Currently, surfers in Tahiti are protesting a permanent structure on a reef that Olympic organizers say is necessary to host the surfing competition in next summer’s Olympic games. Protests, boycotts, and lobbying can often feel like the only options for stakeholders who are excluded from decision-making or when the entities that they are trying to influence are unsusceptible to conventional market influence.
The Olympics are not particularly sensitive to market pressures – they still cost Tokyo a fortune to host in 2021 even as other events were canceled or drastically scaled down in response to the market impact of the COVID-19 lockdowns. The Olympics come, ready or not, so the surfers are fighting to save the reef that made Tahiti a premier surfing competition location in the first place.
But not all activists pursue their goals the same way. Some choose to work through institutional channels, while others circumvent these bureaucratic hurdles. In other words, activists are more moderate or radical in their approach to effecting change. The radical flank effect reflects how other stakeholders view a political or social cause when there is both a radical and a moderate element of activism working towards that cause. Scholars are paying increasing attention to how these disparate groups of activists interact, but Jake Grandy, professor of strategy, entrepreneurship, and venture innovation at the University of Arkansas, says there is still much that researchers have yet to cover regarding this radical flank effect.
While scholars have proposed how this radical flank might affect the success of social movements, there are so far no studies empirically testing the radical flank effect. The few studies, which have looked into the effect, have largely examined the effect of activism on public policy change. Few researchers have considered how these movements interact with private ventures when activists target businesses directly, and until Grandy’s recent study on the radical flank effect, no research had considered the impact on regulated markets.
Grandy and his coauthor, Shon Hiatt (University of Southern California), say this limitation is particularly important because many economic sectors – many of which have huge impacts on our lives, such as telecommunications, finance, energy, water, and biotechnology – are regulated by governmental agencies. To better understand this relationship, Grandy and Hiatt study the effect of social activism on the licensing of hydroelectric power facilities between 1987 and 2019 in their article, “The Radical Flank Revisited: How Regulatory Discretion Shapes the Effectiveness of Social Activism on Business Outcomes.”
Grandy and Hiatt found that when governmental agencies have a large degree of discretion in their decisions and actions, the radical flank had a positive effect, so activist interests were able to achieve at least some of their goals. On the other hand, without much discretion, regulatory agencies proved to be less sensitive to activists’ demands with the presence of a radical element of protest. Grandy and Hiatt argue this is because agencies with less discretion, hemmed as they are by legislation and other institutions, can easily deflect activist criticism and pin the blame on other actors.
The researchers highlight the importance of their work for stakeholders seeking to influence regulatory agencies, so they can choose optimal tactics to influence a governmental agency depending on its regulatory discretion. And to my mind, it draws questions to the fore on how we should be organizing our economy to ensure democratic protections.
The Radical Flank
It’s well known that within a social movement, activists pursue their goals along a spectrum. Some, like Just Stop Oil, use radical, even confrontational, tactics to raise awareness about their positions. Frustrated with radicals taking things too far, others opt to instead work within institutional frameworks to achieve their goals. Illustrating this dynamic, Extinction Rebellion, which used to be more radical in their protests, signaled at the beginning of the year that they’ll focus on relationship building over confrontation to meet their goals.
Scholars have theorized and even found evidence for two primary ways these sometimes acrimonious activist factions might interact with each other. This is specifically the radical flank theory: it is not merely that there is a radical element to protests but that there are both moderate and radical elements at the same time. In some ways, the theory is more about how radical activists change non-activist stakeholders’ opinion about moderate activists.
Alternatively, some suggest a negative radical flank effect, whereby the radical element undermines the legitimacy of more moderate activists. Their extreme politics and tactics become an easy strawman for politicians and regulators, who want to resist change or community input. Others, however, suggest the radical flank can have a positive effect by making moderates seem more reasonable – or at least a more desirable negotiating partner.
Yet even for all this work, Grandy and Hiatt say that scholars have not yet theorized or empirically tested what conditions cause the radical flank to either enhance or diminish activists’ impact, especially in regulated markets. So, their study specifically explores how a regulatory agency’s degree of discretion – how much regulators are bound by other institutions or laws – affects the kind of influence the radical flank has.
