Firms need to speak to the weak, not the strong

Researchers are studying the idea that multinationals spend too much stakeholder engagement time talking to large, loud NGOs rather than weaker-voiced community organizations that can give them a better insight into looming reputational problems.

A team at Cambridge University's Judge Business School is developing the theory that smaller 'subaltern' groups - typically based in local communities and organized on an ad hoc basis - are much better sources of information and feedback than well-funded, well-organized NGOs that often have a wider, national focus.

Rashedur Chowdury, a Cambridge PhD student participating in the research, said: 'When multinationals do stakeholder dialogue they usually engage with strong stakeholders such as WWF and Oxfam, but by engaging with 'weak' stakeholders they can be more effective, especially in emerging nations.

'It's the subalterns who really matter, because they're on the ground locally and they know what is happening and what people really think.

'But at the moment they are largely being excluded, and we need to move to a more bottom-up model.'

Chowdury said that, despite the commonly held view that large NGOs have their 'finger on the pulse', they often lack connections with, or leverage within, local communities - and are sometimes considered by ordinary people to be as remote as the companies themselves.

'It's the weak stakeholders who, in the end, sometimes disrupt a company's operations with protests,' he said. 'If firms are talking to these people they will get a better feel of what is coming and might reduce the likelihood of future conflict.

'They can also gain greater legitimacy at a local level by showing they are engaged with people at the grass roots.'

Marc Hunter, adjunct professor at the Insead international business school, said the idea is a valid one and merits further investigation.

'In the end it's about conflict management,' he said. 'Companies need to get to groups that aren't big NGOs but have significant organizational capacity and are rooted in the societies they are operating in.'

Craig Smith, affiliate professor of ethical and social responsibility at Insead, said he had seen many instances in which companies may have done better to seek the views of subalterns rather than large and relatively out-of-touch NGOs.

He quoted the example of Asia Energy, which, despite having talks with prominent NGOs over its controversial proposals for an open-cast coal mine in Phulbari, Bangladesh, had to shelve the project after violent protests by local people.

He said: 'It was the weak stakeholders who forced Asia Energy to stop, even though it had been engaging with most of the top NGOs.

'With hindsight we can say these stakeholders should have been given attention, but it's not always easy to identify them.'

Chowdury said one aim of the research will be to find ways of finding - and connecting with - such loose groups. However, he said companies should initially put out feelers through human resources managers, sales staff and local employees who have their ear to the ground.