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Shareholder activism and the ethical harnessing of institutional investors: The unique case of ShareAction

Mila Ivanova (Cardiff Business School, Cardiff University, Cardiff, UK)

Critical Perspectives on International Business

ISSN: 1742-2043

Article publication date: 3 May 2016

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Abstract

Purpose

This study aims to foster a deeper understanding of socio-ethical shareholder activism by outlining the corporate campaigning strategies of a UK-based non-governmental organisation (NGO) and by assessing their impact on both institutional investors and the practices of two multinational companies. As we move into a world where shareholder ownership is becoming more democratised, shareholder activism is gaining prominence in the USA, Europe and Asia, opening new avenues for participation in corporate governance by stakeholders such as NGOs who have traditionally been uninvolved in corporate decisions.

Design/methodology/approach

The article adopts a qualitative methodology and case study research design. It relies on semi-structured interviews, analysis of documents and participant observation.

Findings

First, the study sheds light into the ways in which NGOs are connecting themselves to the financial sector. It argues that they can pursue their political goals by framing their arguments in a way that emphasises the short-term financial risks/benefits for investors. Secondly, it demystifies the term “shareholder activism”, transforming it from an action tool belonging only to big and powerful institutions, to a tool which gives other stakeholders such as NGOs and ordinary people a real stake in companies’ affairs. What is more, the study highlights the divergent nature of institutional shareholder activist intervention in the USA and the UK.

Research Limitations/implications

Given the generally long-term nature of shareholder campaigns, which can sometimes span over several years, it could be beneficial to adopt a longitudinal research design. Future research can endeavour to focus on a number of different campaigns over a period that exceeds three years.

Practical Implications

The research has implications for NGOs adopting a shareholder activist campaigning model and for policy makers aiming to encourage investor stewardship.

Originality/value

The fact that the research field of NGO socio-ethical shareholder activism is relatively new and under-explored by academia, coupled with the growing incidence of the phenomenon in the UK and across the world, as well as its potential benefits for society as a whole, renders further investigation into the topic necessary.

Keywords

Citation

Ivanova, M. (2016), "Shareholder activism and the ethical harnessing of institutional investors: The unique case of ShareAction", Critical Perspectives on International Business, Vol. 12 No. 2, pp. 189-214. https://doi.org/10.1108/cpoib-09-2013-0032

Publisher

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Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited

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