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 Springer 2008

Journal of Business Ethics (2009) 85:431–444 DOI 10.1007/s10551-008-9739-7

An Integrated Approach to Implementing ‘Community Participation’ in Corporate Community Involvement: Lessons from Magadi Soda Company in Kenya

ABSTRACT. Corporate community involvement (CCI) is often regarded as means of development in developing countries. However, CCI is often criticised for patronage and insensitivity both to context and local priorities. A key concern is the extent of ‘community participation’ in corporate social decision-making. Community participation in CCI offers an opportunity for these criticisms to be addressed. This paper presents findings of research examining community participation in CCI governance undertaken by Magadi Soda Company in Kenya. We draw on socio-political governance and interaction theories to examine the institutionalisation of participatory decision-making and its impact on changing governing roles and social action in CCI over time. KEY WORDS: corporate citizenship, corporate community involvement, community participation, social interaction, stakeholder relationships, developing countries

Introduction Corporations have long been involved in philanthropic initiatives making corporate community involvement (CCI) the oldest form of corporate social responsibility (Chapple and Moon, 2005). CCI refers to business involvement in social initiatives by way of contributing financial, in-kind and human resources to meet the social and economic needs of the communities in which they operate. Corporations in Africa increasingly engage in philanthropic initiatives with many formalising this through constituting CCI programmes (NgondiHoughton, 2005; Rajak, 2006). CCI practices are, however, contextual according, most obviously, to

Judy N. Muthuri Wendy Chapple Jeremy Moon

the national social, political, legal and economic environment. While western conceptions of corporate social responsibility (CSR) treat philanthropy as the fourth, discretionary, level of CSR (Carroll, 1991), in developing countries where governments and civil society are relatively weak, philanthropy can be just as fundamental as the economic level of CSR (Visser, 2006), such that corporations can be regarded as agents of development through their social initiatives (Goddard, 2005). Corporate philanthropy, the predominant mode of CCI in Africa, is characterised by a donor– recipient relationship and low levels of corporate– community (C–C) interaction (Austin, 2000, p. 35). Philanthropy is criticised for patronage (Frynas, 2005; Rajak, 2006) and insensitivity to both context and local priorities (Fox, 2004). Thus questions arise as to the role the community stakeholders play in influencing corporate social action (Newell, 2002, 2005), the dangers of increasing corporate influence and the long-term ramifications of community dependency (Margolis and Walsh, 2003). To contribute to sustainable community development, CCI practices need to shift from ‘‘short-term transactional-based commitment to longer-term values based on building relationships with stakeholders’’ (Goddard, 2005, p. 275). A pluralistic pattern of dialogic interaction (Calton and Payne, 2003) and stakeholder participation in decisions that affect them (Wheeler and Sillanpaa, 1997) are some suggested approaches to building meaningful stakeholder relationships and giving ‘voice’ to the local communities which participate in influencing development priorities (Fox, 2004). This approach challenges predominant product- or project-oriented

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approaches to CCI (Porter and Kramer, 2002) and champions a process-oriented approach to corporate social performance (Calton and Payne, 2003). A process-oriented approach allows for the analyses of how structural context and actors’ interactions shape the evolution of CCI modes within organisations over time (Chapple and Moon, 2005). We present results of an empirical study of community participation in CCI decision-making and governance processes of Magadi Soda Company (MSC) in Kenya. The paper concludes by making suggestions on how corporations can build relational as opposed to transactional community relationships through empowering and building the local community’s capacity to engage and contribute towards community development. A developmental-relational approach encourages more reflective managerial practices and helps corporations to invest in what really matters to communities. Moreover, an empowered community enhances corporations by contributing to healthy business environments, competitive advantage, social legitimacy and the licence to operate (Goddard, 2005; Hess et al., 2002; Waddock and Boyle, 1995). The participatory approach presented herein contributes firstly, to accountability in business-societal governance (Bendell, 2005; Crane et al., 2004; Newell, 2005), and secondly, to CCI governance based on legitimacy, as opposed to a cost–benefit analysis (Husted, 2003).

