Two decades ago, it was rare to see corporations take a public stance on political and social issues. Today, however, companies such as Target, Apple, Chick-fil-A, Starbucks, Hobby Lobby—even 84 Lumber—are weighing in on everything from transgender rights to U.S. immigration policies. The emergence and proliferation of social media has undoubtedly played a role in this increase in corporate political and social activism, but what else is at play? Do consumers, employees and investors want corporations to take a stand on these issues? And if so, will speaking out pay off for the company?
These are some of the questions that Paul Seaborn, assistant professor of management, posed to roughly 20 senior business leaders at a breakfast hosted by the Daniels College of Business’ Institute for Enterprise Ethics on Thursday, Oct. 5, at the University of Denver’s Joy Burns Center.
Seaborn, who was recently named one of Poets & Quants’ top 40 undergraduate business professors, was introduced by Dan Sweeney, director of the Institute for Enterprise Ethics. While attendees nibbled on bagels and sipped coffee, Sweeney asked them why they were interested in learning more about corporate political and social activism. While a number of the attendees cited a hope of gleaning helpful information to bring back to their own companies, others expressed interest in the subject primarily because it is such a hot topic in today’s business world.
Indeed, corporate political and social activism has become more prominent in the current business environment. According to Seaborn, this is most likely due to an increase in corporate transparency/visibility via social media and the 24-hour cable news cycle; hyper-partisanship in the U.S. government; and a generational shift in expectations from investors, employees and consumers. In fact, Seaborn referenced a study that shows the majority of millennial consumers are in favor of companies taking a stance on political and social issues. He also explained that CEOs are more visible than they were a few decades ago—holding an almost celebrity-like status with the public. Today, “there are more ways that the CEO is heard directly,” said Seaborn.
Some CEOs seem to be more outspoken on this topic than others. Howard Schultz, the former CEO of Starbucks, once said, “I have a fiduciary responsibility beyond my own political views. But I do believe that the rules of engagement for a public company have changed, and there’s an opportunity for businesses to demonstrate a role in society that’s beyond profitability and shareholder value. We yield on the side of making our people proud. It galvanizes our organization.”
So, what should corporations and their CEOs do? Seaborn pointed to the research. One study found that CEOs jeopardize their personal wealth by pursuing stakeholder-related initiatives, while another determined that doing better on corporate social responsibility dimensions may not always lead to higher CEO compensation. However, other studies found that firms that construct stronger sociopolitical reputations will be granted greater access in the public policy-making process. And yet another study revealed that CEO activism can sway public opinion and increase consumers’ intentions to purchase products from the CEO’s company depending upon on alignment between the CEO’s message and the individuals’ preexisting policy preferences.
Ultimately, it seems as though the answer to the question, “Does corporate political and social activism pay off?” is simply, “It depends.” What remains clear though, is that the business world has undergone a major shift in the last two decades and companies that have traditionally been silent on political and social issues, may find it difficult to compete without speaking out.
Interested in learning more about topics like this? The Daniels College of Business’ Institute for Enterprise Ethics hosts a variety of discussions for business leaders to examine current issues in the world of corporate integrity, responsibility, governance and leadership. Visit enterpriseethics.org for information on upcoming events.