Effectiveness of Economic Boycotts (PDF)

# Quelle est l'efficacité économique des appels au boycott? ## Introduction The question of the economic effectiveness of calls for boycotts is relevant to both businesses and activist groups. It can affect businesses directly through sales, indirectly through stock prices due to decreased sales....

# Quelle est l'efficacité économique des appels au boycott? ## Introduction The question of the economic effectiveness of calls for boycotts is relevant to both businesses and activist groups. It can affect businesses directly through sales, indirectly through stock prices due to decreased sales. This can impact the company's success. ## Consumer Behavior For a boycott to be effective, every consumer needs to make a conscious effort to change their behavior. It is not guaranteed as consumers may believe that others will take the responsibility, or the boycott is not effective. ## Examples of Boycotts Over The Last 15 Years The last 15 years have seen many instances of boycotts, from regional to global scale. Some stemmed from fear, for example, the Mad Cow disease scare. Others have been organized by groups intending to achieve a political goal, for instance, the boycotts against Nike for using child labor or Danone for closing down the Lu factory. While Nike reacted to pressure and introduced stricter regulations, the effectiveness of boycotts is often questioned. ## Consumer and Business Perspectives - Not all consumers are activists or have the same level of awareness. - Consumers have different opinions, sensitivities and access to resources to participate in a boycott. - There are only two themes that have successfully mobilized significant numbers of Europeans: public health and perceived ethical violations like child labor. - Consumers generally act based on price, quality and personal preference. - Consumers are generally unaware of the precise origin of the product, especially given globalized supply chains. - Not all products are easily boycotted, for instance, auto parts or circuit boards. ## The Role of Corporate Image and Symbolism - Certain products carry a strong symbolism, influencing consumer choices based upon their political views. - Companies directly selling to consumers are more vulnerable, as they are more likely to be directly impacted by boycotts. - Companies selling to businesses have a greater degree of protection as they are less dependent on public opinion. ## The Limitations of Boycotts - Consumers are not easily swayed. - The complicated nature of globalized supply chain, with intricate business partnerships makes it difficult to target individual entities. - Internationalization of the market and the complex nature of the supply chain create challenges to boycott specific brands. - Boycotts are more effective when targeting simple products, with clear origin, and where the majority of the population are motivated to participate. ## The Example Of The French Wine Boycott in The U.S. - The boycott against French wine in the US, following the Iraq War, was seen as a successful example. - Research shows that the boycott had a clear impact with sales declining significantly. - However, the impact was temporary and the wine industry soon recovered. - The success of the boycott could be attributed to the fact that wine is a simple product, susceptible to substitution, and that the public was highly motivated to take a stand. - The media coverage of this boycott significantly contributed to the campaign's success. ## Factors Affecting Boycott Success: A Case Study of Wine Sales in The US - The impact of boycotts is influenced by the political leanings of the consumers: - San Diego, with a Republican majority, showed higher numbers of boycotts. - Los Angeles, a Democrat-leaning city, followed closely in numbers of boycotts. - Boston, a Democratic city, showed a different pattern, with initial "buycott" (increased spending) before eventually joining the boycott. - The presence of a large military force in a city can lead to a stronger boycott response in those cities. - The impact of the media, particularly on the national level, has a negligible impact. - While boycotts can create a significant impact temporarily, they can rarely last for a long duration. - The overall resilience of the market ensures that the impact is temporary and the economic impact eventually subsides. ## Conclusion - Although consumers can have a significant impact on companies through boycotts, the impact is usually short-lived. - There are specific circumstances that are favorable for boycotts. - There is a fine line between causing a significant impact and achieving long-term results. - Consumers can play a role in making a change, even if they are unlikely to bring long-term change. - In the long run, the market is resilient and will recover from such temporary setbacks.