When Porter Airlines was trying to get a permit in the early 2000s to set up shop at the Billy Bishop Airport on Toronto Island, the company faced heavy resistance from Air Canada and local residents’ associations.
Porter Airlines counteracted by bringing some allies into its corner. The airline agreed to purchase Bombardier planes, which would be manufactured by the Canadian Auto Workers (CAW) labour union at Bombardier’s Downsview plant. In return, CAW advocated for Porter Airlines and succeeded in convincing enough Toronto councillors that Porter would be good for the city. The regional airline received its permits and opened its Toronto headquarters in 2006.
New research in progress from Professor Guy Holburn and Assistant Professor Davin Raiha looks at the power of mobilizing customers or other stakeholders, such as employees and suppliers, to become political advocates.
Lobbying for change
"Regulated firms are often active in lobbying governments or advocating for their positions by meeting with government ministers and bureaucrats to explain their position and what they think will be beneficial for the public interest," said Holburn. "Davin and I are highlighting another approach, which is to mobilize stakeholders who have an interest in the specific policies to provide additional support. This is sometimes an overlooked approach for how firms can be proactive in managing their government relations."
Holburn and Raiha are developing a framework that identifies when stakeholder mobilization may or may not be effective and the different approaches firms can take in various political environments.
They recently co-authored an article in Harvard Business Review that looked at how disruptor firms like AirBnB, Tesla, and Uber have mobilized their customers to fight entrenched regulations.
The researchers hope to offer insights on how firms can design successful non-market strategies, since not every firm has success with mobilizing stakeholders. While Uber has used petitions to demonstrate consumer support of ride-sharing in cities where it has met resistance from local taxi companies, the strategy backfired in Calgary where residents were generally satisfied with the existing taxi industry.
"The contrast in Calgary was that local residents there were happy with the taxi industry and the way it was performing, so it was harder for Uber to compete because consumers were not seeing a big difference between the two," Holburn said. "It’s not always possible for firms to leverage stakeholder support because it requires a compelling business model that really differentiates them from existing firms in the marketplace."
Upping the game
In industries being disrupted by new entrants, incumbents often have several advantages: regulatory and legal barriers to entry, and long-time political ties. But Holburn said there are also lessons for incumbents. As new entrants fight with novel strategies, such as mobilizing customers, partnering with charities, or sponsoring consumer clubs, incumbents may need to reinforce their existing political connections or improve their business models to compete.
Holburn is also working on related research projects for the Ivey Energy Policy and Management Centre, where he is Director and holds the Suncor Chair in Energy Policy. For an upcoming Policy Brief, Holburn and Associate Professor Adam Fremeth chart the growth of the environmental movement and assess how the stakeholder environment for regulated utilities impacts public policy decisions.
In a separate project, Holburn is evaluating a decade of National Energy Board (NEB) pipeline hearings and uncovering the trends in stakeholder organization and opposition.