Multinational Companies and Host Partnership in Rural Development : A Network Perspective on the Lamco Case

Abstract: Multinational companies (MNCs) 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? The purpose is to investigate how an MNC could fulfill its commitment in a way that benefits all involved parties. Urgent and interesting is to study how MNCs manage their relationships with non-business and business organizations in LDCs for local development.Starting points are community development and network theories. Non-business actors in business networks are focused, as this proved to furnish the most relevant description and analyze of the interaction of business and non-business organizations. The theoretical discussions explore the infusion of intermediary actors in order to bridge the gap between business and non-business actors. Beside some case studies for manifestation of this problematic issue, the study conducts two field studies at the site.This study follows ten years of Lamco Joint Venture Operating Company in Liberia which promised success in rural development, had it not been for drastically falling prices for iron ore and a civil war. Other MNCs have tried a one-directional way, whereas Lamco did co-operate in a network. The main result is that an intermediary PVO is an effective and efficient means for an MNC to fulfill its contractual commitments for rural development. The main theoretical contributions are the infusion of non-business intermediary actors to connect business and non-business actors, to enhance our understanding of relationships between MNCs and business and non-business actors in LDCs, and to understand the side-effects of business activities. The empirical contributions discuss the implications for MNCs, host governments, local communities and PVOs.