When Greenpeace pressured McDonald’s over its role in Amazon deforestation in 2006, the company initially faced public criticism before working cooperatively with activists to establish the Amazon Soy Moratorium, a policy that decoupled soy sourcing from deforestation. In contrast, Nike’s response to labor rights activism in the 1990s was initially confrontational, as the company resisted demands for change before ultimately reforming its supply chain through stricter labor standards and transparency measures. These two cases illustrate how firms can innovate in response to activist pressure—either by adapting defensively under contention or exploring new solutions through collaboration. But how do these different engagement strategies shape corporate innovation?
A new study published in Organization Science by Kate Odziemkowska and Yiying Zhu investigates precisely this question, analyzing how social movements influence firm innovation through private politics. The researchers examine the 500 largest U.S. firms targeted by 136 environmental social movement organizations between 1988 and 2012, tracking climate-related patents in air pollution, alternative energy, and energy efficiency. They compare firms that were contentiously targeted (through protests, lawsuits, and boycotts) with those that collaborated with activists and a matched sample of firms that were not targeted.
The study provides compelling examples of how activist pressure influences innovation. For instance, Chevron, after facing lawsuits and protests from Greenpeace in 2009 over its handling of climate-related challenges, increased its green patents from an average of 18 per year to 30 in 2010, including an innovative process for separating carbon dioxide from flue gas. Similarly, Allegheny Energy, which was sued over sulfur dioxide pollution from its power plant, went from no green patents to developing new technology for air pollution control. Finally, Walmart’s partnership with the Environmental Defense Fund (EDF) in 2007 on solar energy led to multiple patents in renewable energy, including a solar heating system to reduce fossil fuel reliance. These cases illustrate how activism often drives corporate innovation.
More generally, the findings clearly distinguish how private politics shapes innovation. Firms that face contentious pressure from activists tend to produce more patents related to movement-advocated issues, but these innovations remain close to their existing knowledge base, focusing on incremental improvements. In contrast, firms that cooperate with activists pursue more radical innovations, combining knowledge from distant fields to develop entirely new technological solutions. However, if a firm collaborates with activists after facing contention, the effects of both engagement strategies weaken—suggesting that some firms may engage in collaboration for legitimacy rather than learning.
This research offers critical insights for companies navigating activist pressure. Firms in industries where activist scrutiny is high—such as energy, transportation, and manufacturing—should recognize contention as a catalyst for innovation within familiar domains but leverage collaboration to access breakthrough knowledge. For companies balancing both dynamics, the study warns against treating collaboration as mere reputation management, as this approach undermines its potential to drive innovation. Ultimately, this study underscores that activist engagement—whether through confrontation or cooperation—can be a strategic driver of innovation, shaping not only how firms respond to societal challenges but also how they compete in the marketplace.
Have a great and impactful week!
João Cotter Salvado
Professor and Academic Director
CATÓLICA-LISBON Entrepreneurship Center