How CEO Activism Goes Beyond Business

CEOs of large companies loom larger in the public sphere than ever before. As names like Jeff Bezos, Mark Zuckerberg, and Marc Benioff become increasingly familiar to the average consumer, they’re able to put faces to the companies they buy from. In 2016, corporations are conflated with the people who run them, and for better or worse—and their actions don’t go unnoticed. As discussed last week, some prominent business leaders are channeling their influence to champion causes they feel strongly about. Once upon a time, if you’d asked a CEO to speak publicly about a contentious political issue, your chances of getting anything more than a “no comment” were minimal. But as influential CEOs move into ever more public roles due to the evolving media landscape and changing expectations from their workforce, many now feel compelled to take a stand about the issues they—and their customers—care about. However, if a trend is going to sweep the business world, it needs to benefit not only the greater good but also a company’s bottom line. So how does CEO activism fare in this respect?

Starbucks CEO Howard Schultz has become well known as an activist CEO, joining others such as Google’s Eric Schmidt, Goldman Sachs’ Lloyd Blankfein, and Apple’s Timothy Cook in recently taking public stances on controversial issues like gender equality, race, and same-sex marriage laws. In March of 2015, Schultz launched his Race Together campaign, an initiative intended to spark conversations about race in our country at a time when stories about the deaths of unarmed black men at the hands of police were dominating news cycles. As part of the campaign, Schultz asked baristas to write Race Together on Starbucks cups, urging them to have conversations with customers about race relations in America. It was a bold move, and unfortunately for Schultz, this likely well-intended effort was not taken well by the public. Critics saw the effort as both tone-deaf and a naked marketing ploy. Many pointed out the also uncomfortable fact that Starbucks’ leadership is predominantly white and that asking the far more diverse and lower-paid baristas to get into such a loaded topic with customers felt wrongheaded at best.

The Race Together debacle might have turned into a cautionary tale about CEO activism, and indeed the campaign itself was swiftly put to rest. But rather than damaging Schultz’s reputation, it illuminated his identity as a progressive CEO. The overwhelming public attention garnered by the initiative shed light on Starbucks’ past and future efforts to benefit the greater good. In tandem with Race Together, Starbucks committed to hiring ten thousand disadvantaged youths over the next three years as well as opening stores in communities with large minority populations. This February, Schultz released a video announcing his mission to urge more Americans to vote and has spoken out about gun control, marriage equality, and affordable education.

Schultz’s willingness to talk about controversial topics is headline-grabbing material, but is this type of activism politically expedient or just talk? With the rise of CEO-turned-activists in today’s corporate culture, Aaron Chatterji, an associate professor of strategy at Duke, set out to understand the effect of this newer and less understood activism both on public opinion and the bottom line of those companies that engage in it.

Since it is difficult to measure whether CEO activism truly makes a difference, Chatterji decided to conduct an experiment. He and his team used a market research firm to ask almost 3,400 individuals whether they supported Indiana’s Religious Freedom Restoration Act. The question was accompanied by a statement cautioning that the law would allow discrimination. For some, the statement was unattributed. Other respondents were told the statement came from Apple CEO Tim Cook; others, that it came from a CEO of a smaller Indiana-based company; and a fourth group, that it came from the mayor of Indianapolis. The results showed that the impact of the statement when coming from CEO Tim Cook was on par with that of the mayor.

The team asked another 2,176 respondents the likelihood that they would buy Apple products. Some were told about Cook’s stance against the discrimination law, some were informed about his business practices, and some were given no information about Cook or the company. When people already opposed to the religious freedom law were told about his views on discrimination, their intentions to buy Apple products increased.

These findings point to an interesting pattern. According to Chatterji, “it might be hard to change people’s minds any more than the next person, but when CEOs make social statements, their potential consumers are paying attention.” This isn’t surprising. While a CEO’s outspoken rhetoric is partially intended to bolster his or her company’s reputation and bottom line, its power extends much further. The CEO is something of a vaunted figure in America, and their opinions make a difference.

Whether or not we agree with the sentiments of CEO activists, the trend reveals a positive shift in corporate influence in the political sphere. Historically, the involvement of corporations in politics has happened via shady practices and lobbying for an advantageous law or regulation. But CEO activism is different. It’s transparent. Yes, profits are in mind, but when a rabble-rousing CEO speaks about a controversial issue, it is, above all, a highly visible tactic that allows employees, customers, and media to form their own opinions. If CEOs can sway public opinion about issues like race and climate change, they might as well use their platform to benefit the greater good.