SME Annual Meeting

Feb. 19 - 22, 2012, Seattle, WA

Preprint 12-037
MINING AND COMMUNITY DEVELOPMENT: FROM RETHORIC TO PRACTICE
E. Sirolli, Sirolli Inst., Sacramento, CA
F. Sirolli, Sirolli Inst., Rome, Italy

Aside from public ethical pressures to embrace CRS, mining

companies are beginning to invest in sustainable community programs
because they recognize their financial benefits (Jenkins & Obara,
2006). In the past, traditional economists argued that investing in CSR
caused competitive disadvantage with direct competitors (Ioannou &
Serafeim, 2010). New evidence now supports the opposite: CSR is
strongly linked to financial performance (Schreck, 2011). This may be
caused by different factors: stakeholders are increasingly influenced by
organizational ethical behaviors and there can be greater investment if
CSR programs are in place (Frynas, 2005); mining employees feel
positive about their company that adopt CSR initiatives, which affects
motivation and efficiency; while having sustainable programs in place
can be used for PR purposes to improve external perception and good
reputation (Jenkins & Obara, 2006).

ABSTRACT
In recent times, with rare exceptions, most economically viable
ore discoveries have been large, low-grade and located in remote
parts of the world. Mining companies have often shown to be incapable
of mitigating their social and economic impact on local communities.
Sustainable development and relations can be achieved by
implementing bottom-up methodologies to the top-down tools already
in use by mining companies. In order to magnify the importance of
enterprise facilitation as a primary method for community development,
data from 25 years of community based work around the world was
used. Results highlight the need for a grassroots approach to local
economic and community development, which focuses on the creation
of a parallel economy in communities. Using solely top-down
methodologies for developing community relations is shown to be a
limited resource for mining companies. There are fundamentally two
dangers for mining companies: alienating the local population, resulting
in militancy and lengthy legal battles to obtain a license to operate;
and, being accountable for building social and economic infrastructure
that are not the companys responsibility.

If CSR benefits are beginning to be understood and invested in,

its practical effectiveness is shown to be limited. The International
Council of Mining published a statement that summarizes the reasons
why mining companies are failing to implement effective CSR
programs into local communities:
Conventionally, mining companies have wanted to take
immediate measures to alleviate poverty they observed in
the neighborhoods of their mining projects. Typically this has
been by building schools, clinics, or hospitals and by
sponsoring external health and education service providers
to create new programs. Often these efforts, although
appreciated as generous gifts to local communities, have not
lasted beyond the life of the mine, and sometimes not even
beyond the tenure of the particular company staff that
instigated the projects.(ICMM, 2005; pg. 8)

INTRODUCTION
This article examines Enterprise Facilitation as an effective
Corporate Social Responsibility (CSR) initiative. In this study, we
identify current issues that mining companies face when trying to open
a new site in rural communities and the reasons why conventional
CSR initiatives do networks. We provide descriptive data of qualitative
evidence of two EF implementations: 1) Wallowa County Oregon,
USA, 2) Cobar Shire, New South Wales, Australia; whose missions
were to increase local entrepreneurial activity and sustainable
development.

The reasons why these programs fail are different: the local
community does not implement it or manage it; they can be accessed
only by the local elites and not by the poorer members; the programs
require knowledge and technology not available at the local level and
can only be maintained by keeping an unhealthy dependency
relationship with the mine (ICMM, 2005).

CSR Current Issues

Over the past two decades, most ore discoveries have been
located in isolated and remote parts of the world. The mining industry,
historically, has implemented its operations in a devil may care
attitude, entering those areas aggressively and causing major
devastation without social legitimacy (Jenkins & Obara, 2008). The
outcomes are often negative in economic, social and environmental
terms which lead mining companies to be considered personae non
grataeby local communities. Both academia and the business world
recognize the issue; mining companies understand the need to move
from their conventional ways of work to contribute to the social and
environmental sustainability in which they operate (Dashwood, 2007).
Mining executives are shifting dramatically their way of thinking toward
Corporate Social Responsibility (CSR) not only because they want to
be ethically sound, but also because there are financial benefits for the
company (Esteves & Barclay, 2011).

