Conflict management of smallholders palm oil plantation: Sustainable business perspective

Abstract

The palm oil sector development can be a driven factor for conflict in some areas. Smallholders are significant stakeholders that affect the palm oil sector's condition and development, including conflict conditions and management. Therefore, conflict management of smallholders palm oil is considered necessary to sustainable business. This paper has investigated the conflict management concept of smallholder palm oil plantation using a sustainable business perspective. Most of the conflict between the company and smallholders happens due to obscure land ownership and negative externalities. However, to prevent the conflict's border impact, the company should have an appropriate method to manage their conflict. Even though the local community does not use violence during the conflict against the company, conflicts may still negatively affect the trust and legitimacy of local communities toward companies. Therefore, we argue that socialization and mediation approaches are successful methods for conflict management. We also argue that integrating social and environmental issues into the core strategies of the company's decision-making process is necessary because conflict is one of the factors used to make sound business and investment decision-making. This study found that conflict management can likely encourage business investment in the company and reduce the company's operational risks and costs.