Companies' Responses to Social Activism: A Resource Reconfiguration Perspective

Private politics scholarship portrays companies’ organizational vulnerabilities as opportunities for social activists because they signal openness to change. But meaningful organizational change requires not only openness to change, but capacity to mobilize resources to implement it. We develop a resource reconfiguration perspective that posits companies’ capacity to reconfigure organizational resources is an important determinant of their responses to private political activism. Furthermore, we highlight the possible trade-offs when organizations respond to activist demands by reallocating resources from other social performance priorities. We test our theory in the context of global supply chain factories by investigating which are more likely to improve wage practices in response to local labor activism demanding better compensation, and whether they do so by trading off commitments to other practices. Analyzing 3,495 social audit reports of 2,352 suppliers in 114 cities in China from 2012 to 2015, we find support for our resource reconfiguration perspective. Worker activism demanding better compensation led local supplier factories to improve compliance with wage and benefits standards, but came with slower improvement in compliance with health and safety standards. Organizational structures that facilitate resource reconfiguration—piece-rate payment and unions—amplify both effects.