Community involvement and changing governance roles Corporations increasingly participate in societal governance through community involvement (Boehm, 2005) with shifting or declining governmental social provision (Kooiman, 1999; Moon, 2002). This often blurs traditional divisions of responsibility for social provision (Moon, 2005). The changing business–society relations yield three roles corporations play in the society: as if they were people-type citizens; as if they were governments in relation to human citizens; and as if they create an arena for people to enact citizenship (Matten and Crane, 2005). By engaging in social issues, corporations enter into the realm of socio-political governance defined as:

All interactive arrangements in which public as well as private actors participate aimed at solving societal problems, or creating societal opportunities, and attending to the institutions within which these governing activities take place (Kooiman, 1999, p. 70).

Thus, solving social problems and creating opportunities for social development in CCI brings corporations into governance relationships with communities. We conceptualise CCI governance as the structures, processes and rules that are socially constructed for organising, coordinating and steering the collective actions of actors involved in CCI programmes. In the next section, we explore further corporate–community (C–C) interaction and community participation within CCI governance. Corporate–community interaction and community participation The ‘community’ is one of the most difficult of a firm’s stakeholders to identify as it may be composed of numerous other stakeholders (Greenwood, 2001) and as it is defined descriptively and normatively (Freeman, 1984; Greenwood, 2001). We define a community as combining elements of ‘locality’, ‘configuration of interests’, and ‘collective action’ (Taylor et al., 2006, p. 42). A community comprises multiple actors interacting within a ‘field’ where socially constructed expectations and practices are generated and reproduced (Silverman, 1970). We conceptualise C–C interaction in Figure 1, where actors engage in purposeful action and mutually determine their relationships. C–C relationships that adopt an interactive approach shift from an entirely corporate-centric orientation (Freeman, 1984) to a more relational perspective of stakeholder engagement (Waddock and Smith, 2000). Stakeholders become subjects with their own objectives and purposes, instead of objects of managerial action (Mellahi and Wood, 2003). Social-political governance consists of structural and action levels (Kooiman, 2003). The structural level incorporates social, political, legal and cultural contexts in which interaction happens. The past interactions and actions of wider social actors (including the government and civil society) generate and establish the structural context for current action and are a source of institutions, whether cognitive-cultural,

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Structural Level (Institutions & Wider Social Actors, e.g. government, civil society) Action Level Corporation • Preference • Intentions • Expectation

Corporate-Community Interactive Governance

Participation in CCI Governance • Who participates • What spheres and relevance • How – participation processes • What are the local conditions

Community • Preference • Intentions • Expectation

Consequences

Figure 1. Framework of corporate–community interactive governance.

normative-social or regulative-legal (Scott, 2001). This consists of ‘‘the social stock of knowledge’’ which actors use to define and make sense of their own and others’ actions (Silverman, 1970, p. 133). Actors draw on institutions when evaluating and assigning meaning to others’ actions. The evaluation of corporate social action and interaction constantly undergoes ‘social validation’ based on taken-forgranted norms (Karnoe, 1997). The structural level can set ‘boundaries’ by enabling or constraining interaction (Kooiman, 2003). The action level denotes the interaction of CCI actors whose qualitative differences and uniqueness explain their diversity (Kooiman, 1999, 2003). Action is goal-oriented and each actor has preferences, intentions and expectations of each other which affect overall C–C interactions. Preferences involve actors ordering alternative choices based on the action chosen by the other actor as well as the action most likely to produce satisfactory outcomes. Intentions include actors’ goals and interests of participation which generate the criteria for assessing the effectiveness of C–C interaction. Actor expectations arise from their past experiences and have to do with anticipated behaviour of the other which generates the criteria for assessing the outcomes

of their own and others’ actions (Manski, 2000; Orlova, 1982; Silverman, 1970). The pattern of interaction and the related meanings that are built up in an organisation role-system (e.g. rules, values and institutionalised expectations) reflect the consequences of the behaviour of the interacting actors and the stock of knowledge the actors draw from the structural contexts (Silverman, 1970, p. 151). Interactions change over time influenced by external context, and through interactions, actors change, modify and transform their preferences, expectations and meanings assigned to corporate social action and corporate–community engagement (Silverman, 1970). To examine the action element, we are interested in ‘community participation’ within CCI governance defined as the process where the community takes part in CCI decision-making processes and influence behaviour of organisations that affect them (Wilcox, 1994). Authentic participation in CCI governance reflects broad inclusion, relevant participation and structural conditions and processes enabling participation (Anderson, 1998, pp. 586–595). In this paper, we explain how MSC operationalised a participatory decision-making process within its CCI, the challenges it encountered and the impacts on changing governance roles and social action.

