When PETA or Other Activists Attack
You’ve just seen a press release from an activist group that has targeted your company or one of your brands for some perceived breach of behavior that conflicts with their mission statement. What’s the best way to answer their demands? It depends, says a new article in the Academy of Management Review.
The Baylor University study examined what makes some firms more willing to change their business practices than others, and also whether and how the targeted company and others in the industry will change.
It’s becoming more frequent: Calls for food and beverage companies to change ingredients, packaging, and labor and agricultural practices because of ethical, sustainability and even perception issues. Gestation crates, pink slime, GMOs, fair trade, BPA, deforestation, artificial colors...the list goes on and on. But the Baylor study suggests that companies may overreact to social or environmental activists, such as PETA or Greenpeace, protesting their business practices. These activists often try to harm their companies’ reputations by publicly portraying them in a “negative, morally problematic light" to influence stakeholders to apply pressure to enact change.
However, “Targeted companies are not losing consumers, suppliers, or other transaction partners in large numbers," says study coauthor Theodore L. Waldron, Ph.D., assistant professor of management and entrepreneurship at Baylor University's Hankamer School of Business. “So the question is, what do executives fundamentally consider when they are deciding how to deal with activists?"
However the “noise" generated by these public attacks “ might cause company executives to overestimate the impact of the campaign on their operations," says Waldron. This makes them more willing to accede to the demands. “As a result, we are starting to see more of these companies accommodate activists’ demands, even in the absence of any noteworthy financial or operational impact," he says.
The outcome often depends the attitude of the company’s decision-makers: Those concerned strictly with the bottom line may be less willing to make significant changes, while those “executives want to do ‘the right thing’ while making money, they are more likely to respond in a serious fashion and maybe even implement changes that go beyond what the activists want from them," Waldron says.
The company’s response can have a domino effect on the entire industry, which is the outcome most activists are hoping for. But other companies tend to wait to see how other companies react before deciding on a response. Waldron says that activists might create a better environment for enacting change by targeting companies that are more receptive to their demands than those that are the largest or most visible. He suggests companies should alter or eliminate potentially contestable practices so activists don’t target the company , which might generate competitive benefits.
“A growing number of people want products that are produced in a socially responsible manner," Waldron said. “Companies can play on that consumer desire and be a kinder, more compassionate kind of business and may increase their revenue in the process. Activists can use those messages when they vilify companies, because it is inconsistent with society’s values."
However, that begs the question, What happens when the business practices are ethically ambiguous or its a question of science over belief? While things like substandard working conditions, child labor and persistent toxic pollution are clear cut to most of society, what about issues like GMOs (as a technology). irradiation or use of “chemical additives" that may in fact be relatively benign or even an improvement? Perhaps that’s a topic for the next study.
-Lynn A. Kuntz