Over the last two decades many of the world’s largest companies have been involved in scandals, misconduct and dubious ethics. Rather than relying on interventions by public authorities, the dominant governing rationality is informed by the belief that the market is able to balance social, environmental, and financial interests. However, the vast majority of companies that have been involved in ethical transgressions have survived – and have even thrived. Potential damage to the reputation of companies, or threats to their ‘social license to operate’, seems to have had a limited effect. There is therefore reason to believe that market forces are not adequate by themselves to correct corporate misbehaviour.
This chapter from the upcoming ‘Research Handbook on the Sociology of Organizations’ explores the reliance on market forces to correct corporate actions that are not aligned with the common good. It examines to what extent legitimacy theory adequately explains the dynamics around organizational legitimacy, and it proposes an expansion of legitimacy theory to increase its explanatory power: the use of social dominance theory and legitimizing myths expands (organizational) legitimacy as a theoretical construct. In explaining why antagonistic stakeholders continue to rely on market-based approaches, this research suggests that they have either bought into the hierarchy-enhancing myths, or they have not yet developed compelling hierarchy-attenuating myths to challenge the status quo. The chapter concludes with the suggestion that the ‘social license to operate’ and ‘corporate purpose’ are legitimizing myths that uphold the idea that the market can balance social, environmental, and financial interests.
3 thoughts on “The Myth of the Social License to Operate”
A very interesting concept. I am the new Executive Producer for 2SER’s Razor’s Edge, the station’s longest running current affairs.
I would like to interview you about this paper.
Thanks Annamarie – I’ll send you an email.