Corporate social responsibility (CSR) has a powerful potential to make positive contributions to addressing the needs of disadvantaged communities in developing countries. On the other hand, there are ways in which CSR could, whether by mistake or design, damage the same communities, politically, socially and economically. This paper presents evidence that demonstrates that although there is a good business case for Shell to contribute to poverty alleviation in the Niger Delta, Nigeria, there is also a danger that in the long term Shell could effectively be leading the pace of, and directing the paths to, socio-economic development in the region with little or no contribution from the Nigerian government. The paper concludes that lack of national macro-economic planning and management, backed by equitable resource allocation, and an enabling environment, have significant implications for the overall performance of CSR initiatives by multinational corporations (MNCs) in developing countries. In other words, if the macro-economy is under-performing due to government failure, there is a likelihood that the contributions of MNCs to poverty alleviation could fail to achieve the desired outcomes. Good governance in all its dimensions is therefore an important component of the CSR agenda. Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment.