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DOCTORAL THESIS Title THE POLITICAL ROLE AND RESPONSIBILITIES OF MULTINATIONAL CORPORATIONS: THE CASE OF ROYAL DUTCH SHELL Presented by ESTHER HENNCHEN Centre ESADE BUSINESS SCHOOL Research Unit INSTITUTE FOR SOCIAL INNOVATION Department DEPARTMENT OF ECONOMICS, FINANCE, ACCOUNTING AND SOCIAL SCIENCES Directed by PROF. JOSEP MARIA LOZANO SOLER PROF. ANN MAJCHRZAK Date SEPTEMBER 2015 Dedication To Vicent and Julia i Acknowledgements This thesis would not have been possible without the invaluable support and inspiration I received throughout the long journey of the PhD. I am very grateful for Fundación ESADE’s support and funding for my research, seminars and international conferences. Without help from the PhD office, the ESADE Doctoral Society and the Institute for Social Innovation, the completion of this thesis would have been infinitely harder. I would especially like to thank Ignasi Carreras and Jonathan Wareham for their financial support for my field research and conference attendances. I would like to express my special appreciation and thanks to my advisors professor Josep Maria Lozano and professor Ann Majchrzak, you have been tremendous mentors for me. I would like to thank you for encouraging my research and for allowing me to grow as a research scientist. Your advice on both research as well as on my career have been priceless. I would also like to thank professor Steen Vallentin, professor Bobby Banerjee, and professor Daniel Arenas for serving as my committee members. Without your incredible flexibility and support in my ‘special circumstances’ I would not have been able to submit this thesis on time. I would also thank you for your work and scholarship that have been a source of inspiration and essential knowledge for my research. I am delighted that you have participated in this PhD process. Special thanks also to professor Arenas for being such a great mentor and support in all respects throughout my PhD journey. My heartfelt thanks also goes to the Directors of the PhD programme at ESADE or ‘PhD mamas without borders’: Vicenta Sierra, and previously Cristina Giménez and Núria Agell. Your constant assistance and encouragement going beyond PhD matters have been an invaluable support throughout the last years. A sincere thanks also to all the administrative staff who have been on hand to resolve doubts, respond to questions and preempt problems. Particularly to Pilar Gallego, Silvia Espin and Núria Fenero for your seemingly unlimited patience and help. I would also thank Sonia Navarro and Maria Sureda for their constant administrative support and friendship. ii Thanks also to all the ESADE professors, post-doc students and PhD colleagues who have provided a stimulating and challenging research and teaching environment over the past six years. Solange Hai, Dorothea Bauer, Theresa Veer, Monika Grau, Kyriaki Papageorgiou, Susanna Salvador, Cristina Sancha, Heidi Kruger, Mehdi Niri, Jana Thiel, Matt Hawkins, Jennifer Goodman, Myrto Chliova, Nicolas Loewe, Joonho Shin, Basak Canboy – thank you. My work has also benefited tremendously from feedback from a number of colleagues abroad who have reviewed my work or provided insights during workshops and conferences. Among others I want to thank Judith Schrempf-Stirling, Itziar Castello, Arno Kourula, Jukka Mäkkinen, Eero Kassanen, Marjo Siltaoja, Guido Palazzo, Tobias Gössling, and Florian Wettstein. I look forward to your continuing friendship and to working with you and strengthening our network in the years to come. I would like to thank also all interviewees who have offered their time and shared their stories and experiences. Your work and ideas have not only inspired me but also laid the groundwork for my thesis. Last but not least, I want to thank my family, friends and loved ones, who have been there for me every step of the way, who have encouraged me and put up with me in difficult times. None of this would have been possible without you. iii Abstract The phenomenon of multinational corporations (MNCs) taking on traditional government activities within their corporate social responsibility (CSR) agenda is receiving increasing attention due to ensuing legitimacy challenges for the corporation and democracy at large. Recently, ‘political CSR’ has become the new normative frame for theorizing on these political role and responsibilities within the business ethics and society and business literature. Political CSR scholarship assumes that MNCs should, and already do, engage in traditional government activities of political and social regulation (Scherer & Palazzo, 2007) and operate as new providers of public goods (Scherer & Palazzo, 2011; Scherer, Palazzo, & Matten, 2009). However, despite these increasing normative demands and concomitant concerns over MNCs undermining the public good, the extent to which companies can and do conform to these normative demands and how this impacts the main affected stakeholders remains theoretically underdeveloped and empirically under-explored. This PhD thesis embraces the legitimacy challenges of MNCs’ political engagement and the lack of attention to the impact of corporate responses on affected stakeholders as a starting point for a systematic in-depth empirical inquiry. The company Royal Dutch Shell is particularly suitable due to its distinctive company characteristics, complex operating environment and access to data. This PhD thesis provides a new perspective on the political role and responsibilities of MNCs, which extends current theorizing with regard to the scope of political responsibilities and the conditions corporate legitimacy. It also conceptualizes a rather more complex and dynamic picture of MNCs’ responses to political CSR demands than that presented in the extant literature. Notably, it identifies previously unidentified responses to normative political CSR demands and takes into account MNCs’ self-interested active agency and power relationships, which challenge the predominantly positivist assumptions and the ‘bright side’ bias of exemplary cases of political CSR. In this way, the thesis reveals crucial insights into the ‘dark side’ not only of the company’s (mal)practices, but also regarding the weaknesses of the broader system of business and society. iv Table of Contents Dedication .......................................................................................................................... i Acknowledgements ...........................................................................................................ii Abstract ............................................................................................................................ iv Table of Contents .............................................................................................................. v Tables and figures ............................................................................................................. ix List of tables .................................................................................................................. ix List of figures ................................................................................................................ ix List of abbreviations .......................................................................................................... x Contributions to scientific knowledge .............................................................................. xi Chapter 1: General introduction ...................................................................................... 1 1.1. Relevance of the topic and research focus ........................................................... 2 1.2. Theoretical background: towards a framework of political CSR ........................... 5 1.2.1. Multi-stakeholder governance ....................................................................... 8 1.2.2. Reliance on soft-law ....................................................................................... 9 1.2.3. Political responsibility ................................................................................... 10 1.2.4. Moral legitimacy ........................................................................................... 10 1.2.5. Deliberative democracy ................................................................................ 11 1.3. Research gaps and questions .............................................................................. 15 1.4. Research methods ............................................................................................... 17 1.5. Structure of the thesis and overview of research studies ................................... 20 1.5.1. Summary of study 1 ...................................................................................... 21 1.5.2. Summary of study 2 ...................................................................................... 23 1.5.3. Summary of study 3 ...................................................................................... 27 1.6. Overall contribution: A new perspective on political CSR ................................... 31 Chapter 2: Study 1 – The role of oil mayors in supporting sustainable peace and development in Nigeria: the case of Royal Dutch Shell ................................................. 34 2.1. Introduction ......................................................................................................... 35 2.2. Conflict in Nigeria: setting the scene ..................................................................