Corporate Activism Yesterday, Today, and Tomorrow

But today’s corporate activism—set across a backdrop of government gridlock, viral social media campaigns, and twenty-something CEOs—is not what it used to be. Brayden King and Klaus Weber, both associate professors of management and organizations at the Kellogg School, conduct research on social movements, including corporate activism. Kellogg Insight sat down with King and Weber to discuss how activism continues to shape corporate behavior, and what it may look like in the years to come.

Kellogg Insight: In some of your work together, you’ve written about how activism came into its own in the 1950s and 60s. Can you give us your perspective on how activism has changed over the years?

Brayden King: It’s become a much more common activity among people who are politically conscious. If you look at the Civil Rights movement when it first started, activists were seen as highly deviant. Many of the parents of the students who were doing the sit-ins looked down on their behavior: What is my kid doing? He’s going to go to jail. He’s going to be throwing away all of the great advantages we’ve tried to give him. This was true even within the African American community! But today, it’s almost commonplace to see somebody on a street corner protesting. We think: this is their right.

Klaus Weber: You see the difference when you look internationally at those countries where protests are not accepted as part of a democratic open society. Look at Ukraine or other eastern European countries that don’t have this kind of civil society tradition because they were under communist rule for so long.

The other thing is that in the US and Western Europe, activists have become more professionalized or routinized or ritualistic in a way.

KI: Does this change activism’s efficacy?

King: Some people would say so—that it is harder to generate a big splash and engage the media. Recently, the US had its largest antiwar protests ever, and yet they barely made a headline.

In line with this, movements have become more like very sophisticated public relations machines. They’ve figured out this is what we need to do to generate so many lines in the newspaper. Because of that, they don’t need the grassroots the way they used to—and by grassroots I mean an extensive network of activists who are all working together at the community level to enact social change. You see a lot of movements that have very small but professionalized staffs who are able to accomplish a lot for their money.

KI: But at the same time as nongovernmental organizations (NGOs) are becoming less involved with grassroots movements, companies are starting to involve themselves more. Is that right?

Weber: Well, companies increasingly try to create the image of a grassroots movement! There’s some very interesting research on company-sponsored protests that finds companies basically create the impression that the grassroots are voicing concerns. But the grassroots are effectively orchestrated, or at least strongly sponsored, by corporate interests. I think some companies are using the tactic strategically to influence the media and affect public opinion, though I’m not sure how widespread it is.

King: The public reacts favorably to activists because the public sees social movements as authentic. The companies that have been the targets of activism in the past are learning, Ok, we can replicate that by going out and trying to create our own grassroots-type movements. The pop term for this is astroturfing: it looks like a movement, smells like a movement, but isn’t exactly a movement.

There are also professionals called “public deliberators” who are paid to go into communities and get people to have conversations about issues that matter to them: things that may be affecting neighborhood or economic development. Conversations are done under this premise of pure democracy. But the trick is that often public deliberators are paid for by corporate sponsors.

KI: There has to be some risk involved for any company that engages in this behavior.

Weber: My hunch would be that if this activity were to come out into the open, it would certainly backfire on the company. But I think it has broader implications for the credibility of movements in general. If you don’t know whether the activist you’re dealing with is sincere—a little guy standing up for something—or has simply been paid to act by someone else, it decreases the trust that we tend to have in grassroots activism.

King: That’s why people in Pennsylvania, when it comes to fracking, tend not to believe anybody anymore.

But a more common way of engaging with activism, more so than corporate-sponsored grassroots activism, is seeking collaboration with existing activist groups.

KI: So activists get to preserve their grassroots integrity while still having the resources of a large corporation?

King: Then, when the company gets into trouble they can say, Look, we’re doing our best. We’re working with people who wouldn’t work with us if they felt we were pure evil.

Weber: Companies like to engage with well-known, bona fide organizations. I do think some of those partnerships are genuine learning opportunities, with the corporation trying to understand people’s concerns and trying to work with them. And some are attempts at cooptation, and bringing activists groups onboard in order to either fend off more-radical groups or to convert those groups to the corporate point of view.

King: And sometimes both are happening. We have this new study, not yet published, that shows if your company has, for instance, a committee for corporate social responsibility, it actually does seem to make you more receptive to activists in the long term. By making some commitments that are initially intended to boost your image, you create avenues for engagement in the future.

There have to be people sitting on these committees, right? So you get executives who suddenly become champions. Or you bring in a former professional at an NGO and make them Head of Global Citizenship, and suddenly there’s an internal ally who is going to be fighting for those issues.

KI: It seems as though the reputational stakes for companies have never been higher—making activism very effective today. Do ever you see the public’s expectations for corporate social responsibility fading?

Weber: Corporate expectations seem to come in 20- or 25-year cycles. In the early 1970s, there was a strong view that companies play an integral role in bettering society. Then in the 1980s and the early 90s, we saw a shift in the other direction, with tough-nosed companies trying to make profits and only serve their shareholders. A lot of the companies that were very forward-looking in the 1970s around environmental issues and social issues actually scaled back.

Then there was an upswing again that probably started in the late 90s and is still ongoing. I’m going to go out on a limb and say that it is going to swing back—social responsibility is going to again come under scrutiny for being a cost item that isn’t worth it.

