Corporate America’s Dilemma: Speak Out or Remain Silent About Societal-Political Issues
The headline of an April 20 Fortune article read: “Derek Chauvin was found guilty. What will companies say about it?” The article focused on the expectation of CEOs and companies to speak out about issues of public interest — a trend that is becoming more common in the United States and globally (Colvin, 2021a). It also highlighted research by Edelman, a global communications firm, which found that 86% of respondents across 27 countries expect CEOs to publicly address societal challenges (Edelman, 2021).
At the epicenter of societal challenges — especially in the U.S. — is the issue of racial inequity. Chauvin’s murder of George Floyd, captured in a horrific video, brought international attention to the issue of systemic racism and sparked a reckoning over race and justice in the U.S. In many ways, Floyd’s death has become a defining moment of our time — a historical event that has galvanized the attention of the nation and corporate America. In the aftermath of Floyd’s murder, corporate leaders and companies across the nation expressed solidarity with Black communities and Black Lives Matter, donated money to combat discrimination and systemic racism, and embarked upon efforts to enhance diversity, equity and inclusion in the workplace. Kramer, Blackwell, and Iyer (2017) pointed out: “… it takes moral courage for CEOs to leverage their influence and address issues of racial inequity.” Meanwhile, others leaped into action — such as the creation of CEO Action for Racial Equity, a corporate-led fellowship that is focused on the advocacy and advancement of public policies to dismantle systemic racism.
With the Fortune article in mind and May 25 anniversary of Floyd’s death approaching, now is the time to examine this emergent trend of CEOs/companies speaking out about societal-political issues — commonly referred to as Corporate Social Advocacy (CSA). Historical context is necessary to better understand CSA and why CEOs have become motivated to interject themselves into societal-political issues, which is somewhat new to contemporary society. The prevailing questions are: Why now? And, why is silence no longer an option?
As noted by Overton, Choi, Weatherred, and Zhang (2020), companies have typically avoided controversial matters (p. 696). That sentiment was also shared in a Harvard Business Review article that examined how corporate America responded to last year’s racial justice movement. Knight (2020) stated: “Companies are ordinarily quiet during times of social unrest.” That’s not to say CEOs and their organizations don’t engage in conversations or work behind the scenes with policymakers and community/civic leaders to address complex issues. Typically, corporate action and involvement regarding societal-political issues, if any, has occurred outside of the public’s view (Gaither, Austin, & Collins, 2018, p. 176).
A prevailing notion as to why corporate leaders should avoid societal and political issues is Friedman’s doctrine, also known as Shareholder Theory or Stockholder Theory. It was written by economist Milton Friedman and published in 1970 in The New York Times Magazine — approximately 17 years after Howard Bowen introduced the concept of Corporate Social Responsibility (CSR), which focuses on the relationship between business and society (Snider, Hill, & Martin, 2003, p. 203). The premise of Friedman’s manifesto is that business practitioners have one responsibility: to make a profit (Carroll, 2015, p. 89). According to Agudelo, Jóhannsdóttir, and Davídsdóttir (2019), Friedman thought social responsibility activities were an inappropriate use of company resources (p. 5). Tepper (2020) noted the manifesto “remains as polarizing today as it was five decades ago.” Similarly, Strine and Zwillinger (2020) said the doctrine is “still hotly debated in business and policy circles.”
Other scholarly and business leaders also voiced opposition and concerns about CEO involvement in societal-political matters. As early as 1958, economist Theodore Levitt spoke of the dangers of social responsibility by stating: “Government’s job is not business, and business’s job is not government. And unless these functions are absolutely separated in all respects, they are eventually combined in every respect” (Levitt, 1979, p. 139). Like Friedman, Levitt said long-run profit maximization is the primary objective of business (Carroll, 2016, p. 1).
Over the past 50 years, America has experienced a fundamental shift in how corporate leaders respond to political-societal issues. Despite the thoughts, opinions and objections of Friedman and Levitt, this shift can be attributed to the growth of CSR, which traces its beginnings to the “emergence of social movements in the realms of civil rights, women’s rights, consumer’s rights and a desire for environmental protection” (Carroll, 2015, p. 88). “During this time, workers’, consumers’ and citizens’ expectations gave stronger shape to the idea that businesses had responsibilities to certain stakeholders other than the traditional stockholders” (p. 88). Cochran (2007) noted that CSR is no longer a novelty or often marginalized notion but has become a complex and multi-faceted concept that is increasingly central to today’s corporate decision making (p. 449). And, empirical research suggests that CSR can contribute to profitability and/or improved financial performance (Aver & Cadez, 2009; Kang, Germann, & Grewal, 2016; Arbogast & Agrawal, 2019). Because CSR has grown in popularity and being a good corporate citizen is now the norm, new generations of Americans — over the past 50 years — have come to expect more from CEOs and their companies. Carroll stated “modern businesses are expected to do more than make money and obey the law” (p. 87).
