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The Link Between Responsibility and Legitimacy: The Case of De Beers in Namibia

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Abstract

This article investigates the link between corporate social responsibility (CSR) practices and the reasons for which legitimacy is ascribed or denied. It fills a gap in the literature on CSR and legitimacy that lacks empirical studies regarding the question whether CSR contributes to organisational legitimacy. The problem is discussed by referring to the case of De Beers’s diamond mining partnership with the Government of Namibia. A total of 42 interviews were conducted—41 with stakeholders and one with the focal organisation Namdeb. The 41 stakeholder interviews are analysed with regard to cognitive, pragmatic and moral legitimacy as defined by Suchman (Acad Manage Rev 20(3):571–610, 1995). The main finding is that the majority of statements on organisational legitimacy refer to moral legitimacy and most issues raised in this context challenge the company’s legitimacy despite its comprehensive CSR engagement. The study demonstrates that legitimacy gaps can be a result of communication practices that raise unrealistic stakeholder expectations and that the legitimacy gained by CSR engagement in one area cannot substitute legitimacy losses caused by failures in another.

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Notes

  1. The term CSR is used here for the social responsibility of all kinds of companies, including those that are not incorporated. This use is common in business ethics and CSR literature where the term CSR is frequently applied to SMEs, NGOs and other organizations that lack corporate status. In contrast, ISO (2010) uses the term social responsibility to avoid confusion.

  2. Note: Namdeb was founded in November 1994. The earlier data refer to its predecessor Consolidated Diamond Mines (CDM). For more details on the collaboration between De Beers and Namibia’s government, see Kempton and Du Preez (1997).

  3. Percentages were rounded.

  4. The South West Africa People’s Organization (SWAPO) was founded as a political party by participants of the country’s independence movement. SWAPO rules Namibia since independence and receives growing support during elections (in terms of percentage), whereas the overall participation during elections declines. This development has been interpreted as a “trend towards single party rule” (Bauer 2001, p. 45).

  5. In contrast, a civil society representative describes Nicky Oppenheimer, the Chairmen of the De Beers Group, as different “from an ordinary man in the street or an ordinary woman in the street […] the power he has, I think is equal to the president of the country and even more because he has means.” Clearly, the description suggests that Nicky Oppenheimer has authority that may trigger cognitive legitimacy. To evoke moral legitimacy, the described power and wealth need to be connected to virtues (such as fairness and prudence); which were not mentioned by this respondent.

  6. For a more detailed description and some estimates of the value added, see Kempton and Du Preez (1997).

  7. On United Nations Human Development Index, Namibia received a value of 0.606 in 2010. Since its independence, Namibia received indices close to the worldwide average and higher than the regional average of Sub-Sahara Africa (which was 0.389 in 2010). In 2010, it was ranked 105 (out of 169 listed countries) among countries with medium human development. To compare: In that year, countries with very high human development received values between 0.938 (Norway) and 0.788 (Barbados). Countries with high human development ranked from 0.784 (Bahamas) to 0.677 (Tonga). Namibia’s group of countries with medium human development has values between 0.660 (Fiji) and 0.488 (São Tomé and Príncipe). Countries with low human development ranked from 0.470 (Kenya) to 0.140 (Zimbabwe) (United Nations Development Programme 2011).

  8. One step toward diversifying the economy is to intensify the exploitation of Namibia’s uranium resources. Already in 2008, Namibia was listed among the major four uranium-producing countries by the International Atomic Energy Agency (2010). In 2009, the French nuclear energy company AREVA signed a joint venture agreement with the Namibian Government to form an exploration company (Business Excellence Magazine 2010). It is to be expected that a public–private joint venture in the uranium mining industry will face similar—if not more intense—legitimacy challenges as Namdeb.

  9. De Beers SA published annual operating and financial reports (De Beers 2011). Namdeb’s annual reports cover financial, operational and social issues (Namdeb 2010). In addition, every second year, a “Report to Society” is published covering the activities of all companies belonging to the De Beers family (De Beers 2010).

  10. The Kimberley Process Certification Scheme is an agreement between the diamond industry, notably De Beers, and governments of diamond-mining countries to track the origin of each stone throughout all stages of extraction, cutting, polishing and trading (Kantz 2007; Grant and Taylor 2004). The aim is to avoid that so-called conflict diamonds (or blood diamonds) from war torn areas can be sold on the international market to finance conflicts as it happened during the civil wars in Sierra Leone and Congo. Namibia participates in the Kimberley Process Certification Scheme, but was never a source of conflict diamonds. For this reason, the Kimberley Process is not discussed as a relevant issue for the legitimacy of Namdeb, although it is important for De Beers internationally.

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  1. Management and Organisation Department, ESC Rennes School of Business, 2, rue Robert d’Arbrissel, 35065, Rennes, France

    Cyrlene Claasen & Julia Roloff

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Claasen, C., Roloff, J. The Link Between Responsibility and Legitimacy: The Case of De Beers in Namibia. J Bus Ethics 107, 379–398 (2012). https://doi.org/10.1007/s10551-011-1045-0

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