Licence revoked?

Despite – or because – of their ubiquity, even digital market giants such as Facebook, Google and Amazon run the risk of losing their social licence.

The social licence is not simply the overall organisational legitimacy, but features a local character in that it builds on locally rooted values and norms. This local character might induce many to think that digital markets are an exception; that digital markets are for global companies and once they know their business and have reached a critical mass of users, social issues are not a top priority. However, such a belief is dangerous and not to consider stakeholder interests as a relevant element of corporate strategy is poor advice. In fact, social licence can be just as relevant in digital markets. What’s more, a strong discrepancy often exists between the global digital markets served and the local nature of values and norms that determine the social licence. This discrepancy can lead to a dangerous strategic blind spot. However, it would be wrong to conclude that, once digital market players identify the relevant local values and norms, they will also easily find the right strategy to gain and maintain their social licence.

The local character of values and norms can at times require the consideration of different strategic options and imply different topics in the conversation with stakeholders. In digital markets, where the company acts and is scrutinised globally, this can pose a challenge for even the most dominant companies. Depending on the product or service that you offer, one or more of the following three topics is probably among the most relevant for your stakeholders and, therefore, your business: (1) privacy and data security, (2) your corporate social responsibility track record, and (3) freedom of speech. The following three cases illustrate how these topics can affect firms’ social licence in different digital markets.

Piet Hausberg

Professor Piet Hausberg holds the chair for Technology and Innovation Management at Osnabrück University. Previously, he worked as a post-doctoral researcher as the chair of management and digital markets, University of Hamburg, having received his PhD from LUISS Guido Carli University, Rome. Piet’s research focuses on R&D management and open innovation, particularly in digital markets.

Marc Suess

Marc Suess works as creative director and brand strategist for a variety of companies, agencies and start-ups from different industries. With nearly 10 years’ experience in design and advertising, he now specialises in holistic brand-communication and product- and service development.