Abstract
The seamless integration of national economies within the global order has increased the transnational movement of TNCs from all economic blocks. To date, it is widely accepted that no economy can prosper in isolation. Therefore, the regulatory focus has shifted towards ‘Social Licence to Operate’ (SLO). The majority of countries, utilising either soft or hard laws, ensure that the community’s preferences are considered in corporate policy—and decision-making. To achieve this, some countries impose positive responsibility on company directors, and others mandate spending of a percentage of corporate profit on the development of social infrastructure. This mandatory spending may be imposed on classes of corporations with specific net worth or financial turnover. The SLO has developed as the third facet of governance for TNCs by means of this formal arrangement. This governance arrangement empowers society to determine the extent, and types of social benefit TNCs need to extend to the community.
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Notes
- 1.
These economic blocks indicate groups of countries with similar national economy conditions.
- 2.
Issues like transfer pricing, taxation, etc.
- 3.
TNCs.
- 4.
When TNCs move funds (read as Capital) from one country to another country, the exit country stands to lose local liquidity, employment, and revenue (taxes), etc. On the other hand, during the TNCs’ period of operation the exit country maximizes profit through consumption of local recourses and benefits.
- 5.
Read as Transnational Corporations.
- 6.
This is a contentious problem regarding TNC operation and is further examined in the chapter discussing competition and taxation.
- 7.
This includes abusing a dominant position of market power.
- 8.
Since adoption, addendums were added in 1987 and 1995.
- 9.
Conducting business through associates, alliances, joint ventures, and supply chains.
- 10.
Natural and human resources.
- 11.
https://www.unglobalcompact.org/docs/about_the_gc/White_Paper_Principles_SDGs.pdf (last visited Jan 13, 2017).
- 12.
The principles were revised in 2006 based on experience of its operation and stakeholder inputs (see www.equator-principles.com).
- 13.
Developed guidelines for all subsidiaries and associates of TNCs.
- 14.
This act replaced the Indian Companies Act 1956.
- 15.
As Karl Polanyi advocated.
- 16.
Though there was initial resistance from different quarters.
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Dube, I. (2019). Transnational Corporations’ Social License to Operate—The Third Facet of Corporate Governance. In: Rahim, M. (eds) Code of Conduct on Transnational Corporations. CSR, Sustainability, Ethics & Governance. Springer, Cham. https://doi.org/10.1007/978-3-030-10816-8_6
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