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Research methodology1 Our case study methodology allows for extensive examination of the social interactions of actors in the CCI programme of MSC – a ‘unique case’ of an extractive company operating in Kenya (Patton, 2002, p. 231). An inductive approach and multiple data collection methods are used including: (a) archival analysis of external reports in the public domain, internal reports and minutes of MSC-community/partners meetings, (b) fifty-five interviews with multiple respondents (community, NGOs, MSC and government officials), (c) participant observation of 12 MSC-community/partners meetings, and (d) three focus groups with general community members. Our unit of analysis is actor interactions and the unit of observation is the actors (MSC, local community, civil society and central and local government) jointly engaging in social initiatives in Magadi division.

Magadi Soda Company: a private government? MSC was established in 1911 and owned by Brunner Mond Plc (UK).2 It is the only corporation in Magadi division and the largest soda ash producer in Africa. The soda ash is dredged from Lake Magadi and used in manufacturing detergents, glass and other chemical/industrial products. MSC has a total workforce of about 500. It runs the only companyowned town in Kenya with a population of over 4500. Its CCI activities are concentrated in the Magadi division with over 35,000 residents who are predominantly the Maasai, a semi-nomadic tribe. Interviews revealed that MSC defines its community at three levels: the local community where it has operations (i.e. Magadi community); the national community to which it pays tax and engage in sporadic donations; and the international community to which it contributes through its major customers. MSC has no legal obligations to provide social welfare except in the land lease which requires it to provide water for the local community (Hill, 1964).

In the past, the government delivered social provisions through MSC’s infrastructure; however, this responsibility shifted to the company as the government cut back on subsidies: ... The medical services at that time were completely free. Both the local and the central government used to reimburse Magadi Soda for services given to the local community. This arrangement was there all the way through to independence. In the late 1960s the subsidies the company used to get from the local government and the central government dried up but the company continued offering free medical services to the local communities. (Senior Medical Officer, MSC)

The community felt that both the central and the local government marginalised them, and perceived the company as their ‘‘small government’’. Consequently, MSC adopted a paternalistic-welfare approach to CCI as a good neighbour.

The local community Members of the local community define themselves by locale, firstly, as the Maasai community of Magadi division, and secondly, as individual members of the group ranches (OldonyoNyokie, Olkeri, Olkiramatian and Shompole) which collectively form the Magadi community structure. Group ranches are legally constituted under Kenya’s Land Adjudication Act Cap 300 enabling groups of people to jointly hold freehold titles to communal land (CDP, 2004). In this perspective, the group ranch can be considered as a separate ‘corporate entity’ governed by elected group ranch committees legally mandated to run group ranch affairs (CDP, 2004). The community strongly protects its ‘Magadi’ identity particularly against perceived political forces of outsiders (i.e. communities outside the division). We have some other political leaders who are undermining our efforts with the company. They say that this company is for the total Maasai land and not for the surrounding Magadi Soda community. We disagree with leaders from Central and South Kajiado because even if Magadi is an international company, Bamburi or Portland Cement are companies in Kajiado Central but we don’t interfere with their

Lessons from Magadi Soda Company in Kenya development or surrounding communities. So we can’t liberalise bursaries to be given to the whole of Maasai community. (Community representative)

These perceived dual identities within the community shape C–C interactions, CCI governance processes and the distribution of social amenities in the division. They influence negotiations among the group ranches; between the ‘Magadi’ community and the company; and among other actors broadly operating within Kajiado district.3 Other significant socio-economic characteristics affecting C–C interaction and scope of corporate social issues include low levels of education, entrenched cultural values, high levels of illiteracy and low skill base.

Civil society The civil society actors include community-based organisations (CBOs e.g. local women’s groups), non-governmental organisations (NGOs e.g. aid agencies) and religious organisations. Numerous CBOs have been formed in Magadi over the last two decades but due to financial and management limitations, the majority are moribund. They remain an untapped opportunity of community development. There are few active local NGOs and most of the community projects are implemented by international and national NGOs. As a result, community development by the civil society is largely uncoordinated and fragmented (CDP, 2004).

