Community Stakeholder Salience to the Forestry Resource Firm: A Property-Rights Game-Theoretic Analysis.

by Sprague, Peter Michael

Abstract (Summary)
In a world of increasing environmental awareness and activism, is it economically advantageous for a forestry resource firm to be proactive in the integration of community stakeholders desires into the business operations? To what degree, and in what form, does the firm include the local community as a stakeholder? What are the economic consequences to the firm from taking various stances in relationship to the community and the resulting allocation of forest resources to the firm? The objective of this research is to test the hypothesis that large industrial resource companies should decentralize more of the production process to the communities which they draw the resource from as a means of sustaining their profitability within a changing sociopolitical climate of community resource ownership. The Province of Saskatchewan and more specifically northwest Saskatchewan including the towns of Meadow Lake, Beauval, Green Lake, and north are the geographic focus of this study. This research examines the economic feasibility of decentralizing the Oriented Strand Board (OSB) feedstock manufacturing process to the remote communities where the primary resource is extracted. A game-theoretic approach is used to assess the long-run gain or cost of co-operating with the community and installing a remote stranding facility instead of hauling the unprocessed fiber to a centrally located Oriented Strand Board (OSB) plant. There are no technical reasons for lack of implementation of remote stranding facilities in North America. Current practices relate to the economics of centralization and to the ownership/control of the resource. This research shows that the major forestry firms long-term profitability could improve, or diminish less, with a remote stranding plant due to a stabilized wood-supply to the OSB plant. The installation of the remote strander reduces the communitys incentive to seeking alternative allocation, through judicial and/or legal means, for the wood fiber that it deems to be its property. Based on this research, the forestry resource firm needs to examine the ability of the community to process the regional wood fiber instead of the firm. The community development corporation can empower itself through the acquisition of the technical expertise and financial backing to process some of the wood fiber from the region. This would increase their bargaining credibility as a viable threat to the firm, and thus induce co-operation from the resource firm in pursuing community economic development. If they have the capabilities to follow through on alternative processing, the forestry firm should view the community as having a high salience to their long-term profitability.
Bibliographical Information:

Advisor:Gertler, Michael; Gillies, Jon A.; Hucq, Andre; Reed, Maureen

School:University of Saskatchewan

School Location:Canada - Saskatchewan

Source Type:Master's Thesis

Keywords:forestry co management property rights organizational behavior stakeholder community


Date of Publication:07/14/2004

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