To Read Now
At this point, please complete Reading Assignment 3--Private or Public Politics? (Baron, 2010, 95-96), located in the Lesson 3 module in Canvas.
In private politics, stakeholders work to advance their position on an issue by using a strategy of direct pressure on one another, most often this is interest groups putting pressure on firms.
A boycott is a “concerted refusal to have dealings with (as a person, store, or organization) usually to express disapproval or to force acceptance of certain conditions.” (Merriam Webster) Boycotts may be made on an individual scale (e.g., there are stores where I don’t shop because of their politics) or by a group (e.g. the mining town in Colorado that boycotted a nearby brewery for supporting a local environmental group that wanted to shut down a local mine in 2015). Boycotts may be organized from the bottom up or top down, with the cost of organizing greatly reduced by today’s technology.
However, do boycotts really have an effect on either the performance of firms or on their policies? Baron (2010, p. 22) reports that “nearly all targets [of boycotts] state that a boycott had no significant effect on their performance,” and that results overall vary by issue. Even if the boycott does not achieve the desired goal, significant benefit may come to the organizer in terms of media coverage and publicity.
To Read Now
- Boycotts can be tricky business! Read "As BP Backlash Grows, So Do Calls For Boycott," which provides details about a boycott related to the infamous Deepwater Horizon oil spill in 2010.
- For a short explanation of some implications of the power of social media regarding boycotts, please read "The Trump Era Boycott" from The New Yorker magazine.
Naming and Shaming
This tactic identifies a specific firm that has an objectionable activity, product, or service and provides information about the perceived harm to the public. The objective is “to harm the target firm by damaging its brand, its reputation or the morale of its employees.” In dealing with interactions of this nature, a “trust gap” often comes into play where one party has greater credibility with the public than another. In a global survey published in 2017, Edelman (a public relations firm) found that more of the public trusts non-governmental organizations (NGOs) (53%) than businesses (52%), the media (43%), and the government (41%). All of these percentages have been declining in recent years, according to Edelman. (Feel free to explore the data in this survey - there is some fascinating info in there!) A 2007 survey highlighted the trust gap between consumers and corporations, reporting that “Sixty-eight percent of executives say that large corporations make a generally or somewhat positive contribution to the public good. Yet only 48% of consumers agree” (Bonini, Sheila M. J., McKillop, Kerrin and Mendonca, Lenny T., The McKinsey Quarterly, 2007, Number 2, pp 7 – 10).
Methods for applying pressure to a named “target” seek to get word out to the public by attracting media to an issue. This may include print, cable, and broadcast media, as well as social media (e.g., Facebook, Twitter) and other Internet-based channels (e.g., YouTube, e-mail, blogging). To attract attention, groups may hold events such as demonstrations or press conferences to release data, studies, or allegations.
Naming and shaming can be done alone, for example when Donald Trump threatened GM with a border tax if it continued to build its Chevy Cruze in Mexico. But keep in mind that boycotts effectively constitute naming and shaming as well. Any number of examples could be cited, but this is a campaign from Marcellus Drilling News (MDN) urging readers/members to boycott the clothing company Patagonia because it advocated against (among other things) a proposed natural gas pipeline in the Eastern United States. MDN names and shames Patagonia while explaining its rationale for a boycott. In short, it's difficult to run an effective boycott campaign without naming and shaming, but naming and shaming can be done without boycotting.
The party that initiates such an action will have a first-mover advantage, giving it the opportunity to frame an issue and make allegations that often take the target off guard, unprepared to make a quick and effective public response. In the GM example above, it was difficult for the firm to counteract Trump's argument because he had successfully framed the issue as one of GM killing American jobs, even though the Cruze model that they manufacture in Mexico is for foreign markets. Often, by the time the "named and shamed" responds, the issue is already framed.