Central and local government The central government is represented by various line ministries. The local government is the Olkejuado County Council with offices in Kajiado town. Whilst government policy relates to development at the district level (e.g. concerning Poverty Reduction and District Development), the Magadi division has not been traditionally well connected to such policies (CDP, 2004). The government is faced with resource constraints in the implementation of these policies, but despite claims of shrinking government resources experienced across the country, the withdrawal of government responsibility in Magadi appears more strategic given governmental claims

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that MSC has sufficient resources and capacity to deliver community development: I think at times Magadi division has been really neglected in terms of development by both the central and the local council, but not for anything, but simply because Magadi Soda is also concentrated in that particular area. Such a big company, if it decides to adopt development in that area, then we better give certain stakeholders that responsibility to avoid duplication of these projects [...] I will not say that the whole area is totally left to Magadi alone, but they have taken a lead and we are only supplementing their services (Chairman, Olkejuado County Council)

We now present our findings on the institutionalisation of the participatory governance within Magadi Soda’s CCI. These results are presented in three phases: traditional, developmental and integrative (summarised in Table I). In each phase, we explore the nature of C–C interaction, how actors confront various social problems and develop appropriate actions, and the reorientation of governance roles as learning occurs.

Traditional phase: antecedents of dialogic interaction Magadi Soda’s early CCI epitomises a paternalisticwelfare approach to community. MSC has built a company town with social amenities to provide a good working and living environment for its employees. CCI mainly focused on single issues – education, water and health. Community involvement was ad hoc and reactive. C–C interaction was minimal and social decisions were at the discretion of company managers and community elites. This contributed to the unequal distribution of social services across the group ranches. The local community has traditionally relied on livestock production as its main source of livelihood but with persistent droughts this was grossly depleted and in the absence of government, they turned to MSC as their closest neighbour for increased social provision and employment. MSC had employed very few locals having drawn skilled labour from outside the region given the local low skill base, high levels of illiteracy and strong cultural beliefs antipathy to work, e.g. anyone not keeping livestock is cursed.

CCI governance

Community participation

Level

Orientation Rationale

Low–moderate None (dormant) Ad hoc Manager & community leader discretion

Charitable donations Philanthropy Paternalistic-welfare Intrinsic value Altruism

Corporate community involvement

Mode

Government (subsidies) MSC

Traditional (pre-2000)

Key actors (social service provision)

Element

High Moderate (learning) SWOT structures and processes established Community relations policy and function established

MSC Civil society & government (uncoordinated & dispersed) Philanthropy Partnerships Philanthropic Enlightened self-interest Legitimacy Efficiency

Developmental (2000–2002)

Period

Mapping community participation and corporate social action trajectory

TABLE I

MSC Civil society & government (moderate & coordinated) Strategic philanthropy Inter-organizational collaboration Sustainable development Enlightened self-interest Legitimacy Efficiency Sustainability High High (active) Commissioning of CDP study Launch of CDP and formation of governance structures Building inter-organizational linkages

Integrative (2003–2006)

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Lessons from Magadi Soda Company in Kenya Paradoxically, the community believes their cultural lifestyle has been used to discriminate against them in employment. The local community, having no alternative means of livelihood, staged a demonstration in July 2000 destroying company property and demanding the sacking of the personnel manager citing employment discrimination practices. The changing socio-economic characteristics of the Magadi community contributed to what interviewees termed a community reawakening. This included abandoning nomadic lifestyles, more education, increased awareness of CSR and NGO activism bringing international debates on the rights of the indigenous people and demands for social justice. The community started challenging MSC’s land lease from the government (approximately 225,000 acres) claiming their ancestral right and describing land demarcation as part of colonial government injustices (Tiampati, 2004). Demands grew for greater CCI contributions commensurate with MSC’s profits. The community employed a ‘rights based’ approach in demanding increased corporate giving, given its proximity to the resources mined. CCI was no longer perceived as a privilege but as a right. Faced with increased community expectations, MSC responded by intensifying their philanthropic giving. As a consequence, both CCI costs and community dependency increased. The paternalistic-welfare approach became unsustainable as the mismatch between community and company preferences for social action crystallised. In response to the legitimacy and licence to operate crisis, MSC devised a strategy to enhance C–C interactions and to seek a lasting solution to community development in order to reduce its dependency on the company.

