By Chip Cutter and Vanessa Fuhrmans 

Amazon.com Inc.'s sudden move to abandon plans for a new campus in New York ends the protests in the city but doesn't remove the national scrutiny being placed on the company, according to corporate reputation and management experts.

"There are two very energetic forms of populism in the U.S. right now, one on the left and one on the right, and neither likes Amazon that much, " said Brayden King, professor of management at Northwestern University's Kellogg School of Management. "For both, Amazon is becoming a whipping boy."

In the short term, experts said, Amazon likely would see little impact to its sales. However, the company's failure to deliver on a New York campus -- the culmination of a high-profile, 14-month nationwide search -- raises questions about the company's ability to sway popular opinion on big ideas.

"Twenty five thousand jobs in the middle of New York was a good thing," said Paul Argenti, professor of corporate communication at Dartmouth College's Tuck School of Business. "But you can't execute it if you can't communicate it. They've completely proven that point in the past few days."

Amazon initially planned to invest $2.5 billion and bring 25,000 jobs to Long Island City, Queens. New York state and local officials had pledged $3 billion in incentives, an economic development package politicians and local groups later criticized. Amazon cited local opposition to the headquarters in canceling its plans.

"Tech companies weren't going to be the darlings forever," Mr. Argenti said. "Now, we're starting to see what that looks like."

That Amazon underestimated community resistance should be a concern to shareholders, said John Wilson, head of research and corporate governance at Cornerstone Capital Group. Mr. Wilson compared Amazon to Walmart, and that retail juggernaut's inability to penetrate places such as New York, even though it continues to grow and dominate many other markets.

"The risk [to reputation] is intangible," he said. "These kind of issues won't show up on the balance sheet anytime soon. But if New York is the place you want to be, and talent is your main asset and now you're not going to have access to that talent pool, you will suffer over time."

Some saw Amazon's decision to pull out of New York as a bid to cut short what could have hardened into ongoing scrutiny over its tax breaks and role as a corporate citizen had it stayed.

"Amazon has historically not been a company that likes to give in on such demands and will fight them if necessary," Mr. King from the Kellogg School of Management said.

He cited Amazon's recent opposition to a proposed Seattle tax on big companies to help combat homelessness. That measure failed.

Even so, Amazon has been able to weather a lot of controversies, including criticism of its treatment of warehouse workers and role in Seattle's affordable-housing shortage. "A lot of people have problems with Amazon, but very rarely do those issues end up shaping how they buy its products," he said.

Coloring the backlash to Amazon's move to New York may be the country's shifting views on wealth and inequality, said Kim Weeden, professor of sociology and director of the Center for the Study of Inequality at Cornell University. Critics of the incentives offered to Amazon often called into question why a company run by Jeff Bezos, the world's wealthiest man, required subsidies.

"Americans have often had a love-hate relationship with billionaires, and I do think we're in a period where there's a little tipping of attitudes," Ms. Weeden said, "because of growing recognition that many of our largest corporations are not paying what we might think of as their fair share of taxes."

With Amazon, there is a growing sense that some deals they've cut with local communities "don't work out so well for the communities themselves, " she said.

Nationally, more politicians are now discussing wealth and income taxes on those making more than $10 million a year. Ms. Weeden said those topics were not part of the conversation two years ago.

Still, she doesn't expect the New York move to affect Amazon's reputation over the long term. "If I had to look into a crystal ball, I would say probably not," she said. "Americans tend to have fairly short memories in many respects."

Write to Chip Cutter at chip.cutter@wsj.com and Vanessa Fuhrmans at vanessa.fuhrmans@wsj.com

 

(END) Dow Jones Newswires

February 16, 2019 10:30 ET (15:30 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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