Corporate Activism and Corporate Identity

Abstract

Research shows that corporate engagement in social issues often backfires. We suggest this may be because the corporate organizational form is viewed as inappropriate for social activism in general and/or because a particular campaign or organizational action is viewed as hypocritical. To test these ideas, we conduct three studies. In the first study, we examine subject ratings of 90 real-world corporate social movement campaigns and show that subjects support campaigns that involve nonprofit or public organizations, which are of an appropriate organizational form, and penalize campaigns that are inconsistent with the firm business practices, which may be seen as hypocritical. In a second study, we experimentally validate these effects by directly manipulating appropriateness of organizational form and hypocrisy of organizational action. We show that benefit corporations (B Corps) do not suffer from the same hypocrisy penalty in donation and recruitment as do other for-profit corporations, evidencing an interaction between organizational form and action. In a third study, we show that firm collaboration with a social movement organization (SMO) reduces the inappropriateness penalty, while collaboration with an SMO that has organizational practices consistent with the campaign issue reduces the hypocrisy penalty.

Keywords: corporate political activity, corporate social responsibility, cross-sector collaboration, hybridity, nonprofit organization, nonmarket strategy, organizational form, organizational identity, social movements, stakeholder theory

JEL Classification: P16, D7, D71, D72, D74, D2, D21, D23