Activist Protest Spillovers into the Regulatory Domain: Theory and Evidence from the U.S. Nuclear Power Generation Industry

Adam R. Fremeth (), Guy L. F. Holburn () and Alessandro Piazza ()
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Adam R. Fremeth: Ivey Business School, University of Western Ontario, London, Ontario N6G ON1, Canada
Guy L. F. Holburn: Ivey Business School, University of Western Ontario, London, Ontario N6G ON1, Canada
Alessandro Piazza: Jones School of Business, Rice University, Houston, Texas 77005

Organization Science, 2022, vol. 33, issue 3, 1163-1187

Abstract: We examine how social activism—in the form of public protests against contentious business practices—can spill over into the regulatory domain, extending beyond activists’ articulated goals to affect firms’ regulatory outcomes in areas that are not directly targeted. We argue that firms are likely to experience broader regulatory repercussions after activist protests because public contention invites greater scrutiny of firm behavior by industry regulators, increasing the likelihood that instances of organizational noncompliance will be discovered. Protests can also cause regulators to evaluate targeted firms more negatively in regulatory assessments, especially firms with less favorable preexisting reputations or stakeholder relations, and to tighten regulations on nontargeted issues that signal their commitment to safeguarding the public interest. We further contend that the political context within which regulatory agencies operate shapes the extent of protest spillovers: When political institutions are aligned with activist goals, and when regulators are ideologically sympathetic too, protests have a more pronounced negative impact on firms’ regulatory outcomes in nontargeted domains. We find robust support for our predictions in a statistical analysis of the impact of antinuclear protests—which sought to block nuclear power plant development by electric utilities—on utilities’ subsequent regulated financial rates of return on their assets. Our analysis contributes new insights to research on the indirect consequences for targeted organizations of social activism.

Keywords: social activism; protests; spillovers; regulation; private politics (search for similar items in EconPapers)
Date: 2022
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