Corporate Social Responsibility and Corporate Control: The Anglo-Iranian Oil Company, 1933–1951

Abstract

A new conceptualization of corporate social responsibility (CSR) is presented as a means of asserting and maintaining corporate control in the face of political, economic, and social challenges. The Anglo-Iranian Oil Company (AIOC) applied different strategies to maintain control of its Iranian assets in the face nationalist demands—political and covert mechanisms, market based, resource access controls, and CSR programs. This paper investigates the third, and least explored, strand of their strategy. It identifies managerial strategies for CSR engagement with respect to three corresponding interest groups: politicians and diplomats, shareholders, and local employees, drawing on a variety of previously unused archival sources. From prior studies it is unclear whether the AIOC's CSR programs, for example, in employment and housing, were motivated by social improvement, its business agenda, or responses to legislative pressures from the Iranian government. A detailed examination of CSR policy and private correspondence between AIOC's senior executives about their negotiations with the Iranian government shows that they engaged in and reported voluntary CSR activities to strengthen their reputation and negotiating position but refused to compromise on aspects of CSR that threatened the existing managerial hierarchy of control. This interpretation is supported by a content analysis of the company's annual reports in the years before and after nationalization, revealing a choice of topics and language intended to support its self-presentation as a socially concerned employer. The results of this study have wider implications for understanding CSR reporting as a corporate strategy to enhance negotiating and bargaining positions.

Narrative reporting and crises: British Petroleum and Shell, 1950–1958

“…(See for instance Abdelrehim et al 2011 on contacts and negotiations between BP and Iran before nationalisation). The choice of medium -reports and AGMs -suggests strongly that the companies were aiming to state their case to the "home" audience.…”

“…Although both crises have attracted substantial interest from business and economic historians, some of which has addressed CSR issues (for example Abdelrehim et al 2011), their implications for financial reporting have attracted less attention This paper considers the ways in which the crises impacted on financial reporting by looking at the companies' narrative disclosures at AGMs and in financial statements over the period affected, from 1950 to 1958, when the oil industry was exposed to challenges to its supply network and to criticisms of its behaviour. It considers how narrative reporting was used to respond to the crises, and to manage the companies' interests with important stakeholders, and how the two companies' choices in reporting reflected similarities and differences in their concerns.…”

Researching Corporate Social Responsibility in the Middle East: The Current State and Future Directions

“…For instance, Ben Brik et al () reveal that CSR does not moderate the association between competitive orientation and inter‐functional coordination and performance. Other researchers also argue that CSR is viewed as a business threat or cost burden in the context of SMEs in the ME (Jamali et al, ) and is used to conceal irresponsible behaviour (Abdelrehim et al, ). In a situation such as conflict resolution or peace building, CSR has been found to be unable to contribute in social development (Jamali & Mirshak, ).…”

“…Current studies pertaining to CSR in the ME focus on a wide range of subjects such as the role of stakeholders (Jamali, ) and institutions (Jamali & Neville, ), the conceptualisation of CSR (Goby & Nickerson, ), the motivations for adopting CSR (Abdelrehim et al, ) and the potential impact of CSR on society (Jamali & Mirshak, ). Existing review articles in the field of CSR (Peloza & Shang, ) have tended to review specific research questions.…”

Review of periodical literature published in 2011

“…International business history too was well represented. Abdelrehim et al. show that the Anglo‐Iranian Oil Company, in their negotiations with the Iranian government, voluntarily adopted corporate social activities to strengthen their reputation but refused to compromise on managerial hierarchy and control. Millward evaluates the relative importance of market failure problems as opposed to geo‐political factors prompting state intervention in infrastructure industries and demonstrates the strong differences between Britain, US, Continental Europe, and Japan.…”