Master Thesis
Jelmer van Roij
5941881Dealing with widely salient issues: the case of NAM.
Supervisor: F. Ciulli
Abstract
This study analyses the successfulness of political strategies adopted by firms under narrow and wide issue saliency. Examining the case of NAM, it is found that preventing an issue from becoming widely salient may not always be possible. Furthermore, it is found that extant literature overlooks the fact that the suggested tactic of self-regulation is not always possible. Therefore, this study examined which (combinations of) political strategies should be used by firms when the level of issue saliency changes. It is found that reactive strategies are unsuccessful when trying to deal with salient issues, and that an information strategy can be a useful strategy for firms during high issue saliency.
Contents
Abstract ... 1 Contents ... 2 1.Introduction ... 3 2. Literature review ... 6 2.1 Political strategies ... 6 2.2 Issue Salience ... 9 3. Methods ... 12 3.1 Case description ... 123.2 Data sources and analysis ... 16
4. Results ... 20
4.1 Media attention ... 20
4.2 Low issue saliency ... 23
4.3 High issue saliency ... 26
5. Discussion ... 37
6. Conclusions ... 37
6. References ... 44
7. Appendix 1: Newspaper articles covering the issue of earthquake risks in the newspaper Dagblad van het Noorden. ... 52
8. Appendix 2: Newspaper articles covering the issue of earthquake risks in the newspaper NRC Handelsblad ... 58
3
1. Introduction
The environment of a business does not only consists of the market environment, where interactions take place between private parties that are intermediated by markets or private agreements, but also consists of non-market components (Baron, 1995). These non-market components include a firm’s “interactions that are intermediated by the public, stakeholders, government, the media and public institutions” (Baron, 1995: 47). A firm’s strategy should therefore also include those two components in a way that is “integrated and tailored to the firm’s market and non-market environments” (Baron, 1995: 48). For example, government action can affect the competitive advantage of firms and therefore have an impact on the profitability of a firm, but since public policies are rarely totally exogenous, a firm may influence the outcome of the decision making process. (Vining et al., 2005). Industries that are likely to be more affected by political decisions are regulated industries, of which the energy sector is a clear example (Sawant, 2012: 194). For these industries the non-market environment can be as important as the economical marketplace (Baron, 1995), and a firm’s political strategy can be decisive in performance outcomes (Lux et al., 2012). The decision of a firm to become politically active can be influenced by the saliency of the issue it faces. Issue saliency has been an important concept in political science to “designate the importance of issues, especially to voters” ( Wlezien, 2005: 555). It is generally accepted that when issue saliency increases, influencing the political decision making process will become more difficult for a firm. However, when an issue is of interest to a lot of people, specifically when it becomes of interest to likely voters, it becomes more likely that political actions will be taken and it is then when a firm most likely will be influenced by these political actions (Bonardi & Keim, 2005). Different levels of issue
4 saliency can be seen as different conditions under which a firm must operate. This is why a firm should take these conditions under consideration when pursuing a specific political strategy. For this reason it is important to research the successfulness of political strategies under different levels of issue salience, so that propositions can developed on how a firm should respond to changing levels of issue salience.
In current literature there has been some attention to issue salience, mainly as an antecedent of a firm’s corporate political strategy (CPA) (Hillman et al., 2004). Yet not a lot of attention has been paid to investigating different stages of issue salience and what CPA a firm should adopt under different levels of issue salience, only premising that success of political activity is determined by issue saliency (Bonardi & Keim, 2005).
Focusing on the political strategies of information, financial incentive and constituency building (Hillman & Hitt, 1999), this study examines the difference in effectiveness of these strategies under different levels of issue saliency. To distinguish narrow and wide issue saliency, this study, as suggested by Bonardi & Keim (2005), considered the level of media attention the issue received during a defined period of time. Therefore, the following research questions were formulated: 1) why can’t a firm prevent an issue from becoming widely salient? 2) how should a firm react to a widely salient issue? In order to answer these questions a longitudinal case study was performed, considering as unit of analysis a firm that had to deal with an issue that in recent years attracted the interest of a wide segment of the regional population. In particular, the case that was selected was that of NAM, which is an oil and gas production company founded and owned by Shell and ExxonMobil and operating in the Netherlands. This company faced an issue that
5 became widely salient and had direct effects on its operations as the issue that was considered was that of the environmental effects of the production of gas in the north-east area of Groningen, The Netherlands. These effects were twofold: due to the production of oil there were earthquakes and cases of land subsidence. This issue acquired increased issue saliency, becoming a highly sensitive issue on the political agenda after a relatively heavy earthquake on the 16th of August, 2012. This resulted in the government’s decision on January 17, 2014 to reduce the production of gas for an initial three year period and invest in different infrastructural restorations and enhancements. These measures would cost approximate 1,2 billion euros and had to be paid by NAM (Kamp, 2014).
Focusing on a timeframe from 2011 to February 2014, this study identified and analyzed the political strategies and tactics adopted by NAM, when the issue was narrowly and widely salient, their outcome and relations with the actions of relevant actors. This exploratory study aims to contribute to extant literature, developing insights on the success of a firm’s political strategy under these different degrees of issue saliency.
In the next section previous research concerning CPA and issue salience is reviewed, defining and explaining categorizations and typologies used for this study. This is followed by a methods section, in which the case of NAM is described in more detail, and the means of data collection and analysis are explained. The results of this analysis are presented in the following section, and are structured as follows: firstly, the results of the media attention analysis are presented to show a changing level of issue saliency. Secondly, the actions of NAM and interactions with other actors concerning the issue of earthquake risks are presented, identifying the political strategies and tactics used by NAM. A distinction was
6 made between low issue saliency and high issue saliency, to compare the actions of NAM and their outcomes in both periods. With the results of this study, the research questions were discussed and propositions were formulated in the discussion section. The final chapter consists of a conclusion section, where limitations of this study and managerial limitations are discussed.
2. Literature review
2.1 Political strategiesA part of a firm’s strategy is the political strategy or corporate political action (CPA), which consists of corporate efforts to shape governmental policy in ways favorable to the firm (Baysinger, 1984; Hillman et al., 2004). A firm can have different objectives when engaging in political activities. These are classified by Baysinger (1984:249) as 1) domain
management, the pursue of a firm’s private interest, 2) domain defense, managing public
policy that could be of opposite interest of a firm or 3) domain maintenance, threats to the means of reaching organizational goals. Once a firm has identified its objectives, it has to decide which CPA to adopt.
Scholars have identified different political strategies and approaches that can be adopted by a firm. In particular, Hillman & Hitt (1999) argue that there are two approaches to political action: a transactional approach, where a firm uses political strategies on an issue by issue basis, and a relational approach, where the focus lies on long-term relations between a firm and the government.
