Explaining Differences in Firms' Responses to Activism

Abstract

Activist campaigns describe efforts to modify socially or environmentally detrimental industry practices by contesting prominent industry members' versions of those practices (i.e., target firms). We adopt a sociocognitive perspective to account for variance in when and how the managers of target and nontarget firms attend to, interpret, and respond to pressure from activists. Overall, we enhance theory by explaining why firms in an industry differ in their reactions to activism, even when they are subject to common campaigns and strategies.