Developmental phase: establishing deliberation arena and governing structures The 2000 uprising took MSC by surprise, and to manage community pressure, it called a community leaders meeting to find the cause of their agitation. A cross section of community leaders converged and tabled a long list of grievances and demands including increased water, education, housing, security, business and contracts, employment, health and transport provisions. It was agreed that MSC and

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the community would deliberate on these issues. Subsequently, four company representatives and over 30 community leaders participated in the problem-identification and problem-solving exercise which adopted the ‘SWOT’ analysis framework exploring Strengths, Weaknesses, Opportunities and Threats facing the community in each of the aforementioned issues. For instance, the SWOT analysis on water addressed the history of water development in the region, when facilities were built, who built them and whether they are functioning. The SWOT members mapped a vision and strategies for accessible, clean and sustainable water supply. There was an assessment of overall social service provision, conventional responsibilities herein and solutions to service deficiencies. The SWOT analysis was completed in April 2001. The SWOT meetings were participatory and interactive. They helped all actors to realise the magnitude of problems facing the community. While the community expected the company to meet all these, MSC soon realised it can’t do it all. The company made a conscious decision to reverse its perceived status of a local or private government. So, solution mapping was conducted in a way that distinguished social issues and actions within (e.g. employment) and outside (e.g. security) the responsibility of the company, and those for which other actors were competent to accomplish. Five priority issues were agreed – health, education, water, employment, business and infrastructure, though the SWOT action plan remained flexible to enable emergent issues to be adopted. The SWOT process was facilitated by a skilful, respected and trusted local community member, a professor of management with expertise in business– community relations. He is also a government appointee to the MSC’s board4 but with no specific responsibility. He encouraged actors to think in sustainability terms as opposed to welfare. The SWOT deliberations led to genesis of the ‘community development plan’ concept designed as a blueprint for development in the region (discussed in integrative phase). The community and MSC also agreed to strengthen and create linkages with other institutional actors (e.g. government, NGOs) to harness their capabilities and resources. The establishment of the SWOT process faced numerous hurdles. Initially, most community leaders

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did not comprehend it, whilst others interpreted the process as a solution to all their problems. The initial enthusiasm waned with the slow pace of implementation and MSC was accused of employing delaying tactics in a prolonged and unnecessary process. The community leaders were under pressure from their respective constituents to deliver tangible projects and not development plans written on paper. Nevertheless, the company insisted on this systematic approach to tackling social issues as its preferred form of engagement. MSC continued to sensitise the leaders with the aim of developing a shared perspective of collective problem-solving. Some community leaders bought into the idea, as the best way to win resources from the company. These leaders convinced the rest and slowly the process was accepted by majority of community members.

efficiency (see excerpt below). MSC proposed a steering committee to act as the interface between the company and the community to ensure effectiveness. These committees were named after the SWOT process (see Figure 2). A SWOT steering committee (also called smaller SWOT) was elected by the ‘larger SWOT’ which is the initial SWOT meeting. ...Again, there is a cultural thing which is very common in Maasai land. I am the secretary of the group ranch, I was in the last meeting, and on Monday I’ll not be there, I will not miss the meeting but I’ll ask somebody to come and seat in for me. So after a while we had different people in the meeting, it happens a lot. [...] It is done so informally not through the organisation. We needed consistency. (Board Member, MSC)

Membership of the SWOT structure includes all Magadi division community leaders. A representative participatory approach was preferred by MSC and the community. MSC wanted an indirect form of participation where community members present their preferences, opinions and concerns to their

Establishing governing structures Numerous community leaders participated in the initial SWOT brainstorming meetings, but the large scale and inconsistency of participation impeded

SWOT Composition

Larger SWOT

Smaller SWOT (Steering Committee)

Task Forces (e.g. ecotourism, health)

Magadi Community (comprises four group ranches) Group Ranch Committees (10 members)

Larger SWOT (30 Members) MSC Representatives - (3) Local Government – Councillors (4) Administration– District Officer (1), Chiefs (3), Assistant Chiefs (4), Senior Chief (1) 4. Community leaders – group ranch chairmen (4) 5. Special Interest Groups – women & youth (5) 6. NGOs and CBOs - Active Partners (5) 7. Founder members – community (2) Note: Government ministries, NGOs, MSC management attend as observers. 1. 2. 3.

Smaller SWOT -10 Members 1. Administration - senior Chief (1) 2. Group ranch chairmen (4) 3. Special Interest Groups – Women & Youth (2) 4. MSC Representatives (3) 5. Elected councillors (ex-officials) Note: Government Ministries, NGOs, MSC management invited on specific agenda and to provide technical expertise.

Key: Direction of reporting structures Direction of communication

Figure 2. Hierarchical participatory structures.