ENTERPRISE FACILITATION
Enterprise Facilitation (EF) is defined as areplicable, costeffective, person-centered approach to economic development,
founded on two fundamental ideas: 1) Human nature is intrinsically
good and the fulfillment of our talents, through work, improves our lives
and the communities in which we live; 2) Development is indigenous; it
is based upon elements that are already present within the community
(Sirolli, 2003). The goal of EF is to help individuals and communities
around the world to achieve economic success through their
entrepreneurial dreams. As the name of the method implies, the
process is based on facilitation: the role of EF is to act as a net,
extending throughout the whole community, waiting for the individual
with an entrepreneurial idea to enter and seek support in developing a
passion into a business reality. The facilitation process is coordinated
by an enterprise facilitator, who will look after the client for free and
confidentially (Sirolli, 2003; Whitman, 2011).

The importance for mining companies to have in place CSR

sustainable-base initiatives has been outlined by different authors in
social, economic and environmental terms. For example, Rae and
Rouse (2001) refer to the poor opinion the public has of the industry;
the public is influenced more by the environmental impact than by
product quality and pricing. A research by SRI Compass (2002) looked
at the increased focus financial groups give to the mining sector from
both risk management and social responsibility perspectives. The
study highlighted the unusual trend to screen out of Socially
Responsible Investing mining companies funds altogether.

EF is based on several psychological and economic principles.

Abraham Maslows Hierarchy of Needs theory is at the foundations of
Enterprise Facilitation: individuals who have their basic needs satisfied

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SME Annual Meeting

Feb. 19 - 22, 2012, Seattle, WA
are in search of ways to realize their full potentials (Maslow, 1943).
Individuals who engage in EF are those whose basic needs are
satisfied and are seeking self-actualization through the creative
process of entrepreneurship. The second principle is based on Carl
Rogers client-centered approach to psychological therapy: people can
find their own way to fulfill their passions; the facilitator should provide
non-judgmental support and create trust (Roger, 1961). Applied to
business, this is perhaps the sharpest point of difference from most of
the conventional programs. Almost all methodologies for economic
development are based on a distrust of the person. Goals must be set
because individualsare seen as incapable of choosing suitable aims.
They are generally seen as lazy, destructive and sinful, who need to be
guided and supervised throughout the path chosen for them (Whitman,
2011).

other areas of the state or country or to find mentors where

appropriate. The project is managed by a resource board made up of
local people who support the enterprise facilitator and offer assistance
to business people. Due to its wide range of skills and experience, the
resource board is an invaluable asset to people developing their
business. The board provides mentors, contacts and practical advice
to the projects clients.
RESULTS
Case Study 1: Outcomes
As of 2011, 723 clients have been involved with a local county EF
(415 women, 285 men and 23 non for profit organizations).
Table1. Clients divided by cities.
City
Enterprise
Joseph
Wallowa
Lostine
Immaha
Troy/Flora/Promise
Minam
Others

An economic founding principle of EF based on Ernst

Schumachers ideas (1973)is to not offer help to those who have not
asked for it. Service should be provided only to those who wish to
better themselves and only after having been invited to do so. The last
principle is that entrepreneurship cannot be predicted solely by a linear
business approach, but can develop through opportunity seeking and
unscheduled (Whitman, 2011).
The purpose of this study is to outline the efficacy of EF. We
demonstrate, though twenty-five years of successful projects around
the world and the case studies of a local community in Oregon and a
mining community in Australia, how sustainable economic
development can be achieved using this CSR methodology.

Clients
273
259
75
41
10
10
3
52

Table 2. Business Assistance generated over 10 years of activity.

