The intersection of social movements and corporations recalls images of protest: red paint on fur coats, logging blockades, placard-filled crowds in public spaces. For the organization being targeted, it can be an adrenaline-inducing event that puts the corporate communications department into high gear.

But what would happen if social movements were not treated as a threat but as an opportunity?

This is the intersection that professors Kate Odziemkowska of the Rotman School of Management, and Yiying Zhu, at Montclair State University, explore in their new paper, “How social movements catalyze firm innovation,” published in the Organizational Science journal.  

The research is a follow-up to Odziemkowska’s 2022 paper, “Frenemies: Overcoming audiences’ ideological opposition to firm-activist collaborations,” which explored what happens when environmental advocacy organizations collaborate with Fortune 500 companies.

It led her to Zhu, who was then a PhD student at Rice University. “We talked about the urgency of climate issues and claims that innovation must come from firms,” Odziemkowska recalls. “This led me to ask whether environmental movements have any role in pushing firms in that direction. Can they drive companies to innovate in this space? After all, companies have a profit motive. Without seeing a motive to innovate on climate issues, why would firms engage in this effort?”

Their early analysis of the existing research found a paradox between companies that had robust innovation in the climate space but had been targeted by environmental activists. The duo dug into the contradiction by analyzing companies in the oil and gas sector, finding that when those companies collaborated with an activist group, or what Odziemkowska calls a social movement organization (SMO), “they end up having 300 per cent to 400 per cent more novel patents on climate innovation,” she says. “I thought that was really cool.”

Zhu and Odziemkowska built two hypotheses examining the intersection of SMOs and corporate innovation in “contentious” and “collaborative” environments.

Contentious interactions occur when a social movement organization directly targets a firm to hold it accountable on an issue, such as its greenhouse gas emissions. The authors posit that the threat of a tarnished reputation could have the effect of focusing managerial attention on the subject. This, the researchers theorized, can spur investment in R&D toward innovative solutions.

In their paper, Odziemkowska and Zhu offer the example of energy utility Allegheny Energy being contentiously targeted by SMOs for pollution. “Two years later, the company applied for patents for technologies to curb sulfur dioxide emissions, where in the previous two decades, it had not applied for any patents related to air emissions or climate change.”

Collaborative interactions, on the other hand, take the opposite approach. This hypothesis posits that when an SMO and a company collaborate, innovation stems from a “distant recombination of knowledge.” In other words, the social movement organization brings outside experience and ideas to the table, spurring new ways of thinking at corporations and finding new ways forward. 

To test their hypotheses, Odziemkowska and Zhu used data from patent applications and hand-collected data on firms, such as media reports and financial filings.

“We looked at companies that activists engaged versus similar companies they didn’t,” Odziemkowska explains. “By comparing the differences in innovation activities between those two types of firms, we can say, ‘If this engagement hadn't happened, this company would have behaved like its peer.’”

Recognizing profit was a key motivation for corporate innovation in climate solutions, their interviews with R&D managers revealed a key insight: “They said they pay attention to activists, especially when they are being targeted, because activists act as harbingers for issues and market trends,” Odziemkowska says. “One quote we heard was, ‘The market demand isn’t there yet, but because activists are agitating on these issues, we know it eventually will materialize.’”

Collaboration, on the other hand, could help push a firm out of its comfort zone. Odziemkowska says that past research showed that companies tend to innovate incrementally within their sphere of knowledge. But collaborating with an SMO and accessing its expertise nudged companies out of that sphere and into new areas. As an example, the authors relate the success of McDonald’s waste reduction efforts in the 1990s to solutions it developed in partnership with the Environmental Defense Fund (EDF). The EDF’s goal was for McDonald’s to reduce packaging waste and use of harmful materials like Styrofoam. McDonald’s goal was to save money. Working together, they achieved both. 

For business leaders interested in this corporate version of turning lemons into lemonade, Odziemkowska has simple advice: “Pay attention to the attack. It can act as a predictor of where demand is going. Whether or not you collaborate, you should direct your innovation teams in that direction.

“Open your doors to these adversaries,” she adds. “There are real learning opportunities for organizations, which can lead to important bottom-line benefits, but also more novel solutions to issues that people care about. These movements don’t come from nowhere — they typically have popular support. Why wouldn’t you want to innovate in areas that people care about and that consumers are willing to pay for?”

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