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Published: February 26, 2013
 / Spring 2013 / Issue 70

 
 

When Companies Become Social Activists

Joining boycotts brings tactical and long-term benefits.

by Matt Palmquist

Title: If You Can’t Beat Them, Join Them: Corporate Sponsorship of Social Movement Boycotts 
Author: Mary-Hunter McDonnell (Northwestern University)
Publisher: Social Science Research Network Working Paper Series
Date Published: August  2012

In 2004, Nordstrom, H&M, and other prominent retailers joined People for the Ethical Treatment of Animals (PETA) in a boycott over shearing practices in the Australian wool industry. In 2008, Walmart partnered with activists and cotton importers to protest Uzbekistan’s use of child laborers. And in 2009, Nike and Harley-Davidson joined others to boycott leather products from deforested Amazon regions.

The effects of firms collaborating with social movements to oppose the practices of other companies, industries, or countries have received little attention from researchers. Aiming to fill the gap, this paper finds that most companies that have partnered with activists have done so out of necessity as much as goodwill.

But companies that banded together with activists tended to continue their alliances after the boycott, the analysis showed. And that’s a smart move, the author suggests, because by sponsoring boycotts, firms can turn potential adversaries into partners and transform vulnerabilities into a strategic advantage.

“Whereas the tactic may be initially employed instrumentally—as a way to curb the adverse consequences of interactions with contentious stakeholders—organizations that sponsor activist campaigns may garner positive experiences and build cooperative capabilities” that change their culture and leadership style, the author writes.

The study analyzed 300 companies from the Fortune 500 rankings between 1993 and 2007. These firms were involved in 210 boycotts, of which 47 ended in concessions from those being boycotted. Combining several databases, the author examined articles and press releases and also collected data on firms’ reputations, their financial performance, and how the boycotts were resolved.

The analysis showed that firms chose to join with activists for two main reasons: because there were clear signs their company’s reputation was being harmed by the conflict, and because their market performance dipped, coinciding with pressure from stakeholders.

In joining a boycott, and thus “acting as activists themselves,” companies turn the situation to their benefit, the study shows. Besides “forging alliances with otherwise hostile stakeholders,” companies attract positive media attention and “save face while…pressuring their peers to follow suit.” According to one former executive interviewed for the study, they even build goodwill that can buffer them from reputational crises down the road. 

Bottom Line: In an emerging strand of corporate social responsibility, businesses are joining activist organizations in boycotts that press for change. Companies tend to continue their partnership after the boycott, suggesting that such alliances have long-term value. 

 
 
 
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