Private Politics, Corporate Social Responsibility, and Integrated Strategy

TLDR

The paper develops a theory of private politics in which an activist seeks to alter a firm’s production practices for redistribution to supporters, examines corporate social responsibility by distinguishing profit‑motivated, altruistic, and threat‑driven redistribution, and explores the strategic implications for rival firms when one or both are targeted by such campaigns. The authors argue that private politics and CSR influence a firm’s costs and reshape competitive positions by differentiating redistribution motives and assessing their strategic effects on industry dynamics. The theory identifies public support as the source of activist influence and derives empirical implications for analyzing these dynamics.

Abstract

This paper provides a theory of private politics in which an activist seeks to change the production practices of a firm for the purpose of redistribution to those whose interests it supports. The source of the activist's influence is the possibility of support for its cause by the public. The paper also addresses the issue of corporate social responsibility by distinguishing among corporate redistribution as motivated by profit maximization, altruism, and threats by the activist. Private politics and corporate social responsibility not only have a direct effect on the costs of the firm, but also have a strategic effect by altering the competitive positions affirms in an industry. From an integrated‐strategy perspective the paper investigates the strategic implications of private politics and corporate social responsibility for the strategies of rival firms when one or both are targets of an activist campaign. Implications for empirical analysis are derived from the theory.