Abstract
Despite the power they wield in modern society, corporations are hardly democratic institutions. Their governance structure is designed to further the interest of a narrow set of stakeholders, leaving little room for safeguarding the interests of other constituencies. Moreover, the power to manage corporate affairs rests in the hands of a few individuals who enjoy broad discretion and face limited accountability. This decision-making structure fosters an environment that favors the pursuit of profits at the expense of the interests of those who lack access to the corporate governance framework. Since infiltrating this governance mechanism to influence a firm’s decision-making is costly and largely ineffective, outsiders have resorted to extra-institutional tactics to persuade primary stakeholders that do have such influence. Boycotts are one of these extra-institutional tactics. As the regulatory state waned throughout the 20th century, boycotts became a means of regulating and influencing corporate behavior. Being subject to a boycott threatens a firm’s reputation and decreases the willingness of market participants to deal with it, which can adversely impact its stock price. This alters the calculus of those who control the levers of corporate governance. Two recent trends, however, threaten the effectiveness of boycotts as an extra-institutional corporate governance mechanism: increasing political polarization and the growth of social media. These co-existing trends have lowered the costs of starting a boycott and reduced the reputational costs associated with being targeted by one. If modern boycotts pose a lesser threat to a company’s reputation and stock price, they will have less influence on corporate decision-makers. This development adds urgency to two long-standing debates. First, it underscores the importance of defining the role of the corporation in society and the goals and duties that should be imposed on those managing a corporation. Second, it stresses the importance of reinvigorating a fading regulatory state as a bulwark against corporate actions that impose costs on society and harm the most vulnerable.
Recommended Citation
Carlos Berdejó,
Boycott Governance,
56
N.M. L. Rev.
277
(2026).
Available at:
https://digitalrepository.unm.edu/nmlr/vol56/iss2/3
