Do firms seek social license to operate when stakeholders are poor? Evidence from Africa

Abstract

Purpose

The purpose of this paper is to test for the salience of social licence to operate in the context of a very poor community. The idea of social license to operate is closely linked to ideas of stakeholder power, legitimacy and urgency (Mitchell et al., 1997). But what if a community is impoverished, and lacks the tools and privileges to effect change? Do the stakeholders believe they have influence over extension of the social license to operate? Does the employer listen to them? To examine this issue, survey data was gathered from 12,000 stakeholders working in a poor township in South Africa. The township is located near a major South African city in an employment market dominated by a single heavy industry. Responders perceived their welfare to be of importance to the employer and that they had a role in extension of the social license to operate.

Design/methodology/approach

A survey of 12,000 employees working in an impoverished township near a large South African city.

Findings

Despite being impoverished and lacking the tools and privileges to effect change that are available in wealthier communities, responders perceived some influence over extension of social license to operate.

Research limitations/implications

While responders expressed clear sentiments, their actual power to extend or withhold social license to operate is unclear, and the study did not test for this.

Practical implications

The practical implication is that firms should be wary of assuming that just because a stakeholder group is impoverished, it is unaware of its role and power as a stakeholder.

Social implications

The more important implication is that under conditions of poverty, responders expressed a clear desire to see impediments to work removed, rather than a desire for handouts.

Originality/value

The authors doubt there has ever been a study of this kind with this large a sample, in conditions of such extreme poverty.

Citation

McIntyre, M.L., Murphy, S.A. and Tetrault Sirsly, C.-A. (2015), "Do firms seek social license to operate when stakeholders are poor? Evidence from Africa", Corporate Governance, Vol. 15 No. 3, pp. 306-314. https://doi.org/10.1108/CG-01-2014-0011