As a result of a globalized business environment, companies such as Shell operate in a number of international markets,and consequently enounter various risks not normally attributed with domestic markets (Beck 1993). In developing countries such as Nigeria the regulatory frameworks may exist but are not adequatley enforced.
Hence,The intent of CSR activities performed by multinationals are not always well determined, And powerful multinationals such as Shell have emerged as the major players in this era of globalization, largely inhibited by domestic regulation (Rwabizambuga 2007), but what is evident by the increased involvement by MNCs is negative consequences with regards to the impact on society and the environment (Sklair 1995).
The relationship between between MNCs and developing countries has been described as asymmetric, in that not only are these countries inable to regulate large MNCs but also that they may reduce existing standards in order to attract foreign investment in order to remain competitive. With regards to Shells engagement with local Stakeholders in Nigeria, it has had two core concerns,as discussed by (Rwabizambuga 2007). Firstly, mending its reputation, which had been tainted by incidents in the 1990’s afer decades of negative press. The oil sector in Nigeria is known for volatility, see Appendices.
The initial causes of these conflict were disputes between local communities and the goverment over the allocation of oil revenues. through the absence of an appropriate avenue to to express such grievances, companies such as Shell and others have become proxy targets through there influence as a means to get a response from the goverment, and Secondly, securing a licence to operate, through abating societal hostility towards Shell throughout Nigeria, In recent years oil companies operating in Nigeria have approached there relationship with local communities with increased institutional and financial commitment, e.g.
Shell introduced a process of Stakeholder consultation in 1997, and Shell claim since its inception that its relationship with external stakeholders is paramount to its CSR strategy. (Livesey 2001) notes that Shell’s negotiations with external stakeholders such as political consumerists groups now appear to emcompass a greater emphasis on responsibilty and accountability.
However, for large multinationals such as Shell, translating these ethical policies into results on a local level in a developing country such as Nigeria is not always possible (Wheeler et al. 2002) Shell’s experience with Community CSR projects have been described as a double edged sword (Holzer 2007) as until 2000 they accepted the responsibility of installation and maintenance of community projects, but the result of this was greater critisicm than praise, as Shell was blamed for arising malfunctions and problems.