Article by Joy Dwele

Photo by Math on Unsplash

Starbucks, a multi-billion dollar coffee corporation, has this year come to light for reasons more pressing than coffee. Accused by its consumers as funding Israel’s military campaign in Palestine, Starbucks faced a series of worldwide boycotts causing cuts to their profits and share prices to plunge. In November 2023, union workers of the corporation staged a walkout and released a statement in solidarity with Palestine, calling for a ceasefire in which Starbucks were quick to separate themselves from this. Starbucks’s actions raised the question of whether corporations are merely merchandisers, or rather have evolved into vessels of political agendas.

Boycotts to corporations is not something unheard of in the growing culture of ‘pressure politics’; Corporations such as Apple have also fallen victim to boycotts due to the link between their products and exploitation of cobalt mines in Congo. However, the magnitude of the 2023 Starbucks boycotts revealed a unique mobilisation of consumers. Similar to how voters may scrutinise incumbent political institutions, we now see a form of activism amongst society for companies to hold themselves accountable for their sponsors, investors and donors. In Starbucks’ case, they were accused of having money invested in military companies which were linked to Israel and subsequently aiding their military assault in Gaza.

Here, a debate can arise concerning whether the boycotts were a form of self-flagellation by consumers, or whether this was more economically and politically driven by shareholders and employees in the company. Taekjin Shin’s article ‘The Shareholder Value Principle: The Governance and control of Corporations in the United States’ investigates the shareholder value principle, and how through a sociological standpoint this has been developed into the ‘Agency Theory’ [1]. The article presents a notion in which the bureaucratic and feudal nature of corporations enable conflict between shareholders and ‘agents’ [2] which then causes a loss in profits. Theorists of this notion suggest that when agents, who are employees and managers, ‘misuse their discretionary powers’ [3], this can cause negative financial implications on shareholders who seek to reap the profits of the company.

This view is personified in the story of Starbucks as the workers themselves went ahead of the corporations and acted off personal belief by issuing a statement in support of Palestine and the consumer boycotts. This contradicted the shareholders of Starbucks, in which some directly invest in arm dealings with Israel. By walking out and mimicking the boycott occurring in the wider world, this further ostracised Starbucks, affecting their ability to make profit. In response, Starbucks released a statement, which may be perceived as a message of appeasement for both sides, in order to keep the workforce in check, as well as simultaneously enabling consumers to morally accept purchasing and investing in their markets once again.

I would caveat this and suggest that instead, the political and sociological implications motivated Starbucks actions rather than simple internal corporate rules. I would also suggest that theories such as the ‘Agency theories’ echo wider sociological arguments applicable in several aspects of life such as politics, the economy and society. The basis of the agency theory is about establishing control between hierarchies, which is evident across all aspects of society; Class,Gender, Race and Sexuality. When put in the perspective of a corporation, their objective is to produce the most yield out of their product, meaning whichever view is most profitable to them is what they will go by. For Starbucks, this was a debate on whether they would side with shareholders who had bought into the company, or alternatively with the consumers who buy from the company and what financial side was most important to them. But viewed through a sociological lens, the shareholder’s political view on the Israeli-Gaza war was seen as a ‘minority’ view amongst their consumers, meaning the company could not be seen to colloude with them. Yet, the shareholders are crucial in the financial foundations of a corporation, and therefore Starbucks were not in a position to oust them; hence why Starbucks preferred to take a neutral position. Corporations across the world are now in a position where their internal structures must reflect and work alongside external views and perceptions, meaning that it is no longer enough to just have a ‘profitable product’. They now need to appeal in ways much different than a conventional producer-consumer manner, by having the ability to navigate the socio-economic background of their audience. This unveils the extent of monopolisation of politics in recent years, anointing consumers with a level of power that they have not had nor asserted previously.

References:

Shin, Taekjin. 2013. ‘The Shareholder Value Principle: The Governance and Control of Corporations in the United States’ (unpublished Article, University of Illinois), pp. 830–32 [accessed 3 November 2024]

Footnotes:

[1] Shin ‘The Shareholder Value Principle: The Governance and control of Corporations in the United States’ pg 830-832

[2] Shin ‘The Shareholder Value Principle: The Governance and control of Corporations in the United States’ pg 830-832

[3] Shin ‘The Shareholder Value Principle: The Governance and control of Corporations in the United States’ pg 830-832

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