Linking host community satisfaction to operational performance in the oil and gas industry

Abstract

Purpose: Motivated by the reported link between the management practices of the oil and gas industry in Nigeria and the continuous conflict situation in the Delta region of the country, this study is an original attempt to comprehensively describe the complex relationships between Quality Management Practices, Corporate Social Responsibility, National Culture, Host community Satisfaction, and Operational Performance in the context of the oil and gas industry. The major aim is first, to investigate the management factors that impact on the satisfaction of the host communities and secondly, identify the significance of host community satisfaction in the relationship between Quality Management Practices, Corporate Social Responsibility and Operational Performance in the industry. Methodology: With the use of a quantitative research approach, a conceptual framework, developed from literature and showing the hypothesised relationships was tested. A total of 221 responses were collected using a survey-based questionnaire. The respondents were management staff members of the oil and gas industry in Nigeria, which is the context of this study. The choice of the research context was informed by the uniqueness of the industry in Nigeria in terms of its operational peculiarities and in relation to the impact of the industry’s operational activities on the host communities. Data analysis was done using SPSS and Structural Equation Modelling techniques in AMOS computer software where the proposed conceptual framework was statistically tested. Findings: The result has revealed that host Community Satisfaction significantly mediates the effect of Quality Management Practices and Corporate Social Responsibilities on Operational Performance. Further, the result has shown that although Quality Management Practices impact on Community Satisfaction, however, this is achieved indirectly through the effectiveness of the Corporate Social Responsibility initiatives of the industry, involving actions such as: showing more transparency, greater focus on ethical behaviour, more seriousness with environmental protection issues and greater concern for community involvement and development. Furthermore, the findings show that National culture has a significant influence on the operations management practices in the industry in Nigeria, indicating the need for industry practitioners to utilise the principle of cultural-specificity in the development and implementation of operational systems in the industry. The major and original contribution to knowledge is the developed conceptual model, describing the relationships considered as critical success factors in the oil and gas industry.