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Strategic Activism and Nonmarket Strategy

Stanford GSB Research Paper No. 1909

40 Pages Posted: 31 Aug 2005  

Multiple version iconThere are 2 versions of this paper

Date Written: August 2005

Abstract

Activist NGOs have increasingly foregone public politics and turned to private politics to change the practices of firms and industries. This paper focuses on private politics, activist strategies, and nonmarket strategies of targets. A formal theory of an encounter between an activist organization and a target is presented to examine strategies for lessening the chance of being a target and for addressing an activist challenge once it has occurred. The encounter between the activist and the target is viewed as competition. At the heart of that competition is an activist campaign, which is represented by a demand, a promised reward if the target meets the demand, and a threat of harm if the target rejects the demand. The model incorporates target selection by the activist, proactive measures and reputation building by a potential target to reduce the likelihood of being selected as a target, and fighting a campaign. The supply of activism and the inherent free-rider problems are considered, as are target strategies to reduce that supply.

Keywords: private politics

JEL Classification: L31, L51, D74, M14

Suggested Citation

Baron, David P. and Diermeier, Daniel, Strategic Activism and Nonmarket Strategy (August 2005). Stanford GSB Research Paper No. 1909 . Available at SSRN: https://ssrn.com/abstract=791006 or http://dx.doi.org/10.2139/ssrn.791006

David P. Baron (Contact Author)

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-723-3757 (Phone)
650-725-6152 (Fax)

Daniel Diermeier

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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