Assistance
Clients
Idea Development
596
Marketing
212
Business Plan
241
General Operations
41
Exit Strategy
15
Research/Other
106

APPLYING EF: CASE STUDIES

Case Study 1: Wallowa County, Oregon, USA
Wallowa Countys economy (population of 7,226) is based mainly
on agriculture, lumber, ranching and tourism. The Forest Service is the
largest landlord in the county, owning 56% of the land. EF was
implemented in 2001 after local citizens researched a methodology
that could help entrepreneurs start up and keep their businesses open.
The first facilitator, Myron Kirkpatrick, held the role for six years.
Wallowa County Business Facilitation (WCBF) implemented the idea
that the success of small businesses generates vitality among the
whole community. The program facilitates business start-up, its
development and expansion. WCBF mission is: Supporting Wallowa
County citizens with a passion to transform their entrepreneurial dream
in reality(Wallowa County Business Facilitation, 2011).

Table 3.
2011).

Results obtained by WCBF since 2001(State of Oregon,

Results
Business Opened
Completed Acquisitions
Expansions
Non For Profit Projects Completed
New Directions or Operations Revised
Business Plan Development
Obtained Funds
Awaiting Ideas
Abandoned Ideas
Activities Shut
Activities Sold
Set Ups

WCBF objectives are: promoting local and innovative

entrepreneurship; helping business start-up; helping businesses to
grow and expand; assisting entrepreneurial dreams to come to life;
and, improving community capacity to be in touch with social and
economic changes.
Case Study 2: Cobar Shire, New South Wales, Australia
Cobar Shire is situated in the center of New South Wales at the
crossroads of the Barrier Highway and the Kidman Way and is well
connected to most of Australia's capital cities. With an area of 45,609
square kilometers, the Shire is almost the same size as the whole of
Tasmania. It is home to approximately 5,120 people. The Shire's
prosperity is built around the thriving mining copper, lead, silver, zinc,
gold and pastoral industries, which are strongly supported by a wide
range of attractions and activities that make it a major tourist
destination. Cobar Enterprise Facilitation Inc. is a community funded
non-profit organization that offers free, confidential business coaching
to anyone in the Cobar shire. The enterprise facilitation project was set
up in Cobar in 2007 to help establish, retain and expand small
business in the area with the aim of creating a sustainable business
future for Cobar. The project employs a full-time facilitator, available to
assist business people who are contemplating starting a new business
in the Cobar Shire or existing businesses looking to expand or change
direction. The enterprise facilitator works with the client to determine
their strengths and weaknesses in the areas of product development,
sales and marketing and financial management. The facilitator then
finds local people who are able to assist the client in areas in which
they lacks skills or experience. The enterprise facilitator is also able to
assist the business person to establish links with similar businesses in

100
20
25
6
37
79
28
2
43
4
4
62

The economic impact of WCBF was the creation of 107 new

employments (not in the agriculture industry), which represents 4.7%
of the employment rate in the county (State of Oregon Employment
Department, 2011). Every new employment in Wallowa County is
equal per capita to 418 new jobs in the city of Portland (Oregon State
Capital with 570,000 inhabitants). Overall, 107 new jobs in the Wallowa
County represent approximately 71,352 new employments in the city of
Portland.
Case Study 2: Outcomes
In the first twenty months of operation, the Enterprise Facilitation
program has achieved high results (summarized in Table 4) and was
nominated for the Regional Business Award (Awards Australia, 2011).
Overall, the positive results achieved in both case studies are
similar to those achieved in over 300 communities around the world
where EF was implemented. General data of EF programs are
described in the Conclusions section.

