence of trends such as the 立 which the revision of the conceptual framework starts from the institutional theory and literature. ‧ 國. 學. “What” and “Why” of B Corps, contrasting these with other types of existing models and the process of certification through B Labs parameters.. ‧. 4.1.2. Stage 2: Collection of data. y. Nat. io. sit. Drawing on academic theory and previous studies, this research used a questionnaire (refer to. n. al. er. appendix A pages 88 to 91) to gather quantitative and qualitative data about B Corps’. Ch. i n U. v. motivations that drove them to get certified; how the actual certification has impacted different. engchi. aspects of the company’s financial and non-financial performance and ultimately collect information on how to escalate the B Movement and better accept this new kind of business model in today’s society. The questionnaire was distributed to 3 B-certified companies in Taiwan and 3 B-certified companies in Nicaragua. To make collected information fittingly comparable, The B Corps were selected based on their industry in both countries: •. 1 Taiwanese and 1 Nicaraguan B Corp in the Professional services industry,. 11. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(22) •. 1 Taiwanese and 1 Nicaraguan B Corp in the natural organic fair-trade product industry. •. 1 Taiwanese and 1 Nicaraguan B Corp in the coffee/tea beverage industry.. The chosen Sample of this study represent 14% of the B Corp population in Taiwan (3 out of 21 certified B Corps) and 100% of the B Corp population in Nicaragua (3 out of 3 certified B Corps). 政治大. In order to answer our research questions, the questionnaire is structured in 3 interrelated parts:. 立. − PART 1: Motivation for seeking B Certification. ‧ 國. 學. Part 1 looks into answering research question #1, which basically seeks to know the main reasons that motivated the company to acquire the B Certification in the first place.. ‧. sit. y. Nat. Based on information released by B Lab, the entity in charge of granting the B Certification,. io. er. there are 9 main reasons that motivate companies to become certified B Corps. This part of the questionnaire intends to measure how important were these reasons in each company’s own. n. al. Ch. decision making to acquire the B Certification.. engchi. i n U. v. The questions below follow a methodology called Analytic Hierarchy Process, which is a structured technique for organizing and analyzing complex decisions. The respondent of this part shall evaluate each pair of reasons as structured below and designate a value depending on what reasons were more, less or equally important when deciding to acquire B Certification the first time. The table below explains the values assigned to each variable in the Analytic Hierarchy Process.. 12. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(23) Table 2: Explanation of values in the Analytic Hierarchy Process *assume “j” is the variable closer to your mark. Value given. Interpretation. 1. “j” and “k” were equally important reasons that motivated the company to acquire B Certification. 3. “j” was slightly more important reason than “k” in motivating the company to acquire B Certification. 5. “j” was more important reason than “k” in motivating the company to acquire B Certification. 7. “j” was strongly more important reason than “k” in motivating the company to acquire B Certification. 9. “j” was absolutely more important reason than “k” in motivating the company to acquire B Certification. 立. 政治大. ‧ 國. 學. The variables for the AHP methodology used for this part are defined as Reasons that motivate. ‧. companies to become certified B Corps, officially released by B Lab and defined in the “B Corp. sit. y. Nat. Handbook”, written by R. Honeyman; [4]. n. al. i n U. and they want to “use business as a force for good”;. Ch. engchi. er. io. A. Lead a movement: companies join the movement first of all because they believe in it. v. B. Partner with peers: Certified B Corps meet frequently and create a sense of community where opinions and experiences are shared, creating learning opportunities; C. Benchmark CSR performance: the certification is effective in showing how a company fares against other sustainable organizations, highlighting improvement areas; D. Save money and access network services: B Lab gives the opportunity to get discounts on numerous business services (e.g. Salesforce). For over 50 B Corps in 2010 the savings coming from these relationships more than offset the certification fee; [5] E. Protect Mission: often companies’ CSR efforts risk to be thrown away when 13. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(24) management or ownership changes. The certification is a tool to reduce this risk by creating some legal and reputational constraints; F. Differentiate from pretenders: the certification is an official and public statement that recognizes B Corps as truly effective in being socially and environmentally responsible. ‘Greenwashing’, which is the disinformation conducted by some companies to present themselves as responsible even if they are not, is increasing, and customers don’t trust much the CSR statements of corporations [6]. The certification is a powerful tool to. 治政 differentiate ‘good’ companies from the ones which 大are simply ‘greenwashing’; 立 ‧ 國. 