When Corporate America Dabbles in Divisive Politics, Who Wins?
In an age where social activism often reigns supreme, a growing number of companies conduct themselves as though they have a duty to use their resources and brand to secure particular political outcomes on contentious social issues.
These corporations seem to assume that businesses have everything to gain and little if anything to lose by engaging in divisive social and political causes. For years, businesses have taken it as a given that failure to accede to the demands of far-left activists will result in significant fallout – whether through campaigns, political scrutiny, or boycotts – while such concessions hardly register any pushback from companies’ ideologically conservative customers, shareholders, and employees. But that dynamic is changing.
A recent article in Newsweek explores this trend, exposing the cracks in old assumptions about the perceived non-engagement of those on the right. Valentin Haddad, assistant professor at UCLA Anderson School of Management and research fellow for the National Bureau of Economic Research, points out that while “[t]he initial stage of corporate activism is coming from the left … now there's pushback from the right.”
Haddad suggests that the real question is whether “companies (are) gaining more from the left or losing more from the right?”
Some say yes, corporate politicking benefits companies overall. For instance, Kirk Snyder, a professor at USC’s Marshall School of Business, proposed that “[c]ompanies wading into politics provides an opportunity to further define its values and what it stands for.”
But Vanessa Burbano of Columbia University suggests in her 2021 research that corporations may in fact have little to gain and much to lose by following the herd and taking a stance on a hot-button issue:
Among [the study’s] conclusions, Burbano says: "Employees who disagree with a political stance taken by their companies are demotivated—they do less extra work and do lower quality work." On the flip side, "Those who agree with a political stance taken by their companies are not motivated—they behave no statistically differently than a control group." There's similarly a downside in regard to wooing consumers, as they are likely to boycott over a political position they don't like but are not likely to "buycott" over stances they agree with.
It's one thing for a company to risk alienating employees and customers who disagree with their controversial stands, if the harms of doing so are outweighed by overall gains in employee engagement, productivity, and customer loyalty. But that calculation only works if the second half of that bargain holds up—which, according to Burbano, is doubtful at best.
The same holds true for shareholders. A recent poll by Echelon on behalf of The Daily Wire found that 58 percent of shareholders (in addition to 53 percent of consumers) said they don’t want companies weaving political agendas into their businesses.
Corporate political activism has the added danger of enforcing a kind of ideological homogeneity on its workforce. Taking sides on controversial issues risks compromising the values of religious and ideologically diverse stakeholders. It creates barriers for employees with different beliefs about the causes in question from coming forward, sharing their opinions, and contributing to a culture of openness and accountability. As John Siverling, Director of Private Markets and Impact Advocacy for OneAscent, and President of OneAscent Capital, argues, companies who opt for ideological conformity on important issues are also sacrificing their long-term ability to innovate.
“In the field of business, it is within the very nature of capitalism and competitive markets that new ideas lead to innovation and change,” Siverling, who serves on the Viewpoint Diversity Score advisory council, writes. “Diversity in thoughts and ideas leads to understanding new customers and unmet need.”
The future of business is pluralism and diversity of thought—not conformity. Shareholders, customers, and employees agree. Companies have little to gain, and much to lose, by wading into hot-button political issues. Instead, they should respect the viewpoints of everyone—from the shop floor to the boardroom.
Find out more about what your business can do to respect freedom of thought, speech, and religious exercise, at our Resources page.