Thoughts on a Consumer Boycott of Ganong

Submitted to the Times and Transcript as an Op/Ed Piece


I have read with interest commentary both in print and online regarding recent calls for a boycott of New Brunswick based confectioner Ganong Bros. Ltd. We are made to understand that the purpose of this call to consumer action (via the social networking site Facebook) is to punish the chair of the St. Stephen based company for his role on the advisory panel on the sale of the Province’s power utility.

The use of consumer boycotts is not new – in fact the term originated the late 1800’s as the result of actions taken by tenants against English land agent Charles C. Boycott who in 1880 refused to reduce rents on his Irish properties. Boycotts have been applied throughout recent history by various groups who have sought to achieve their objectives by encouraging consumers to refrain from purchasing the goods and services of target companies. Research has demonstrated that the use of boycotts as a coercive marketplace tactic is widespread, and that our cousins south of the border have particularly embraced the idea, with approximately 18% of Americans – predominantly with high incomes and college education – reporting participation. But the question must be asked – are boycotts truly effective in achieving the aims of their organizers?

At face value that’s a difficult question to answer, as boycotting groups often claim success while target businesses downplay the effects of boycotts on operations and profitability. What we do know is that while boycotts may temporarily reduce market efficiency, many are ultimately ineffective because of what researchers call “small-agent” and “free-rider” problems. The small-agent problem describes a consumer’s perception that boycott activity will have a personal cost and result in little overall impact (e.g. “I am just one person… will Ganong’s really miss the profits from one box of chocolates if I decide not to buy it?”). The free-rider problem describes a rational and egoistic consumer who prefers that other consumers engage in boycott activity while s/he does not, creating a situation in which the individual consumer will not suffer personal deprivation and yet may still benefit from any perceived positive boycott outcomes (e.g. “Sure I support the boycott in theory… but there are lots of other folks involved, and I sure do love chicken bones.”)

From a financial perspective it has been demonstrated that boycott results are counter-intuitive in that the value of targeted firms actually tends to increase when boycotts are announced. Research by P. Koku, A. Akhigbe, and T.M. Springer actually demonstrates that boycotts fail - on average - to instigate financial loss in targeted firms (although they do recognize that boycotts can be an effective negotiating tool, and that those enjoying significant public sympathy tend to result in speedy settlement, while those that do not tend to continue for years).

In light of these facts, a consumer boycott of Ganong would seem extraordinarily misplaced, especially when you consider that the boycott is really unrelated to the company’s business, and rather a seemingly knee-jerk reaction by some to a particular position articulated by Mr. Ganong. While it may be true that his firm (and others in New Brunswick) will stand to gain from the sale of NB Power, one questions how consumer action against one of the Province’s oldest and most-respected companies (which would appear unlikely to succeed anyway) will further the cause of those opposed to the sale of the utility. Opponents of the deal could better spend their time and energies elsewhere.


Robert A. MacDonald is the Stephen S. Steeves Professor in Business at Crandall University, Moncton, NB, where he serves as the Chair of the Faculty of Business Administration.