THE INFLUENCE OF IDEOLOGY ON CORPORATE SOCIOPOLITICAL ACTIVISM: A STAKEHOLDER PERSPECTIVE

Despite the historical norm that businesses should refrain from making public political statements for fear of losing customers, recent history has shown an increase in firms wading into controversial sociopolitical topics. As politics become increasingly pervasive in everyday life, consumers, investors, employees, and the general public expect firms to engage in political topics and make their positions clear. However, the considerations and processes firms undertake in deciding whether to take political stands are largely unstudied.
This study examines the role of firm executives’ ideologies on their propensity to engage in corporate sociopolitical activism (CSA). Further, I examine how the ideologies of organizational, social, and capital market stakeholders also influence the decision to engage in CSA as executives weigh the desires and expectations of key stakeholders. Using stakeholder theory, I argue that CEOs and top management teams (TMTs) are responsive to the ideological leanings of multiple stakeholder groups, while also considering their own political opinions. Studying a random sample of 139 public firms, I find that CEO and TMT ideologies, on their own, are not reliable predictors of firm CSA. Firms are more likely to engage in CSA when the CEO’s ideology is aligned with that of employees or the region surrounding the firm headquarters. I also find that the volatility of the firm’s stock price reduces the propensity toward CSA, suggesting that the potential for adverse impacts on firm value can blunt firms’ CSA efforts. Further, I find that firm factors, such as B2B vs B2C markets, firm size, and firm reputation also predict the likelihood of CSA. The results have theoretical implications by adding to the nascent body of CSA literature, as well as managerial implications for perceptions of the business environment and political influences.