7 When the decision has been made on the approach to political action and the level of participation, the choice of a political strategy has to be made (Hillman & Hitt, 1999). For different reasons, a firm that is affected, or risks to be affected by policy decisions, may choose not to be active in the political arena. This approach, typified as a non-bargaining approach by Boddewyn and Brewer (1994) can entail different types of response. Firstly, a firm can choose to be a free-rider: benefiting from the activities of other firms without contributing resources (Vining et al., 2005). Secondly, a non-bargaining approach can also consist in a “passive reaction” (Weidenbaum, 1980), where a firm “only reacts post-hoc to new legislation” (Hillman & Hitt, 1999: 827). Finally, a firm can adopt an upfront anticipation strategy on possible government policies and develop an appropriate strategic response, without directly participating in the public policy process (Hillman & Hitt, 1999).
The second type of political strategy, which consists in actively trying to influence the political decision-making process, is a proactive approach to policy making. Hillman & Hitt (1999) distinguish three political strategies that a firm can actively pursue: information strategy, financial incentive strategy and constituency building strategy. Information strategy directly targets policy makers and consists in providing them with information about policy preferences or policies’ implications in terms of costs and benefits (Hillman & Hitt, 1999; Aplin & Hegarty, 1980). A key strategic choice for a firm is the decision on the means by which a company tries to “frame the policy argument (..), arguments [which] have to be constructed within a complex institutional environment” (Vining et al. 2005:162). In their study, Vining et al. (2005) focus in the information stream specifically on firm’s issue-specific lobbying strategy. Building on the information stream of a firms’ political strategy, they identify fact/science arguments, efficiency arguments and equity arguments to frame
8 an issue (Vining et al., 2005:162). Tactics that firms can use as part of an information strategy include internal and external lobbying, reporting of research results, testifying before government bodies, commissioning think-tanks and supplying decision makers with proposition papers or technical reports (Hillman, 2003:458; Hillman & Hitt, 1999:834).
The second strategy directly targeting political decision makers is that of financial incentives. With tactics such as providing contributions, honoraria to speak, paid travels and hiring individuals with government experience, a firm tries to influence policy formulation or implementation (Hillman & Hitt, 1999:834).
The third proactive political strategy identified by Hillman and Hitt (1999) is constituency building, which they define as “the attempt to influence public policy by gaining support of individual voters and citizens, who, in turn, express their policy preferences to political decision makers” (Hillman & Hitt, 1999:834). Constituency building differs from informational and financial strategies because it consists in the attempt to influence the political decision making process indirectly by approaching individual voters (Hillman & Hitt, 1999), stakeholders (Lord, 2003) or experts and reporters (Bonardi & Keim, 2005). Different possible tactics of constituency building are identified by scholars, such as mobilizing grassroots tactics, education programs, research funding, public relations, advocacy advertising and press conferences. (Bonardi &Keim, 2005; Lord, 2003; Hillman & Hitt, 1999; Hillman, 2003).
A large part of research about CPA investigates situations in which a firm has a choice to engage in political action (Hillman et al., 2004), or it assumes that constituency building involves a public or stakeholders with a shared interest, that can contribute to
9 political decisions in favor of a firm’s interest (e.g. Lord, 2003; Bonardi & Keim, 2005; Baysinger, Keim and Zeithaml, 1985). The view that the public potentially can serve as an ally with a shared interest can also be seen in the definition of constituency building by Baysinger et al. (1985). In their view constituency building consists of “corporate efforts to identify, educate and motivate to political action individuals who may be affected by public policies that also have an impact on the corporation” (Baysinger et al., 1985: 250). In some cases a shared interest can exist between a firm and a population, for example when a firm has to do mass layoffs due to government’s regulations. However, the public can also be a stakeholder that is opposed to certain operations of a firm and may induce political decision making. This may happen when relative small, non-election issues receives a high degree of public interest and develop into election issues, which are issues that individual voters “may cast ballots based on their position on them” (Hillman & Hitt, 1999:832). An issue may become an election issue when the level of saliency of that issue changes, thus becoming of interest to a greater part of constituents.
2.2 Issue salience
Issue salience is a concept that has been introduced by business scholars as an antecedent of CPA ( Hillman et al., 2004). The degree of issue salience can vary, as a public issue may be of interest to few or a large number of likely voters. Considering the degree of issue saliency, Bonardi and Keim (2005) distinguish between narrowly salient issues and widely salient issues. The former are “issues of salience to a limited few, often advocated only by advocated groups and resolved without public discourse” (Bonardi & Keim, 2005:556).
10 Indeed, some issues are not important enough to the public opinion to become widely salient and induce any public pressure and policy formulation, though they are important to some people and thus salient to some level (Bonardi & Keim, 2005). These issues are often mainly of interest to some minor activist groups or NGO’s. Bonardi and Keim (2005) define, instead, ‘widely salient’ issues as “issues that attract the interest of a wide segment of likely voters and whose opinions coalesce around one or two policy options” (2005:555). Widely salient issues are thus the opposite of narrowly salient issues and they may lead to political decision making that is not in the best interest of the firm.
Therefore, in the case of a widely salient issue, the firm may focus on the government as target of its political strategies, trying to influence the decision making process in the firm’s interest. However, it is not sufficient for a firm to target with its political strategies only politicians, because the public is no longer “rationally ignorant” (Bonardi & Keim, 2005: 569). Constituency building is often regarded as an effort to gain support of the (relevant) public, who will express their policy preference to decision makers (Hillman & Hitt, 1999). It is however possible that the objective is not to gain the full support of the public, but more damage-control oriented, to ease the objections of certain operations that lead to public pressure.
A firm therefore can have the objective of preventing an issue to become widely salient, or when that fails, it can try to contain the issue. Bonardi and Keim (2005) suggest ways to possibly prevent an issue from becoming widely salient, and, in a limited way, show how a firm could react to increased saliency. Important concepts in their theory are information cascades (among average individuals) and reputation cascades (among ‘experts’ and
11 reporters). They state that by influencing reporters and experts opinions an issue may not become widely salient. The greater part of their research is focused on the prevention of an issue from becoming widely salient, targeting experts and reporters to propose opposing perspectives. Yet, less effort is made to the identification of tactics to be adopted after an issue becomes of wide interest to the public, only proposing that denial and aggressive tactics can have negative outcomes and self-regulation positive outcomes. (Bonardi & Keim, 2005:572). In particular, the tactic of self-regulation (Bonardi & Keim, 2005) can be a fast way of dealing with a widely salient issue, if the issue concerns a firm’s operations. However, it is seen by Bonardi & Keim (2005) as a temporary solution to prevent escalation and it is therefore crucial to investigate what (combinations of) political strategies should be implemented when, instead, escalation has happened. A large part of research in the field of firms’ political strategies examine the conditions under which firms choose to become politically active (e.g. Sawant, 2012; Bonardi, Hillman & Keim, 2005), or are prescriptive studies on what a political strategy should constitute ( Vining et al., 2005). The saliency of issues is mainly researched as an antecedent of CPA (Hillman et al., 2004). Bonardi & Keim investigated issues’ saliency but mainly focused on the prevention of wide saliency. It is therefore still unclear how a firm should react when facing a widely salient issue, who it should target and how proactive political strategies as developed by Hillman & Hitt (1999) can be used under these circumstances. Indeed, so far, scholars have overlooked the research of political strategies of a firm during different levels of issue salience, or the study of the actors to target during different levels of issue salience. This is in keeping with the Bonardi & Keim (2005)’s call for an empirical testing of their theory and for research on the adoption of potential strategies to deal with salient issues. This study can be useful
12 knowledge for firms, as the saliency of an issue can be seen as a determent of the effectiveness of a firm’s political activities (Bonardi & Keim, 2005).