To do so, Grandy and Hiatt studied the U.S. hydroelectric power sector, the largest source of renewable electricity in the U.S. While hydroelectric power is regulated at the federal level by the Federal Energy Regulatory Commission (FERC), each state can also introduce additional license requirements, so states can individually deny or delay federal licensing.
The researchers point out that states like California and New York have expanded regulatory frameworks, while others, like Kansas and Indiana, choose to only adhere to the federal regulations. In some cases, these states adopt legislation that specifically prevents regulators from creating new restrictions. This means there is a patchwork of regulatory environments for hydroelectric power throughout the United States.
Hydroelectric power also offered the researchers a good data sample because licensing is frequently protested by a plethora of environmentalist and community organizations. Activists argue that hydroelectric facilities damage the environment, negatively impact fish and birds, and harm communities. They have also lobbied Congress and FERC as well as protesting new facilities.
Regulators Respond (or Not) to Protest
Grandy and Hiatt used FERC’s docket library between 1987 and 2019 to study the effect of the radical flank on nearly 800 hydroelectric license applications. Most of these licenses were ultimately approved, with just 5% being withdrawn or rejected and 7% still awaiting a decision at the end of their study window.
In their study, the researchers found that about 600 dockets were high discretion, meaning regulators had more leeway in making their own decisions. The remaining 200 were considered low discretion. Based on their sample, Grandy and Hiatt say that the average wait time for licensing is 1,695 days (a little over four and a half years).
The researchers found that moderate tactics had a positive and significant impact on time to licensing in their low-discretion conditions. They argue that this impact is probably due to regulators’ reduced flexibility, meaning they have to address formal objections that activists file via institutional channels. Inversely, with high discretion, regulators have more flexibility to ignore activists, so they saw moderate tactics alone were not enough to slow licensing down.
As they predicted, Grandy and Hiatt found that in an environment of high regulatory discretion, the presence of radical and moderate activists slowed licensing by 90% or, in other words, by 1526 days. But with low regulatory discretion, this same array of activist tactics sped licensing by 33% or 560 days. This means that there isn’t simply a positive or a negative radical flank effect. Instead, the regulatory conditions change the relative impact of activists’ tactics.
Grandy and Hiatt say there is still much to study about the radical flank’s effect on activism in business. For instance, they suggest further research is needed on how this effect generalizes to other kinds of targets such as managers and the response differences between business-to-consumer and business-to-business firms. Likewise, they call for further scholarly scrutiny on circumstances when businesses and activists’ interests align.
Managerial Implications
Grandy and Hiatt highlight the implications of the study for the different stakeholders. Managers need to attend to the combination of moderate and radical activism. On the one hand, they state that “when hydropower companies proactively addressed the concerns of regulators and moderate stakeholders, it reduced the broader movement’s ability to hinder facility licensing via the positive radical flank effect.”
On the other hand, though, Grandy points out that protestors “would be wise to coordinate their tactics according to the character of the institutional environment” where they intend to effect change. And to that end, he suggests elected officials “think carefully about the nature of stakeholder activism in their states and the discretion granted to regulators to achieve policy goals.”
Grandy’s research highlights that regardless of its organization, our economy’s structure has a direct impact on who gets a say and sometimes whether that say is meaningful or not. We should be mindful about the knock-on effects of states’ regulatory decisions and advocate that the decision makers who affect our lives reflect our shared democratic values.
Jake Grandy is an assistant professor of entrepreneurship and venture innovation at the Sam M.
Walton College of Business at the University of Arkansas. He earned a Ph.D. in 2017
from the University of Southern California's Marshall School of Business. Grandy studies
entrepreneurship, non-market strategy and corporate social responsibility and is specifically
interested in differences in how established firms and new ventures influence and
are influenced by powerful stakeholders, such as elected officials, regulatory agencies
and social movement activists, and the ramifications for firm competitiveness.
Mitchell Simpson is a doctoral student in the Department of English at the University
of Arkansas. His research focuses on the Global Middle Ages and cross-cultural communication
in the European Medieval and Early Modern Periods. When his nose isn't buried in a
book (usually a Japanese textbook right now), he can be found hiking the Ozarks or
at the gym improving his grappling. He lives with his wife, Rachel, and their small
menagerie, two cats, Hildi and Winnie, and a goofy dog, Birch, in Fayetteville.
