Social movements and corporate political activity: Managerial responses to socially oriented shareholder activism

Firms increasingly face socially oriented shareholder activists who seek to influence corporate policies and practices on a variety of issues. While extant scholarship acknowledges that firms can rebuff such external pressures, there is limited understanding of why they do so. Drawing on corporate political activity (CPA) and social activism scholarship, we hypothesize that politically active firms are more likely to fight such pressures and less likely to cooperate with social activists because CPA functions as a buffering and insurance-like mechanism that makes firms more disposed to resist such pressures. Focusing on the resolution stage of socially oriented proxy contests, we find evidence that for S&P 500 firms, politically active firms are more likely to challenge socially oriented shareholder proposals and less likely to arrive at agreements with social activists than their less politically active counterparts. Our findings contribute to and inform social activism and CPA scholarship.