The Power of Activism: Assessing the Impact of Ngos on Global Business
The Power of Activism:
ASSESSING THE IMPACT OF NGOS ON GLOBAL BUSINESS
Debora L. Spar Lane T. La Mure
n 1995, a group of Burmese and American graduate students at the University of Wisconsin at Madison created the Free Burma Coalition (FBC), a non-governmental organization (NGO) comprising a diverse mix of high school, university, environmental, human rights, religious, labor, and grassroots organizations. Reacting to the Burmese military government’s atrocious human rights record and disdain for democracy, the Coalition sought to cut the flow of foreign currency provided by multinational investors and strengthen the country’s prospects for democratic leadership. In pursuit of these objectives, the FBC targeted firms that sourced or produced goods in Burma with peaceful protests, consumer boycotts, shareholder activism, and federal and state lawsuits. In one instance, activists handed out flyers in front of Kenneth Cole’s New York City store, pressuring the company to eliminate its production facilities in Burma. In another case, the FBC posted a condemnation of Sara Lee Corporation on its web site, prompting the company to halt its manufacturing practices in the country. By 2002, at least thirty firms—including adidas, Costco, Wal-Mart, and Levi Strauss—had bowed to FBC pressure and shuttered their Burmese operations. However, a handful of companies—such as Unocal, Suzuki, and France’s Total—vowed to remain. Despite embarrassing public protests and an ongoing barrage of lawsuits and related forms of activism, these firms elected to maintain, even to augment, their businesses in Burma. Such a broad discrepancy raises an interesting puzzle: What accounts for the variation in how firms respond to activist pressure? Why do some firms take extremely proactive measures, engaging activist groups and anticipating their protests, while others stand defiant? Why do some firms capitulate to NGO demands while others refuse? In the analysis that follows, we explore the different
ASSESSING THE IMPACT OF NGOS ON GLOBAL BUSINESS
Debora L. Spar Lane T. La Mure
n 1995, a group of Burmese and American graduate students at the University of Wisconsin at Madison created the Free Burma Coalition (FBC), a non-governmental organization (NGO) comprising a diverse mix of high school, university, environmental, human rights, religious, labor, and grassroots organizations. Reacting to the Burmese military government’s atrocious human rights record and disdain for democracy, the Coalition sought to cut the flow of foreign currency provided by multinational investors and strengthen the country’s prospects for democratic leadership. In pursuit of these objectives, the FBC targeted firms that sourced or produced goods in Burma with peaceful protests, consumer boycotts, shareholder activism, and federal and state lawsuits. In one instance, activists handed out flyers in front of Kenneth Cole’s New York City store, pressuring the company to eliminate its production facilities in Burma. In another case, the FBC posted a condemnation of Sara Lee Corporation on its web site, prompting the company to halt its manufacturing practices in the country. By 2002, at least thirty firms—including adidas, Costco, Wal-Mart, and Levi Strauss—had bowed to FBC pressure and shuttered their Burmese operations. However, a handful of companies—such as Unocal, Suzuki, and France’s Total—vowed to remain. Despite embarrassing public protests and an ongoing barrage of lawsuits and related forms of activism, these firms elected to maintain, even to augment, their businesses in Burma. Such a broad discrepancy raises an interesting puzzle: What accounts for the variation in how firms respond to activist pressure? Why do some firms take extremely proactive measures, engaging activist groups and anticipating their protests, while others stand defiant? Why do some firms capitulate to NGO demands while others refuse? In the analysis that follows, we explore the different