學. G. Attract investors: some investors are interested in companies that not only have a solid business, but also have a solid CSR approach. Adding to that, a consistent number of. ‧. VCs, investment banks, wealth managers and commercial banks are B Corps, and. sit. y. Nat. already in some cases a financial B Corp has invested in another B Corp (e.g. Good. io. er. Capital invested $2.5 million in Better World Books) [5]. In fact, Socially Responsible. al. Investing (SRI) is growing decisively. In 2007 it accounted for about $2.7 trillion of all. n. v i n managed C assets, in 2017 for about h e nwhile gchi U. professionally. $21.4 trillion [6]. The. certification signals investors that a corporation is worth of receiving Socially Responsible Investment; H. Generate press: the movement is becoming more and more popular, finding coverage on important media outlets such as Bloomberg Businessweek, CNN, etc., providing free advertising to all B Corps; I. Attract and engage talent: most workers are attracted towards workplaces where they can have a positive impact and are more motivated and engaged if that is the case.. 14. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(25) Several studies have shown that, but just to mention a few examples: •. In 2012, 58% of American graduates declared that they would accept a 15% pay cut if they worked for a company that shares their values;. •. In 2013, Deloitte conducted a study that highlighted how Millennials (people born after 1982) believed that ‘improving society’ should be the first goal of a company (36% of respondents), while profit is only second (35%) [6]. 政治大. Here is an example on how the questionnaire implements AHP methodology to collect the. 立. needed data:. ‧ 國. 學. Assuming the following:. “Leading a movement” was an absolutely more important reason than “Partnering with. ‧. •. y. sit. n. al. er. and “Attract investors” was a slightly more important reason than “Leading a movement”. io. •. Nat. peers” in motivating the company to acquire B Certification…. v. then motivating the company to acquire B Certification. Ch. engchi. i n U. The respondent would mark the questionnaire as follows:. Table 3: Example of Analytic Hierarchy Process data collection Motivation. 9. 7. 5. 3. 1. 3. 5. 7. 9. Motivation Partner with peers. Lead a movement Attract investors. − PART 2: Impact of B Certification on Financial and Non-Financial performance 15. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(26) Part 2 looks into answering research question #2, which basically seeks to know if and how the certification has had an impact in different financial and non-financial aspects of the company. Studies suggest that having a certification such as the one for B Corps, has a direct impact on many financial and non-financial aspects of a certified company. Based each of the selected companies’ experience with being certified, this part aims to detect how the B Certification has had an effect (or not) in many performance variables of the organization.. 政治大 forth in the study had been Positively Impacted, Not Impacted or Negatively Impacted by the 立 The questionnaire uses a straight forward approach to ask respondents whether the variables set. ‧ 國. 學. B Corp Certification in the company.. The variables for this part #2 are defined as Financial and Non-financial performance aspects. ‧. of the company, as identified by the 2016 Q3 Research: “B Corporation Benefits?” by The [7]. and. duly. defined. by. the. webpage. n. er. io. http://www.businessdictionary.com:. al. below. y. Consultancy. sit. Investment. Nat. Social. Ch. i n U. v. A. Revenue per year: The income generated from sale of goods or services, or any other. engchi. use of capital or assets, associated with the main operations of an organization before any costs or expenses are deducted. [8] B. Expenses per year: Money spent or cost incurred in an organization's efforts to generate revenue, representing the cost of doing business. [8] C. Taxes paid per year: Compulsory monetary contribution to the state's revenue, assessed and imposed by a government on the activities, enjoyment, expenditure, income, occupation, privilege, property, etc., of individuals and organizations. [8] D. Debt: A duty or obligation to pay money, deliver goods, or render service under an 16. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(27) express or implied agreement. [8] E. Equity: Ownership interest or claim of a holder of common stock (ordinary shares) and some types of preferred stock (preference shares) of a company. equity represents funds contributed by the owners (stockholders) plus retained earnings or minus the accumulated losses. [8] F. Overall Financial Performance: Measuring the results of a firm's policies and. 政治大 investment, return on assets, value added, etc. [8] 立. operations in monetary terms. These results are reflected in the firm's return on. ‧ 國. 學. G. Impact on Marketing Strategy: An organization's strategy that combines all of its marketing goals into one comprehensive plan. A good marketing strategy should be. ‧. drawn from market research and focus on the right product mix in order to achieve the. Nat. sit. y. maximum profit potential and sustain the business. The marketing strategy is the. n. al. er. io. foundation of a marketing plan. [8]. Ch. i n U. v. H. Supply or distribution chains: Entire network of entities, directly or indirectly. engchi. interlinked and interdependent in serving the same consumer or customer. It comprises of vendors that supply raw material, producers who convert the material into products, warehouses that store, distribution centers that deliver to the retailers, and retailers who bring the product to the ultimate user. [8] I. Markets served: An actual or nominal place where forces of demand and supply operate, and where buyers and sellers interact (directly or through intermediaries) to trade goods, services, or contracts or instruments, for money or barter. [8] J. Products / services offered: A good, idea, method, information, object or service 17. