Why Companies Take Political Stands

In 2016, PayPal scrapped plans for an operations center in North Carolina after the state passed its controversial “bathroom bill.” In 2022, Disney publicly criticized Florida’s “Don’t Say Gay” law. These actions show a growing trend: big companies weighing in on divisive political issues.

At first glance, this seems puzzling. Taking a political stand can upset customers, investors, and employees, all of which could hurt a company’s bottom line. Yet, in the past decade, many businesses have backed progressive causes, such as transgender rights, climate change, and immigration.

New research from the Kellogg School of Management offers an explanation. It challenges the idea that activism comes only from external pressure or top executives’ personal beliefs. Instead, it shows that corporate activism often reflects a shared political alignment between a company’s leadership and its employees.

The Rise of Corporate Activism

Researchers looked at four corporate letter campaigns from 2016–2017, where companies publicly opposed conservative policies, including North Carolina’s bathroom bill and Donald Trump’s travel ban. Of 1,328 companies studied, 118 signed at least one of the letters.

The data revealed a pattern: companies were more likely to take a political stand when both their top managers and employees shared progressive views. Interestingly, neither a liberal CEO nor progressive employees alone was enough to drive activism—it was the alignment between the two groups that made the difference.

“Activism isn’t just about a powerful CEO pushing their agenda,” the researchers explain. “It also isn’t about companies simply giving in to their workers. Instead, it’s about shared beliefs across the organization.”

Why Take the Risk?

Taking a stand can have benefits. It can strengthen employee loyalty and reinforce shared values. But it also carries risks. Disney, for example, faced significant backlash after criticizing Florida’s education law.

Perhaps as a result, corporate activism has become less common in recent years. “In today’s polarized political climate, companies are more hesitant to wade into controversial debates,” the researchers note.

Even as corporate activism has slowed, its origins remain clear. When employees and leadership share political values, companies are more likely to speak out. Whether this trend will return depends on broader political shifts, including the outcome of the 2024 U.S. presidential election.

Modern companies are more than profit machines—they are communities of people with values that shape their decisions. As the researchers conclude, “Corporate activism reflects the beliefs of the people within these organizations, not just market forces or political pressures.”

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