Who Do They Think They Are? Identity as an Antecedent of Social Activism by Institutional Shareholders

Abstract

Shareholder activists increasingly pressure corporations on social policy issues; yet, extant research provides little understanding of who these activists are and how they choose their corporate targets. In this article, we adopt an activist-centered approach and rely on hybrid organizational identity theory to determine, in a two-phase analysis, how shareholder activists define their economic and social identities and whether these identities are associated with specific target characteristics and tactical strategies. Our findings form the premise of a typology of institutional shareholder activists that is empirically derived and takes into account the wide range of hybrid organizational identities that shareholders exhibit. With a sample of 735 social policy shareholder proposals filed by 104 institutional shareholders in the 2009-2010 period, our study presents one of the first empirical tests examining the heterogeneity of identities within the broad stakeholder category of “social shareholder activists.” Our empirical evidence demonstrates that these shareholders’ mix of economic and social identities is systematically related to their targets’ characteristics and tactical strategies. The implications of our new typology for research on shareholder activism and the value of our findings for managers conclude this article.

Do sustainable institutional investors contribute to firms’ environmental performance? Empirical evidence from Europe

“…A growing body of academic literature investigates the influence of institutional investors as a key corporate governance mechanism that affects invested firms' nonfinancial performance (Dam and Scholtens 2012;Dyck et al 2019;Gloßner 2019;Kim et al 2019a;Xiang et al 2020). This specific investigation of institutional investors is a result of their greater influence on corporate decision-making in recent years (Shleifer and Vishny 1997;Aghion et al 2013;Sikavica et al 2018;Kordsachia 2020). Today, shares of the largest corporations around the world are owned by institutions rather than individuals (Dyck et al 2019).…”

Private engagement by Nordic institutional investors on environmental, social, and governance risks in global companies

“…Institutional investors have become more active in the management of environmental, social, and governance (ESG) risks of the companies in which they invest (Eurosif, ; Eurosif, ; Gifford, ; Goldstein, ; Gond & Piani, ; Kiernan, ; Principles for Responsible Investment, ; U.S. SIF, ), and investor activism on ESG issues has evolved into an important mechanism and research topic in corporate governance (Goranova & Ryan, ; Sikavica, Perrault, & Rehbein, ; Thomsen & Conyon, ). Prior broad‐scale database studies have examined investor activism on ESG issues from different perspectives.…”

“…2 | THEORY, PRIOR FINDINGS, AND RESEARCH CONTEXT 2.1 | Social movements and the private engagement process This paper will employ social movement theory for social activism to provide a theoretical basis for the selection of target companies and how private engagements on ESG risks can influence target companies. Social movement theory suggests that social movements can elicit organizational change by challenging the legitimacy of existing social responsibilities and practices with new arguments based on moral principles or pragmatic business concerns (den Hond & de Bakker, 2007;Reid & Toffel, 2009;Sikavica et al, 2018). Activists can support companies not only to manage ESG risks but also ways to find new business opportunities.…”

“…Social movement theory has found support in research on the antecedents and outcomes of formal and visible forms of investor activism on shareholder resolutions that challenge companies to address various ESG concerns by improving existing and developing new practices (Ferraro & Beunza, 2014;Goodman et al, 2014;Grewal et al, 2016;Lee & Lounsbury, 2011;McDonnell, King, & Soule, 2015;Reid & Toffel, 2009;Sikavica et al, 2018;Vasi & King, 2012). Rehbein, Waddock, and Graves (2004) document that company characteristics can explain targeting decisions of social activists in terms of the number and nature of shareholder resolutions appearing on the proxy statement.…”

Company Receptivity in Private Dialogue on Sustainability Risks

“…Many studies have examined a visible and formal dialogue in the context of shareholder proposals filled by institutional investors. Research outcomes include the model of shareholder proposal process, responses of companies to shareholder proposals, the antecedents of proposal withdrawals, and the impact of proposal withdrawals on the sustainability performance of target companies [11,15,[18][19][20].…”