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(28) created as a result of a process and serves a need or satisfies a want. It has a combination of tangible and intangible attributes (benefits, features, functions, uses) that a seller offers a buyer for purchase. [8] K. Socially responsible action: A company's sense of responsibility towards the community and environment (both ecological and social) in which it operates. [8] L. Employee attraction and retention: An effort by a business to maintain a working. 政治大 attractive for potential new employees. [8] 立. environment which supports current staff in remaining with the company and makes it. ‧ 國. 學. M. Organizational reputation: Overall estimation of the character or quality of an organization, generally held by those who know it and are familiar with it. [8]. ‧. N. Investor interest: A person, group or organization that has interest or concern in an. y. Nat. er. io. sit. organization and can potentially own one or more shares in that organization. [8] O. Benchmarking Performance: A measurement of the quality of an organization's. al. n. v i n C h programs, strategies, performance (policies, products, etc.), and their comparison with engchi U standard measurements, or similar measurements of its peers. [8]. P. Consumer and Press Brand Awareness: Extent to which a brand is recognized by the press or potential customers and is correctly associated with a particular product. [8] Q. Knowledge sharing / Partnerships: The extent to which two or more individuals / entities pool money, skills, and other resources, and share profit and loss or knowledge. [8] As a quality control measure, the respondent is instructed to answer based on whether the B. 18. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(29) Certification had an incidence on the impact stated; for example, for the variable “Investor interest”; if being certified has attracted more investors to the company, then mark “Positive Impact”; but if the company has still attracted more investors but only because of a new product line instead of the B Certification, then mark “No Impact”. For the structure of this part of the questionnaire. (refer to Appendix in Page 90) − PART 3: Escalating the B movement Part 3 looks into answering research question #3, which basically seeks to get insights on how. 政治大. to escalate the B Movement in both Taiwan and Nicaragua based on the experience of the. 立. selected companies that have already been certified.. ‧ 國. 學. This part uses qualitative open-ended questions to collect valuable information that can help. ‧. future research in the matter and somehow promote or escalate the B Movement in strong Asian. sit. y. Nat. economies like Taiwan or Latin-American economies in ways of development like Nicaragua.. n. al. er. io. The identified variables that were asked I this part are:. i n U. v. − Challenges: What were 3 biggest challenges the company faced while acquiring the B Certification. Ch. engchi. − Advice / Suggestions: Based on the company’s experience and knowledge about the B Certification, please provide your advice and suggestions to other companies that are looking into becoming B Corps in your country. 4.1.3. Stage 3: Data Analysis The aforementioned variables were studied through data collection techniques, both primary and secondary. The first correspond to the questionnaire data and analysis on the information for each of the selected B Corps. The collection of secondary type was carried out through the 19. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(30) review of information provided by the B Lab, as well as existing articles and past studies. This stage was devoted to the analysis of the information collected in the previous stages for the identification of opportunities, risks, recommendations and perspectives for the promotion and possible escalation of this new business in Asia and Latin America. First, the results will be compared and contrasted from Taiwan and Nicaragua, pairing them in accordance to their respective identified industries in hopes of identifying common trends and. 政治大 framework in order to make conclusions and recommendations based in the best ways to 立 differences in the set variables. Second, these results will be paired with the conceptual. ‧ 國. 學. escalate the model in the respective geographical areas of study.. 4.2. Hypothesis Development. ‧. This study only develops a hypothesis for research questions #1 and #2 as these are the. y. Nat. io. sit. questions that are analyzed through both qualitative and quantitative approaches where. n. al. er. hypothesis testing is viable. For research question #3, the approach is merely qualitative and. Ch. i n U. v. just aims to gather all date and theoretical framework analysis to provide solutions and suggestions on the matter.. engchi. Research question #1: What are the most important reasons that motivated B Corps to seek certification in Taiwan and Nicaragua? Hypothesis #1: − The most important reasons that motivate B Corps to seek the B certification are the same for companies in both Taiwan and Nicaragua. Literature review suggests that the standardized processes of becoming a B Corp and the. 20. