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Differential Firm Commitment to Industries Supported by Social Movement
Organizations
Durand, R.; Georgallis, P.
DOI
10.1287/orsc.2017.1170
Publication date
2018
Document Version
Submitted manuscript
Published in
Organization Science
Link to publication
Citation for published version (APA):
Durand, R., & Georgallis, P. (2018). Differential Firm Commitment to Industries Supported by
Social Movement Organizations.
Organization Science
,
29
(1), 154-171.
https://doi.org/10.1287/orsc.2017.1170
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Differential Firm Commitment to Industries Supported by Social Movement
Organizations
ArticleinOrganization Science · March 2018
DOI: 10.1287/orsc.2017.1170
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1
Differential firm commitment to industries supported by social movement organizations
1
Rodolphe Durand
HEC Paris
1 rue de la Liberation. 78351 Jouy en Josas. France
durand@hec.fr
Panayiotis (Panikos) Georgallis
2
University of Surrey
Alexander Fleming Rd, Guildford GU2, United Kingdom
p.georgallis@surrey.ac.uk
(June 2017)
Abstract: This article theorizes about and tests the conditions under which firms‘ commitment to an
industry is influenced by social movement organizations (SMOs) that favor the industry. We argue that
the more prominent SMOs are within an industry, the more a firm increases its commitment to that
industry by expanding its operations; yet, this main effect should be moderated substantially by a firm‘s
idiosyncratic characteristics. The current research predicts that a firm‘s location, its sensitivity to
information about the industry‘s potential, and its history of associations with activists determine the
magnitude of the effect of SMO prominence on its strategic commitment to the industry. We test and find
support for these hypotheses using a longitudinal data set of European manufacturers of solar photovoltaic
cells between 1990 and 2011. The findings offer new insights for literature on social movements and
organizations, as well as strategic management research.
Keywords: Organization and Management Theory, Strategy and Policy, Sustainability/Corporate
Environmentalism, Economic Sociology, Nonmarket/Political Environment
1
The authors are listed in alphabetical order. We are grateful to Brayden King and three anonymous reviewers for
their helpful feedback. We also thank Glen Dowell, Eric Brousseau, Bertrant Quelin, Yannis Ioannou, Susan Kayser
Daniel Waeger, Georg Wernicke, Thomas Roulet, and Estefania Amer for their feedback on earlier versions of this
manuscript. Participants at the Academy of Management 2013 conference, the Strategic Management Society 2016
conference, and the Society and Organizations (SnO) Research Center at HEC Paris provided helpful comments.
Finally, we thank Romain Boulogne, Bob Cavents, Elena Fumagali, Cedric Gutierrez Moreno, and Natalie Sophia
Pilling for their excellent research assistance. The paper is based on the second author‘s doctoral dissertation, which
received financial support from the SnO Research Center, the GDF Suez –HEC Paris Chair, the HEC Paris
Leadership Center, and the Strategy Research Foundation (SRF) Dissertation Grants Program.
2
Corresponding author.
2
In 1992, Greenpeace Germany obtained orders for 70,000 alternative refrigerators that do not use
greenhouse gasses, encouraging manufacturers to bring this product to market.
3
In the late 1990s,
Greenpeace Netherlands collected the names of 15,000 people who were willing to buy solar photovoltaic
(PV) modules in its campaign to promote the solar power industry. In Spain, environmental activists have
toured the country with a solar-powered caravan to demonstrate that solar electricity works. In 2001,
Greenpeace partnered with the European Photovoltaic Industry Association (EPIA) to produce a report
that forecast the long-term future of solar energy; this report received a great deal of attention in industry
circles and led to additional reports by the two organizations in the years that followed.
4
As these
examples illustrate, social movement organizations (SMOs), defined as ―organizations which identify
their goals with the preferences of a social movement and attempt to implement those goals‖ (McCarthy
and Zald 1977: 1218), can be prominent supporters of industries that they consider more acceptable
alternatives to dominant industries. We address two questions that emerge in relation to these scenarios:
How does SMOs‘ prominence within an industry influence firms‘ strategic commitment, and why do
firms differ in their responses to such SMO prominence?
Prior literature on social movements and organizations investigates the support that SMOs
provide and their role in industry creation and expansion. For example, SMOs have influenced
entrepreneurial activity in the wind power sector (Sine and Lee 2009; Pacheco, York, and Hargrave
2014), the development of the green building industry (York and Lenox 2014), and the creation of
markets for local goods (Kurkland and McKaffrey 2016). However, because research in this area mainly
focuses on the industry as the primary level of analysis, it has been ill-positioned to address heterogeneity
in the strategic choices of firms operating in these industries. This omission is problematic on at least two
accounts. First, few studies of industries supported by SMOs have moved beyond entrepreneurial entry
rates, leaving firms‘ subsequent decisions to commit strategically to such industries unexplored. This gap
raises the question of whether (some) firms enter industries merely to comply symbolically with social
3
Source: http://www.greenpeace.org/usa/Global/usa/binaries/2009/4/greenfreeze-in-europe-and-asia.pdf.
4
Source: Photon International. Murray Cameron, the EPIA‘s secretary general at the time, later called the 2001 joint
report one of the highlights of his stewardship.
3
expectations, without investing substantively down the road. Second, research that views social
movements as a source of market contentiousness, rather than as market supporters, consistently reports
that responses to activism differ depending on the firms‘ characteristics (King 2008; McDonnell and King
2013; Waldron et al. 2013; Weber et al. 2009). Given these observations, although prior work has
documented the macro-level effects of support for new industries by SMOs, the need remains to examine
whether SMOs affect concrete investment strategies at the firm level and to understand why firms react
differently to SMO prominence.
We argue that the more SMOs are prominent in an industry (i.e., the more they are noticed within
the industry) the more a firm will increase its commitment to the industry. Because SMO prominence
signals shifting general public preferences, reflects active sponsoring of the alternative industry‘s
economic potential, and defines new contours for reputation building, firms will tend to expand their
commitment to the alternative industry in this case. Yet we also expect that firms differ in their responses
to SMO prominence, particularly because their perceptions of the perceived benefits of social movement
support might be magnified or stifled according to the firms‘ location, prior commitments, or history of
associations with activists.
Empirically, we focus on the European solar PV (photovoltaics) industry, which has been widely
championed by the environmental social movement, ―the most comprehensive and influential movement
of our times‖ (Castells 1997: 67). To test our hypotheses, we built a longitudinal data set of solar PV cell
producers operating in European countries from 1990 to 2011. We operationalize SMO prominence in
reference to Greenpeace‘s presence in the PV industry‘s professional media and track all producers‘
production over time. Using growth models and accounting for country, time, regulation, and other
effects, we find results consistent with our predictions. In particular, we uncover a positive effect of SMO
prominence on a firm‘s increased commitment to the solar PV industry. Our results also show that solar
PV cell producers that operate in a country with greater local SMO support and that have stronger prior
commitments to the industry are more sensitive to SMO prominence (i.e., increase their commitments
more). On the contrary, even if SMO prominence reflects overwhelming support for the solar PV
