Do Boycotts Work?
IPR associate finds boycotts threaten reputation more than revenue
IPR associate Brayden King finds that media attention, more than petition signatures, make boycotts effective.
According to IPR associate Brayden King, a professor of management and organizations, activists who call for boycotts usually set out “to put financial pressure on a company” by convincing consumers to shop elsewhere.
“But it turns out that’s not the way that boycotts usually work,” he explained. “The typical boycott doesn’t have much impact on sales revenue.”
One reason is consumers’ habitual nature. Even people who publically denounce a company might still purchase that company’s products. Plus, the people boycotting a company might not be its target consumers.
“Think of PETA activists who are boycotting KFC,” King explained. “That’s a boycott that’s not going to have much of an impact on sales revenue."
Nevertheless, boycotts can still be effective, according to King’s research. He finds that while boycotts rarely hurt revenues, they can threaten a company’s reputation, especially by generating negative media coverage.
“The no. 1 predictor of what makes a boycott effective is how much media attention it creates, not how many people sign onto a petition or how many consumers it mobilizes,” he noted.
His research shows that the most successful boycotts are those that generate the most media coverage, typically to a single, high-profile company. These headline-grabbing boycotts lead to a greater fall in stock prices and are more likely to cause a company to change its behavior.
However, as more and more companies today are targeted by activists on both sides of the political aisle, are boycotts becoming less effective?
Given the recent rise in anti-corporate activism, King said that targeted companies might do better to simply “wait it out” rather than taking action in response to a boycott that might be in the news one day and out the next.
“One has to wonder if the effect of activism targeting companies is becoming diluted, in the sense that we can’t pay attention to any single controversy for very long,” King said.
“I don’t think I’ve ever seen as many boycotts announced in a short period of time,” he concluded.
Brayden King is Max McGraw Chair in Management and the Environment, professor of management & organizations, and an IPR associate.
Photo credit: Martin Abegglen, Flickr