Week 3: Organizations as targets of SMs

Impact of Social Movement Activities on Organization

Disruption of resources

Disruption of reputation

Future Financial uncertainty

Direct financial implications

activity can lead to financial losses in different ways

may impact external ratings

social movement protests led to negative stock price returns (King & Soule)

large effects on sales (Barley & Child)

overall firm profits decline after profits ( Luders)

stock returns targeted firms were c.1% lower between 1962-90

eg. MSCI-KLD 400 index rates social and environmental factors of firms to help investors make informed decisions

influence relationships with stakeholder (eg. government)

eg. Boycotts incentivise governments to give back political contributions received from organizations and stop relationship ie. cancel contracts (McDonnell & Werner)

Unintended impact

Reputation

unique evaluation of an organisations behaviour and quality of products/services. It sets an organization apart from others

organisations can build strong reputation by sending performance and quality signals to meet society's expectations

has consequence for financial performance, ppl might disengage from low reputation organizations

SMs prefer attacking Organizations with high reputation (Florida; Etzion)

  1. generates more media attention, enhances movements influence
  1. knock-on effefcts, other organisations feel threat and respond to SM positively out of fear getting targeted too

activists therefore ignore smaller firms and those with lower reputation all together

Organisations with high reputation for socially responsible activities, who then engage in reprehensible acts VERY likely to be attacked

accused of organisational hypocrisy (Vogel)

eg. Nike made itself very vulnerable bc it tried to brand itself as good corporate citizen, but faces detrimental labor conditions

interestingly , some adopt "strategic silence" regarding positive record of activities in order to not attract unwanted attention

Organizations can observe and learn ho SM attack

can learn to hide "bad" practices

strategically avoid markets/industries/locations

Organizational Responses to SM activities

Response continuum

responses placed along continuum from very aggressive and defensive to very accommodative and giving in

Prosocial claims

Symbolic Concessions

Cooptation/ Partnerships

Donations/ Philanthropy

Denial/ Ignore

Concrete Concession

Retaliation/ Repression

responce by policing, repressing, censoring against activists

ignore activists, deny culpability/ responsibility for charges

invite activist to partner or response to critics, sometimes to silence activists or learn and benefit from them

Firm issues statements and press releases, commitment to social action , Aim: distract from claims

institutes policies, procedures, positions meant to manage image, aim: show "active" without doing much

donates money to cause

concedes to demands by granting concessions

eg. polaroid responded to activism by firing a number of employees involved in organising it

eg. Unocal, energy company, attacked by Free Burma Movement in 90s. Unocal refused to divest from Buma despite threats

eg. Many organisations explicitly work with LGBTQIA+ groups.
Collaboration can be instrumental to get more LGBTQIA+ individuals to become costumers and supporters of the organisations
population with great deal of disposable income

eg. called for boycott of VW for emissions scandal, VW responded with high profile auction of a pink beetle to raise money for breast cancer

eg. issuing CSR reports or implementing comittees, to respond to SM

eg. Google donated 2.35$ mil to BLM after facing pressure

eg. universities terminated contract with clothing companies after anti-sweatshop activism OR firms adopted voluntary emissions controls

broader managerial responses

critic: too narrow as leader will often need to draw on different combinations of responses to deal with social movement pressure successfully. either at the same time or over time

4W Framework

brings many of individual responses together into broader strategies

2. Withdraw

  1. Wait

1. Wage a Fight

4. Work it out

opposing and defying demands

withdraw from dispute, pursue objectives in different context (or capitulation)

wait for dispute to shift/ go away. Not the same as ignoring... Waiting is concisely passing time

active engagement with stakeholders, ongoing process of dialogue, solutions mutually accepted

eg. lawsuits, support of political elites, intimidation, police, public opionion, potential allies

Mini Case: Freeport Indonesia

change internally, so not targeted anymore eg. stop production of set. OR physically moving to different place

Mini Case: Bioscience

Mini Case: Endesa

unstable strategy, matter can suddenly become urgent

active process seeking common ground, generation of new options, compromise or collaboration

Mini Case: Bloedel

Determinants of Organisational Responses

3 characteristics (& combos) of situation, influencing strategy pursued

Firm Power

Resource dependence

Dispute urgency

organisations depend on external actors & their resources, it may shape response to SM pressure -> especially when SM can influence actors

capacity to control behavior of others

Utilitarian power

Normative power

Coercive Power

threat of physical punishment (SM: working with courts, police = suppress social movement activities

control of material rewards & punishments (SM: offering financial benefits to activists or imposing costs on them)

persuasion, rest on ability to shape others opinions (SM: convincing activists to stop protests by highlighting 'expert' opinions)

power an organisation has influences partly how it responds to SM pressure

increase urgency

degree to which it feels need to resolve issue quickly

investors may pressure organization to address quickly. especially if it is preventing revenue-generating project

Seasonality may heighten urgency, bc limited time frame of oncome