AbstractShell began its operations in the Gbarain and Ekpetiama regions in 1967 when it discovered an oilfield on its swampland. The company has since then discovered more oilfields. As result, its activities and operations have increased. These activities have had more social and economic impacts on the communities in these regions. For instance, the indigenous communities are said to have reported that Nigeria’s Federal Government has always used the Land Use Act of 1978 to force them out of their lands so as to contain the increased operations of Shell. Unfortunately, these local communities are not normally consulted before such evictions, neither do they get meaningful compensation.
Moreover, the activities of the company have depleted the natural resources, e.g. land and water sources, on which the communities depended for their agriculture and fishing, part of their primary economic activities (Ereba et al 2010). This paper attributes this situation to poor stakeholder management and seeks to look at how the company could have done better. IntroductionThe contemporary corporation thus emphasizes the concept of social responsibility, which refers to voluntary consideration of- besides economic objectives- social goals, which provide a basis for the legitimization of a corporation’s activities and actions (Mintzberg, 1999; Boatright, 2004).
The social goals are based on the recognition of the fact that business activities and actions are of interest to- and also impact on- various people and groups. In other words, corporations are not only responsible to their owners, but also to the other people, e.g. employees, public interest groups such as environmental organizations, journalists, strategic business partners, public watchdog/monitoring bodies, etc. Businesses/corporations operate amidst a complex network of influences and interests, some of which may be in conflict.
It is therefore important for corporations to have the ability and capacity to not only assess and evaluate such stakeholder factors, but also align them with the corporate goals and objectives (Recklies, 2001; Boatright, 2004). Stakeholder Theory & Shell in the Gbarain and Ekpetiama RegionsStakeholder management goes beyond daily business. Infact, it essentially concerns itself with long-term decision making. Having this knowledge- and before any stakeholders management strategies can be recommended or adopted- requires the company to identify who the stakeholders are.
According to Recklies (2001), identifying stakeholders should focus on not only the formal organizational structure, but also beyond. Where ‘beyond’ here refers to the other informal and indirect relationships as well. Thus, Recklies (2001) proposes a stakeholder identification model that involves the visualization of stakeholders’ environment as expressed in both the inner and outer spheres/circles. The inner circles is where the key stakeholders, with the highest influence are found. In relation to Shell’s operations in the Gbarain and Ekpetiama regions, three major groups of stakeholders can be identified here: the local communities the company, the government.
But there are also the overall Nigerian population, environmental interest groups, etc. Figure 1 below illustrates a overall picture of potential stakeholders and their influence on a corporation. Source: Recklies (2001)As the figure shows, stakeholders are classified based on each corporation’s individual situation. In other words, the classification and identification of stakeholders is not independent of context, i.e. the circumstances that are unique to a specific business (Donald & Lee, 1995; Scholes, 1999; Jensen, 2002). As Recklies (2001), puts it, analysis of stakeholders owes its effectiveness and success to the evaluation of specific problems that face organizations and businesses.
And in justifying this stance, Recklies (2001) goes further to agree that individuals and groups are likely to behave differently under different circumstances. To show this, Shell only seems to pay ‘real’ attention to the local communities when these communities have conspicuously resisted a project, e.g. through demonstrations. Otherwise, the company mostly ignores the local people (Dadiowei, 2003; Ereba et al 2010).