3. Methods
This study aims to increase the understanding of strategy formulation and change in response to a complex social phenomenon, that of issue salience. For this purpose, a case study is most appropriate (Yin, 2009). The case that was chosen for this study also complies with other criteria identified by Yin (2009): the case is a contemporary issue, and the political strategy decisions that NAM, the firm that is the focus of this study, must make are dependent on the contextual conditions. A single case study was chosen for this study, to “expand and generalize theories” ( Yin, 2009: 15), and to “illuminate a decision or a set of decisions” (Yin, 2009:17). This analytical, or theoretical, generalization purpose provides the external validation of a case study, in contrast to statistical generalization made with quantitative studies (Yin, 2009; Ryan et al., 2002). A single case study design has been chosen for multiple reasons. Firstly, this study has been a longitudinal study, where a single case was studied in different points in time. Secondly, the case that was studied could be seen as a representative case, in the sense that other firms may deal with similar issues (Yin, 2009). In the following section the case that has been selected for this study is presented in more detail, and the methods of collecting and analyzing the data sources are explained.
3.1 Case description
The case selected for this study is the one of The Dutch Petroleum Company (NAM) with a focus on its response to the issue of the environmental consequences of gas production in the north-east of Groningen. NAM was founded in 1947 by Shell and Esso as a joint venture
13 to exploit a then recently discovered oil field in Schoonebeek, The Netherlands, and to search for more oil fields (NAM, 2014). In 1959 NAM discovered a gas field in Groningen, The Netherlands, which was found to be one of the twenty biggest gas fields in the world (Shell, 2009). After the discovery of the gas field in Groningen NAM became the main responsible of the production of gas there, consisting of about 75% of all gas that is produced in the Netherlands (NAM, 2014). This discovery led to big changes in the energy consumption in The Netherlands, making a large part of the Dutch population dependent on the gas from Groningen for cooking and heating of their houses, which provided substantial earnings for the government. These incomes were mainly used for social security, building the welfare state, public administration and security (NRC, 2009). Yet, the production of this gas had relevant environmental consequences: there have been cases of land subsidence and since 1986 there have been several earthquakes, however, until the 2000s, of limited magnitude (KNMI, 2013). In last decade the situation worsened: In 2003 the first earthquake with a magnitude of 3,0 on the scale of Richter occurred, and until 2013 there were nine earthquakes reaching that magnitude (SodM, 2013). The largest earthquake occurred on August 16, 2012 in Huizinge (Loppersum, Groningen) and had a magnitude of 3.6 on the scale of Richter (KNMI, 2013). Not only the magnitude of the earthquakes increased, but also the amount of earthquakes increased drastically in the last years, as can be seen in table 1.
14 (KNMI, 2014; SodM, 2013) Table 1
The earthquakes occurred recently have led to great public and political pressure regarding the production of gas in the area of Groningen resulting in the government’s decision on January 17 2014 for a reinforcement plan costing 1,2 billion euros, which had to be paid by NAM.
This case was chosen for multiple reasons: Firstly, relatively clear boundaries could be identified between the period in which the earthquake risks related to gas production in Groningen were a narrowly salient issue and the period in which these risks became a widely salient issue. An analysis, illustrated in the next section, of the media attention given to the issue has allowed to select a timeframe in the period from January 2011 to February 2014. This timeframe was chosen because in this period of time the environmental risks’ issue shifted from being narrowly salient into being a widely salient issue, which means that the political actions of NAM and their successfulness could be compared.
Secondly, the case of NAM was selected because the issue of earthquake risks caused by gas production in Groningen has been well-documented. This allowed identifying
0 20 40 60 80 100 120 140 2010 2011 2012 2013
Number of earthquakes in Groningen
Number of earthquakes in Groningen
15 NAM’s political strategies and tactics and the actions of other relevant actors in relation to the increase in the issue’s salience. In particular, it was possible to identify the actions through which NAM has tried to influence the public policy process, how these actions have changed when the issue became widely salient and whether they were successful or not.
Thirdly, this case has been chosen because the main actors involved in the issue are clearly defined (table 1): NAM was represented by Bart van de Leemput, CEO of NAM, and Maarten Veldhuizen, government relations manager. Both national and regional governments were involved with different representatives; the national government was involved through the minister of Economic Affairs Henk Kamp and state supervisor of the mines SODM, and regional government was involved through the Provincial Executive and Max van den Berg, the commissioner of the queen (now king) of Groningen. The Commission for a Durable development of North-East Groningen was involved by examining the issue on basis of reports and interviews, and was responsible with providing advice to Minister Kamp regarding the direct and indirect effects of gas production in the area by NAM, and measures to compensate these effects. Also, several activist groups were involved, of which Groninger Bodem Beweging was the largest, and the general public, because of individual monetary claims that were made to NAM.
16 Table 2: Key actors and representatives
3.2 Data sources and analysis
A case study can include different sources of evidence: document, archival records, interviews, direct observation, participant-observation, and physical artifacts ( Yin, 2003:83, 85-96). For this study, the sources used for data collection have been interviews and archival data. Data were collected from newspapers, published documents by NAM, government’s documentation, reports and interviews with relevant actors.
As regards archival data, different sources were used to allow triangulation. In particular, the national newspaper ‘NRC Handelsblad’, and the regional newspaper ‘Dagblad van het Noorden’ were used as main sources. The NRC was chosen because it is one of the main national renowned newspapers of the Netherlands, and it has spent considerable Key actors Representatives
NAM B.vd Leemput, CEO; M. Veldhuizen, government relations manager
National government Ministry of economic affairs, minister Henk Kamp; State Supervisor of the Mines (SodM). Regional government Provincial Executive of Groningen; Max van den
Berg, royal commissioner of Groningen. Activist groups Groninger bodembeweging; Schokkend
Groningen; Groningers in opstand.
Commission “ Durable development of North-East Groningen”
Wim Meijer, former labor party politician, head of the commission.
17 attention on the issue of the environmental effects of gas production by NAM in Groningen. The NRC has also written a reconstruction of the political and social happenings after the earthquake in 2012. This reconstruction is very detailed, and has been made in cooperation with the ministry of economic affairs as well as the government relations manager of NAM. The newspaper Dagblad van het Noorden was selected because it had also spent considerable attention on the issue, and as a regional newspaper focuses on the area in which this issue mainly took place (i.e. Groningen). Besides archival data from newspapers, press releases, studies and other documents released by both NAM and different governmental actors have been used and archival data from the activist group “Groninger Bodem Bewegening” have been used, as they have recorded the issue in great detail and they provide coverage of the issue from a different perspective.
