Why Do Companies Engage in Controversial Political Issues?

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In another article, I discussed different ways in which CSR is used in political contexts. Especially striking was the development in international and domestic CSR to employ a rather confrontational and controversial strategy towards governments. This had not been the case many years ago. Nowadays, we are witnesses of Google attempting to foster freedom of information in China, or global investment manager BlackRock Inc opposing the President of the United States in the matter of gun regulations.

But why have companies started to be strong-minded political and societal actors? And why do they pursue a strategy to publicly oppose their national governments? I will suggest three developments that have paved the way for corporate activism in societal and political issues.

Changing Expectations of Corporations

Citizens’ perceptions of global companies are changing. The main finding of the Cone Communications Global CSR study of 2015 was that

91 % of global consumers expect companies to not only focus on their profit but also to operate responsibly to address societal and environmental issues.

The same study found in 2017 that

63 % of Americans want businesses to take action beyond government regulation and 78 % want them to deal with issues of social justice.

The demand of corporations to influence social justice is a significant extension to the expectations two years earlier. Businesses are not only expected to operate responsibly but also to actively get engaged in shaping the relationship between the individual and the society, and to influence this traditional political sphere that decides upon wealth distribution and social privileges.

Another recent survey of employees of Fortune 1000 companies shows that

44% of the surveyed employees believe that the corporation’s role in addressing societal issues will increase in the next years.

It seems that more and more consumers and citizens demand not a neutral stand but a clear opinion on current (local) issues. Many businesses have reacted to the changing expectations of them: they have adopted a political identity and built up strategy which actively fights for the social value the firm wants to represent.

Positive Policy Changes Increase Legitimacy

A recurring criticism of corporate political activism is about legitimacy. The argument is that CEOs have not been elected democratically but are now in the position to influence policies and public goods. However, in this powerful position, they lack the accountability of politicians who are being held accountable for their actions through elections.

With the positively perceived policy change, companies are ‘earning’ the legitimacy for their influential role. An example is the 2015 legislation change in Indiana. The state gave in over fierce pressure of corporate America to amend a law which allegedly allowed companies to refuse their service to homosexual customers. Following the legislation change, the law now forbids any discrimination against the LGBTQ+ community.

It is useful to distinguish between two forms of legitimacy to understand this point: input and output legitimacy.

Although the companies which stood up for LGBTQ rights had not been elected democratically and they do not function under political rules of transparency and accountability (input legitimacy), they contributed to an outcome – the policy change – which is perceived to be socially desirable and good. Through political CSR activities, they have gained output legitimacy to be a powerful political actor.

Increasing Importance of PR & Communication

An often-overlooked benefit is that engagement in salient issues ensures public attention. The relationship between CSR and brand communication has long been recognized. Many times, good PR is essential for the success of a firm’s strategy. PR tells the world about a company’s efforts and communicates its values.

With controversial and salient issues, the media coverage will most likely be extensive. The Indiana legislation change mentioned above is one such example. Several newspapers reported, for instance, Apple’s CEO Tim Cook’s disapproval of the law.

But the communication of a company’s political stance can also be beneficial for small businesses. Shared political ideals can increase the communication between the business and its customers, leading to a greater brand affinity.

In a time in which social media provides an important means to engage with stakeholders, political and ethical values are a good basis for dialogue because this is what many people care about. Millennials, for example, are known to care strongly for responsible companies, and to not separate business and money-making from values. As this generation, which more or less grew up learning to communicate through technology, is estimated to make up 75 % of the workforce by 2025, PR and communication strategies are a valuable source for companies to spread the word about their political values to create a personal bond with their customers.

Juliane Markscheffel

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