It’s Never Been More Important for Big Companies to Listen to Local Communities

Firms need to understand the people and places they affect.

by

Sinziana Dorobantu

and

Dennis Flemming

by

Sinziana Dorobantu

and

Dennis Flemming

November 10, 2017

Alice Potter/Getty Images

Summary.

Conflicts between multinational firms (particularly those specializing in mining, oil and energy, and real estate) and local communities are not only divisive, they are expensive. The failure to recognize the risk of social conflict can cost millions of dollars and set investments back by years. Yet the same companies that spend months and millions tweaking operational details devote only a small fraction of their resources to understanding and addressing the social risks they face. The result is a limited ability to recognize how their decisions affect — and are affected by — local problems and concerns. To address this, companies and their supply chain subcontractors should learn to build strong relationships, including with those adamantly opposed to their business plans.

On paper, the project seemed like it would be a hit: The investment by the mining company would bring jobs and 21st-century technology to an economically poor area and tax revenues to the government. So why were citizens blocking the roads and protesting in the streets, drawing considerable attention from NGOs and the media and delaying the project?

SD

Sinziana Dorobantu is an Assistant Professor of Management and Organizations at New York University Stern School of Business. Professor Dorobantu’s research and teaching focuses on the value and evolution of firms’ relationships with stakeholders such as local communities, governments, and non-governmental organizations. She has been published in the Strategic Management Journal and Administrative Science Quarterly.
DF

Dennis Flemming is the Executive Director of the Hamakua Institute and has 30 years of experience in the design and implementation of community programs in developing countries. He headed the establishment of several special initiatives for Chevron Corporation, including the Community Development Initiatives (CDI) Foundation to support rural development in Papua New Guinea; the Angola Partnership Initiative designed to support peace and development at the end of its 30 year civil war; and the Niger Delta Partnership Initiative (NDPI) to facilitate sustainable peace and development in the Niger Delta region of Nigeria. Prior to Chevron, Dennis worked in Papua New Guinea, initially as a Peace Corps Volunteer and then managing a small business services and local content consulting firm.

It’s Never Been More Important for Big Companies to Listen to Local Communities

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