Accounting to the Public: Internet Activism and Corporate Social Responsiveness in Emerging Markets

Abstract

Civil society’s inability to hold powerful businesses accountable in authoritarian regimes is a grand challenge in today’s global environment. We propose that the development of Internet activism provides a novel mechanism to pressure for corporate response in those societies. Internet activism is dispersed, fast moving, and interactive, and hence can effectively focus public attention and potentially undermine a company’s public image by generating social comparison. In addition, firms with public image vulnerability may experience magnified pressure from Internet activism, as well as more intense social comparison. We explore this framework in the setting of corporate donations made in the wake of the 2008 earthquake in the Sichuan Province of China, which triggered Internet activism that challenged corporations to contribute to the good of the community. Analysis based on 613 large publicly listed Chinese firms supports our framework.