The Radical Flank Revisited: How Regulatory Accountability Shapes the Effectiveness of Social Activism on Business Outcomes

Posted: 12 Jan 2021 Last revised: 10 Jan 2022

See all articles by Jake B. Grandy

Jake B. Grandy

University of Arkansas - Walton College of Business

Shon R. Hiatt

University of Southern California - Marshall School of Business

Date Written: January 7, 2022

Abstract

Although scholarship has highlighted how stakeholders influence business outcomes, few studies have examined how simultaneous, different tactics interact to impact firms. Critical to understanding this interaction is the radical flank effect, which asserts that the moderate and radical elements of social movement tactics can interact to either enhance or diminish a movement’s ability to accomplish its goals. However, research is unclear about when and whether the radical flank effect enhances or diminishes movement influence and says little about factors that may influence the direction of the effect. To address these limitations, we explore one such factor—the degree to which the regulatory agencies that oversee businesses in regulated markets are accountable for their decision making. Drawing on management and political sociology studies, we argue that shifting the degree to which regulators are accountable to the public can alter the radical flank effect on business outcomes in regulated markets. We analyze stakeholder opposition to U.S. hydroelectric power facilities from 1987–2019. The results show that high accountability to the public enhances the radical flank effect, thereby enhancing stakeholders’ influence, whereas low accountability reverses the radical flank effect, thereby diminishing stakeholders’ impact on business outcomes. Post-hoc analyses illustrate that firm engagement with regulators who are accountable to the public can mitigate social activists’ ability to impede business licensing in the presence of the positive radical flank.

Keywords: stakeholder management, nonmarket strategy, institutional environment, radical flank, social movements

Suggested Citation

Grandy, Jake B. and Hiatt, Shon R., The Radical Flank Revisited: How Regulatory Accountability Shapes the Effectiveness of Social Activism on Business Outcomes (January 7, 2022). Available at SSRN: https://ssrn.com/abstract=3725852

Jake B. Grandy (Contact Author)

University of Arkansas - Walton College of Business ( email )

191 N. Harmon Ave.
Bldg WJWH Suite 514
Fayetteville, AR 72701
United States

Shon R. Hiatt

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

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