Lessons from Magadi Soda Company in Kenya representatives, who then discuss these in the SWOT structures. This is consistent with the local culture’s hierarchical social ordering and the community’s high regard for leadership. The downside of this approach was that other features of the community structure were mirrored in the C–C interactions (e.g. the discrimination of women as a cultural barrier contravening the principle of inclusivity).

Governing rules and responsibilities The initial rules, responsibilities and procedures of the participation process (e.g. members’ roles, frequency of meetings, decision rules, information dissemination and leadership) were agreed upon in the SWOT. Nevertheless, the formulation and enactment of new rules, responsibilities and procedures was dependent on emerging needs in the governing process. The mandate of smaller and larger SWOT was stipulated in their terms of reference. That of the smaller SWOT included: • Preparing action plans based on identified and prioritised community needs. • Helping mobilise and secure projects funding. • Reviewing the performance of the committee. • Communicating progress to the larger SWOT after every 6 months. • Periodically inviting experts to give technical advice on specific issues. The terms of reference reveal a variety of roles played by SWOT – as planners, implementers, evaluators, communicators or playing the networking role. MSC as the initiator of the participatory process facilitates it through financial, technical and material support. SWOT leaders have acquired the status of community champions, arbitrators, spokesmen or gatekeepers. Any new SWOT member is socialised into the system and is expected to enact these roles and adhere to generally acceptable rules of engagement.

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identifying social problems and opportunities to solving them; generating alternative solutions to problems; selecting, planning and implementing the selected solutions; and evaluating the impacts of decisions taken (Black and Gregersen, 1997). The degree of stakeholder consultation in the process varies depending on the risk of decision attracting social sanctions. Complex and controversial-looking issues which can potentially divide the community or risk SWOT leaders losing face are referred to the community for further deliberation and guidance. Similarly, issues that pose significant economic, political and technical difficulties to the company are discussed at board and senior management levels before the company makes any commitments. Differences in actors’ expectations and action preferences sometimes lead to protracted negotiations and delays in decision implementation, and can be a source of tensions and mistrust in C–C interactions.

Reporting and communication processes The SWOT structure is layered with reporting and communication channels designed to provide a system of communication and accountability among the actors. The smaller SWOT presents progress reports to the larger SWOT biannually detailing achievements and strategies for specific issues. The larger SWOT is supposed to critically evaluate the performance of the steering committee, and either endorse and/or amend proposed biannual action plans. However, there are no formal procedures that the larger SWOT be regularly updated on smaller SWOT deliberations. Individuals have to take their own initiative to read meeting proceedings and reports, or depend on informal communication. Some community members have criticised the biannual meetings as a rubber stamping exercise. This demonstrates that the larger SWOT may have the formal authority but not the power to influence the processes.

MSC responsiveness to community participation Decision-making process The SWOT steering committee was mandated with the day-to-day decision-making on issues including

Corporate–community interaction has played a role in changing corporate social action. MSC redefined its core values, vision and policies to reflect the centrality of the community to its business.

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A community relations function was established to coordinate CCI implementation across the departments and with other stakeholders. CCI is now more coordinated and prioritised according to the needs of the community. MSC is more proactive by investing in projects that develop sustainable community infrastructure. These changes are used by the community and company as success indicators of the impact of C–C interaction.

Integrative phase: reorientation of governance roles Community participation is now an institutionalised form of local governance. The company and community jointly continue to challenge existing mindsets including the limiting conceptualisation of corporations as a private government underpinned by MSC’s traditional paternalistic-welfare approach to CCI. The company has embraced a ‘sustainability’ CCI philosophy emphasising inter-organizational collaboration and offering a framework for participatory community development. This demonstrates a shift from pursuing a pure self-orientation to a collective-orientation to tackling poverty alleviation for the benefit of the community: We as Magadi Soda recognize the fact that working alone is not sustainable, desirable or appropriate in the longer-term. [...] We will continue to facilitate an appropriate planning and institutional framework for implementing such an approach that harmonizes development activities in this Division. (Managing Director’s speech, CDP launch)

Magadi now facilitates an interactive community that brings different actors together to find a common ground and develop solutions to sustainable community development. MSC is using its influence to change the wider institutional context through the Community Development Plan (CDP) initiative. The CDP framework is designed on the principles of ‘‘sustainable livelihood framework’’ with the aim of building strong network of partners to foster a public– private-community partnership approach to development in Magadi (CDP, 2004). The language of ‘sustainability’ and ‘collective action’ is now established. The CDP framework has been taken forward by a multi-agency-funded initiative by the Royal

Danish Embassy in Kenya and coordinated by Practical Action, a regional NGO. The NGOs operating in Magadi are using the CDP framework to fundraise for projects, and their boards have endorsed CDP as a working document for their operations in Magadi division.

