Unexplored aspects of the social licence for SMEs

Purpose – This paper aims to examine social licence in the context of small and medium-sized enterprises (SMEs). Social and economic actors can assist in protecting the environment by granting firms a social licence. The social licence is regarded as a regulatory trigger, which some claim can improve organisational practices and possibly induce beyond compliance behaviour. Design/methodology/approach – The paper uses data from interviews with the owners and managers of 110 manufacturing SMEs. Findings – Social licence pressures are generally weak, while traditional regulation remains essential for encouraging and sustaining environmental activity. That said, the data show important differences across firms, for some SMEs are influenced by and responsive to social licence pressures. Typically, these pressures derive from stakeholders who pursue a relatively narrow self-interest (rather than public interest) mandate, and focus on particular issues rather than broader objectives of environmental responsibility. When responding to pressures, SMEs are likely to take specific and focused actions that address specific stakeholder concerns. Research limitations/implications – Fresh insights are provided into the social licence and smaller firms. Contrary to previous views, there are circumstances where the social licence provides a limited and tailored regulatory tool for initiating change, and it typically leads to firms making alterations to business practices that tend to be low-cost and easy to implement. The social licence can provide a consensual micro-social contract and limited public interest service, and, subject to supporting circumstances, it may be extendable to other types of smaller firms. Social implications – The paper presents fresh insights into the relationship between SMEs and social and economic stakeholders. Originality/value – The paper provides new insights into how relevant stakeholders can influence the environmental behaviour of small firms.