Blacklisted Businesses: Social Activists' Challenges and the Disruption of Corporate Political Activity

37 Pages Posted: 9 Jul 2014 Last revised: 26 Apr 2016

Mary-Hunter McDonnell

The Wharton School - The University of Pennsylvania

Timothy Werner

University of Texas at Austin - Red McCombs School of Business

Date Written: 2014

Abstract

This paper explores whether and how social activists’ challenges affect the willingness of politicians’ willingness to associate with targeted firms. We offer the first systematic study of the effect of public protest on corporate political activity, using a unique database that allows us to empirically analyze empirically the impact of social movement boycotts on three proxies for associations with political stakeholders: the proportion of campaign contributions that are rejected, the number of times a firm is invited to give testimony in Congressional congressional hearings, and the number of governmental procurement contracts awarded to a firm. We show that boycotts lead to significant increases in the proportion of refunded contributions, as well as decreases in invited congressional appearances and awarded governmental contracts. These results highlight the importance of considering how a firm’s socio-political environment shapes the receptivity of critical non-market stakeholders. We supplement this primary analysis by drawing from social movement theory to extrapolate and test three key mechanisms that moderate the extent to which movement activists’ challenges effectively disrupt corporate political activity: the media attention a boycott attracts, the political salience of the contested issue, and the status of the targeted firm.

Keywords: nonmarket strategy, boycotts, campaign finance, social movements, organizational theory

JEL Classification: D72, G38, K20

Suggested Citation

McDonnell, Mary-Hunter and Werner, Timothy, Blacklisted Businesses: Social Activists' Challenges and the Disruption of Corporate Political Activity (2014). Administrative Science Quarterly, 1-37, 2016, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2454702 or http://dx.doi.org/10.2139/ssrn.2454702

Mary-Hunter McDonnell

The Wharton School - The University of Pennsylvania ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Timothy Werner (Contact Author)

University of Texas at Austin - Red McCombs School of Business ( email )

United States
5122326844 (Phone)

HOME PAGE: http://timothywerner.com

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