As regards the interviews, Maarten Veldhuizen, the government relations manager of NAM was interviewed to get insight on the firms’ political strategies adopted by NAM both when the environmental risks’ issue was narrowly salient and when the saliency of the issue increased. The position of government relations manager at NAM is a position that didn’t exist until it was formed in the summer of 2013, when it became clear that contact between NAM and the government would intensify because of the increased issue salience and political interference that resulted from the increased issue salience. Prior to that, the relations with governmental actors were conducted by Shell representatives.
As regards to the data analysis, firstly, the level of saliency was determined by the level of media attention, as media “play an important role in the mechanism by which salient issues develop” (Bonardi & Keim, 2005: 558). In particular the number of newspaper
18 articles covering the issue of earthquake risks due to the gas production in Groningen in the two newspapers, the national newspaper ‘NRC’, and the regional newspaper, ‘Dagblad van het Noorden’ were used as main sources for this study. The timeframe that has been selected is between 1-1-2011 and 1-3-2014, because in this period of time the level of issue salience on the earthquake risks changed, and the actions of NAM and other actors regarding this issue could be identified. Furthermore, before 2011 NAM didn’t conduct any actions that were relevant for this study. To illustrate the difference in media attention the digital archive LexisNexis was used. Key-words that were used to come to a meaningful figure were combinations of the Dutch equivalents of ‘ earthquake Groningen’, ‘ NAM’ , ‘gas production Groningen’. These were keywords that would give most results. Also the names of activist groups ‘Groninger Bodem Beweging’ and ‘Schokkend Groningen’ were used. The relevant articles were distinguished from irrelevant articles in the sense that the article had to be relevant to the issue. Indeed, by using key-words such as ‘NAM’ or ‘Nederlandse Aardolie Maatschappij’, results showed articles covering topics irrelevant to this study. Relevant articles were distinguished from the irrelevant articles for all results of the different LexisNexis searches, and the headlines plus dates were noted to avoid counting articles twice. The results of this data search are presented in the results section. A list of all headlines and dates of the newspaper articles of Dagblad van het Noorden and NRC Handelsblad are presented in appendices 1 and 2.
Then the actions of the main actors during the specified timeframe were analyzed, using constructs identified from the literature. In table 3, an overview is presented of classifications from the literature that were relevant for this study. In particular, the constructs used to identify NAM’s actions were derived from the categorization of political
19 strategies and tactics developed by Hillman & Hitt (1999), the constructs used to identify government actions were derived from the typology developed by Tanaka (2011) and the constructs used to identify activist groups were derived from typologies developed by Eesley & Lenox (2006) and Aplin & Hegarty (1980). Thematic coding, using Nvivo software, was used to analyze the data in terms of these categorizations and typologies, to identify the political strategies of NAM and the relevant actions of other actors. A ‘chronological list of events’ (Garud & Rappa, 1994) was then developed, which allowed to analyze events as “critical incidents” (Garud & Rappa, 1994:349), and allowed to analyze the interactions between NAM and the other key actors both in the period in which the issue was narrowly salient and in the period in which the issue became widely salient. The actions of NAM could therefore be put in the context of interactions with other actors and their possible successfulness or unsuccessfulness could be examined.
Classifications of actions by public, private and non-governmental actors.
Actors Actions
Government Prescriptive measures, information
measures, hortatory measures. (Tanaka, 2011)
Activist groups Letter writing campaigns, media campaigns
protests ( Eesley and Lenox, 2006:772; Aplin & Hegarty, 1980:445).
20
Firm Passive reaction, positive anticipation,
information strategies, financial incentive strategies, constituency building strategies ( Hillman & Hitt, 1999)
Table 3
4. Results
In this section the results of this study will be discussed. Firstly, the level of issue salience is displayed through the amount of media attention on this issue, both regionally and nationally as widely salient issues are those issues that are “to receive considerable media attention” (Bonardi & Keim: 556). Then the (inter)actions of the key actors are presented, from which the political actions of NAM in different levels of issue salience could be identified and their successfulness examined. To be able to identify the actions of NAM and their outcomes during different levels of issue salience, firstly the results of the period of low issue salience and then the ones of the period of high issue salience will be illustrated.
4.1 Media attention
The results of the media-analysis, to determine the level of issue salience, are displayed in table 4. The results show articles published after 16-08-2012, the date of the earthquake in Loppersum, because after that date the issue received ongoing media attention. Between January 2011 and 16 August 2012, only five articles were found that were of relevance for
21 this study using the same keywords. For practical reasons, these articles aren’t displayed in table 4. The amount of media attention show a clear pattern: there was very limited media attention during low issue saliency, and there was a high level of media attention during high issue saliency. Therefore these results are representative for the relative difference in media attention for the issue of earthquake risks related to the gas production in Groningen.
22 Table 4
It seems that the issue remained narrowly salient for a long period: when an earthquake occurred, there would be some attention to the issue, but these were only a handful of
0 2 4 6 8 10 12 14 16 18 au g-j j se p-j j ok t-jj no v-jj de c-j j ja n-jj fe b-j j m rt-jj ap r-j j m ei -jj ju n-jj ju l-jj au g-j j se p-j j ok t-jj no v-jj de c-j j ja n-jj fe b-j j
Number of articles covering earthquake
issue in 'Dagblad van het Noorden'
Reeks 1 0 1 2 3 4 5 6 7 8 9 10 au g-j j se p-j j ok t-jj no v-jj de c-j j ja n-jj fe b-j j m rt-jj ap r-j j m ei -jj ju n-jj ju l-jj au g-j j se p-j j ok t-jj no v-jj de c-j j ja n-jj fe b-j j
Number of articles covering earthquake
issue in 'NRC handelsblad'
23 articles. Between August 2012 and January 2013 there still was limited media-attention, which could mean that the earthquake itself didn’t cause the changing level of issue salience. As can be seen in Table 4, both regional as national newspapers have given structural media attention to the issue from January 2013. At that time, the SodM published a report regarding the effects of earthquake risks, which changed discourse on the issue.
For a long time, the issue had been only of interest to regional actors: for the public not living in the production area, no effects of gas production were noticed, so no concerns existed. Also, the issue was not on the national political agenda. After 2012, the issue got a lot of attention of national media, which caused that more people took active interest in the issue. Although the number of articles differ, the tendencies in both graphs similar, peaking in early 2013, when the issue got the interest of (national) political actors, and in early 2014, when a decision was made concerning the issue of earthquake risks and gas production in Groningen. In the next section the periods of narrow and wide issue saliency and the actions of actors will be illustrated more in depth.
