Safe Bets, Long Shots, and Toss-Ups: Strategic Engagements Between Activists and Firms
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UNIL restricted access
State: Public
Version: author
License: Not specified
Serval ID
serval:BIB_A53EE687BB0F
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
Safe Bets, Long Shots, and Toss-Ups: Strategic Engagements Between Activists and Firms
Journal
Management Science
ISSN
0025-1909
1526-5501
1526-5501
Publication state
Published
Issued date
2024
Peer-reviewed
Oui
Volume
70
Number
11
Pages
7443-7462
Language
english
Abstract
We use a game-theoretic model to examine how different types of activist motivation affect strategic interactions between an activist and a firm in the context of a threatened adversarial engagement, in which the activist can benefit from “warm glow” and media publicity as well as from firm compliance with activist demands. The model yields novel predictions about when firms prefer to self-regulate to pre-empt a contested engagement, how vigorously firms defend themselves against the activist’s attack if an engagement occurs, and a new taxonomy of engagements, characterized by offensive and defensive strategies and the likelihood of activist success. The model predicts that when warm glow and campaign-driven wins are important motivations for activists, safe bet and long shot types of engagements are more likely to occur: These tend to be lower expenditure skirmishes where one party has a clear advantage and where a pre-emptive settlement is infeasible. By contrast, firms and activists are more likely to negotiate self-regulation that pre-empts resource-intensive toss-up engagements where each side is evenly matched and expends significant effort. Our findings contribute to strategic management research by developing new insights about how firms respond to different activist motivations and types of engagements. We explore extensions of the model and discuss implications for future empirical and theoretical research on the management of activist relations.
Keywords
Management Science and Operations Research, Strategy and Management
Create date
28/12/2023 17:08
Last modification date
21/11/2024 7:30