The Case of the Bougainville Mine: Success and Failure in the Management of a Multinational Corporation

Abstract

ABSTRACTAlthough inquiry into the impact of contextual factors on the governance of multinational enterprises (MNEs) has increased, primary attention has centred on MNEs from developed countries, which operate in other industrialised economies. There has been relatively little research into organisations from developed nations involved in less developed countries (LDCs). As this dearth of inquiry is particularly evident in South Pacific economies, this paper examines the management of Bougainville Copper Limited (BCL), an Australian mining company that operated in Papua New Guinea (PNG) until it was violently expelled by local communities in 1990. While this study supports research claiming that MNE performance depends upon the alignment of firms' internal and external environments, it demonstrates that alignment becomes increasingly difficult as characteristics in the host setting deviate from those in the home country. More importantly, it reveals that MNEs cannot survive under extremely divergent home—host conditions despite management efforts to control environmental variables. It also establishes that MNEs should focus contextual congruency on the host society, not the host country as widely suggested in the literature.