The Effect of Insider versus Outsider Activism on Corporate Targets’ Market Performance

Abstract

Although outsider activists are the main participants of social protests, the large scale protests initiated by insider activists in recent years have attracted the public eyes and induced us to wonder whether insider activists, with higher risk and more significant cost to initiate and participate in social protests, are able to achieve more social movement outcomes than outsider activists. While factors influencing social movement outcomes have received ample attention from the perspectives of structure and agency, we still lack a good understanding of the impact of activist identity on social movement outcomes. This research builds a theoretical model to explain the links between activist identity and social movement economic outcomes by employing and extending the political process mode, a particular theory to explain social movement emergence and outcomes. Hypotheses developed from the model predict that protests initiated by insiders are more destructive to corporate targets’ market performance than outsider protests and that the destructiveness advantage of insider protests would be alleviated if corporate targets enjoy higher status but strengthened if targeted firms focus on service business. Results from a sample of social protests targeting U.S. public corporations reported by the New York Times between 2001 and 2021 provide support for the predictions. This research contributes to social movement outcomes by exploring the diverse impact of different types of activists and examining and extending the mobilizing structures of the political process model. This research also extends literature about insider activism by studying the economic outcomes of insider external activism.