Recent years have witnessed a growing trend of stakeholder issues becoming prominent in discussions of corporate governance. One source of this pressure comes from an unexpected constituent: the company’s own employee base. In this Closer Look, we examine the rise of employee activism and its implications on corporate mission, the board, and management. We ask: How well does management and the board understand the impact of employee activism on its business? Does activism lead to lost productivity, or does supporting activist initiatives improve the company’s reputation in the labor market? How well has the board set the boundaries on ESG-related activities the company will engage in? How should companies engage in relevant issues without losing sight of the company’s core mission?
Copyright held by Stephen A. Miles, David F. Larcker, and Brian Tayan. Further inquiries about reproduction and use should be directed to the Corporate Governance Research Initiative.
