Multinational Companies and Rural Development

MNCs activities in less developed countries (LDCs)
are regularly contracted to undertake rural
development around their sites. Likewise, they
regularly fail. How can a profit-making MNC
encourage rural development in an undeveloped area
of a host LDC? The purpose of this research is to
investigate how an MNC could fulfill its contractual
commitment for local development in a way that
benefits MNC and also the involved parties. This
study concerns the urgent and interesting issue of
how MNCs manage their relationships with other
organizations in LDCs for local development. This
study followed ten years of a mining company (Lamco)
in Liberia which promised success in rural
development, had it not been for drastically falling
prices for iron ore and a civil war. Apart from the
MNC and the host government, a PVO and the rural
people were involved. The main result of this study
is that the use of an intermediary PVO is an
effective means for an MNC to fulfill its
contractual commitments related to rural
development. The empirical contributions discuss the
implications for MNCs, host governments, local
communities and PVOs.

Autorentext

Mohammad Latifi is senior lecturer at the department of Business Studies, Uppsala University. He received his Ph.D. from Uppsala University in 2004. His research interests concern leadership and issues regarding corporate social responsibility. Mohammad Latifi teaches courses in organisation theory, management and marketing.

Klappentext

MNCs activities in less developed countries (LDCs) are regularly contracted to undertake rural development around their sites. Likewise, they regularly fail. How can a profit-making MNC encourage rural development in an undeveloped area of a host LDC? The purpose of this research is to investigate how an MNC could fulfill its contractual commitment for local development in a way that benefits MNC and also the involved parties. This study concerns the urgent and interesting issue of how MNCs manage their relationships with other organizations in LDCs for local development. This study followed ten years of a mining company (Lamco) in Liberia which promised success in rural development, had it not been for drastically falling prices for iron ore and a civil war. Apart from the MNC and the host government, a PVO and the rural people were involved. The main result of this study is that the use of an intermediary PVO is an effective means for an MNC to fulfill its contractual commitments related to rural development. The empirical contributions discuss the implications for MNCs, host governments, local communities and PVOs.