Australian National University · FACULTY OF MANAGEMENT

MGMT3102 Chap.5 Trust, Procedural Fairness and Social Licence

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Chapter 5 of 13 · MGMT3102

Trust, Procedural Fairness and Social Licence

A social licence to operate is the continuing acceptance and approval of an operation by local communities and other stakeholders who can affect its profitability. This chapter follows Moffat and Zhang's study of an Australian coal seam gas region, which tested what builds that acceptance.

Their model shows contact quality and procedural fairness building trust, impacts on infrastructure eroding it, and trust driving acceptance, while the number of contacts made little difference.

The chapter turns those results into exam tools.

It explains what procedural fairness requires when decisions feel already settled, why spending money does not buy acceptance, and how to tell which kind of trust, in integrity or in competence, a firm has lost. A counter-example shows why doubling information sessions is unlikely to win back a community.

In this chapter

What this chapter covers

  • 01

    Social licence to operate as ongoing acceptance

  • 02

    Moffat and Zhang's trust pathway

  • 03

    Contact quality versus contact quantity

  • 04

    Procedural fairness and feeling heard

  • 05

    Infrastructure impacts acting through trust

  • 06

    Why spending does not buy acceptance

Worked example · free

Rebuilding acceptance for a quarry expansion

Q [5 marks]. A quarry company has approval to expand. It already funds a local sports ground and has doubled its newsletter, yet neighbours' acceptance keeps falling after blasting schedules were changed without notice. Use the trust pathway to explain the decline and propose a remedy. This mark allocation is AskSia's own practice weighting, not an official University mark allocation.
Which paths carried weight in Study 1.Which paths carried weight in Study 1. Line thickness is drawn in proportion to each standardised path: procedural fairness and contact quality raised trust, infrastructure impact lowered it, contact quantity had no significant effect, and trust strongly predicted acceptance.−.16Infrastructure impactn.s.Contact quantity.22Contact quality.59Procedural fairness.76TrustAcceptance
Which paths carried weight in Study 1. Line thickness is drawn in proportion to each standardised path: procedural fairness and contact quality raised trust, infrastructure impact lowered it, contact quantity had no significant effect, and trust strongly predicted acceptance.
  • +1Name the model. Moffat and Zhang: contact quality and procedural fairness build trust, and trust drives acceptance.
  • +1Explain the decline. Changing schedules without notice signals an unfair process and lowers trust, so acceptance falls.
  • +1Explain why spending fails. Sports funding and more newsletters raise goodwill or contact frequency, which the study found does not significantly build trust.
  • +2Remedy. Give neighbours advance notice and a say in blasting times, and report back on how their input changed the schedule.
Acceptance fell because an unfair process damaged trust; the remedy is a fairer process, not more spending or more newsletters.
Sia tip — State which path you are trying to move, fairness, contact quality or impact, before recommending anything.
Glossary

Key terms

Contact quality
How positive and respectful people find their interactions with a company, which Moffat and Zhang found raised trust.
Contact quantity
How often people interact with a company, which did not significantly predict trust in Moffat and Zhang's study.
Integrity-based trust
Confidence that an organisation will act honestly and keep its word.
Competence-based trust
Confidence that an organisation has the capability to do what it says it will do.
FAQ

Trust, Procedural Fairness and Social Licence FAQ

What builds a social licence to operate?

In Moffat and Zhang's study, trust was the key. Residents who felt the company's procedures were fair and whose contact with it was positive trusted it more, and higher trust predicted acceptance and approval. Impacts on local infrastructure lowered trust, and the sheer number of contacts made no significant difference.

Why doesn't community investment guarantee acceptance?

Money can create goodwill with some groups, but acceptance in the study flowed through trust, and trust depended mainly on fair procedures and good-quality contact. A company that funds projects while excluding people from decisions that affect them can still lose support, as the oil executive quoted at the start of the paper admitted.

What does procedural fairness mean in practice?

It means people feel decision makers treat them respectfully and give them a real say before outcomes are fixed. Consultation held after the key choices are made offers information rather than voice. A fair process explains how input was used and can win acceptance even from people who disagree with the decision.

How large were the samples in the study?

Study 1 surveyed 123 local residents and Study 2, conducted a year later in the same region, surveyed 142. The first model explained 68% of the variance in acceptance, and the second replicated the main pattern, with procedural fairness and contact quality the strongest predictors of trust.

What kinds of trust can a company lose?

Moffat and Zhang distinguish trust in a company's integrity, meaning confidence that it will be honest and keep its word, from trust in its competence, meaning confidence that it can do what it says. The repair differs: an honest but incompetent operator needs capability, while a capable but evasive one needs openness.

Study strategy

Exam move

Memorise the pathway as one line with its signs: fairness and contact quality raise trust, impacts lower it, contact quantity does nothing significant, and trust drives acceptance. Then practise diagnosing three invented responses to community opposition and labelling which path each one moves. Keep the two sample sizes and the 68% figure for evidence sentences.

Pair each recommendation you write with the path it is meant to move.

Working through Trust, Procedural Fairness and Social Licence in MGMT3102? Sia is AskSia’s AI Management tutor — ask any MGMT3102 Trust, Procedural Fairness and Social Licence question and get a clear, step-by-step explanation grounded in how MGMT3102 is taught and assessed. Read this chapter free, then take your hardest questions to Sia.

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