Stakeholder Relationships in the Nigerian Oil Industry




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De Montfort University


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Peer reviewed


The discovery of oil in commercial quantities in the Niger Delta region of Nigeria in the 1950s has brought with it both benefits and consequences, with the latter purported to have resulted in violence as well as the loss of lives and properties (Hummels, 1998; Eweje, 2007). This study examines the nature of the relationships existing between stakeholders in the industry and the understanding of the connections between these relationships and CSR in the industry. This resulted in the choice of Social Contract and Resource Dependence theories to be used in harmony as part of the theoretical base for this study, as a further expansion of Stakeholder theory. The Social Contract theory helps to bring out the place of agreement in the maintenance of these relationships between stakeholders, with the resources being crucial in the determination of the power balance. The study was a qualitative one that involved interviews and surveys amongst the different stakeholders that make up the industry (oil companies, host communities, NGOs, Experts). The data gathered was analysed using Thematic Discourse Analysis, with the aim of finding out how the words and phrases used by respondents gave an indication of their perceptions and actions in these relationships. This thesis results in the proposition of a Micro-System Perspective Model which asserts that different stakeholders start their relationships with each other with varying objectives that can only be achieved as outcomes, only if certain mechanisms are properly applied to these relationships. These mechanisms are resources, licences and agreements impact these relationships as reflected by the different features of these relationships. This model also emphasizes the separation of the government from the relationship between the oil companies and the host communities and as a result can carry out its roles in the industry without bias. Also, the relationships between stakeholders in the industry are deemed to be dynamic in nature, as influenced by the use of these mechanisms by the different stakeholders in their interaction with each other. The findings show that such dynamism is also caused by the management of these relationships through the CSR activities undertaken by the oil companies operating in the various parts of the region. As a result, CSR is viewed in the region as being a social obligation owed to the host communities by the oil companies. It is asserted that the definition and identification of stakeholders should not be based on their relationships with the firm (Freeman, 1984), but on their relationships with the industry and its resource which should be deemed the focal point. In line with this, the findings show that the salience of a stakeholder group is not just dependent upon their power, urgency and legitimacy alone as earlier purported by Mitchell et al (1997). On the contrary, these attributes together with the resources held by such stakeholders are crucial in deciding who controls these relationships between stakeholders. This study makes significant contributions to knowledge, especially in relation to the advancement of stakeholder debate and theory. It proposes that stakeholders should be identified not just based on their relationships with the firm but a consideration of their control of the resources deemed crucial by other stakeholders. Such a relationship with the industry and its resource is deemed crucial in determining stakeholder salience, thereby leading to the call for resources to be regarded as a stakeholder attribute in addition to urgency, power, legitimacy and proximity which is another contribution. The study also shows the different challenges and complexities of managing stakeholder relationships in the region that cause these relationships to be dynamic in nature. The proposal of a Micro System Perspective is another contribution as this has a direct implication for the Nigerian Oil industry and its impact on the different stakeholders involved in its operations.



CSR, Stakeholder Relationships, Stakeholder Identification, Stakeholder Attributes, Resources, Social Contract, MOUs, GMOUs, Community Development, Government, Host Communities, Oil Companies, Niger Delta



Research Institute