4.2 Low issue saliency
As the amount of media-attention shows, in the period between 2011 and January 2013, the gas production in Groningen was an issue with a narrow saliency. Locally, there have been (organized) concerns on this subject since at least 2003. In that year, on November 24rd, a gathering was held to provide information about the consequences of the gas production, where also NAM was present (Groninger Bodem Beweging, 2011). At that time, the main concern of the inhabitants of the production area was the compensation of damages caused by land subsidence and earthquakes that had a relative low magnitude.
24 Three years later, in 2006, an earthquake occurred that had a magnitude of 3,5 on the scale of Richter (KNMI, 2013). Although a relative heavy earthquake took place, (to compare, the magnitude of the earthquake in August 2012 was 3,6), the issue didn’t cause for ongoing media attention and it didn’t appear on the national political agenda yet, or at least didn’t develop into an election-issue ( Hillman & Hitt, 1999). In multiple periods of relative heavy earthquakes during low issue salience (i.e. before 16-8-2012), there would be some media-attention for a short period of time, but even when there was no doubt that these were the effect of the gas production, there was no political activity: that the amount of gas produced was not questioned and the environmental risks did not become a national issue. In the period of the timeframe for this study there hasn’t been a peak in media attention to the issue of earthquake risks during low issue salience. Since this issue was also not on the political agenda, NAM didn’t feel to have a reason to adopt a political strategy at all. As can be read in the case description, NAM had always been a production company, first of oil and later mainly gas. The government relations manager of NAM stated in an interview for this study that “the focus within the company had always been on the operations of production” (30-4-2014). A political strategy was thus almost a non-issue within NAM, which also was the reason that the position of government relations manager didn’t exist before the summer of 2013. Contacts with the government were on an ad-hoc basis, and were handled with the CEO of NAM, or with a Shell representative, though no such contacts took place between 2011 and January 2013, concerning the issue of this study.
Since 2003, citizens had the possibility to file a damage claim against NAM, due to a mining law that was passed in 2002. Between 2003 and August 2012, NAM received 1166 damage of such claims, and reimbursed to 902 victims (DvhN, 2012). This shows that
25 inhabitants of the gas production area had noticed earthquakes as an effect of gas production since at least 2003, and the issue of uncertainty of earthquake risks existed, but it was only salient to a limited number of people. This is in correspondence with the view of Bonardi & Keim (2005) that every political issue is salient to some people, and that no non-salient issues exist. It therefore seems that before August 2012 the issue was not of interest to enough people to “generate election debate”(Bonardi & Keim, 2005: 556). An explanation for this could be that the effects that were noticed were limited, damages to houses were in most cases minor breaches in walls, which could be easily fixed. The main concern of the inhabitants of the gas production area was on compensation, and people were disappointed about the compensation procedures. During the low issue saliency period an expert, a seismologist of the National Meteorological institute (KNMI), spoke about the risks of more heavy earthquakes in the future, stating that an earthquake with a maximum magnitude of 3,9 could occur (DvhN, 2011), but this did not lead to an increase in the issue’s saliency. As regards NAM’s actions, besides simply compensating damages if a claim was found to be a just claim, the company did not engage in political strategies. Between NAM and activist groups, there were contacts and a meeting took place in 2011. This meeting is a striking example of the stage the issue was at that time as the most important problems the Groninger Bodem Beweging had were with the compensation handling (Groninger Bodem Beweging, 2011). In October 2011, a report made by research institute Deltares was presented in Loppersum on the issue of the effects of earthquakes and land-subsidence to the properties of inhabitants of the gas production area (De Lange et al., 2011). The Groninger Bodem Beweging, stressed as the main conclusion that insecurities existed about future earthquake risks, and that there was a lack of knowledge
26 concerning this issue (Groninger Bodem Beweging, 2011). The actions of the actors intervening in the period of low issue saliency show that their main focus was on the compensation to damaged properties. In the following section it is illustrated that, when the issue became widely salient, the focus shifted to the future earthquake risks and the subsequent environmental, social and economic effects of the gas production in Groningen. In the next section the (inter) actions of the relevant actors during high issue saliency will be presented.
4.3 High issue saliency
As shown by the amount of media attention, the issue of earthquake risks became widely salient after SodM’s report on the environmental effects of gas production in Groningen in early 2013. Several different actors took active interest in the issue, which gained national political attention. It would take however another half year before the amount of gas produced was debated. On September 1st, 2012 questions were asked in parliament on the issue by labor party member van Dekken to the minister of economic affairs (Groninger Bodem Beweging, 2012). These questions were on damage compensations by NAM, which shows that even after the earthquake of August 2012, the issue was still seen as an issue of better damage compensation procedures for the inhabitants of the production areas, and the issue was not related to other (in)direct damages. However, among the inhabitants of the gas production areas, the earthquake raised even more concern about their safety and a feeling emerged that the costs and benefits of the gas production weren’t divided equally. In January 2013 the SodM, the supervisor of all mining activities in The Netherlands,
27 presented a report in which it advised Minister Kamp to reduce the gas production “as much as realistically possible”, because it would bring an unacceptable risk for earthquakes, maybe even as high as 5.0 on the scale of Richter (SodM, 2013). Also within NAM there was a rising awareness that maybe operations should be reconsidered. In September 2012, there were meetings between NAM and activist group Groninger Bodem Beweging, the subject of which was not only the damage compensations, but also possible drops in value of houses in the gas production area (Groninger Bodem Beweging, 2012). On January 25, 2013 the NAM’s CEO, van de Leemput, contacted the commissioner of the Queen (now King) of the province of Groningen, Max van den Berg, and a regional labor party member. At this meeting NAM’s CEO informed them about “problems” with the gas exploitation in Groningen (NRC, 2014). As a consequence of the findings of the SodM, the issue of earthquake risks had also reached the national political agenda and in early 2013 the discourse on the issue of earthquake risks didn’t revolve around the compensation procedures alone anymore. This change in view on the issue is illustrated by the chairman of the Provincial Executive of Groningen in the letter in which the installment of the Commission of a Durable Future for North-East Groningen (Commission Meijer) was announced: “ In January 2013, the gas extraction in North-East Groningen been put in different perspective, the [effects of gas] extraction have not been, as has long been assumed, only limited land subsidence, limited earth tremors and minor damage. Now, there is a real threat (..), earthquakes that cause injuries and major damages are a concrete risk” (Province Groningen, 2013:3). On the same date as the meeting between van de Leemput and regional representatives, the 25th of January 2013, the minister of Economic Affairs, Henk Kamp, wrote a letter to the parliament regarding the issue of earthquake risks
28 in Groningen. However, differently from the SodM’s advice, Minister Kamp postponed a decision on this case and first ordered for fourteen studies, of which two were to be done by NAM and one by a daughter company of NAM ( Kamp,2014). The other studies were done by research agencies, the National Meteorological Institute (KNMI), and Gasunie (Rijksoverheid, 2014). These studies would take “at least a year” (NRC, 15-2-2014) and were not only on security, but also on financial consequences. An example of other financial consequences besides that of basic gas revenues, were that of fines and income losses due to contractual export obligations. As production would be limited, these obligations couldn’t be met, which would cause financial penalties for the national government. These consequences had to be considered also in the decision on production limits. (NRC, 2014). The reason for the hesitance by the government was the great insecurity that existed about the extent of future risks. According to Maarten Veldhuizen, the main problem was that there weren’t any real comparable cases to be found in the world, and therefore all forecasts on possible earthquakes were based on statistical probabilities.
