3.1 Why Do O&G Social Investments Fail?
33
open to corruption (Cash, 2012; Frynas, 2009b; Frynas & Wood, 2001; Hilson, 2012;
Idemudia & Ite, 2006).
Frynas (2009b) and Idemudia and Ite (2006) illustrate this misuse of social investment resources to benefit the private interests of a few in Africa. For instance, Frynas
(2009b) discusses three local communities in Africa settled alongside a gas-pipeline
project. The company responsible for the pipeline construction established social
investment that solely benefited the three community chiefs, causing intergroup
jealousy, community unrest, and hindering the community-company relationship.
Meanwhile, in Nigeria, a few social investments failed because of greed amidst local
chiefs and disruptive behaviour among youths due to political intergroup jealousy
(Idemudia & Ite, 2006). Accordingly, having the whole community involved in the
design of social investment is a way of mitigating some of these negative impacts.
3.1.4 O&G Social Investment as an Alternative
to Government
Many companies use social investment to fill gaps left by host governments. Brazil
and Argentina are examples of places where social investment in the O&G sector has
been used as a way to meet the countries’ development agendas. In Argentina, the
government plays an active role in debates on social responsibility and social investment programmes (Newell & Muro, 2006). The Argentinian government requires
companies to invest in broader national development objectives. For instance, the
Spanish Repsol has developed social investments in Argentina that reflect the local
government’s focus on supporting employment (Newell & Muro, 2006). Repsol
invested in a working cooperative for unemployed women, and in biodiesel research
and development (Newell & Muro, 2006).
Brazil has a very similar approach to O&G social investment. As in Argentina,
Brazil’s government plays an active role in advocating for O&G social investment that
meets Brazil’s national development goals. For instance, in 2000 and 2001, Petrobras,
the Brazilian oil company, promoted social investment in thermoelectric projects
that were in accordance with Brazil’s development plans for energy self-sufficiency
(Frynas, 2009a).
However, O&G social investment that aligns with the host government’s agenda
does not necessarily mean it benefits host communities, as government aspirations
may not coincide with host communities’ needs and aspirations. This commonly
occurs in host nations with governments that have high corruption indices and low
human development indices (Cash, 2012; Frynas, 2005; Hilson, 2012).
Additionally, O&G social investment may harm society if it is presented as an
alternative to the government (Cash, 2012; Frynas, 2005; Hilson, 2012) as it creates
an unequal balance of social power between the firm and government (Cash, 2012;
Garriga & Melé, 2004; Hilson, 2012). Studies suggest that social investment that
appropriates the role of the government to provide local social welfare may contribute
33
open to corruption (Cash, 2012; Frynas, 2009b; Frynas & Wood, 2001; Hilson, 2012;
Idemudia & Ite, 2006).
Frynas (2009b) and Idemudia and Ite (2006) illustrate this misuse of social investment resources to benefit the private interests of a few in Africa. For instance, Frynas
(2009b) discusses three local communities in Africa settled alongside a gas-pipeline
project. The company responsible for the pipeline construction established social
investment that solely benefited the three community chiefs, causing intergroup
jealousy, community unrest, and hindering the community-company relationship.
Meanwhile, in Nigeria, a few social investments failed because of greed amidst local
chiefs and disruptive behaviour among youths due to political intergroup jealousy
(Idemudia & Ite, 2006). Accordingly, having the whole community involved in the
design of social investment is a way of mitigating some of these negative impacts.
3.1.4 O&G Social Investment as an Alternative
to Government
Many companies use social investment to fill gaps left by host governments. Brazil
and Argentina are examples of places where social investment in the O&G sector has
been used as a way to meet the countries’ development agendas. In Argentina, the
government plays an active role in debates on social responsibility and social investment programmes (Newell & Muro, 2006). The Argentinian government requires
companies to invest in broader national development objectives. For instance, the
Spanish Repsol has developed social investments in Argentina that reflect the local
government’s focus on supporting employment (Newell & Muro, 2006). Repsol
invested in a working cooperative for unemployed women, and in biodiesel research
and development (Newell & Muro, 2006).
Brazil has a very similar approach to O&G social investment. As in Argentina,
Brazil’s government plays an active role in advocating for O&G social investment that
meets Brazil’s national development goals. For instance, in 2000 and 2001, Petrobras,
the Brazilian oil company, promoted social investment in thermoelectric projects
that were in accordance with Brazil’s development plans for energy self-sufficiency
(Frynas, 2009a).
However, O&G social investment that aligns with the host government’s agenda
does not necessarily mean it benefits host communities, as government aspirations
may not coincide with host communities’ needs and aspirations. This commonly
occurs in host nations with governments that have high corruption indices and low
human development indices (Cash, 2012; Frynas, 2005; Hilson, 2012).
Additionally, O&G social investment may harm society if it is presented as an
alternative to the government (Cash, 2012; Frynas, 2005; Hilson, 2012) as it creates
an unequal balance of social power between the firm and government (Cash, 2012;
Garriga & Melé, 2004; Hilson, 2012). Studies suggest that social investment that
appropriates the role of the government to provide local social welfare may contribute