Social protest action, stakeholder management, and risk : managing the impact of service delivery protests in South Africa

Abstract

Stakeholder management is an important method for reducing business risk. Recent decades have seen the growth of a new type of stakeholder: social protest stakeholders, individuals engaging in protest action which is directed at other unrelated parties, often the government. However, the actions of social protest stakeholders may negatively affect companies located nearby. This stakeholder category has not received any formal attention in the literature, and this article addresses the knowledge gap by exploring the effects of community-driven protest action in South Africa and the strategies that firms adopt to mitigate the negative consequences of such protests. A multiple case study analysis was used to describe this type of stakeholder group and the management of the consequences of social protest action. Eight manufacturing companies in the Gauteng province participated in the study, the companies varied in size and industry. Among the key findings are that companies need to be highly adaptable if they are to mitigate the impact of protest action. We make practical suggestions about how companies may manage these risks, including the recommendation that companies engage more directly with social protestors to manage risks. The study makes an important contribution to the literature by identifying an additional key category of stakeholder and proposing a risk management approach to avert or minimize loss and damage.