The Choice between Public and Private Targets in Anti-Corporate Activism

By Mary-Hunter McDonnell

While there is a considerable and expanding body of work dedicated to understanding the targeting decisions of movements operating in the private sector, this body of work has developed in large part in isolation from more traditional work exploring public sector movements. But this separation in the literature ignores potentially important connections between private-sector and public-sector movements, as well as the fact that social movements often have the freedom to choose whether to target industry incumbents or the state. For example, contemporary anti-corporate movements in the US regularly choose the field on which to wage their campaigns for industry reform, either by targeting the public sector (a top-down strategy where the movement pushes for new regulations that will pertain to all private sector companies) or the private sector (a bottom-up strategy where the movement tries to win concessions from individual companies that it can then mobilize to pressure industry or public sector officials to create industry-wide change through new standards or regulations). Thus the choice of which sector to target is a first-order strategic decision for many movements, but it is one that is often overlooked or taken for granted in the research.

To properly understand the targeting behaviors of such movements, scholars must consider political opportunities in the public and private sector relative to one another. Below is a discussion of some possible levers that may channel the attention and action of social movement organizations toward the public or private sector. These levers include characteristics of the public sector, characteristics of the private sector, and interactions between them. I am currently pursuing a project that will employ a longitudinal analysis of the targeting behaviors of over 100 US environmental NGOs over a period of twenty-years in order to test these potential mechanisms, and so I will focus on the environmental movement in the discussion below.

Characteristics of the Public Sector

Given that the procurement of new regulation is perhaps the quickest route to industry-wide reform, one could imagine that a movement would prioritize targeting the public sector whenever opportunities there appeared ripe. For the environmental movement, for example, signals of the openness of the public sector to regulatory reform might include the relative presence of progressive politicians in congress, the extent to which environmental issues were mentioned in the state of the union, or the number of bills related to environmental issues being introduced in a given term.

Of course, the environmental movement has to compete with any number of other movements for the attention of the public sector, and elected officials will likely consult the present priorities of their constituencies when determining the issues on which to focus their energy. Thus public attention to environmental issues is likely a strong signal to the environmental movement of when the public sector is ripe for real progress. Public attention is, of course, highly variable, fickle, and temporary. In the face of other profound public issues like unemployment, education, or civil rights, the environment (and the need for industry reform to protect it) is often not a priority. That said, momentary shocks could lead to windows in which the public’s attention and interest is captured. Natural or man-made disasters such as Hurricane Katrina or the Deepwater Horizon oil spill can rally public support for regulation, and shocks to corporate legitimacy (such as the falls of Enron and WorldCom and the Great Recession) can spur political pressure for industry reform. At these moments when the public interest is turned towards environmental issues or the public sector is intent on large-scale industry regulation, NGOs likely emphasize public sector targeting in order to ensure that their particular issue appears on the agenda.

Characteristics of the Private Sector

In the face of growing frustration at the inefficiency and inaction of the public sector toward many pressing public problems, movements may feel that a more viable route to reform is through targeting industry participants directly in order to promote change from the ground up. As in the public sector context, NGOs considering campaigns targeting the private sector are likely to search for signals that corporate officials are attending to and considering environmental issues. Signals of the ripeness of political opportunity structures may include the extent to which the environment is mentioned in annual reports or sustainability reports, or the extent to which industry incumbents support corporate social responsibility initiatives in the environmental domain. Companies that publically tout their environmental stewardship make especially attractive targets as they are easily made to look like hypocrites when their environmental performance is decoupled from their public statements. An industry’s performance also likely plays an important role in the choice of public versus private targeting. Whereas research in economics suggests that regulatory threat is higher when an industry’s performance is very good (suggesting NGOs would have more success targeting the public sector to press for reform when industries outperform), management research suggests that shareholders tend to care more about a firm’s social performance when its market performance is poor, as they seek to search for and correct the source of underperformance. Thus the private sector may make a riper target when performance is poor, particularly when activists intend to use tactics that target shareholders directly, such as shareholder proxy proposals.

Interactions between the Public and Private Sector

NGOs deciding whether to target a campaign at the public or private sector are likely to weigh the relative political opportunities existing within each, as outlined above. A final consideration, however, are the interactions between the public and private sectors that affect the ripeness of either field. Perhaps the most salient of these is the ostensible extent of regulatory capture. As the corporate dollars spent on lobbying and campaign contributions increase, the potential for meaningful industry reform from the public sector naturally appears more remote. If companies are calling the shots in the public sector, private politics becomes the most direct route to industry reform, as movements that are able to mobilize industry incumbents can then leverage these industry allies to pressure regulators to create meaningful reform.

The public sector also at times carves out new opportunities for activism in the private sector. For example, the SEC, through Rule 14(b)-6 of the Exchange Act, has the authority to decide what kinds of social policy issues can be submitted by activist shareholders as proxy proposals to be voted on at a firm’s annual meeting. The SEC has become more progressive over time in exercising its discretion in this regard, which opens up the door for activists who seek to use proxy proposals to place their issue on a corporate agenda. For example, the SEC permitted the exclusion of proposals pertaining to assessments of a company’s environmental risk, but reversed its position in 2009. As the SEC opens up access to the corporate proxy for more diverse issues, it synchronously opens up political opportunities for activists to initiate direct corporate engagement on those issues, ripening the private sector to increased access and influence.

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Filed under Essay Dialogues, Protestors and their Targets, Uncategorized

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