Do boycotts really work?

The holidays are over, but the shopping boycotts aren’t. Consumer protests over Black Friday abuses and anger over Ferguson have largely eased, only to be replaced by a fresh wave of boycotts and battles.

Some shoppers are giving Chipotle restaurants the cold shoulder over an employee’s protest of the New York police department, while a major student teachers’ union recently announced plans to boycott Israel. The UK Christmas boycott of Amazon over its tax dodges has segued into a joint US and Canadian bookstore boycott of the company over its aggressive business practices. Consumers are shunning Alaska over its wolf hunting, Burberry over its animal treatment, and Chevron for its toxic dumping.

In fact, according to Ethical Consumer, a UK-based consumer activist magazine, there are 66 active, “progressive” boycotts currently under way. And that’s just scratching the surface: a quick search on Facebook reveals that, at any given time, a seemingly endless list of companies, movies, TV programs, actors, business executives and events are being shunned by consumers for some reason or another.

Clearly, boycotts are the preferred tool for consumers hoping to make their feelings known. But how effective are they – and what separates an effective boycott from an ineffective one?

Grassroots versus professional boycotts

The basic narrative of a grassroots boycott is familiar: a group of consumers, angry about an issue, refuse to spend money at a retailer. They enlist like-minded consumers, the boycott grows and the company suffers from lower sales.

While these sorts of campaigns are useful for expressing displeasure, they aren’t all that successful when it comes to changing a company’s policies. For example, one of the most widespread grassroots campaigns of recent years – the 2003 US boycott of French wines – quickly caused a 26% drop in sales, but had little long-term effect on either France’s wine industry or its politics. Within six months, says Larry Chavis, a professor of entrepreneurship at the University of North Carolina at Chapel Hill, “sales had returned to the same trajectory that they had been on before the boycott.”

By comparison, Chavis says, the economic sanctions against Russia following its invasion of Ukraine took longer to develop, but also had a much more significant impact. “They were a stronger engagement,” he says. “They were well-planned with a clear, strategic purpose. And if you look at the performance of the ruble today, it’s clear that they were very effective.”

Comparing a consumer-based boycott to a national economic policy may smack of apples and oranges, but these two cases highlight the difference between a carefully planned campaign and a spur-of-the-moment boycott. Brendon Steele, a senior manager of stakeholder engagement at Future 500, says that boycotts are most effective when combined with a broader collection of carrots and sticks.

“Smart campaigners combine boycotts with carrots such as brand promotion if a company makes a change, and other types of sticks if it does not, such as targeted protests, social media campaigns, and brandjacking,” he says.

Successful campaigns, Steele says, also have well-defined “asks” that let a brand know what, exactly, the campaigners want. To be most successful, he argues, campaigners need to present a business with two paths. “In one, the brand loses value because it is connected with a problem,” Steele says. “In the other, the brand gains value when it is perceived as a leader. Combined with a smart, do-able ask, a brand might be inclined to sign on without the need for a public boycott.”

Attacking a brand, not just its bottom line

Another major difference between grassroots boycotts and professional campaigns lies in their focus. While grassroots campaigns are usually aimed at convincing consumers to spend their money elsewhere, Steele says that smart campaigns direct their attention towards a brand’s reputation instead of directly at its bottom line. “Although seemingly intangible, the brand value alone of a consumer-facing company can be worth billions of dollars,” he explains. “The brand is what connects with consumers. Done strategically, putting a brand at risk can encourage a conversation.”

This is borne out by the 1990s Nike boycott, an exceedingly effective action. It’s true that the company’s sales fell after activist groups accused the brand of using child labor. “Because they’re dependent on cutting-edge styles, the loss of sales caused immediate, serious harm,” explains Judith Samuelson, executive director of the Aspen Institute’s business and society program.

But while the short-term hit to Nike’s profits was significant, the most impressive long-term impact came from the hit that the company took to its brand. Since the 90s, Nike has worked hard not only to rehabilitate its reputation, but to become a sustainability leader. “Today, Nike is very proactive,” Samuelson says. “They’re aware of the need to be on top of their supply chain.”

In addition to preserving the long-term value of their brands, companies facing consumer boycotts have another pressing concern: preserving the short-term value of their stocks. Brayden King, a professor at Northwestern University’s Kellogg school of management, says that, in addition to sending a message about a company to consumers, a boycott can send a message about a company’s leadership to its shareholders.

“Investors may perceive that a CEO’s inability to resolve a conflict may be indicative of a bigger leadership problem at the company,” King says. For example, in the case of BP’s Deepwater Horizon oil spill catastrophe, the resultant debacle demonstrated a lack of leadership. “The company handled the PR so poorly that stockholders lost confidence in its executives,” King says.

On the other hand, King points out, a boycott that is handled quickly and effectively also sends a message. “If an executive can quickly put a controversy to bed, it may even improve his or her standing among stockholders,” he says.

Conflicting goals

In a 2011 study that compared successful boycotts to unsuccessful ones, King discovered that every day in which a company’s boycott was in the news, its stock price declined. But while companies want to resolve boycotts quickly, activists often have the opposite aim.

For many activists, the goal is not to change a company’s policies but rather to change public opinion on an issue, King says. “They often regard these companies as a visible, public stage that they can use to draw interest,” he says. “They will change or evolve their tactics to keep the spotlight on their cause as long as possible.”

This use of companies as a stage for raising issues is borne out by Oxfam’s NikeWatch, which continues to use the manufacturer as a way to draw attention to its workers’ rights campaign. By focusing on Nike, Oxfam has been able to fuel discussions about wages, trade unions, confidential complaint reporting and other workers’ rights issues.

King says that, while activists and companies may have opposing goals, there’s room for compromise. “Dialogue with powerful people is a powerful win for activists,” he says. So companies willing to open a conversation with activists can use that as a carrot to help end the boycott earlier instead of leaving it to drag on. This is also demonstrated by Oxfam’s NikeWatch, which highlights the impact of its ongoing back-and-forth correspondence with the manufacturer.

Dialogue, of course, can have its dangers too. While companies often expect that activists will go away when the problem is resolved, King says they are more likely to continue to keep a close watch on a company. “Companies that engage often get more targeted in the future,” he says. “This may partially be because they seem more likely to be affected by shame.”

In addition, companies that have been the subject of boycotts and protests often become far more sensitive to public perception, King says. “After an action, companies often engage in pro-social behaviors that are completely unrelated to the campaign that brought them negative attention in the first place,” he says. An example, again, is Nike, which has spearheaded initiatives that have extended beyond child labor to a wide range of environmental and societal issues.

Ultimately, this may be the most desirable effect of all for boycotters: a behavior change that extends far beyond a company’s short-term profits or a dip in its stock price.

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