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Journal of South African Institute of Mining and Metallurgy. 96 (2):
67-90

Table 4. Results obtained by Cobar Shire EF Project since 2007

(Cobar Shire Council, 2011).
Results
Businesses Opened
18
Businesses Expanded
6
Businesses Retained
1
Job Created
62
Investment Generated
$150,000
Clients Assisted
73
Personal Contacts Made
467
Business Failures
0
Businesses Sold
2
CONCLUSIONS
A typical Enterprise Facilitation program assists in the creation of
50 new businesses and 150 new jobs over a five year period. In
addition to small business and related job creation, a typical Enterprise
Facilitation assists in the successful turnaround of at least five
businesses during a five year period, together with an average of 15
jobs.Research from the US Bureau ofLabor Statistics states that less
than50% of new businesses still exist after five years of operations
(Spletzer,et.al., 2004).

Cobar Shire Council. (2011). Business Groups. Last accessed

12/10/2011
on-line
at:
www.cobar.nsw.gov.au/economicdevelopment/business-groups#cobar-enterprise-faciltation

3.

Esteves, A. M., and Barclay, M-A., (2011). New Approaches to

Evaluating
the
Performance
of
Corporate-Community
Partnerships: A Case Study from the Mineral Sector. Journal of
Business Ethics, 103:189-202

4.

Dashwood, H., (2007). Towards Sustainable Mining: The

Corporate Role in the Construction of Global Standards. The
Multination Business Review, 15 (1): 47-65

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Epps, J.M. (1996). Environmental management in mining: an

international perspective of an increasing global industry. The

Frynas, J. G. (2005). The false developmental promise of

Corporate Social Responsibility: evidence from multinational oil
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8.

Ioannou, I., and Serafeim, G. (2010). The Impact of Corporate

Social Responsibility on Investment Recommendations. UK
Harvard Business School.

9.

Jenkins, H., and Obara, L. (2006). Corporate Social

Responsibility (CSR) in the mining industry the risk of
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www.crrconference.org/downloads/2006jenkinso ara.pdf

12. Rae, M., and Rouse, A. (2001). Mining Certification Evaluation

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Responsibility: New Evidence and Analysis. Journal of Business
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Passion,
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DERWALL.pdf
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REFERENCES

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11. Oregon State, Employment Department. (2011). Employment

Department Success Stories. Last accessed 12/10/2011 on-line
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The ICMM recognizes that knee-jerk infrastructure development

approach is unsustainable even though it is the easiest thing for mining
companies to do. Effective programs are those that shift away from a
paternalistic dependency to sustainable economic independency that
ensures future development of communities and their long-term
livelihood (Epps, 1996). CSR initiatives can be used as starting points
to obtain agreement with local communities, which allow companies to
operate. Mining projects planned together with locals can develop not
only a positive relationship but also an economically sustainable
community once the external support from the mining is withdrawn.The
ICMM, in its Toolkit (2005, Pg. 9), recommends that: The challenge is
to not only build the skills but also facilitate the growth of other
activities in parallel of mining. Mining companies, therefore, should
facilitate local entrepreneurship. By definition, facilitation is bottom-up
and responsive. Working with entrepreneurs in a community requires
the creation of a convivial social infrastructure that allows for free,
confidential, and competent service to them. Unless such social
infrastructure is in place, would-be entrepreneurs will shy away from
working outsiders or, even worse, they will seek help for the wrong
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Psychological Review, 50 (4), 370-396.

On the other hand, survival rates for newly created businesses

supported by Enterprise Facilitation programs have consistently been
above 80% after 5 years (Webb, 2001). This difference underlies and
supports the value proposition offered by the Enterprise Facilitation
model. Not only will the adoption of the approach create a different
economic and social environment, it will also ensure that the new
businesses will thrive over a longer period of time making the
investment worthwhile.

1.

6.

20. Webb, N., 2001. Enterprise Facilitation White Paper.Kansas,

USA. The Kansas Department of Commerce & Housing.
Community Development Division,
21. Whitman, J, R. (2011). Enterprise Facilitation: Local Economic
Development and the Challenge of Going Mainstream.
Unpublished Manuscript

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