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Shuna Ho, Rowe School of Business

Non-market strategies, social license, and legal license: A necessary condition analysis

Corporate political activity (CPA) and corporate social responsibility (CSR) are two types of non-market strategy for multinational corporations trying to attain legal license and social license, respectively, the latter being 鈥渢he acceptance or approval by local鈥攊f not indigenous鈥攃ommunities and stakeholders of a business enterprise鈥檚 operations or projects in a certain area鈥� (Demuijnck & Fasterling, 2016: 675). On the one hand, as complementarity between CPA and CSR is largely unexplored in the current literature, it is unclear whether the existence of CPA would challenge the attainment of social license through engaging in CSR. Yet, some scholars feel that CPA is antithetical to social license because these activities serve self-interests rather than public interests.

On the other hand, whether or not legal licensors receive CPA, they must take social license into account to be accountable to communities. While regulation is the lowest ethical standard, communities may deem a legal license necessary prior to granting social license. The interaction between legal and social license is seemingly a chicken-and-egg problem. This research seeks to uncover the conditions that influence the attainment of social and legal license under the interplay among corporations, regulators and communities. Empirically, it uses big data and natural language-processing techniques, such as sentiment and emotion analysis, to operationalize social license. It then employs necessary condition analysis to determine whether the absence of CPA is necessary to attain social license and whether social license and a legal license are necessary or sufficient conditions for one another.

Demuijnck, G. & Fasterling, B. (2016). The social license to operate. Journal of Business Ethics, 136 (4): 675-685.