3.1 Why Do O&G Social Investments Fail?
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between the social programme design and the communities’ perceptions of what they
need.
3.1.2 Solely Business-Oriented O&G Social Investment
O&G social investment fails to benefit society when it is solely business oriented.
Studies by Frynas (2005) and Ahmad (2006) suggest that companies’ motivation
for initiating social investment initiatives are mainly, if not solely, business oriented.
Frynas (2005) researching the main reasons behind O&G companies’ decisions to
promote social investment in host countries worldwide revealed that O&G companies
seek “competitive advantage … a stable working environment, … managing external
perceptions…[and] keeping the employees happy” (Frynas, 2005, p. 583). Similarly,
Ahmad (2006) found that companies mainly develop social investment to enhance
“company share price and reputation, increase companies sales, attract and retain
high-calibre employees, promote international business strategies, retain government
support, enhance corporate brand positioning and help to withstand the impact of a
corporate crisis” (Ahmad, 2006, p. 123).
None of the companies in the studies mentioned above cited ‘benefiting the host
community’ as a rationale for social investment. This raises the question: how can
social investment benefit the host community if it does not specifically identify what
would benefit the community in the first place? Social investment that focusses solely
on benefiting the firm tends to fail in benefiting its host communities (Frynas, 2005;
Van Tulder, 2008).
Two examples highlight how O&G social investment can fail due to a focus on
the company’s reputation, rather than addressing communities’ actual needs. ExxonMobil was accused of implementing unsuccessful social investment in Equatorial
Guinea because of a lack of community participation. ExxonMobil donated mosquito
nets to the health ministry of Equatorial Guinea, but because they were not needed
in the region, officials ended up exporting the nets to Cameroon (Frynas, 2005).
Another non-community-oriented social investment was an anti-AIDS campaign in
Angola. BP distributed Asian-made condoms that turned out to be too small for the
men (Frynas, 2005).
Van Tulder (2008) categorises social investment
1 that is solely business oriented
as ‘in-active’ and/or‘re-active’. In-active social investment’s main objectives are to
obtain operational advantage and maximise profits, irrespective of a moral code of
conduct (Van Tulder, 2008). Re-active O&G social investment is mainly developed
because of public pressure. It is also used as a business strategy to gain political
legitimacy and favours (Van Tulder, 2008). In-active and re-active social investment
1 Van Tulder talks about in-active and re-actives categories of social responsibility. In this research,
when referring to Van Tulder’s categorisation of social responsibility I use the term ‘social
investment’.
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between the social programme design and the communities’ perceptions of what they
need.
3.1.2 Solely Business-Oriented O&G Social Investment
O&G social investment fails to benefit society when it is solely business oriented.
Studies by Frynas (2005) and Ahmad (2006) suggest that companies’ motivation
for initiating social investment initiatives are mainly, if not solely, business oriented.
Frynas (2005) researching the main reasons behind O&G companies’ decisions to
promote social investment in host countries worldwide revealed that O&G companies
seek “competitive advantage … a stable working environment, … managing external
perceptions…[and] keeping the employees happy” (Frynas, 2005, p. 583). Similarly,
Ahmad (2006) found that companies mainly develop social investment to enhance
“company share price and reputation, increase companies sales, attract and retain
high-calibre employees, promote international business strategies, retain government
support, enhance corporate brand positioning and help to withstand the impact of a
corporate crisis” (Ahmad, 2006, p. 123).
None of the companies in the studies mentioned above cited ‘benefiting the host
community’ as a rationale for social investment. This raises the question: how can
social investment benefit the host community if it does not specifically identify what
would benefit the community in the first place? Social investment that focusses solely
on benefiting the firm tends to fail in benefiting its host communities (Frynas, 2005;
Van Tulder, 2008).
Two examples highlight how O&G social investment can fail due to a focus on
the company’s reputation, rather than addressing communities’ actual needs. ExxonMobil was accused of implementing unsuccessful social investment in Equatorial
Guinea because of a lack of community participation. ExxonMobil donated mosquito
nets to the health ministry of Equatorial Guinea, but because they were not needed
in the region, officials ended up exporting the nets to Cameroon (Frynas, 2005).
Another non-community-oriented social investment was an anti-AIDS campaign in
Angola. BP distributed Asian-made condoms that turned out to be too small for the
men (Frynas, 2005).
Van Tulder (2008) categorises social investment
1 that is solely business oriented
as ‘in-active’ and/or‘re-active’. In-active social investment’s main objectives are to
obtain operational advantage and maximise profits, irrespective of a moral code of
conduct (Van Tulder, 2008). Re-active O&G social investment is mainly developed
because of public pressure. It is also used as a business strategy to gain political
legitimacy and favours (Van Tulder, 2008). In-active and re-active social investment
1 Van Tulder talks about in-active and re-actives categories of social responsibility. In this research,
when referring to Van Tulder’s categorisation of social responsibility I use the term ‘social
investment’.