Many interesting phenomena have been observed regarding the mechanism of adsorbate interactions with MgO and Li-doped MgO. This investigation seeks theoretical explanations for several of these phenomena using ab initio methods and the natural bond orbital approach with H-2 as a probe molecule on small MgO and Li/MgO clusters. We find that electrostatic effects largely determine the preference of H-2 chemidissociation at low-coordinated sites and account for the positive cooperativity calculated for multiple dissociation events at neighboring surface sites. We also find that charge transfer and polarization determine the accessibility of a particular dissociation channel on MgO and Li/MgO. The H-2 probe molecule acts simultaneously as an electron acceptor and donor along those pathways having low activation barriers. Li-doping enhances the catalytic activity of MgO by creating O- centers that strengthen donor-acceptor interactions with H-2.