The process of constructing and maintaining a social licence to operate in a developing market

Abstract

The aim of this thesis is to demonstrate how a subsidiary of a multi-national corporation (MNC) achieved a social licence, in a Sub-Saharan host country undergoing agrarian transformation. Several foreign companies lost their land to communities in the wake of land conflicts between the legal owners and surrounding communities. However, this is a case of one of a few big landowners that have survived and continued to operate, without suffering substantial vandalism from communities. The study argues this to be an instrumental case of achieving and maintaining a social licence in a context characterised by heighted resource nationalism sentiments. Extant literature acknowledges that communities’ expectations are rising, rendering a legal licence insufficient. Emphasis is on the need for firms reliant on finite natural resources, such as land, to seek a social licence from communities. Yet, the processes through which such a licence could be achieved and maintained are little understood. The social licence is conceptually and theoretically underdeveloped. Anchoring on legitimacy theory, this study looks across two literatures on social licence and corporate community engagement. It empirically demonstrates how and under what conditions corporate community engagement processes deliver phases of a social licence. An embedded case study is utilised to capture processes from the perspective of both the firm and the community. The study advances theory of social licence by exploring the processes of an instrumental firm in an understudied but critical agriculture industry. The study identified transactional, transitional and transformational engagement processes, as essential in building legitimacy and trust which are the basis of dynamic phases of social licence. The researcher proposes three new constructs: context specific community expectations, engagement legitimacy, and corporate community visibility, to advance scholarship on social licencing processes. The study distinguishes firm legitimacy from engagement legitimacy. This paves way for future studies to further develop these concepts in social licence process research. Managers in agriculture and other extractive firms will use the theory built from this study to understand how they can achieve social licence at various levels, thereby mitigating the high social risk associated with losing a social licence.