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.