The Economic Consequences of Protest Repression: The Case of Business Activism in Hong Kong

Abstract Studies of contentious politics have extensively examined the impacts of protest repression on mobilization, but the implications of repression on economic phenomena have received little attention. This study contributes to the literature by examining the impact of protest repression on business activism. Business activism refers to businesses taking a public stance on controversial social-political issues, a subject that has been understudied in academic research. We examine the effect of protest repression on business activism through the case of the “yellow economy circle” since the 2019 Anti-ELAB Movement in Hong Kong, in which some businesses publicly took a pro-movement stance by labeling themselves as “yellow businesses.” Utilizing a novel dataset containing geographical information about pro-movement “yellow restaurants,” we find that constituencies that experienced tear gas had a higher proportion of yellow restaurants. We provide two explanations for the causal effect, one from the financial-profit perspective and the other from the socio-psychological perspective. The effect of protest repression was more pronounced in constituencies with a higher proportion of pro-movement residents, supporting the financial-profit explanation that protest repression causes business activism when businesses find it profitable to attract political consumers.