Institutional scaffolding: MNEs responses to institutional weakness in contexts of violent conflict

Abstract

Multinational enterprises (MNEs) use a variety of strategic responses to navigate weak institutional contexts. Scholars of MNE responses general focus on relatively stable regions. This paper examines how MNEs navigate institutional weaknesses in contexts of violent conflict by examining the Global Memorandum of Understanding (GMoU), a community engagement model created between MNEs, NGOs and local communities in Nigeria. Leveraging a qualitative study, our findings suggest that the GMoU serves as an institutional scaffold that acts as a temporary infrastructure to pull various stakeholders together while stabilizing the operating environment. The GMoU also influence governmental regulation, as seen with a section of the 2021 Petroleum Industry Act. We contribute to the literature on MNE responses to weak institutions in three ways: (1) we introduce the term institutional scaffolding as a way for MNEs to co-construct temporary and flexible infrastructures and manage institutional weaknesses; (2) we provide insights into how the co-creation of the GMoU model helped MNEs manage conflict and insecurity in weak institutional contexts; and (3) we explain how MNEs collaborated with local stakeholders and NGOs on several levels of the institutional building process to provide local communities with a voice and agency and establish a path towards peacemaking.