Managing Secondary Stakeholders: Lessons from the Monsanto Case Study

By Raman, S. Raghu | South Asian Journal of Management, October-December 2004 | Go to article overview

Managing Secondary Stakeholders: Lessons from the Monsanto Case Study


Raman, S. Raghu, South Asian Journal of Management


The booming agricultural biotechnology industry in developing countries has opened up tremendous opportunities for many multinational corporations. But the entry into this lucrative market has not been easy. The main reason has been the challenges posed by the key stakeholders like media, environmental groups and regulatory authorities. This article explores these challenges in the context of Monsanto's entry into the Indian agricultural biotechnology market.

INTRODUCTION

Agricultural biotechnology is fast emerging as one of the high-growth industries in Asian countries like China and India. China for example, has already commercialized four Genetically Modified (GM) crops and there are another 60 GM plants at various stages of development (Huang et al., 2002; The Economist, 2002). India recently gave permission for commercializing the genetically modified cottonseed, Bt Cotton. More importantly, the demand for crop protection technology is expected to grow faster in Asia than in other regions (Financial Times, 1999). Given such a potential, many agro-majors like Monsanto have already moved into these markets.

However, unlike other industries like say, FMCG or Financial Services, the entry into these markets has been relatively arduous. One principal reason for this difficulty has been the role of 'secondary stakeholders' (Clarkson, 1995) like regulatory authorities, media, and non-governmental organizations or environmental groups. Baron (1995), for example, suggests that the non-market environment, which he identifies as consisting of the "social, political and legal arrangements that structure the firm's interactions outside of, and in conjunction with, markets" (p.48), play a far important role for firms operating in biotechnology industry. He also notes that activists and interest groups have challenged agricultural biotechnology firms by organizing boycott of products, seeking media coverage to air their concerns and attempting to influence the views of consumers. Some of these challenges have been well-studied in the context of United States of America and EU markets (Haniotis, 2000; Hoban, 1998; Junaillojr., 2001; Kalaitzandonakes, 2000).

But how different are these issues in developing countries? What role do secondary stakeholders play in the commercialization of biotechnology products? These questions assume importance in the light of the fact that every major life science company has a presence in developing countries, especially in countries like India, China and Brazil (Byerlee and Fischer, 2001). The aim of this article is to explore these questions in the context of an emerging market, India. This article would use the introduction of Bt Cotton in India by Monsanto and its local partner as an example for highlighting some of the complexities involved in managing stakeholder expectations. This example is interesting and appropriate as it is the first transgenic product to be commercialized in India and it also highlights some of the inherent tensions and conflicts that occur when a multinational and its partner launch a biotechnology product in a developing country.

The article is structured in the following way. The first section reviews relevant literature on the concept of stakeholders. In particular this section focuses on certain definitional issues, the classification of stakeholders, and more importantly the role of secondary stakeholders in influencing the organization and other stakeholders in an industry like biotechnology. Based on this review a hypothesis has been generated with specific reference to secondary stakeholders in biotechnology industry. The second section would use the Monsanto case study to illustrate this hypothesis. The final part would discuss a few key issues that arise out of this analysis and would also look at areas for future research. The example is based on information from secondary sources like media reports and the World Wide Web. Relevant articles in major business dailies, magazines and journals, both national and international, were the main sources for the case study. …

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