Today, corporate America is increasingly expected to take a public position and address societal-political issues of importance. Thus, CSA has emerged as a complement to CSR and vehicle for companies to voice their positions. By definition, the construct describes the public stance that corporations, including their leaders, take on controversial issues (Dodd & Supa, 2014; Overton et al., 2020). Gaither et al. (2018) defined CSA as a method for businesses to engage with the public on important issues (p. 178). Waymer and Logan (2021) said CSA occurs in many ways, including via financial contributions, direct and indirect lobbying, philanthropy, and communication to raise awareness about a societal issue (p. 3). The construct is drawing increased scholarly interest.
Ultimately, CSA serves as a theoretical mechanism to better understand the contemporary and emergent sense of obligation/responsibility by CEOs to speak publicly and take action on societal-political issues. In many ways, the construct provides context to assess corporate America’s response to Floyd’s death. Here are three examples:
- Although some remained silent, an unprecedent number of CEOs and their organizations responded immediately with statements (to the public and employees) condemning Floyd’s death, social justice advertisements, and commitments to make their companies more diverse and anti-racist. Plug, which reports on the Black tech and start-up industries, created this spreadsheet to track public statements, mostly of tech companies.
- A recent Associated Press article revealed that corporations have become an unexpected leading source of funding racial equity and social justice (Hadero, 2021). “Corporate giving to racial equity causes has far outpaced donations from foundations and individual philanthropists…” (Hadero, 2021).
- The CEO Action for Racial Equity fellowship was created in October 2020. It’s comprised of more than 100 U.S.-based companies and organizations, which have devoted at least one employee (for up to two years) to research and develop public policy recommendations to benefit Black people and communities throughout the U.S. The policy areas include healthcare, education, economics, and public safety. Recently, CEO Action for Racial Equity said it will advocate to close the digital divide and expand access to telehealth for Black people, nationwide. Other policy priorities will be announced in the coming weeks.
Similarly, CSA provides context to assess corporate America’s response to former Minnesota police officer Chauvin’s conviction on April 20. Shortly after the verdict was announced, Fortune called attention to the CEO/corporate dilemma by noting that companies and CEOs generally don’t comment on verdicts but their constituents, nonetheless, expect them to speak out on societal issues (Colvin, 2021b) — underscoring the relevance and timeliness of this article. Many companies, including CEO Action for Racial Equity and the Business Roundtable, which represents CEOs of many of the nation’s leading companies, responded with media statements. The themes of those statements acknowledged the ongoing battle against racism, described the decision as a step forward in the fight against systemic racism, and recognized that combating racism requires more work (Meyer, 2021; Scherzer, 2021; Alcorn, 2021). CEO Action for Racial Equity stated: “The significance of today’s verdict for Derek Chauvin should not be lost. The sense of urgency to protect Black Americans from police violence could not be greater. Our collective work in this area remains unfinished” (CEO Action for Racial Equity, 2021).
The Business Roundtable said: “Today’s verdict confirms that George Floyd was the victim of a senseless crime. Though today’s verdict is a step toward justice in this case, unarmed Black men and women continue to die in encounters with the police. To ensure true justice and healing, our country needs to take steps to address its long history of racial inequity in law enforcement” (Business Roundtable, 2021). The organization said it will continue to work with the White House and Congress on bipartisan reforms, including national policing standards, greater accountability, training, community engagement, and transparency (Business Roundtable, 2021).
In conclusion, the events of the past year — Floyd’s death, Chauvin’s conviction, and the upcoming one-year anniversary of the unfortunate incident — continue to galvanize the nation. The importance of ameliorating racism in the U.S. has become a societal priority — with current realities and future challenges in mind. More than ever before, CEOs are interjecting themselves into societal-political issues — such as the issue of systemic racism. Corporate America now feels a sense of urgency to speak publicly and leap to action, which comes as a surprise to some business critics and observers. Although there’s a risk of alienating stakeholders/customers, it appears that silence is no longer an option for many CEOs and their companies. To the expectations of Friedman and Levitt, profits remain a priority. However, profitability now coexists with a sense of social responsibility and the emergent willingness of CEOs speak out about complex societal and political issues — during these modern times. Overton et al. (2020) said: “It is important for companies to recognize the shift in societal expectations and to embrace opportunities to take an active role in solving social problems” (p. 708). According to Gaither et al. (2018), “CSA reflects a unique and emerging trend” (p. 182).
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