Information Spillovers from Protests Against Corporations: A Tale of Walmart and Target Lori Yue, Hayagreeva Rao, Paul Ingram

Motivation From 1998 to 2008, Walmart made 2,050 proposals, encountered 805 protests, and managed to open 1,234 stores. Target floated 1,110 proposals, attracted only 74 protests, and was able to open 1,046 stores. What explained the striking difference in the protest rates experienced by Walmart and Target?

Popular Media’s Explanation Walmart is a poster child of extreme capitalism Target has a benevolent corporate image Activists argue that Target is not really that different from Wal-Mart Serres, 2005; Bustillo and Zimmerman, 2010 A tough anti-union attitude Wages and benefits mirror Walmart’s Super Target has similar impacts as Walmart Supercenter Walmart is a regular contributor to community causes “Why is Walmart the bad guy?”

A New Explanation: Information Spillover from Social Movement Activism A framework with three parties: a first-mover (Walmart), a second- mover (Target), activists Information asymmetries. Activism against the first-mover signals a community’s preference Second-mover receives the signals and better positions itself

Walmart and Target Store Location, Before Walmart stores 764 Target stores

Walmart and Target Store Opening: Walmart in triangles 1004 Target in dots

Hypotheses H1: Protest events against Walmart have a curvilinear (+,-) relationship with Target’s entry. H2: Walmart’s withdrawals due to protests have a curvilinear (+,-) relationship with Target’s entry. H3: Walmart’s successes in overcoming activists have a positive relationship with Target’s entry.

Data and Methods Data: All the 25,375 places in the U.S. from 1998 to Due to the creation of time-lagged variables, the sample used in the final estimation include all the years from 2001 to Store Proposal and Protest: A media search from 1998 to 2008 using the Lexis-Nexis, the America’s News, and the Sprawl-Busters databases. Matched with a list of Walmart/Target store openings from 1998 to 2010.

Variables Dependent Variable: A dummy variable to indicate whether Target proposed to open a new store in a place in a year Independent Variables: Anti-Walmart protest Walmart’s withdraw due to protest Walmart’s success despite protest Control Variables: Community characteristics (population, income per capita, unemployment, urban, race, and region), political ideology (Pro Democrat, hazard of institutional escalation ), organization of mobilization (anti-Target protests, union, church, Main Street Program) ; retail economy (distance to Target d.c., Wal-Mart and Target stores within 5 miles); the effect of media (media’s attention, unfavorable editorials)

Estimation Problem: Unobserved heterogeneities that simultaneously affect Walmart’s proposal (Y 1 ), anti-Walmart protests (Y 2 ), Walmart’s withdrawals (Y 3 ), and Target’s entry (Y 4 ) Solution: Conditional Mixed Process (CMP) Model (Roodman, 2011)

Estimated Probability of Target’s Entry with 95% Confidence Interval Walmart’s Withdrawl Due to Protest

Estimated Probability of Target’s Entry with 95% Confidence Interval Walmart’s Success Despite Protest

Discussion & Conclusion Theoretical Contribution 1.The literature on private politics has emphasized the direct effect of protests on their intended opponent, and overlooked information spillovers from protests. 2.We distinguished between two types of spillovers, one type produced by the incidence of protest and a second type from a targeted firm’s response. 3.We contribute to the strategy literature on market entry by showing second-movers benefit from a first-mover’s exposure to protests. 4.For organizational learning, we show that social movement activism constitutes another form of information spillover between organizations. Extension & Revision-mechanism & market size