Seminar – The radical flank revisited: How regulatory accountability shapes the effectiveness of social activism on business outcomes

Shon Hiatt, Associate Professor, Marshall School of Business USC

Although scholarship has highlighted how stakeholders influence business outcomes, few studies have examined how simultaneous, different tactics interact to impact firms. Critical to understanding this interaction is the radical flank effect, which asserts that the moderate and radical elements of social movement tactics can interact to either enhance or diminish a movement’s ability to accomplish its goals. However, research is unclear about when and whether the radical flank effect enhances or diminishes movement influence and says little about factors that may influence the direction of the effect. To address these limitations, we explore one such factor – the degree to which the regulatory agencies that oversee businesses in regulated markets are accountable for their decision making. Drawing on management and political sociology studies, we argue that shifting the degree to which regulators are accountable to the public can alter the radical flank effect on business outcomes in regulated markets. We analyse stakeholder opposition to US hydroelectric power facilities from 1987–2019. The results show that high accountability to the public enhances the radical flank effect, thereby enhancing stakeholders’ influence, whereas low accountability reverses the radical flank effect, thereby diminishing stakeholders’ impact on business outcomes. Post hoc analyses illustrate that firm engagement with regulators who are accountable to the public can mitigate social activists’ ability to impede business licensing in the presence of the positive radical flank.

Speaker bio

Shon Hiatt is an associate professor at USC Marshall School of Business and faculty affiliate of the Greif Center for Entrepreneurial Studies. He researches entrepreneurship, ESG strategy, and sustainable innovation in domestic and international contexts. Professor Hiatt’s research has been published in academic journals and featured in media outlets.

He is the recipient of numerous scholarly and teaching honors, including the Kauffman Junior Faculty Fellowship in Entrepreneurship and the Academy of Management and ARCS Emerging Scholar Awards. Prior to joining USC, he was on the faculty at Harvard Business School.

For more information, please contact Luke Slater.