Primary sector Multi-National
Enterprises (MNEs) in developing countries are the subject of intense concern
regarding their social, environmental and economic sustainability. MNEs
investing in emerging economies need to be able to adapt and work in a
challenging institutional environment governing the legitimacy of their
activities. The study uses Institutional Theory and the concept of
Institutional Pressure to analyse the process of Pressure and Response by
which the social sustainability legitimacy of an MNE project was constructed
on different levels. The purpose of the study is to understand how
primary sector MNEs operating in complex developing country contexts respond
to a variety of institutional pressures to demonstrate legitimacy in terms of
project sustainability?

Drawing on the case
of a Roundtable on Sustainable Palm Oil (RSPO) certified Oil Palm company in the
Republic of Liberia, this study provides insight into the process by which
MNEs negotiate a complex multi-layered institutional environment that seeks a
balance between the needs and requirements of the company, the host community
and those of domestic and international institutional actors. The specific
case in this case study revolves around the implementation of a social
sustainability principle, FPIC, by the MNE and the institutional pressure
brought to bear on the company by a number of actors including host
government, host community, local and international NGOs and an international
certification body.

The central finding
of the study can be encapsulated thus: instead
of a single universal legitimacy, Primary Sector MNEs hold bundles of
potentially contradictory legitimacies. These are held with different
institutions in different contexts. They may support one another, or be in
conflict, and may be either more, or less, important to the organization from
time to time. This is combined with the caveat that these legitimacies are grounded in the
legitimacy of the relationship between the MNE and Host community. MNEs
can demonstrate this legitimacy to other institutional actors through a
documented process of constructive engagement that leads to the existence of
a state of Social Licence to Operate – a defined form of social
sustainability. It is suggested that an important part of constructive
engagement for primary sector MNEs in developing countries is the application
of a thorough Free Prior and Informed Consent (FPIC) procedure in before and
through-out project work.