Trouble in Store : Probes, Protests, and Store Openings by Wal-Mart, 1998-2007

We consider how uncertainty influences the strategic interaction between companies and potential activists who would influence their operations. Our empirical context concerns Wal-Mart, which has increasingly become the target of protests over its scale, manifested as contention over specific expansions. Protests are complex instances of collective action and as a result, companies face uncertainty whether activists will organize a protest. We suggest that companies respond to this uncertainty through a ‘test for protest' approach. In Wal-Mart's case, this consists of low-cost probes that take the form of proposals to open a store. They then withdraw if they face protests, especially when the contexts of those protests make them more costly, either in terms of legislative barriers, consumer demand, or encouragement of protests elsewhere. Wal-Mart is more likely to open stores that are particularly profitable, even if they are protested, and in such cases, they also make larger donations to community causes. We find broad support for our predictions. Our uncertainty-based account of protests as signals stands in sharp contrast to full-information models which predict that protests should be rare miscalculations