Wednesday, April 30, 2014

Would Boycotting the L.A. Clippers Have Taught the NBA a Lesson?: Why Boycotts Rarely Work

There has been plenty of hullabaloo lately around the racist remarks of former Los Angeles Clippers owner Donald Sterling. Magic Johnson thought it would have been a great idea to boycott the L.A. Clippers to teach the lesson that racism is unacceptable in a civilized society. However, the threat of a boycott was allegedly averted because the NBA fined Sterling, as well as placed a lifetime ban. While the outrage towards Sterling's racist comments is perfectly justifiable, the question I have to ask is whether a boycott would have actually done harm.

Boycotts are nothing new. People have collectively and voluntarily abstained from economic commerce with a certain company, country, or other entity to make a political or social statement. The idea is that if one can amass enough support for a boycott, it can adversely affect the bottom line and send the message that certain behavior or beliefs are unacceptable.

Let's take a look at some of the academic work on the topic. A couple of economists showed that the American boycott on French wine because of France's opposition of the Iraq War actually succeeded. (Chavis and Leslie, 2006). Other economists have shown that either the threat of boycotts nor boycotts themselves inflict noticeable economic damage on the boycotted entity (Koku, 2012Koku et al., 1997).

Even with conflicting scholarly works, I'm still unconvinced that a boycott on the Clippers would have worked. If one decides to boycott a country, at least the country has enough economic commerce where it can withstand that sort of pressure. In spite of the attempts of certain countries boycotting Israel, Israel's economy is doing just fine (Congressional Research Service, 2013, p. 3). Companies don't have the luxury of having entire national economies to bolster their revenues. Even so, companies typically have enough insulation to make it through. The L.A. Clippers are worth $575M [as of 2/2014] and bring in $128M in ticket revenues per annum.

For a boycott to work, you need to have a targeted, massive enough of a collective to impact the revenues. Then there is the temporal factor. Even if the Clippers had a bad year in term of its revenue, the boycott would need to last long enough to run the entity out of business.  Most boycotts don't have the longevity to make an impact, presumedly because many people have short attention spans and simply move on to the next thing. Finding a sufficient amount of people who can show the zeal to boycott long enough is highly improbable to affect the bottom line. However, the threat of a boycott or the perception that it works seems to do more harm to one's reputation than anything else (King, 2011). If boycotts succeed in anything, it is a boycott's ability in reaching a compromise solution, which would explain why the NBA replied by fining and banning Sterling in lieu of any actual boycott.

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