Why Apple, Disney, IKEA and hundreds of other Western companies are abandoning Russia with barely a shrug
Based on research by Alessandro Piazza and Fabrizio Perretti
The Unexpected Way Company Behavior Guides Activists’ Choices
- Persistent activists can move mountains — or at least company locations.
- Companies that capitulate to protestors may encourage them to protest for more. Companies that win against protestors may catalyze them to join similar movements nearby.
- Winning or losing a protest showdown can have long-term effects on other controversies.
It’s been more than 100 years since Pavlov’s dog showed the world that behavior is often guided by forces we don’t comprehend.
The same is true of the interaction between companies and protestors, according to Rice Business professor Alessandro Piazza and Fabrizio Perretti of Bocconi University in Milan. In a recent study, the scholars show that when protestors fight to change a company’s policy, their future choices of where and how much to protest are shaped by the company’s response.
Moreover, the outcome may not be what either group has planned for. Companies that meet protestor demand often inadvertently spur the protestors to demonstrate further; conversely, companies that refuse to give in tend to propel protestors to redirect their energies toward related but different issues.
The researchers based their conclusions on a deep dive into the anti-nuclear movement of the 1970s and 1980s, and a close analysis of protests and company responses in specific locations.
During the time period studied, the researchers found, public sentiment toward nuclear energy changed from mild support to open hostility in the form of an organized protest movement. To quantify this movement’s impact on nuclear power plant construction, the researchers studied the aftermath of protestors’ local victories.
In Massachusetts, for example, the first nuclear power protest in 1974 persuaded Northeast Utilities to postpone, and then permanently cancel, its plant. This reaction, Piazza and Perretti found, catalyzed local protestors. In the years that followed, the region became one of the United States’ strongest bastions of anti-nuclear activism.
In order to quantify how company actions affected protests, the researchers first measured the number of U.S. protest events by geographic location from 1970 to 1995. They then compared this number to the number of nuclear facilities either completed or cancelled over a one-year time period within 100 miles of a given demonstration. They included controls to account for local economic and political differences upon local activism, and for any geographic bias of the newspaper sources used to identify protest events.
The patterns they found were intriguing. Proposing a new plant for construction boosted anti-nuclear protests by 18 percent in a 100-mile radius. Cancelling construction of a plant drove a 27 percent increase in anti-nuclear protests. And when a new nuclear plant was completed and connected to the grid, the researchers witnessed a 2.3 percent increase in the number of protests not directly aimed at nuclear power plants.
The reason for the increase in other protests when a company prevailed and built a power plant? The researchers hypothesize that each time a plant was completed, demoralized activists attached themselves to other movements.
These results raised a related question. Did company decisions on one type of controversy, such as a nuclear power plant, lead to greater support for related protest movements or for unrelated ones? The former, it turns out.
To measure this, the researchers again looked at protests within given regions and categorized them into anti-nuclear weapon protests, environmental protests, public policy protests, anti-war protests and protests against the proximity of a given plant to a specific property, that is, “not in my backyard” protests.
Nuclear power opponents, they found, were most likely to turn to adjacent issues such as protests against nuclear weapons. Protest activities, in other words, have a domino effect.
While most research tracks the effects of activism on companies, Piazza and Perretti’s study shows that the way companies act is also a critical event driver. Company choices can actually drive the evolution of activism, triggering activist mobilization in other causes.
The research represents a challenge to traditional explanations of activism, which usually assume that mobilization and protests are most effective early on then dwindle over time, regardless of the behavior of the organization.
Piazza and Perretti’s findings suggest a valuable lesson for companies, especially those operating in more than one location: Their decisions in one place may actually escalate activism elsewhere. Pacific Gas & Electric successfully acted on this insight in the 1980s. Working with the Sierra Club, the company swapped the cancellation of one site at Bodega Bay, California — the target of frequent protests — for support of a plant at a second site elsewhere in the state at Diablo Canyon.
The findings also offer important insight for activists choosing a company on which to focus. These activists should keep in mind that the companies most likely to capitulate are also the ones most likely to feed a movement going forward — providing, in effect, the possibility of a double win.
Meanwhile, even if they fail in one effort, activists can take heart that their energy isn’t necessarily wasted. Only a little further afield, a similar movement may gain momentum from demoralized protestors looking for a new cause.
Alessandro Piazza is an assistant professor of strategic management at Jones Graduate School of Business at Rice University.
To learn more, please see: Piazza, A. & Perretti, F. (2020). Firm behavior and the evolution of activism: Strategic decisions and the emergence of protests in U.S. communities. Strategic Management Journal, publication pending.