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(31) marketing / awareness campaigns of B Lab allow for companies to have similar motivation sets to acquire the certification and their general scope allow for similar current situation regardless of their different geographical location and business environment. The set of motivations are true for all B Corps all around the world according to the 2014 B Corporation Handbook by Ryan Honeyman, and it is fair to say that the same trend would be replicated in B Corps from similar industries. [4]. 政治大 and non-financial performance in both Taiwan and Nicaragua? 立. Research question #2: What is the impact of the B Certification on the organizations’ financial. ‧ 國. 學. Hypothesis #2:. by the B Certification in both Taiwan and Nicaragua [7]. Nat. sit. y. ‧. − Organizations’ financial and non-financial performance aspects are positively impacted. io. er. This hypothesis stems from two theories emerging in previous research: 1) positive corporate social performance leads to positive corporate financial performance and 2) socially responsible. al. n. v i n C positively third-party certifications and labels organizational financial performance. U h e n gimpact i h c. Orlitzky, Schmidt, and Rynes’ 2003 meta-analysis is one of the most recent studies finding corporate social performance to be positively correlated with corporate financial performance. [9] Beurden and Gössling support this finding with their 2008 meta-analysis discovering that 68% of studies included in their research demonstrate a positive relationship between corporate social performance and corporate financial performance, 26% display no significant relationship, and only 6% display a negative relationship.8 Even more recently, major studies from the International Finance Corporation and Harvard and the London Business School (to name a couple) support these academic findings by showing positive relationships between 21. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(32) sustainable companies and both stock market and accounting performance. [10] Previous research also shows that socially responsible third-party certifications and labels (such as B Corp certification) positively impact organizational financial performance. Parkinson concludes that seals and certifications significantly influence consumer choice behavior, creating a positive attraction towards a product. Etilé and Teyssier support these findings by using an experimental market to compare the impact of two corporate social responsibility (CSR) signaling strategies: 1) CSR signaling through a certified third-party label and 2) CSR. 治政 signaling through unsubstantiated company claims. This 大research concludes that third party 立 certification clearly produces efficiencies.12 Finally, Bridges Ventures notes that a benefit of ‧ 國. 學. third party B Corp certification is its advertisement of an organization’s “profit with purpose”. ‧. approach; otherwise socially responsible organizations are not always easy to identify. [11]. sit. y. Nat. The 2014 B Corporation Handbook by Ryan Honeyman contains some of the most. io. er. comprehensive research on B Corps thus far. This handbook provides a step-by-step resource. al. explaining the B Corp movement and supports the business case for B Corp certification. n. v i n through interviews with certifiedC organizations. this research outlines 9 benefits to h e n g cSpecifically, hi U B Corp certification: being part of a community of leaders with shared values; attracting talent and engaging employees; increasing credibility and trust; generating press; benchmarking and improving performance; attracting investors; protecting a company’s mission for the long term; building a collective voice; saving money; and leading a global movement. Which leads to believe that a B-certified corporation would have a positive impact on all those non-financial performance variables. [4]. 22. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(33) 5. THEORETICAL FRAMEWORK 5.1. Taiwan vs Nicaragua Table 4: Taiwan vs Nicaragua Fact sheet GENERAL INFORMATION Unit Location Area km2. ‧ 國. Government type Capital. y. sit. GMT +8 23.56. er. al. n Language. ‧. GMT Million. io. Religion. Atlantic coastal plains rising to central interior mountains; volcanoes interrupt the narrow Pacific coastal plains. Eastern two-thirds are mostly rugged mountains; flat to gently rolling plains in the west. Nat. Time zone Population. Tropical in the lowlands; cooler in the highlands. 學. Terrain. Nicaragua Central America 130,370. 政治大. 立. Climate. Taiwan Eastern Asia 35,980 Tropical and marine; rainy season during southwest monsoon (June to August); cloudiness is persistent and extensive all year. i n U. Buddhist 35.3%, Taoist 33.2%, Christian 3.9%, Taoist or Confucian 10%, none or unspecified 18.2% (2005 est.). Ch. engchi. Mandarin Chinese (official), Taiwanese, and Hakka dialects. Semi-presidential republic Taipei. v. GMT -6 6.26. Roman Catholic 58.5%, Protestant 23.2%, Jehovah’s Witness 0.9%, other 1.6%, none 15.7% Spanish is the official language. Other languages spoken include Miskito, Mestizo of the Caribbean coast, English, and indigenous languages Presidential republic Managua. 23. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(34) THE WORLD BANK DOING BUSINESS INDICATORS Unit Taiwan Overall 2018 Rank rank 15 Starting a Business rank 16 2018 rank The Overall 2018 DTF 80.07 distance to Starting a Business frontier 94.43 2018 DTF (DTF)* ECONOMIC INDICATORS Unit Taiwan GDP $ Million 529575 GDP growth % 1.5 Inflation (CPI) % 1.4. 79.61. Nicaragua 13230.8 4.7 3.5. 3.9. 5.9. % %. 1.7 2.6. Current account balance. $ Million. 74280. Public debt External debt. % of GDP $ Million. 36.2 74280. $ Million. 5551. % of GDP. e n g c-2.2 hi. % of GDP. 14.3. 8.3. % of GDP. 1.9. 0.5. Net borrowing Government consumption Military expenditure. 6.7 5.5 7 -1133.4. Ch. sit. y. al. er. io. Total debt service. ‧. -. Nat. % of GDP. n. ‧ 國. 55.39. 學. Foreign direct investment Export growth Import growth. 138. 政治大. % 立. Unemployment. Nicaragua 131. i n U. v. 31 10990.9 830.5 -. * The distance to frontier (DTF) measure shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies. 0 represents the lowest performance and 100 represents the frontier. Sources: Baker Tilly International, Doing Business in Taiwan, 2017 and Doing Business in Nicaragua, 2017 | The World Bank, World Development Indicators | International Monetary Fund (IMF), World Economic Outlook | Stockholm International Peace Research Institute (SIPRI), Military Expenditure Database.. 24. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(35) 5.2. Taiwan Overview The Republic of China, commonly referred to as Taiwan, is considered the heart of the AsiaPacific region, as it is considered an imperative hub for trade and investment at both the regional and global scale, especially in high-tech industries. It is an island nation situated in the West Pacific Ocean some 180 km off China’s southeast coast, midway between Japan and the Philippines. Home to 23.3 million people, Taiwan is one. 政治大. of the most densely populated areas in the world at 650 people per km² and with a total surface area of about 36,000 km².. 立. ‧ 國. 學. Over 95% of the population is of Han Chinese ancestry, and the rest composed of aboriginal peoples and recent marriage immigrants from Southeast Asia and mainland China. Chinese is. ‧. the main language used in Taiwan. Various ethnic groups use Taiwanese Hokkien, Hakka or. Nat. sit. y. one of 16 indigenous languages in every- day speech. Taiwan shares the same linguistic heritage. n. al. er. io. as China but differs in its continued use of traditional written Chinese characters instead of the simplified ones used in China.. Ch. 5.2.1. Taiwan’s economy [12]. engchi. i n U. v. Taiwan is a highly developed market economy. The country’s level of socioeconomic development permits adequate freedom of choice for all citizens. Fundamental social exclusion due to poverty, gender, religion or ethnicity is qualitatively minor to nonexistent and is not structurally embedded. Taiwan’s poverty rate is low in international comparison and stands at 1.5 % according to the latest available data. Income distribution – as measured by the Gini coefficient – is relatively equal and has been stable around 0.34 since 2010 and throughout the review period. This stands in contrast to an energetic domestic debate on rising social inequality. 25. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(36) in Taiwan caused by low economic growth, stagnant wages and highlighted by their shrinking share of Taiwan’s GDP. According to the most recent data available (2014), Taiwan is considered a country with very high human development. At 0.882, it would rank 25th globally in UNDP’s Human Development Index. Moreover, Taiwan has a relatively low level of gender inequality, ranking 5th worldwide with a Gender Inequality Index of 0.052. The most socially excluded group is Taiwan’s 625,000 strong foreign blue-collar worker community employed as household caregivers, factory workers and in the fishing industry who suffer from low salaries. 政治大. and social discrimination, but also enjoy increasing support from civic groups and social. 立. organizations. The new DPP government has announced intentions to improve their legal and. ‧ 國. 學. socioeconomic position. However, a major problem is the dependence of migrant workers on private brokerage agencies in Taiwan, which depress their salaries by taking huge commissions.. ‧. This results in many of them leaving their commissioned jobs very quickly to find better paying. y. Nat. io. sit. illegal work, which further increases their vulnerability to exploitation.. er. 5.2.2. Taiwan’s Organization of the Market and Competition [12]. al. n. v i n Ch Taiwan’s market economy is institutionally with transparent, clearly defined and statee n gsound chi U guaranteed rules for ensuring fair competition and largely equal opportunities for all market participants. A Fair-Trade Commission supervises business practices to ensure fair competition. Business freedom is high and market actors face neither entry nor exit barriers. Taiwan ranks consistently high in global economic indices in terms of ease of doing business, economic freedom and competitiveness. According to the Economic Freedom of the World Annual Report 2016, Taiwan is ranked 23rd with a score of 7.65 out of 10 (based on 2014 figures), and 3rd in Asia behind Hong Kong and Singapore. It did particularly well in the categories of government size, sound money and credit market regulations. According to the Global Competitiveness. 26. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(37) Report 2016-2017, Taiwan is ranked 14 out of 138 countries, and in the 2017 Index of Economic Freedom, Taiwan was ranked 11th with very high scores for well-specified property rights, and freedom of business, monetary transactions and trade. The main limitation on Taiwan’s economic openness remains the restricted access for Chinese firms to Taiwanese markets despite considerable liberalization since 2008. Investment in a number of strategic sectors like LED, solar cells and display panels remain capped for mainland investors at less than 50%. In non-strategic sectors of Taiwan’s manufacturing industries, however, mainland Chinese capital. 政治大. can increase its ownership to more than 50%. Plans to reduce further the barriers of Chinese. 立. investment into Taiwan’s sensitive telecommunications sector and the lifting of Chinese capital. ‧ 國. 學. inflow have stalled with the non-ratification of the Cross-Strait Trade in Service Trades Agreement (CSSTSA) in the aftermath of the 2014 Sunflower protests. The DPP government. ‧. has pledged that it will not advance further cross-Strait liberalization until the Legislative Yuan. y. Nat. io. sit. passes a cross-Strait supervisory bill to monitor all agreements between China and Taiwan.. n. al. er. Even though the state maintains its monopoly over certain basic utilities and services (e.g.,. Ch. i n U. v. water supply and postal services), market competition is well established and legal frameworks. engchi. exist to combat cartels. The Fair-Trade Law that took effect in 2002 ensures a coherent and effective approach to combating monopolistic structures or predatory price fixing. In January 2017, the Legislative Yuan passed an amendment to its electricity act that effectively ended the monopoly of state-run Taiwan Power Co. (Taipower) in the electricity market by allowing “green” energy producers to sell directly to customers. Taiwan enjoys a high degree of trade freedom, as its economy is heavily reliant on its export economy. The country is one of the world’s principal exporters of electronics and IT-technology. Tariff rates on industrial products are comparable to those found in industrialized nations such. 27. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(38) as Japan and the United States, and Taiwan generally plays to WTO rules. With the exception of cross-strait economic relations, the state refrains from intervening in investment planning and foreign trade. Intervention in the former mainly takes place in order to control the level of Taiwan’s high trade dependency on China, but also to restrict mainland investment in sensitive sectors, most notably, real estate, finance and telecommunications. Some 40% of Taiwan’s exports and more than 60% of its outbound investment have gone to the Chinese mainland (including Hong Kong) over the last two decades, resulting in a high. 治政 trade dependency on China, which has worried critical大 observers for quite some time. The 立 ratification of follow-up agreements to the cross-strait Economic Cooperation Framework ‧ 國. 學. Agreement (ECFA) to liberalize further trade in services and goods across the Taiwan Strait has. ‧. been halted after the March 2014 Sunflower protests. The DPP government has pledged that it will not advance further cross-Strait liberalization until the Legislative Yuan passes a cross-. y. Nat. er. io. sit. Strait supervisory bill to monitor all agreements between China and Taiwan.. al. According to official data, at the end of 2015 Taiwan had 39 commercial banks, which. n. v i n C h accepted and 89.08% accounted for 79.24% of total deposit e n g c h i U of total loans extended in Taiwan.. 30 local branches of foreign (including mainland Chinese) banks were responsible for 1.37% of total deposits and 3.33% of loans. 23 credit cooperatives, which mainly service regional customers, accounted for 1.44% of total deposits and a market share of loans of 1.49%. Taiwan has a tightly regulated and transparent banking system, which is effectively supervised by the Financial Supervisory Commission (FSC) and an independent central bank. The capital and stock market are reasonably developed and in principle open to foreign participation. Banks benefit from a high proportion of stable customer deposits and flexibility to access domestic capital markets. Also, the system’s low use of cross-border funding makes it less vulnerable to. 28. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(39) contagion risks during periods of turbulences in global capital markets like the 2008/9 global financial crisis. The official non-performing loans (NPL) ratio of Taiwanese domestic banks was 0.23% and 0.27% at the end of 2015 and 2016, respectively. The slight increase during the review period was driven mainly by the economic slowdown in China. The capital adequacy ratio of Taiwan’s banking stood at 12.98 % in mid-2016, well above the statutory Basel III minimum of 10.5% that is required by 2019. A 2016 stress test under the auspices of the FSC diagnosed Taiwan’s banking industry as having sufficient financial resilience, and international. 政治大. analysts agree that Taiwan’s banking system is overall stable and poses low risk.. 立. On the negative side, real estate-related loans account for an unhealthy 40% in the books of. ‧ 國. 