Corporations and Politics: Shunning the Middle Road to Go Left or Right

politics

Corporations in the past avoided public political stances at almost any cost. Now they are adopting red or blue bands of the political spectrum more frequently, according to this opinion piece by Daniel Korschun, a professor at Drexel University and a research fellow of the LeBow Institute for Strategic Leadership.

A number of corporations that had funded the 2012 Republican National Convention, including Apple, Wells Fargo, and Ford Motor Company, have announced they will not sponsor Cleveland’s RNC. Apple said the decision was in response to the rhetoric of presumptive nominee Donald Trump. The others did not comment publicly, but it is probably safe to assume that their reasons were in line with Apple’s.

These corporations are hardly alone in entering the political fray. Hobby Lobby famously opposed elements of Obamacare, a stand that was challenged all the way to the Supreme Court. Pfizer recently announced that they will no longer supply seven drugs needed to impose the death penalty; The Economist wrote that the “move throws a wrench into America’s death-penalty machinery.”

Name any controversial political issue – there is probably a company that has taken a public position on it.

What is going on? Corporations used to avoid public political stances at almost any cost. Now they are adopting red or blue bands of the political spectrum more frequently than ever before.

“As America polarizes, that mainstream marketplace of years past is shrinking with it. Taking the middle of the road is much less safe than it used to be.”

My research team (myself and Drexel University colleagues Anubhav Aggarwal and Hoori Rafieian) has been examining this phenomenon for several years. We are finding that behind the change is a dramatic shift in expectations that is changing the rules of the game for even the largest publicly traded corporations.

There once existed a mainstream America that resided in the middle of the political spectrum. At that time the largest corporations encountered a marketplace where the political beliefs of liberals and conservatives overlapped considerably. Executives knew that taking political sides was a surefire way to alienate large swaths of people.

But over the past several decades, liberal Americans have grown more liberal while conservative Americans have grown more conservative. And according to a Pew Research Center study, antipathy towards the opposing party is growing. As America polarizes, that mainstream marketplace of years past is shrinking with it.

Taking the middle of the road is much less safe than it used to be. In one of our research projects, we ran a series of controlled experiments to compare companies that take a stand to those that don’t. Early results suggest that consumers are quite tolerant of political stances — even when they disagree with it — as long as they believe the company is upfront and honest about their motivations. In contrast, avoiding a stance can be seen as hypocritical, especially for companies that describe themselves as being guided by a core set of beliefs and values (working paper available here).

Consumers and employees increasingly want to associate with corporations that help them express their true selves. As politics creeps into how we define ourselves, it is only natural that we use politics as a lens to determine whether a corporation’s values match our own.

Unsurprisingly, services are popping up to help consumers sort through corporations based on their political leanings. A conservative group called 2ndVote ranks dozens of companies based on issues such as the second amendment, the environment, abortion and same-sex marriage. Another, an app called BuyPartisan, enables consumers to scan supermarket items before purchasing to find the proportion of political donations the manufacturer made to Democrats or Republicans.

There is, of course, a long, and sometimes sordid, history of corporations seeking to influence political outcomes. However, efforts in the past were designed mainly to protect market leaders, and conversations were conducted mostly behind closed doors. What distinguishes today’s corporate political activism is that executives are publicly diverging from middle of the road positions, even on issues that are not traditionally viewed as essential to business operations (Chick-fil-A’s CEO on same-sex marriage, Facebook on immigration, etc.).

“The days when executives were able to avoid public political discourse are over.”

Moreover, the explicit goal of some of this activism is to shape public discourse on some of the most controversial political issues, elections and legislation facing the nation today. For example, when Starbucks announced its Race Together campaign that encouraged conversations about race, CEO Howard Schultz described his motivations this way: “If we just keep going about our business and ringing the Starbucks register every day and ignoring this (the race issue), then I think we are, in a sense, part of the problem.”

The political mainstream of America is disappearing. The notion of politically neutral corporations may be disappearing with it. If current trends continue, it is entirely possible that sometime in the future, buying a Pepsi at Target or a Coke at Walmart may not be much different than proclaiming that one is a Democrat or a Republican.

The public increasingly expects corporations to be active public citizens. When executives are confronted with political controversy, they can no longer rely on a middle of the road position. The days when executives were able to avoid public political discourse are over.

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"Corporations and Politics: Shunning the Middle Road to Go Left or Right." Knowledge@Wharton. The Wharton School, University of Pennsylvania, 07 July, 2016. Web. 25 March, 2017 <http://knowledge.wharton.upenn.edu/article/politically-polarized-world-corporations-can-no-longer-rely-middle-road/>

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Corporations and Politics: Shunning the Middle Road to Go Left or Right. Knowledge@Wharton (2016, July 07). Retrieved from http://knowledge.wharton.upenn.edu/article/politically-polarized-world-corporations-can-no-longer-rely-middle-road/

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"Corporations and Politics: Shunning the Middle Road to Go Left or Right" Knowledge@Wharton, July 07, 2016,
accessed March 25, 2017. http://knowledge.wharton.upenn.edu/article/politically-polarized-world-corporations-can-no-longer-rely-middle-road/


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