King: The agenda of any corporation is fairly limited—you can’t do everything all the time, so your attention has to be directed to certain issues. Today it seems the environmental movement has been successful in getting corporate leaders to pay attention to sustainability. But a big recession or a change in the competitiveness of American companies could really limit their attention.

KI: Do you see politics shaping corporate activism?

King: New research is showing that CSR is fairly tightly connected with political ideology. Companies with executives who donate money to Democratic candidates tend to be more heavily engaged in CSR. It seems to be because the CEO’s values end up filtering down, maybe because the CEOs pick people who share their beliefs, or because the employees feel like they have permission to act out these values. And internal social movements like LGBT groups are also more likely to form in companies where there is a liberal CEO.

Weber: But politics also make it more difficult for companies to take a strong perspective on some issues. Take climate change, which over the last five to six years has become almost entirely partisan. For a while, companies actually formed a counsel to form a cap and trade system. But they’re a little more reluctant to do that now because they feel when they make a case for environmental sustainability, they’re going to annoy Republicans. And you don’t want to be seen as a partisan company because you don’t know who is going to be in government and who is going to regulate you.

One additional thought. Politicization is a very American thing. You do not find as much divide on climate change in other countries.

KI: Really? What about other issues?

Weber: No, it’s a different discourse really. I think it has to do with most European countries having multiparty systems, which are less polarizing. It seems to me that the broader responsibilities of businesses are much more accepted there.

King: One thing that we know about the American corporate sector as well is that over time it has become increasingly fragmented, meaning that the executives who lead our companies are less connected to one another than they ever have been in the past.

Weber: CEOs were relatively homogenous in terms of backgrounds. They all went to the same colleges together, they saw each other a lot and they had an ethos of “we’re business leaders, and we have a leadership role in the community.” And that really came under severe attack with the shareholder rights orientation movement.

The corporate sector also became more fragmented due to substantial turnovers in leadership. A colleague of ours, Jerry Davis at the University of Michigan, has done really nice research showing that turnover in terms of what the largest, most-valuable companies are is much higher than it was in the 60s. The Zuckerbergs are 20-something CEOs. They haven’t been socialized into the corporate elite!

KI: Clearly the shareholder rights movement has had a huge effect on how firms behave. Can you talk more about what shareholder activism looks like?

King: I see there being two types of activists. There are corporate governance activists: these are the Carl Icahn types, where their goal is to make the companies function according to how shareholders think they should, rather than being led in ways that really benefit the managers or the employees. These are the leaders of the shareholder activist movement.

Then there are social activists. They’re people who have beliefs about social change and environmental sustainability, and they use their investments as a way to gain some access to corporate decision making. It’s a very simple process: you have to have a certain number of shares and you can submit a proposal.

The company is likely to claim that the issue should not be subject to shareholder scrutiny because it is an ordinary business practice. But doing this all the time can amount to bad publicity. Often companies engage with shareholder activists, or allow their proposals to move to a vote, simply because they don’t want to look like bad guys.

Weber: Corporate activism is often a sign that there could be broader scrutiny coming, because social shareholder proposals are just one of the tactics activists use. These proposals send a signal to the leadership of the company that they’re on the radar.

KI: Where do you see activism headed in the next decade or so?

King: In the last five years, one of the biggest developments has been the use of social media. Not just to organize people, as you saw with the Egyptian uprising. But social media is a way for social activists to bypass traditional media to create a stage for themselves in public. Think of the Save Darfur campaign, which took place on Facebook. Activists asked people to donate money. And there was no physical presence at all.

Weber: Companies are monitoring social media really well. Probably more so than many of the grassroots efforts!

King: They realize that hedge funds and other financial groups use Twitter to gauge their investment strategies. There can be an algorithm that says, “Sell when you have so many Twitter messages with one of these 10 negatives words in it.”

KI: But the weird thing about social media is that it’s nothing, nothing, nothing, nothing until it’s viral! You can complain to Coke all you want, and send them messages back and forth, and your 14 followers can retweet you to their 14 followers, but until something goes big, it is pretty pointless. Right?

King: What activists have that you and I don’t are networks of people who will be ready to go into action when they’re needed. In the past networking has been about creating membership lists and showing up to events. For many organizations now it’s about getting people to jump in and retweet or hyperlink when the time has come to engage in online activism.

Weber: Online activists are not transparent to companies, so companies don’t quite know whom they’re dealing with. But they’re also a little more volatile. They come and go more quickly because they’re not based on those tight-knit relationships. So I think for companies they are hard to manage in many ways.

King: Another change that feeds into the social media phenomenon is howactivists engage. People engage with social media in very personalized ways, using the technology to communicate their own identities in ways that help them fit in with a clique or stand out from their friends. And so the kinds of expressions that you see in this new form of activism are also very different.

It’s not, “we’re going to tout the party line, we’re going to say what the NGOs are telling us to say.” Instead, “we’re going to personalize it.” And this can catch activists by surprise. They may have gotten the ball rolling, but what actually occurs falls out of the control of any hierarchical entity.

There can be much more personalized communication, and the benefit of that is that there are high levels of authenticity. And it can also lead to increasing fragmentation of this activist field as well. Take the Occupy movement. What was the Occupy movement about? We say it was about inequality. But it was about hundreds of different ideas and issues because people had personalized it.

Editor’s Note: Our interview was edited for length and clarity. Artwork by Yevgenia Nayberg.