Private Politics, Corporate Social Responsibility, and Integrated Strategy

This paper provides a theory of private politics in which an activist seeks to change the production practices of a firm for the purpose of redistribution to those whose interests it supports. The source of the activist’s influence is the possibility of support for its cause by the public. The paper also addresses the issue of corporate social responsibility by distinguishing among corporate redistribution as motivated by profit-maximization, altruism, and threats by the activist. Private politics and corporate social responsibility not only have a direct effect on the costs of the firm, but they also have a strategic effect by altering the competitive positions of firms in an industry. From an integrated strategy perspective the paper investigates the strategic implications of private politics and corporate social responsibility for the strategies of rival firms when one or both is the target of an activist campaign. Implications for empirical analysis are derived from the theory.