Multinational companies’ social license to operate in Sub-Saharan Africa

Abstract

Sub-Saharan Africa has been the central attraction to foreign direct investment (FDI), largely in the form of multinational companies. This growth has highlighted the extent to which multinationals gain a social license to operate; the ongoing acceptance of an organisation’s operations by society. The purpose of this research was to explore how multinational companies operating in Sub-Saharan Africa obtain a Social License to Operate (SLO), how they measure it, and how they manage key stakeholders to obtain it. A multiple-case study method was used to analyse the application of the SLO concept for multinational companies operating in the Sub-Saharan Africa region. This entailed conducting 13 in-depth semi-structured interviews with managers from four case companies who are responsible for setting and/or driving the social performance and stakeholder engagement strategy for the organisations. The study found that an understanding of stakeholder expectations is a key input to gaining an SLO and that targeted goals are required to ensure that appropriate efforts are directed into acquiring it. Furthermore, it was found that formal and informal tools can be used to measure the SLO. Finally, the role of key stakeholders was explored and it was found that the support of the global head office was crucial to the SLO, that government partnerships and the adherence to regulation are a dependable way for an organisation to gain it and lastly, the role of the employee as a licensor and a facilitator of the SLO was explored. The study contributes to the body of knowledge on the social license to operate for multinationals operating in developing countries. Thus, a framework is presented to support managers of multinationals in gaining their social licenses.