Ripple Effects: How Collaborations Reduce Contention



Prior work suggests firms can reduce stakeholder contention (e.g., lawsuits, protests) by establishing collaborations with those stakeholders. We explore when collaborations produce ripple effects beyond the firm’s partner to attenuate contention from a broader set of stakeholders. Using variation in the willingness of firms and stakeholders to collaborate exogenous to contention to account for selection, our examination of contentious and collaborative interactions between 136 environmental movement organizations and 600 large U.S. firms reveals that collaborations reduce contention against firms through two pathways: signaling and relational. As evidence of a signaling mechanism, we find that firms experience a decrease in contentious challenges from a movement after they collaborate with a more contentious activist in that movement, provided their partner can signal the authenticity of its motive for collaboration. As evidence of a relational mechanism, we find that firms face less contention when an activist with which they collaborate has more board interlocks with other activists in the movement. Bilateral collaborations with a well-connected activist are particularly useful because the partner is more motivated to share affirming information about the firm. Our findings also generalize to stakeholder criticism beyond movement organizations, suggesting collaborations are powerful means by which firms can exploit the identity and networks of stakeholder partners to fashion less contentious environments.

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