The Social License to Operate and Social Contract Theory

The Social License to Operate, or ‘social license,’ is a recent concept of business ethics, emerging in the discussions around Corporate Social Responsibility (CSR). It is broadly defined as the ongoing public acceptance of a business’s impact on the local community or society at large. It is often stated that the social license is rooted in social contract theory of political philosophy. However, this link between the social license and social contract theory is little researched. Through a literature analysis of the field of modern business ethics, this thesis aims to investigate the conceptual links between the social license and the social contract. It identifies three main themes that are at the core of both concepts: legitimacy, consent, and trust. Further, the social license and the social contract are used as metaphors and models. This thesis reviews current attempts to apply social contract theory to the domain of business. It aims to clarify the relation between a potential ‘business covenant’ – i.e., an application of social contract theory to business – and the social license. The thesis develops a notion of the relation between the social license and the social contract applied to business, where a ‘business covenant’ is the normative basis for standards of good business practice and where the social license is the empirical validation of such standards. This thesis hopes to bring greater clarity to the discussion of the social license and the use of the social contract idea in business ethics and to thereby contribute to the academic discourse