Van den Berg was the first politician who really had an outspoken opinion on this issue, stating, a week after he was informed by NAM about the problems with gas production, that a fund of at least 1 billion euros should be established to for compensation of direct and indirect effects of gas production by NAM (DvhN, 2013). This action is an example of an entrepreneurial act of a politician, to be the first to address this issue to compete with other politicians (Bonardi & Keim, 2005). This example was later followed by multiple mayors of cities in the area were gas was produced. On May, 23, 2013, the regional government of Groningen installed a commission, which was to be led by Wim Meijer, an old labor party politician, with the task of developing recommendations for a durable future
29 for North-East Groningen and was a direct consequence of the earthquake in Loppersum on August 16, 2012 (Commission Meijer, 2013). Besides Meijer, the commission consisted of
Pieter van Geel, former state secretary of environmental issues, Ed Nijpels, former minister of Housing & Infrastructure, and Hannie te Grotenhuis, a private advisor to the government. The assignment of the commission was to assess in what the “disadvantages” in the area of gas production consisted, and how these losses could be recovered. These disadvantages were seen as indirect effects of the gas production in terms of (economic) perspective, image, conditions of establishment and experiential quality (Commission Meijer, 2013). It therefore was not the assignment to assess direct consequences, as they had to be handled in agreement with existing procedures (i.e. the compensation handling procedures of NAM), nor was the assignment of the commission to “quantify indirect damage, value drops or other disadvantages for individual citizens or firms” (Commission Meijer, 2013:12). In the announcement of the installment of the commission, the Provincial Executive stressed the importance of those indirect effects by stating that although direct damages are compensated, “there are no provisions for indirect damages, while the image, residential quality and the business climate are severely affected in the area” (Provincial Executive, 2014:2) This shows that a change occurred in the thinking on the issue of earthquake risks as a result of gas production. It was no longer only about better compensation procedures, but it was on insecurities about future development of the area. During this period it became clear for NAM that the issue of earthquake risks related to gas production in Groningen would be a ongoing issue. Therefore the firm decided in the summer of 2013 to create the position of government relations manager to manage any dealings with the government. However, this study did not find evidence that a political strategy was initially
30 formulated as that would entail plans to actively try to influence government decision making. On the contrary, the government relations manager of NAM described their political strategy as “reactive”.
On November 1, 2013, the commission Durable Future for North-East Groningen presented their report, which contained a set of proposed measures, for the Minister of Economic Affairs, that were based on meetings with inhabitants, entrepreneurs, interest groups, politicians and the management of NAM (Commission Meijer, 2013).The most part of the financial costs of these measures had to be paid by NAM. Concerns on the long-term effects of the gas production had also caused activist groups to change their operations. They started stating that not only direct damages, but also indirect consequences for the production areas should be compensated. That an inequality between the benefits and burdens of gas production existed was something mentioned also in the report of Commission Meijer. These feelings of the inhabitants of the production area were backed with several protests on NAM locations and government buildings in Groningen between November 2013 and February 2014. On January 17, 2014, Minister Kamp announced a set of measures concerning the effects of the gas production in Groningen. This prescriptive government action (Tanaka, 2011) included measures imposing limits to gas production, reinforcements of buildings and the enhancement of the economic perspective of the gas production area (Rijksoverheid, 2014).
Although no political strategy was formulated as such , from the second half of 2013 NAM adopted several political strategies. Firstly, it adopted an information strategy (Hillman & Hitt, 1999) and, in particular the lobbying tactic, especially in the period between November 2013 and January 2014, in which negotiations following the report of
31 Commission Meijer with the government were held regarding the future of the gas production in Groningen, and the compensations NAM had to pay in the form of repairs, reinforcements and other investments to the area of Groningen. As there were no certainties on the number and magnitude of future earthquakes, nor on the exact difference limiting production would make, the negotiations mainly revolved around the amount of gas that could be safely produced, which means without excess risk, and the amount that NAM had to pay (Veldhuizen, 30-4-2014).
Another reason that justified the possibility to negotiate on the amount of gas that could be produced was that of the government’s financial situation. The national government was in a way dependent on the revenues from gas production. Minister Kamp stated that as the majority of citizens in the Netherlands were dependent of gas, gas revenues from the gas field in Groningen amount to approximately 15 billion euros in 2013 (Kamp. 2014). Because of the tight budget of the national government, a decision about the amount of gas to be produced was difficult. Maarten Veldhuizen, the government relations manager of NAM, noted in an interview held for this study that if this issue happened ten years ago, thus before the economic crisis and the very tight state budget, the government probably would have set much lower production limits. Projections showed in one of the studies ordered by Minister Kamp that limiting production anywhere between 40 billion m³ to 20 billion m³ gas a year, would mean structural income losses of several billion euros a year for the government (Rijksoverheid, 2013). The decision of Minister Kamp, on January 17, 2014, to limit gas production had a timespan of three years. In these years it was hoped to get further insights in the effects of gas production on the area. The outcomes of the negotiations held prior to this decision were relatively favorable for NAM. NAM negotiated
32 that not all costs would have be paid by them. Their 1,2 billion euros cost of the measures announced by Minister Kamp would be partially compensated by the national government. This deal included that the national government would receive less benefits from NAM as part of gas taxes, which would add up to an amount of 144 million euros a year in the years 2014-2018 (Kamp, 2014). This would mean that eventually 64% of the costs would be paid by the national government (Kamp, 2014).
Another informational tactic that NAM adopted is that of providing studies to decision makers (Hillman & Hitt, 1999). In the period prior to the decision of January 17, 2014, NAM provided the government with a study of several scenarios on the amount of gas production. When Minister Kamp addressed the Parliament on January 17, 2014, he stated which decisions had been made on the gas production, and how these decisions were made. In this statement references to a study performed by NAM were included, in which NAM examined several scenarios on the difference in earthquake risk in relation to production levels. Most of the scenarios studied by NAM showed that there would be only a limited difference in earthquake risk and that with the same level of production, the risks would only be limitedly increased.(Kamp, 2014). This shows that providing a study had direct impact on a government’s decision, which in a way was in the interest of both NAM as Minister Kamp: NAM had limited the loss of operations, and the Minister had a valid reason to not limit the production even more, which would mean more setbacks for the state budget.
As regards the financial incentive strategy, no evidence was found that NAM employed such a strategy concerning this issue.
