The yin and yang of social activism

Social activists boost social entrepreneurs’ success but provoke “green hush” among established companies.

Entrepreneurs starting companies with a social mission need plenty of grit, savvy, and skill. They also need the support of social activists, whether local grassroots organizations or long-established national institutions.

But new research examining the connection between entrepreneurs and social activists suggests that the relationship changes over time, says Wesley D. Sine, professor of management and organizations at the Samuel Curtis Johnson Graduate School of Management. Once they’ve become established, social entrepreneurs need activists less to help them attract attention from investors and regulators and more to support them in responding to countermovements that may hinder their mission, Sine says. (“Gone with the Wind: The Evolving Influence of Social Movements and Counter Movements on Entrepreneurial Activity in the U.S. Wind Industry,” a book chapter in Sustainability, Stakeholder Governance, and Corporate Social Responsibility, [Advances in Strategic Management, Vol. 38], Emerald Publishing, 2018.)

Starting out, entrepreneurs seeking to, say, develop a new wind-power technology can benefit greatly from passionate social activists, who might draw attention to the initiative by writing op-ed pieces, holding rallies and conferences, and otherwise publicizing the benefits of clean energy. Financial returns for social enterprises in new sectors typically are unpredictable or nonexistent in the early years, so activists effectively serve to help entrepreneurs attract investors influenced by both social and monetary returns. Activists “play a critical role in motivating people to take the risks necessary to support businesses in new areas because there is greater risk and no assured short-term monetary payoff,” says Sine.

Once a company or industry shows financial promise, though, entrepreneurs no longer need activists to attract investors inspired by ideology. Rather, the prospect of a financial return is itself sufficient to attract mainstream investors. And while early on, activists can help lobby regulators to establish policies favorable to a new industry, once those policies are in place, activists play a far less critical role in helping the industry maintain government relations.

“The importance of social movements declines over time as the industry establishes itself and demonstrates that it can achieve what it claims to achieve,” says Sine.

But entrepreneurs may still require help from activists later for another reason: Every new industry built on a social mission attracts countermovements — individuals who, for instance, support the idea of clean energy but take a “not-in-my-backyard” stance against windmills located near their own property. Social entrepreneurs still need activists who “continue to have influence in their ability to counteract the countermovement,” says Sine, adding that it’s in entrepreneurs’ interest to maintain long-term relationships with the social activists who supported their original mission. “Social movement organizations, with their motivated membership and substantial resources, can be one of your most important allies,” he says.

In the research, Sine and co-authors W. Chad Carlos of Brigham Young University, Brandon H. Lee of the University of Melbourne, and Heather A. Havemen of the University of California, Berkeley, analyzed data from 1992 to 2007 on wind farm foundings and membership growth in the Sierra Club, one of the largest environmental organizations that urged the use of wind power. The researchers also examined state-level legislation supporting wind power and analyzed media reports on countermovements against the wind industry, particularly protests by groups opposed to windmills near their property.

Controlling for factors that could have influenced the number of new wind farms, including population trends and changes in gross state product, the researchers found that Sierra Club membership contributed to an increase in the number of new wind farms. They also found that rising government support eventually reduced activists’ positive influence on foundings and that protests by countermovements significantly slowed the growth of the overall wind industry.

The relationship between social activists and companies can take a twist later. When companies grow large and influential enough to gain public recognition for social or environmental initiatives, they may come to fear some activists, the researchers note. Many companies want to avoid charges of hypocrisy or cynicism from activists accusing them of merely chasing good publicity. Believing that an accusation of hypocrisy is as damaging or even worse than no publicity at all, companies might engage in “green hush,” declining to announce or even discuss their social efforts and accomplishments so as to avoid attention from activists.

But green hush may have the effect of chilling the broader pursuit of social initiatives by others. “When companies actively talk about the good things they are doing, that can lead to greater social pressure for competitors to adopt similar practices,” says Carlos. But if they stay quiet, others won’t be aware of their social initiatives and won’t feel inspired to follow, he says.

The upshot for social activists? Being too aggressive in criticizing companies could stifle the diffusion of socially responsible or sustainable practices, says Carlos. “If you’re an activist, maybe the question to ask yourself is, ‘By attacking these companies, am I doing more harm?’ If activists are too hard on these companies, then it could in some cases backfire.”