Community specific The shift in CCI orientation is evident in community leaders’ discourse and their acquired role as partners and not recipients of philanthropy. Their attitude towards work and dependency on MSC is slowly shifting. They are able to organise themselves to solve their problems. In 2003, MSC initiated a cooperative society with membership of local community members which benefits from business contracts for township cleaning and services to MSC. The cooperative thus provides an alternative source of employment and income through dividends to its 600 members. The SWOT structure now manifests wider institutional power and is recognised in Kajiado district as the legitimate voice of Magadi division. It is represented in the ‘District Steering Group’ the highest multistakeholder consultative group coordinated by the central government. SWOT uses its organising strength as a bargaining tool with other stakeholders in the district and they are able to hold actors accountable for failed or inadequate project or service delivery. The local community acknowledges that the SWOT process has given them a new voice: SWOT has given us a discussion forum, whether fruitful or not fruitful, at least it’s important that we air our problems. SWOT has given us a chance to prioritise and solve our problems. We solve those that we are able to and we pend others for the future. It has also helped us not look at Magadi Soda only but we channel our problems to others like the government and NGOs working within the local community. (Councillor, Shompole Location)

Company specific MSC continues to redefine its relationship with the community as it encourages it to take responsibility for its own development. MSC provides mechanisms

Lessons from Magadi Soda Company in Kenya for building community leaders’ capacity through skills training and learning (e.g. leadership and negotiation skills), sensitisation workshops and through visits to other companies and community projects. The aim is to develop the leaders’ ability to identify, enhance and mobilise their community’s human potential, social relationships and resources. Despite the changes achieved, members of the community still have high expectations of the company, but MSC manages these through clearly communicating its limitations and what it can realistically deliver. This exposes the community to the challenges MSC faces and generates cognitive empathy useful in negotiations: You see if you don’t talk to somebody it is very different from when you talk. When you have a meeting and table issues, reasons and why some things are impossible, you can see. Some of us started seeing sense because some company representatives were saying some of these obligations belong to the community, others to the government and other donors, and they were not purely there for community but to also make profit. We started seeing sense. We could kill the company and then deny the community everything. (Chief, Olkiramatian location)

The community, government and NGOs now view MSC as a committed and reliable development partner. By integrating CCI within its business operations, the company has gained social legitimacy, licence to operate, managed environmental uncertainty, and achieved its social and economic objectives. MSC’s image has been enhanced and since 2000 has won the coveted Kenyan Company of the Year Award – corporate citizenship category seven times (http://www.kim.ac.ke/coya).

Consequences and risks of participatory governance A paternalistic-welfare orientation may have negative unintended consequences for the corporation (e.g. high transaction costs) and the community (e.g. dependency, powerlessness). Responsible CCI does not perpetuate community dependency but enhances the conditions for communities to take responsibility for their own development. Actors have to continuously challenge and redefine the

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taken-for-granted assumptions of their roles in CCI. In our case, the community’s role as development partner in governance is applauded by the NGOs, government and the company. However, detractors argue that MSC is running away from responsibility and endorsement of the strategy by SWOT is seen as a sign of compromised community leadership. The choice of indirect representation could perpetuate and reinforce power imbalances already existing in social structures, particularly if the representatives form elite clubs or pursue personal interests at odds with interests of the entire community. Moreover, the company has to continually manage tensions caused by shifting community preferences. In our case, community participation has moved beyond concerns of legitimation to that of control as reflected in the shift from community demands for simple social provision to community expectations of being awarded shareholding in the company. Participatory governance is time consuming and resource demanding, as is translating these decisions into action (Pederson, 2006). Whilst the community evaluates MSC’s commitment according to the implementation of decisions, the company faces resource limitations and delays arising from the implications of C–C interaction for the more traditional intra-company expectations of governance and management. It is also difficult to achieve a companywide buy-in to the SWOT processes. Some lowerlevel managers have been accused of undermining employment decisions that would favour the local community. Overall, opening up participation presents the opportunity for redistributing power but the company still faces dilemmas over the best approach for community participation that does not compromise the company’s own decision-making autonomy: Personally I think it’s a very tricky situation to know at which point, or what is adequate and what is beyond reason. When does a commercial organisation allow outsiders to get involved in its long-term strategic thinking? There is a very thin line and I really don’t know where that line is. (Sales & Marketing Director, MSC)

