Download this Paper Open PDF in Browser

Not All Sparks Light a Fire: Stakeholder and Shareholder Reactions to Critical Events in Contested Markets

Administrative Science Quarterly, Forthcoming

50 Pages Posted: 4 Oct 2016  

Sinziana Dorobantu

New York University (NYU) - Leonard N. Stern School of Business

Witold J. Henisz

University of Pennsylvania - Management Department

Lite Nartey

Darla Moore School of Business, University of South Carolina

Date Written: September 27, 2016

Abstract

This paper examines when and how a critical mass of social and political stakeholders mobilizes against a corporate organization, and the impact of such mobilization on the value of the organization. We examine the conditions and dynamics that explain whether an isolated, stakeholder-initiated negative statement or action – a “spark” – goes unnoticed or escalates into a cascade of stakeholder reactions targeting the firm. We argue and show empirically that both stakeholders’ and shareholders’ reactions following critical events are largely influenced by stakeholders’ prior beliefs about the target organization and by the reactions of peer stakeholders to the critical event. We test these arguments using a dataset of more than 51,000 media-reported events describing the interactions between 2,293 political, social and economic stakeholders and 19 publicly-traded gold mining firms operating 26 mines around the world.

Keywords: Social and Political Stakeholders; Collective Mobilization; Critical Mass; Cascade of Stakeholder Reactions; Shareholder Reactions; Critical Events; Contested Markets

Suggested Citation

Dorobantu, Sinziana and Henisz, Witold J. and Nartey, Lite, Not All Sparks Light a Fire: Stakeholder and Shareholder Reactions to Critical Events in Contested Markets (September 27, 2016). Administrative Science Quarterly, Forthcoming . Available at SSRN: https://ssrn.com/abstract=2844466

Sinziana Dorobantu (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
New York, NY NY 10012
United States

Witold Jerzy Henisz

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States
215-898-0788 (Phone)
215-898-0401 (Fax)

HOME PAGE: http://www-management.wharton.upenn.edu/henisz/

Lite Nartey

Darla Moore School of Business, University of South Carolina ( email )

United States

Paper statistics

Downloads
179
Rank
142,373
Abstract Views
643