Wharton management professor Witold Henisz has
been studying political and social risk management for 15 years,
focusing mainly on strategies of avoidance -- i.e., better
identification of risky places to do business, and then helping
companies minimize their exposure to them. Recently, he discovered a way
to distinguish the payoff in "engag[ing] with these risky environments.
What strategies did firms that decided to enter these markets follow?
Why did some succeed and others fail?"
The result is a research paper titled "Spinning Gold: The Financial Returns to External Stakeholder Engagement,"
by Henisz and Sinziana Dorobantu, a senior research fellow and lecturer
at Wharton, and Lite Nartey, an assistant professor at the University
of South Carolina.
The authors used data from 26 gold mines owned by 19 publicly traded
firms between 1993 and 2008. By coding more than 50,000 "stakeholder
events" found in media reports, Henisz and his colleagues developed an
index of the degree of stakeholder cooperation or conflict for these
mines.
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