Conclusion and implications Stakeholder participation in decision-making ‘‘cannot be discarded as just another management fad’’ (Pedersen, 2006, p. 158) and is not ‘‘a utopian

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alternative to existing practices [but is] a promising next step toward conceiving, discussing, and taking action on actual (if messy) problems that occur in creating and sustaining stakeholder relationships’’ (Calton and Payne, 2003, p. 11). Community participation provides companies the opportunity to invest in fostering, trusting and understanding community relationships. However, companies are faced with challenges of how best to implement systematic stakeholder participation in decision-making processes (Green and Hunton-Clarke, 2003). The case study demonstrates the usefulness of community participation as a means of evaluating community needs, finding solutions and creating opportunities to address community development. We have also shown the utility of SWOT as: (a) an analytic tool when assessing social problems and developing action plans to addressing social problems, (b) a useful tool for initialising and developing stakeholder participation processes, and (c) an information tool necessary when formulating corporate social strategy. The SWOT analysis framework has been criticised as ineffective in strategy development process and, according to Hill and Westbrook (1997, p. 46), requiring ‘‘a product recall’’. However, our research attests the usefulness of SWOT is in its application. We argue that first, the specific strengths, weaknesses, opportunities and threats facing the community need to be listed at different levels, e.g. macro (structure) and micro (actor) level. Second, action plans should be based on priority needs, with the specific timeline for their execution articulated (i.e. immediate, intermittent and long-term). Third, corporate–community interactive process and the SWOT action plans need constant reevaluation to meet emerging needs and challenges in CCI governance (see also Wheelan and Hunger, 2002). In this paper, we presented empirical evidence of how MSC has applied the SWOT analysis and gone about institutionalising participatory governance in CCI programmes. Figure 3 represents a simplification of the participatory decision-making process, which highlights some key guiding principles. The process levels should be perceived as a continuous ‘‘openended search for terms of engagement’’ that can sustain corporate–community interaction (Calton and Payne, 2003, p. 35). This form of interactive governance involves building actors’ capacities through training them to

Level

Key Principles

Selection of participants

Inclusivity

Structuring of the deliberation arena, governing rules and responsibilities

Flexibility, Openness and Transparency

Decision making process

Relevance, Compromise and Collectiveinterest

Implementation of decision

Collective Responsibility

Assessing impact

Learning and Common-good

Figure 3. Process and key principles of participatory decision-making in CCI.

meaningfully engage in interactions and requires the creation of a ‘participatory climate’. This requires the development of appropriate institutional infrastructure where actors can collectively set their goals, strategies and principles for governing CCI initiatives (Anderson, 1998). To ensure a unified approach towards sustainable community development, all actors should share an understanding of interaction principles and subscribe to a collective-orientation towards sustainable community development. Open dialogue ensures that conflict in C–C interaction is healthy in contrast to consensus for its own sake of harmony which can have negative impacts on choices made (Orlova, 1982). In dialogic interactions, CCI actors need to be sensitive to their cultural and social differences, and be ready to concede some power to pursue collective action. However, the extent to which participatory governance is mediated by cultures of power and politics remains an evaluative question (Anderson, 1998). Critics might argue that the CCI presented here is simply window-dressing for the perpetuation of MSC’s dominant economic, social and political roles. Certainly the company retains important power resources which the community does not possess. However, the community possesses some power over MSC’s legitimacy. Therefore, successful CCI implementation is likely to depend on clear understanding and appreciation of power relations in emerging corporate–community interaction.

Notes 1 2

Italics represent direct interview quotes. In December 2005, Tata Chemicals Company acquired majority stake of Brunner Mond Plc.

Lessons from Magadi Soda Company in Kenya 3

The district is the next tier above the divisions in the government structure. 4 The Government of Kenya, under the lease provision dated 1st November 1924, has a right to nominate one member to the Board (Hill, 1964).

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International Centre for Corporate Social Responsibility, Nottingham University Business School, Jubilee Campus, Wollaton Road, Nottingham NG8 1BB, U.K. E-mail: [email protected]