Corporate Networks and the Collective Action of Large Corporations Faced with Protest

Do large corporations respond to social movement protest with an individual, firm-centric rationale or do they develop their strategies relationally with other firms? If they do so relationally, do corporate networks help unify the responses these firms take?

Social movement research has developed a prolific body of scholarship on anti-corporate activism, demonstrating the ways in which activists attain leverage over corporate targets and achieve concessions (e.g., Clawson 2003; Soule 2009). However, most research (and quantitative studies in particular) has emphasized the specific dynamic between social movements and individual firms, neglecting the possibility that how firms respond to protest is also constructed socially through their relationships with other firms.

Yet, corporations are not atomistic actors. We know a lot about the ways in which the political actions of large corporations are constructed relationally with other firms. Developments in network analysis over the last few decades have allowed organizational sociologists to elaborate on numerous ways in which the social relationships between large corporations structure their political behavior.

Two key networks that shape corporate behavior are those formed through overlapping boards of directors of different corporations (Mills 1956; Mizruchi 1989) and through shared memberships in policy planning groups (Domhoff 2006 [1967]; Burris 2008). By inviting a senior officer of another firm to a company’s board, the network of overlapping boards of directors provides companies with a source of shared information (Palmer 1983; Useem 1984). Similarly, when multiple corporations take leadership roles in policy planning groups, it allows these firms and policy groups to each impact on the political behavior of the other.

Research shows that firms highly embedded in corporate networks tend to be more politically conscious (Useem 1979, 1984) and engage in political activity with class-wide considerations (Mizruchi 1989). More embedded firms also tend to be more ideologically conservative: they are more likely to oppose intervention from the state, and support deregulation and the reduced power of labor and unions (Akard 1992; Vogel 1989). This helps solidify a capitalist class-wide resistance to accept those acting outside the purveyor of free-market forces as legitimate actors, making them more hostile to the claims of insurgents.

If this is the case, then the leverage protestors can achieve is not just a function of features of the protest or of the individual firm, but is shaped by the target firm’s embeddedness in the capitalist class. However, scholars have not yet examined this. Coupled with case studies on the class dynamics of movements (e.g., Schwartz 1976; Hetland and Goodwin 2014; see Barker, Cox, Krinsky, and Nilsen 2014), this suggests social movement research can be furthered with an investigation into the collective action of corporations faced with movement opposition.

I address this through two key questions: Do firms develop their response strategies individually or in socially constructed ways with other firms? If they do so relationally, do these networks help unify the responses of corporations?

To interrogate these questions, I created a database of protests against the 500 largest public corporations in the U.S. (the Fortune 500) from 2005 to 2010. I conduct two sets of statistical analyses on these: one, the more standard protest-level analysis to determine the effect of a company’s embeddedness in corporate networks on its responses to protest; the other, dyadic analysis, where every pair of targeted firms is its own case. The logic underlying dyadic models is that firms that have more in common will also be more likely to exhibit similar behavior. This allows us to test the effect of direct ties between firms on their propensity to act more similarly to other firms. Performing both analyses allows for an investigation into how individual actions are translated into similar behavior.

My findings show that a company’s embeddedness in corporate networks indeed shapes its responses to protest: firms more central in both the board of director and policy group networks are less likely to concede and more likely to retaliate against protestors. Furthermore, the profile of resistance is conditioned by the ideologies of the policy groups with which the firm is embedded. Firms connected to relatively liberal groups are more likely to concede to demands and less likely to retaliate against protestors. Results from dyadic analyses further show that in all cases the direct ties between corporations helps unify their responses against protest actors (Banerjee and Burroway, forthcoming). These results were robust net of the protest- and organizational-level variables traditionally considered in studies. These findings provide evidence that it is social relationships between firms and not just structural equivalence that shapes and unifies corporate behavior around protests.

The networks assessed here connect a broad swathe of large corporations in the U.S. For instance, in 2010, 92% of all firms in the Fortune 500 had at least one direct tie to another Fortune 500 firm through an overlapping directorate. Almost half (45%) had leadership positions on at least one of the 12 policy boards I considered. Further, these two networks themselves had substantial overlap (I estimate about 48% of policy board positions were occupied by then-current members of Fortune 500 companies). As such, these appear to be cohesive networks whose influence extends to how corporations respond when faced with protest pressure.

These findings confirm the much hypothesized—but rarely documented—propensity of corporations to act collectively in response to social movements. Beyond their usefulness in understanding corporate decision-making, these results have significant implications for the leverage movements can apply to corporate behavior. For instance, a successful short-term strategy may be to target relatively isolated firms (that may be more amenable to the claims of insurgents). However, a long-term approach would instead focus on key highly connected targets, where successful outcomes may have broader effects on other firms. Activists may also need to increase efforts to counter not just corporate dominance or malfeasance but their efforts at organizing. This increases the need for movements to reach across narrow interests and coalitions to identify common ground. Finally, as corporate economic and political behavior becomes increasingly globalized, global networks are likely to have greater implications for both transnational and more local movements.