RESEARCH BACKGROUND

Multinational
enterprises (MNEs) in the primary sector are the subject of considerable
controversy regarding their legitimacy in terms of the social sustainability of
their operations. Primary sector MNE managers are challenged to develop and
apply strategies that achieve both business and social sustainability goals
while responding to significant, and varied, institutional pressures on both
global and local levels. Primary sector MNEs also face particular challenges in
demonstrating the legitimacy of their operations because they often operate in
the global periphery, sometimes alongside vulnerable communities, and are
subject to complex institutional arrangements governing both the policy
environment and social sustainability standards. The complexity of these
operating environments often leads to an increase in business risk associated
with stakeholder conflict which can have serious operational implications (see
e.g. recent cases involving Tahoe resources and Acacia mining). In this vein,
emerging evidence also points to more concrete reasons for managers and owners
of primary sector companies to ensure organisational legitimacy; stakeholder
acceptance is understood to positively impact valuations of primary sector
firms (Henisz, Dorobantu, & Nartey, 2014).

For
society more broadly, understanding what happens inside primary sector
multinationals can suggest ways in which sustainable outcomes might be
co-produced together with the MNE. Primary sector investment, done well, can be
a powerful catalyst for employment and regional (re)development, especially in
areas that may be considered peripheral (Gifford, Kestler, & Anand, 2010; Rival &
Levang, 2014). Done
poorly, environmental, social and economic costs become significant (Baumol, 1996; Kemp & Owen, 2013). Interestingly,
current interdisciplinary research in the field of sustainability and
management has only recently begun exploring the institutional dynamics that
construct sustainability and legitimacy (Ehrnström-Fuentes, 2016; Jamali & Karam, 2016;
Rathert, 2016; Yin, 2017).

RESEARCH OBJECTIVES

The
overall goal of my research project in its entirety is to understand how primary sector multinational enterprises
(MNEs) operating in complex business environments respond to institutional
pressures to demonstrate legitimacy in terms of social sustainability. A central
theme running through my work is what happens when managers are challenged to
respond to a wide array of pressures and to balance organisational goals with
the requirements of a multitude of institutions in order to gain and maintain
legitimacy. This matters for MNEs because the way they manage this
institutional complexity, in terms of what is legitimate, has important
implications for determining what the organisation can and cannot do and also
for organisational survival (Scott, 2001).

RESEARCH DESIGN AND METHODOLOGY

My
research uses a single case study.
As a research strategy, a case study explores a phenomena in the context in
which it is situated to “’confront’ theory with the empirical world” (Piekkari, Welch, & Paavilainen, 2009: 569); in
other words, case studies test theory and form the basis for further
development of theoretical explanations (Ragin, 1992: 221). In
addition to theory testing and development case studies seek to explain “how
processes and causes ‘fit together’” in the case (Piekkari et al., 2009: 569). Also, adopting
case study methodology is warranted because “the phenomenon under investigation
is difficult to study outside its natural setting” (Ghauri, 2004: 112). Dubois
and Gadde (2002: 554) note
that “interaction between a phenomenon and its context is best understood
through in-depth case studies”. Furthermore, this study adopts a single case
study design where the objective is to critically explain, examine and extend
existing theory (Ghauri, 2004: 114). Single
case studies are appropriate when the case itself is revelatory; that is, it
addresses a phenomenon that has not been observed in detail before, and that it
offers novel insights (Ghauri, 2004: 114). Also,
single case study approach may be used when the objective is thorough
contextualisation, to elicit a ‘deeper’ understanding of the causal mechanisms,
processes and structures at play in the case (Dyer & Wilkins, 1991; Fletcher &
Plakoyiannaki, 2011).

EXPECTED CONTRIBUTION

Building
on recent interdisciplinary developments in institutional legitimacy approaches
to sustainability research, this study contributes a bargaining framework for
primary sector project legitimacy. The framework proposes a model of
institutional dynamics between host communities, the host government,
non-governmental organisations and the MNE. The model of institutional dynamics
is intended to help primary sector MNE managers gain and maintain
organisational legitimacy through constructive engagement with host
communities, governments and NGOs in multifaceted institutional environments. This research will
also contribute to an ongoing discussion regarding socially sustainable
approaches for mining investment and operations (Gifford & Kestler, 2008; Owen & Kemp, 2014;
Prno & Slocombe, 2014). Another contribution lies
broadening that discussion to include other industries in the primary sector
such as palm oil (Corley & Tinker, 2003) and the dynamics of sustainability
governance there (Köhne, 2014). Different industries in the
primary sector face may face similar challenges, and cross pollination of
potential solutions and methodologies in practice and in academic literature
can, potentially, contribute to more sustainable outcomes.

Preliminary results
suggest that MNEs hold a bundle of potentially contradictory legitimacies
within multiple institutional arrangements, and that these are subject to
change as institutional priorities evolve over time. Importantly organisational
legitimacy at the local level underlies some of the ways in which institutional
dynamics play out between the MNE and other institutional stakeholders, for
example governments and non-governmental organisations (NGOs). This makes
gaining and maintaining local legitimacy an important strategic imperative for
primary sector MNEs, while also being important for managers to achieve in
practice.