學. Taiwan’s domestic banks and the banking sector remains dominated by fully and partially state-. ‧. owned banks and is highly fragmented. Taiwan’s banking system has the lowest banking concentration ratio of the large financial systems in the region. While this reduces the threats of. y. Nat. io. sit. excessive concentration in a few “too big to fail” institutions, it has led to fierce competition. n. al. er. that drives down profitability close to unsustainable levels. Moreover, to improve profitability,. Ch. i n U. v. Taiwanese banks have expanded into potentially unstable regional markets, including China. engchi. and Myanmar, which exposes them to greater risks, as exemplified by the increase in nonperforming loans in 2016.. 5.3. Nicaragua Overview Nicaragua, officially the Republic of Nicaragua, is the largest country in the Central American isthmus, bordered by Honduras to the north, the Caribbean to the east, Costa Rica to the south, and the Pacific Ocean to the west. Managua is the country's capital and largest city and is also the third-largest city in Central America, behind Tegucigalpa and Guatemala City. The multiethnic population of six million includes people of indigenous, European, African, and Asian 29. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(40) heritage. The main language is Spanish. Native tribes on the Mosquito Coast speak their own languages and English. Originally inhabited by various indigenous cultures since ancient times, the Spanish Empire conquered the region in the 16th century. Nicaragua gained independence from Spain in 1821. The Mosquito Coast followed a different historical path, with the English colonizing it in the 17th century and later coming under the British rule, as well as some minor Spanish interludes in the 19th century. It became an autonomous territory of Nicaragua in 1860 and the. 治政 northernmost part of it was later transferred to Honduras 大 in 1960. Since its independence, 立 Nicaragua has undergone periods of political unrest, dictatorship, and fiscal crisis, leading to ‧ 國. 學. the Nicaraguan Revolution of the 1960s and 1970s and the Contra War of the 1980s. Nicaragua. ‧. is a representative democratic republic.. sit. y. Nat. The mixture of cultural traditions has generated substantial diversity in folklore, cuisine, music,. io. er. and literature, particularly the latter given the literary contributions of Nicaraguan poets and. al. writers, such as Rubén Darío. Known as the "land of lakes and volcanoes", Nicaragua is also. n. v i n C h of the Americas.U The country has set a goal of 90% home to the second-largest rainforest engchi. renewable energy by the year 2020. The biological diversity, warm tropical climate and active volcanoes make Nicaragua an increasingly popular tourist destination.. 5.3.1. Nicaragua’s economy [13] Poverty and inequality are key problems in contemporary Nicaragua. Since its return to power, the Sandinista government has extended social policies that aim to reduce poverty in urban and rural areas. However, after 10 years, it is hard to confirm that these social policies have really tackled poverty in the country as inequality remains a fundamental characteristic of society.. 30. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(41) Nicaragua’s socioeconomic development status is low. According to the 2016 Human Development Report, the country’s Human Development Index (HDI) value was 0.631 (0.614 in 2014) and Nicaragua ranked 125 out of 188 countries, only ahead of Guatemala (128), Honduras (131) and Haiti (163) in Latin America. The country’s Gender Inequality Index score was 0.449, worse than the Latin American average, though ahead of Panama (0.454), Honduras (0.480) and Guatemala (0.533) in the Central American region. Social exclusion due to poverty and hardship is quantitatively and qualitatively very. 治政 pronounced and is structurally entrenched. According 大 to official data, inequality diminished 立 during the 2000s. In 2014, the Gini Index value reached 47.1. According to the World Bank ‧ 國. 學. Development Indicators 2016, 17.1% of the population lived on less than $3.10 a day. However,. ‧. most of the country’s almost 6 million inhabitants live in poverty.. sit. y. Nat. 5.3.2. Nicaragua’s Organization of the Market and Competition [13]. n. al. er. io. The organization of market and competition in Nicaragua works under a weak institutional. i n U. v. framework. There is little judicial independence, a weak regulatory framework and very high. Ch. engchi. levels of corruption. Since the 1990s, free-market competition has been implemented in Nicaragua and the return of Sandinista government in 2006 hasn’t changed the principles of free-market organization. However, during Ortega’s mandates, market competition has been undermined by the emergence of strong enterprises dependent on the government and Ortega’s family. The informal sector remains large. In the Doing Business Report 2017, Nicaragua ranked 127 out of 190 countries, an improvement on previous years, but lowest of all Central American countries. Nicaragua ranked particularly poorly for paying taxes (176), protecting minority investors (145) and registering. 31. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(42) property (146). The 2016-2017 Global Competitiveness Report ranked Nicaragua 103 out of 138 countries, with Nicaragua scoring poorly for the efficiency of government bureaucracy, educated workforce, supply of infrastructure and corruption. Weak government institutions, shortcomings in the rule of law and executive control pose significant challenges to investors in Nicaragua, especially for smaller foreign investors. According to the U.S. Department of Commerce, investors regularly complain that regulators, in particular the Nicaraguan Customs Authority, are arbitrary, negligent and slow to apply. 