Safe Bets, Long Shots, and Toss-Ups: Strategic Engagements Between Activists and Firms

• 成果类型: Article
• 署名作者: Holburn, Guy L. F.; Maxwell, John W.; Bonardi, Jean-Philippe
• 署名单位: Western University (University of Western Ontario); Indiana University System; Indiana University Bloomington; IU Kelley School of Business; University of Lausanne
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.01638
• 发表日期: 2024
• 关键词: activist campaigns; self-regulation; game theory; nonmarket strategy; Warm glow

摘要

We use a game-theoretic model to examine how different types of activist motivation affect strategic interactions between an activist and a firm in the context of a threatened adversarial engagement, in which the activist can benefit from warm glow and media publicity as well as from firm compliance with activist demands. The model yields novel predictions about when firms prefer to self-regulate to pre-empt a contested engagement, how vigorously firms defend themselves against the activist's attack if an engagement occurs, and a new taxonomy of engagements, characterized by offensive and defensive strategies and the likelihood of activist success. The model predicts that when warm glow and campaign-driven wins are important motivations for activists, safe bet and long shot types of engagements are more likely to occur: These tend to be lower expenditure skirmishes where one party has a clear advantage and where a pre-emptive settlement is infeasible. By contrast, firms and activists are more likely to negotiate self-regulation that pre-empts resource-intensive toss-up engagements where each side is evenly matched and expends significant effort. Our findings contribute to strategic management research by developing new insights about how firms respond to different activist motivations and types of engagements. We explore extensions of the model and discuss implications for future empirical and theoretical research on the management of activist relations.