Interest groups may use a firm’s annual shareholders meeting as an opportunity to question the company in a venue where the exchange will be reported to the public. This may also be followed by a more formal filing of a shareholder resolution with the Securities and Exchange Commission (a move to public politics), as discussed in the previous lesson. We'll address this more in this week's Lesson 3 questions.
In some cases, interest groups and firms will choose to work together to improve practices. What a novel idea! Baron (2010, p 98) cites the example of the Sustainable Forestry Initiative (SFI) which was developed by the timber industry in cooperation with Conservation International and the Nature Conservancy. Admirable to some, but to others, SFI is a case of the “fox watching the hen house.” The Forest Stewardship Council (FSC) was also formed by a mix of "businesses, environmentalists, and community leaders" and continues to be governed by a mix of firms and interest groups.
An effective way to call attention to an issue is to “release” scientific data that supports a group’s position on an issue. To do this, a group may design and conduct a study or an investigation, then compile and announce the findings, or the group may seize on the release of studies done by others. Information in this form can add credibility to the claims being made, draw considerable public attention, and encourage sympathetic legislation.
This is a common strategy for many organizations of all political stripes. For example, the Union of Concerned Scientists (UCS) released a report in 2015 that analyzes the risk to U.S. states based on over-reliance of natural gas. UCS is known as a socially progressive organization. The World Resources Institute is a "global research organization" that publishes a variety of sustainability-based research reports, with a global focus. The CATO Institute is a well-known libertarian think tank, and publishes reports supporting "free market" principles, while the Heritage Foundation is a think tank that "promote(s) conservative public policies," and is often the go-to organization for conservative politicians in the U.S. Note that most of these organizations engage in other nonmarket activity, both public and private.
In an effort to apply pressure related to an issue, a group may target an individual for activities related to the individual’s professional or personal roles. For example, a CEO who personally donates to or otherwise supports a group on the other side of an issue.
In a particularly public targeting, Eric Schmidt, CEO of Google, was targeted for his professional role by the privacy advocacy group Consumer Watchdog. The group launched an attack on Schmidt in response to what the group perceived as Google's intrusions on privacy. Consumer Watchdog ran a 15-sec clip on a large screen in Time Square that promoted a longer video, featuring a “ghoulish” character of the CEO in a creepy interaction with children (which many found offensive). Text stating "He is collecting your personal information" flashes across the screen. Viewers are then given a number to text to send a message to Google, telling them to stop collecting private information. You can see the (:15) video below:
Check Your Understanding
The image above is from a protest in the Philippines in 2015. This was part of a campaign by the anti-climate change environmental organization 350.org. The goal of this campaign is to have the Vatican Bank "divest" from fossil fuels, i.e., pull investments from fossil fuel-based industries. The divestment movement has been happening worldwide, mostly on college campuses, with mixed success.
Can you name the private nonmarket strategies being employed?
ANSWER:There are at least two strategies evident here. The Vatican is being "named and shamed," and thought it's being done in a relatively benign way, the protesters "targeted" Pope Francis (note the sign calling him out by name). If a firm (e.g., a solar company or other business) were involved in the protest, then "cooperation" was likely taking place between the firm and 350.org, which is an interest group.
To Read Now
One nonmarket movement that has picked up steam in the past few years is "divestment." The main targets have been university endowments, which are investment funds run by universities that can run into the billions of dollars. The top 10 endowments alone had nearly $200 billion in 2016, but as you'll see in the article below total endowment assets in the U.S. are measured in the trillions of dollars. Pressure from students and other interest groups has proven to be somewhat successful, though specific divestment numbers are difficult to determine, as you'll see in the article below. The main goal of this movement has been to convince endowment holders to divest from industries and firms that interest groups see as socially- and/or environmentally-irresponsible, the primary focus being the fossil fuel industry.
- "Vanguard chief criticises fossil fuel divestment campaigns" Financial Times, May 2016. (You may be blocked from accessing the link. If so, there is a .pdf version under Lesson 3 in Canvas.)