33 For NAM, the constituency building strategy was not the main focus in their political actions. One reason for this was that at the time NAM realized that adopting political actions could be useful, the issue had already reached the political agenda, which meant that decision makers had to be targeted directly. Although constituency building hasn’t been the main focus, several tactics could be identified. Firstly, NAM developed a separate website for all information concerning the issue of earthquake risks. This enabled NAM to try to improve relations with the inhabitants of the production areas by communicating their view on the issue, and defending their operations. Also, the public was invited to production facilities to see how NAM operated. These actions can be understood as a public image and public relations advertising tactic identified by Hillman & Hitt (1999:834).
Secondly, from September 2013, NAM engaged in visits to multiple villages by a NAM representative, where a presentation would be given and questions of the public answered. After January 2014, it was also decided that NAM was to join a ‘dialogue table’, which was formed by the government of the province of Groningen, following the advice of the Commission Meijer, and would comprise representatives of the public, activist groups, employer-organizations and different governmental bodies. Not all activist groups were included, as the group ‘Schokkend Groningen’ had taken a more radical approach, and instead of negotiating have been occupying and protesting on NAM locations (NRC, 2014). This dialogue table had as goal to develop possible measures that could compensate the negative effects of the gas production in Groningen (Dialoogtafel Groningen, 2014). In table 5, the actions of main actors are chronologically listed to provide an overview of the events that led to the development of this issue.
34 Chronological list of events
Actor Date Action Quotation
General public 2011-2014 Monetary claims due to damage to private properties.
NAM 1-6-2011 Meeting with Groninger Bodem Beweging
“To discuss compensation procedures”
SodM 22-01-2013 Advises minister of
economic affairs to reduce production in the area.
“To reduce the gas production as quickly and as much as realistically possible” (SodM, 22/01/2013)
NAM (CEO) 25-01-2013 Informs vd Berg about
situation in Groningen.
“There are problems with the production of gas in Groningen.” (NRC, 15/02/2013)
Commissioner van der Berg 01-02-2013
Monetary 'claim' to NAM of at least 1 billion euros.
“This asks for a major compensation that are a part of the operating expenses of the NAM.” (Dagblad v/h Noorden.)
Minister Henk Kamp February 2013 Orders fourteen studies to be done on the consequences of gas production.
“To take a good decision on the future of gas production in Groningen” (Rijksoverheid, 2014) Provincial Executive Groningen 23-5-2013 Installment of “Commission Meijer”
“There should be a structural compensation due to image loss en worsening of living- and
35
investors climate“(Provincial Executive, 23-5-2013). NAM Summer 2013 Creation of position of
government relations manager
“It was clear that the NAM would have more business with the government in the near future.” ( M. Veldhuizen, 22/04/2014)
NAM Summer 2013-December 2013
Providing government with studies.
NAM 9-2013/2-2014 Visiting villages, building separate website for information on the issue of earthquake risks, inviting public to NAM locations
Commission Durable Development of North-East Groningen 01-11-2013 Report with recommendations is presented.
“A firm perspective for North-East Groningen. “
NAM 11-2013/1-2014 Lobbying with national
government on amount of gas to be produced, and amount of compensation to be paid by NAM
“To negotiate on the amount of gas that safely could be produced and the dividing of costs between NAM and government” ( Veldhuizen, 2014)
National Government 7-11-2013 Research for formation dialogue table.
“To restore faith between inhabitants of the production area, and NAM and the government.” (Van Geel & Wallage, 2013)
Minister Henk Kamp 17-01-2014 Set of measures are announced to reduce the
“To reduce gas production for safety purposes, make reinforcements to
36
gas production, and invest in the production area.
infrastructure and improve the economic perspective of the region.”(Kamp, 2014)
37
5. Discussion
In the literature on corporate political strategies, “an important focus (...) has been identifying contingencies that make a firm’s participation in the public policy process more or less successful” (Bonardi & Keim, 2005: 555). A key determinant is that of issue saliency (Bonardi & Keim, 2005). However, not much focus has been spent on successfulness of political strategies with widely salient issues. Therefore the research question of this study has been twofold: 1) why can’t a firm prevent an issue from becoming widely salient? 2) how should a firm react to a widely salient issue?
As regards the first question, this case shows that a firm may face unlikely contextual conditions, in which it gets involved. It is arguable if NAM could prevent the issue from becoming widely salient under these conditions. Bonardi and Keim (2005) propose that it can be useful to create variance in experts’ opinions regarding an issue by providing support to research centers and interest groups. However, in 2011 the link between gas production and earthquakes had been undisputed for some time. Also, as described in the results section, self-regulation was not a strategy that could be adopted to prevent the issue from becoming widely salient. For these reasons it seems unlikely that NAM could prevent the issue of earthquake risks from becoming widely salient. Dealing with a changing level of issue salience thus may not only entail trying to prevent an issue from becoming widely salient, but can also include managing the process.
Proposition 1: Institutionalized experts’ opinions are likely to hinder a firm prevent an issue from becoming widely salient.
38 During the period of low issue salience of the gas production in Groningen, the lack of actions of NAM stand out more than their actions. Their political strategy can be described with Weidenbaum’s (1980) ‘passive reaction’. As stated, NAM may have not been able to prevent the issue from becoming widely salient. However, as there were structural damage claims, (grouped) citizen resistance and an increase in the amount and magnitude of earthquakes, NAM could have foreseen that the issue could become widely salient, and that this could lead to political action of governmental bodies. An earlier awareness and active political action could therefore have been beneficial for NAM as both government and the public could be addressed by NAM so that its interests were defended better. The passive reaction strategy of NAM caused that the issue developed without the perspective of NAM being heard by the public. This caused that discourse on this issue was revolved around the same perspective, namely that NAM should compensate all (in) direct damages. For example, the indirect damages of image and investors climate in the area were issues that not necessarily should have been linked to operations of NAM, or that is should be compensated. NAM could have advertised the view that such compensations and investments should be paid by the government. However, since NAM didn’t pursue any active strategies to frame those arguments, the outcome wasn’t favorable for NAM, since a firm is then reacting to actions and/or concerns instead of anticipating and try to ‘frame the policy issue’ (Vining et al. 2005:162) As there were clear signals that there was an issue that was salient to some people, it can be said that NAM responded inadequately, or management underestimated the importance of the issue to the public and the possible consequences this could lead to. Either way, a passive strategy didn’t have favorable outcomes for NAM.
39
Proposition 2: In conditions of low issue saliency, when there are indicators that the saliency level of an issue could change, passive reaction is an unsuccessful strategy for a firm.