治政 existing laws. Nevertheless, foreign investment is considered 大 to be economically important and 立 Nicaragua offers business opportunities in various sectors such as construction, food processing, ‧ 國. 學. packaging equipment and tourism. Nicaragua’s emerging tourism industry has recently been. ‧. enhanced by attractive tax incentives.. io. n. al. er. (74.4% in 2013). This percentage is even higher for women.. sit. y. Nat. According to the central bank, the informal sector in Nicaragua represents 75.2% of the jobs. i n U. v. A competition-promotion and anti-monopoly law came into effect in 2007 and was again. Ch. engchi. modified in 2008. The law prohibits anti-competitive practices and created a national institute for the promotion of competition (Procompetencia), which is tasked with enforcing the law. The promotion of competition law establishes financial sanctions for companies that engage in anti-competition practices, varying between 1% and 10% of the company’s net sales. However, after 10 years of the law’s existence, anti-competitive practices still exist. Procompetencia has experienced a lot of difficulties in tackling anti-competitive practices and its record has been poor. In 2016, Procompetencia dealt with only 11 cases related to unfair competition and price fixing, according to its 2016 report.. 32. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(43) Nicaragua’s market contains a number of oligopolies, common to small economies, in which two or three companies control the majority of a sector. According to Procompetencia, anticompetitive practices prevail in sectors such as milk, flour, wood and tourism. Oligopolies in the airline and telecommunication sectors have also been denounced by the president of the National Assembly. According to Procompetencia, many of the most important economic sectors have one company that controls more than 50% of the sector. One contributing factor, related to Nicaragua’s development model, is considerable state. 治政 interference in economic activity. Collaboration and complicity 大 between the government and 立 business sector has resulted in a small group, generally based on strong friendship or family ‧ 國. 學. bonds, making economic decisions favorable to themselves and facilitating anti-competitive. ‧. practices.. sit. y. Nat. Furthermore, in its last report, Procompetencia recognized that, 10 years after its creation, most. io. er. industrial businesses don’t even know that Procompetencia exists, which indicates the weak. al. culture of competition in Nicaraguan markets. The Global Competitiveness Index 2016-2017. n. v i n C hcountries concerning ranked Nicaragua 121 out of 138 e n g c h i U the effectiveness of anti-monopoly policy, and 135 concerning the extent of market dominance. Since the 1990s, Nicaragua has liberalized its foreign trade. Nicaragua is now a member of various regional and bilateral trade agreements with other Central American countries and the United States, including the Dominican Republic-Central American Free Trade Agreement (CAFTA-DR). According to WTO, Nicaragua has a relatively open trade and investment regime. The average applied tariff rate is 2.0% according to the Heritage Foundation. In the Global Competitiveness Index 2016-2017, Nicaragua ranked only 103 out of 138 countries, but 66 concerning foreign competition and 51 concerning trade tariffs. According to World Bank’s 33. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.

(44) Doing Business Report 2017, Nicaragua made trading across borders more expensive by introducing a new security fee, which increased the cost of border compliance for exporting and importing. The United States is Nicaragua’s largest trading partner, both in imports and exports, followed by Mexico. According to the U.S. Department of Commerce, trade with the United Sates represents about a quarter of imports and two-thirds of exports (including free trade zone exports). In 2006, CAFTA-DR entered into force for the United States and Nicaragua, making. 治政 all U.S. exports of consumer and industrial goods duty-free. 大 Tariffs on most U.S. agricultural 立 products will be phased out by 2024, with all tariffs eliminated by 2026. In 2010, Central ‧ 國. 學. American countries, including Nicaragua, also signed a trade agreement with the European. ‧. Union. In 2014, a partial free trade agreement came into effect between Nicaragua and Cuba. Nicaragua also has trade agreements with Mexico, Panama, Taiwan, Chile and the Dominican. er. io. sit. y. Nat. Republic.. al. Since its incorporation into the Bolivarian Alliance for the Peoples of America (ALBA) in 2007,. n. v i n C h has also focusedUon bilateral relations with Venezuela. the government’s foreign trade policy engchi As a result, Venezuela became Nicaragua’s third largest trade partner between 2007 and 2014. Hugo Chavez’s death and the fall in world oil prices altered the commercial partnership between Nicaragua and Venezuela, with Venezuela limiting its investments in Nicaragua. Since the Venezuelan crisis in 2016, Venezuelan investments in Nicaragua have almost disappeared. Since 2013, the Nicaraguan government has tried to develop new commercial partnerships. During the period under review, Nicaragua (together with Costa Rica, El Salvador, Guatemala, Honduras and Panama) concluded terms for a free trade agreement with South Korea. Nicaragua is also negotiating a bilateral trade agreement with Peru and its accession as a full 34. DOI:10.6814/THE.NCCU.IMBA.028.2018.F08.