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Reputation Risk and Globalisation

Terry O’Callaghan

Recently, multinational corporations have begun to reinvent themselves as socially responsible actors. This is largely in response to activist pressure. These activists have perceptively understood the link between corporate success and corporate behaviour. Corporate self-regulation has emerged as an important mechanism to counter this activist pressure. The author argues that corporations have a capacity for self-regulation because their reputation is critical to their success. As such, reputation is beginning to discipline corporate behaviour. The book first explores the link between corporate reputation, corporate behaviour and self-regulation. The author then compares and contrasts various studies of multinational corporations that have sought to self-regulate.
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Chapter 4: Royal Dutch Shell’s ‘PR-led’ approach to corporate self-regulation

Terry O’Callaghan


When writers discuss the essence of a strong corporate reputation, they invariably point to the performance of companies such as The Body Shop and Timberland. For various reasons these companies are judged to have excellent reputations in the marketplace. As such, they make useful case examples of the way MNCs can grow and manage their reputations. Almost the exact opposite is the case with resource companies. For some people, they epitomise the ugly side of the modern global economy. They are large companies which are seen by many to lack accountability, have little regard for social and environmental values and often appear to be beyond the control of states.1

This chapter is the first of three cases that examine the link between corporate self-regulation and its ability to promote a strong corporate reputation. Royal Dutch Shell is one of the largest MNCs in the world. The statistics are impressive. In 2013, the company had revenues of US$451.23 billion and an income of US$26.87 billion (Royal Dutch Shell, 2013). It had an after tax profit of US$16.56 billion. The company spent US$44 billion on capital investment, US$1.3 billion in research and development, and US$156 million on voluntary social investment. Shell operates in more than 70 countries and produces 3.2 million barrels of oil a day (Royal Dutch Shell, 2013). The company also owns approximately 44000 service stations and operates more than 30 refineries and chemical plants around the world....

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