As regards the second research question, the reaction of NAM was to contain the effects of the issue on the company. By pursuing a combination of active political strategies it successfully influenced, or managed, the decision making process in favor of its own interest, given the circumstances. This objective is the ‘domain defense’ identified by Baysinger (1984) and had to be reached under wide issue exposure. Bonardi & Keim (2005) propose in their paper that a possible reaction on a widely salient issue is that of self-regulation. When a firm would limit its operations regarding the issue, than some demands of interest groups could be met (Bonardi & Keim, 2005:572). However, NAM wasn’t responsible for the demand side, as it produced what was asked by the market. Furthermore, these demand-side tasks were handled by the company Gasunie. As NAM produced what was asked by the market, and limiting production would mean gas should be imported, unilaterally deciding to limit production was not an option for NAM. Therefore, the tactic of self-regulation, suggested by Bonardi & Keim (2005) regarding a widely salient issue is sometimes not a realistic option for firms.
Proposition 3: Self-regulation may not be a possibility for firms to deal with widely salient issues.
40 When all contextual conditions are considered, providing the political decision makers with studies and lobbying seems to be the most successful tactics NAM could adopt when the issue became widely salient. As showed, public pressure did add to the political process, but it was not the definitive factor. Fact/science arguments are often decisive in health and environmental issues (Vining et al., 2005: 162). Indeed, economic and security issues where more profound, and these were issues that were of interest to regional and national politicians more than to the general public or activist groups. NAM provided information with different arguments that can be classified as fact/science arguments, efficiency arguments and equity arguments (Vining et al., 2005, 162-164). The providing of ‘factual and scientific’ data was done with reports on the effects and risks of their operations. Efficiency arguments were made by arguing that limiting production would only cause for a small reduction in earthquake risk, which perhaps wouldn’t outweigh the financial consequences of such a decision. Finally, an equity argument can be identified during the negotiations on the investments that would be done in the area, where NAM negotiated on governmental compensation in the form of tax relieve for the financial consequences it would endure. Also, due to the high level of insecurity, different views on the risk of gas production, and the effects of limiting these operations existed. By providing the government with studies and using the tactic of lobbying, NAM was able to create a better bargaining position, which led to a better outcome of the minister’s decision for NAM than when they wouldn’t have engaged in such activities.
41
Proposition 4: In conditions of wide issue saliency and shared interests between a firm and the government , the information strategy is a successful strategy for the firm to adopt.
NAM tried to manage the inhabitants of the production area by improving their damage claim procedures, visiting villages and promoting their operations. These were activities not opposing public opinion, as that could have negative outcomes (Bonardi & Keim, 2005), and thus seem as beneficial activities to target public opinion. This study did however not examine if, and in what way these activities had a positive influence on the attitude of the public towards NAM, as that would require a quantitative study. Activist groups were partly satisfied by their increased influence in the decision making process through the creation of a dialogue table, although they stated that in their view the measures of Minister Kamp weren’t completely satisfying. NAM CEO joined the dialogue table, however the firm’s participation was not proposed by NAM itself, but it was the initiative of the province of Groningen. From a public relations perspective NAM could have benefitted if it had initiated such deliberation itself. At the time there was awareness within NAM on the possible substantial effects of the issue, which had already reached the political agenda. NAM therefore had its main focus on targeting the government directly, instead of the indirect strategy of constituency building. Due to the limited efforts of NAM as regards constituency building tactics, the evidence were not sufficiently to develop propositions on the successfulness of constituency building activities in both a period of narrow issue saliency as wide issue saliency.
42 Since NAM didn’t adopt political strategies during the period of narrow issue saliency, this study couldn’t develop propositions on the successfulness of active political strategies during narrow issue saliency. Since NAM did actively engage in political strategies when the issue became widely salient, this study allowed examining the successfulness of certain political strategies during a period of wide issue saliency. For this case a number of political strategies could be distinguished that are more successful than others, and these outcomes give insight in the way a firm should tackle a widely salient issue.
6. Conclusions
This study has investigated the successfulness of political strategies adopted by firms under narrow and wide issue saliency. The results emerged from the case of NAM and the issue of environmental risks related to gas production allowed to develop propositions on the inability of firms’ to prevent an issue from becoming widely salient, and which political strategies a firm should or should not adopt under narrow and wide issue saliency.
Yet, the generalizability of this study is limited because the contextual conditions are exceptional. Indeed, while Vining et al. (2005:162) point out that most issues that firms actively try to influence through a variety of political strategies, are issues that have “long latencies” and therefore a direct relationship between the operations of a firm and the concerning issue is often difficult to prove. In NAM’s case this uncertainty did not apply. Indeed, the fact that earthquakes were the effect of the gas production in the area was a proven fact, so that creating variance in experts’ opinions (Bonardi & Keim, 2005) on this point was not possible. However, since there nevertheless were uncertainties concerning
43 earthquake risks in terms of the amount of future earthquakes, possible maximum magnitudes and the effects of production limits, and the issue developed into a national issue over a longer period of time, NAM could pursue a number of different political strategies to influence the decision making process of the national government. This enabled to develop several propositions regarding political strategies during different levels of issue salience. Also this study showed that the proposed tactic of self-regulation may not always be possible for a firm. Excluding such a possibility, extant research does not provide an answer regarding which political strategy a firm should adopt when dealing with a widely salient issue.
With this study, insight could be given in the (un)successfulness of both passive and active political strategies under different levels of issue saliency. Being research on the relation between political strategies and issue saliency still in its infancy, several avenues for future research are present. In particular, future research could aim investigating more in-depth the successfulness of a constituency building strategy under conditions of wide issue salience. Also, the successfulness of political strategies when dealing with issues that will possibly become of interest to a large segment of a population would deserve further investigation, as the late awareness of NAM on the changing level of issue salience caused for a delayed response from the firm. Therefore, cases should be selected that adopted political strategies in periods of both narrow and wide issue saliency. Furthermore, more research is required regarding the aspect of what the best strategic decision would be for a firm when deciding on whom to target: constituents, the government or both. This case showed that the issue of earthquake risks caused by gas production didn’t primarily reached
44 the political agenda because of public pressure by activist groups, who de facto were just organized inhabitants of the area. It is true that the issue became widely salient and that this caused for political pressure, but the actions of governmental actors such as minister Kamp, the Provincial Executive of Groningen and van der Berg weren’t directly induced by the public pressure, but by studies and advices.
In future research focus should also lie on cases where the effects of operations on the environment are more latent or difficult to see, so that the opinions of public, reporters and experts could be influenced more by a firm’s efforts. There is also a need for quantitative studies on the successfulness of CPA during changing levels of issue saliency, so that statistical data can be obtained on the strategic responses of firms in terms of proactive political strategies. This would enable to develop statistical generalizations on the successfulness of different active political strategies, complementing this study.
Finally, as regards managerial implications, this case showed that a late awareness within a firm on a potential increase in issue saliency may cause a tardive response of a firm in the form of CPA, targeting government and/or constituents. Furthermore, this case showed that a firm should adapt its political strategies to the level of issue saliency as the success of a political strategy depends on the way a firm responds to the level of issue saliency. Therefore, a firm should consider an active political strategy if issue saliency levels may change, focusing on an information strategy when an issue reached the national political agenda.
