By Daniel Korschun
Traditional wisdom holds that corporations should avoid making political statements at any cost. Companies cannot afford to alienate their customers; or so the logic goes.
But something is changing in the corporate world.
A number of high profile companies are challenging that view, voluntarily taking stands on some of the most controversial issues facing the nation today. For example, Hobby Lobby opposed elements of Obamacare. Chick-fil-A famously came out against same-sex marriage. Panera Bread announced that customers should not bring guns into their stores. And Apple opposed a law in North Carolina that would restrict bathroom usage for transgender men and women.
Even more companies are being dragged into the political sphere unwillingly. For example, Lands End irked conservative consumers when it published a glowing profile of Gloria Steinem in its catalog; but the moment it issued an apology, it was lambasted by liberals. And Walmart has come under fire this week by labor groups that insist it pull out of the Republican National Convention due to the often divisive rhetoric of presumptive nominee Donald Trump.
It seems that for companies, there is no avoiding the political tide.
I have been studying this phenomenon for several years with my research team (Drexel University colleagues Hoori Rafieian and Anubhav Aggarwal). We call it corporate political activism, defining it as “a public position taken by an organization or its executives on a divisive political issue, election or government legislation” (Korschun et al. 2016).
We have interviewed managers and frontline employees, conducted controlled lab experiments, set up field studies and are even planning to enter the neuroscience lab, all in an effort to understand why politics and business can make for such an explosive cocktail.
Our research program reveals both unexpected benefits and overlooked pitfalls of taking – but also not taking – such stands. For example, we find that even when customers support a political stand unreservedly, the stand can harm the company’s relationships with those very customers if employees are not also on board. The reason? Those employees can feel alienated when customers bring up the political stand in conversations, resulting in the employee withdrawing from the relationship and becoming less attentive to serving that customer’s needs.
We were also surprised by some of our findings in the consumer realm. For example, we find that under some circumstances, consumers rather a company take a stand than avoid a stand, even if the stand is opposite their own personal view. The reason is that for certain types of companies, avoiding a stand is viewed as hypocritical.
This is an extraordinary time to participate in the political process. It is also an extraordinary time for business leaders who want to do the right thing without alienating stakeholders. It appears there is no turning back now that companies have become politically active.
Daniel Korschun, PhD, is an associate professor in Drexel’s LeBow College of Business. To contribute your thoughts on this research or to read more details about any of the studies mentioned above, contact Korschun at email@example.com.
Media interested in interviewing Korschun, should contact Niki Gianakaris, executive director of media relations, Drexel University at firstname.lastname@example.org