When polarization hits corporations: the moderating effect of political ideology on corporate activism

Abstract

Traditionally, it has been argued that companies should maintain a neutral stance on issues of a social or political nature, especially controversial ones. However, in recent years, corporations have begun to adopt clear positions on sensitive and polarizing social and political issues. This new phenomenon, called corporate activism, is beginning to gain prominence in corporate strategies, which now extend beyond business objectives and sometimes may go against the beliefs held by many customers. To date, studies aimed at identifying whether these types of actions benefit or harm companies are scarce, and none of them have focused on consumer perceptions. Adopting the latter approach, this work identifies the antecedents and effects of corporate activism, and the influence that political ideology can have as a variable moderating these effects. Analysis of a sample of 1,521 individuals representative of the Spanish population using a structural equation model yielded the following results: (i) institutional and corporate credibility and authenticity act as antecedents of corporate activism, (ii) when credibility in institutions diminishes, consumers perceive that corporations should be more involved in social and political affairs, even when controversial or polarizing, (iii) reputation and brand equity are considered effects of corporate activism, and (iv) political ideology acts as a variable moderating these effects, in such a way that individuals with a more conservative ideology do not appreciate that companies that get involved in activist initiatives will enjoy positive consequences on their reputation and brand equity, while individuals with more liberal views do perceive such positive effects. These findings help companies to guide their strategic decisions, especially those related to corporate social responsibility (CSR), as well as help governments and institutions to understand the social changes that are taking place and understand the role that consumers expect corporations to play today.

The Side Effect of Political Standing: Corporate Activism and Its Impact on Stock Returns

“…In summary, previous empirical literature has focused on the relationship between corporate activism and purchase intention (Corcoran et al, 2016;Krebel Chang, 2017;Overton et al, 2021;Robinson et al, 2012), changes in consumer attitudes (Atanga et al, 2022;Parcha & Kingsley Westerman, 2020), the impact on brand equity (Korschun et al, 2019;Vredenburg et al, 2020), reputation (Den-Hond et al, 2014), or both (Villagra, Clemente-Mediavilla, et al, 2021), as well as understanding the antecedents of the concept (institutional and corporate credibility and authenticity) from the consumer's point of view (Villagra et al, 2022). Moreover, the relationship between corporate activism and financial performance is receiving research attention (Bhagwat et al, 2020;Dodd, 2018;Dodd & Supa, 2014;Glambosky & Peterburgsky, 2022;Villagra, Monfort, & Méndez-Suárez, 2021;Weinzimmer & Esken, 2016), which is closely related to the principal objective of this research.…”

“…They also found that the higher the perceived credibility and authenticity of companies, the more positively their corporate activism actions will be regarded. In addition, Villagra, Clemente-Mediavilla, et al (2021) found that consumers' political ideology could act as a moderating variable of the effects of corporate activism. On the one hand, consumers with a more conservative ideology do not consider that the activist actions of companies will have positive consequences on their reputation and brand value.…”

Empresas con valores: un modelo conceptual del activismo corporativo

“…Como se ha observado en los apartados previos, el activismo corporativo, de gran interés y desarrollo en los últimos años, ha sido estudiado desde perspectivas diversas. Sin embargo, no hay apenas estudios que se centren en explicar si es aceptado o no por los públicos de las organizaciones (Mukherjee y Althuizen, 2020;Parcha y Kingsley, 2020;Villagra et al, 2021b). No obstante, es interesante profundizar en teorías previas que, aún sin tener una relación directa con el tema, pueden servir como punto de partida para explicar los comportamientos y situaciones desde el punto de vista de la compañía y sus públicos.…”

“…Este modelo puede aplicarse a diferentes stakeholders, esto es, consumidores con características sociodemográficas muy diversas (edad, país de origen, situación económica, etc. ), distintas ideologías políticas (Mukherjee y Althuizen, 2020;Villagra et al, 2021b), inversores de varios sectores (Bhagwat et al, 2020, Sánchez et al, 2022 u otros a considerar por futuros autores.…”