CEOs of large corporations have become increasingly influential in shaping public discourse around important societal issues (Krause & Miller, 2020). For example, Salesforce CEO Mark Benioff publicly sparred with the state of Georgia over its proposed religious freedom bill, while CrossFit CEO Greg Glassman stepped down following mounting opposition to the controversial comments he made amidst the George Floyd protests that erupted throughout the United States.
In many instances, CEOs enter the public forum because they are pressured by social activists challenging them over policies and practices they deem detrimental to society. Being the public face of their firms, CEOs can play an important role not only in responding to these social activists, but also in shaping the perceptions of other activist groups and important stakeholders. However, because CEO responses to social activist challenges are likely to be evaluated differently by different stakeholders (Bridoux & Stoelhorst, 2014; Zavyalova, Pfarrer, Reger, & Hubbard, 2016), CEOs’ public responses to these social activist challenges may have important consequences; some of which they may not clearly anticipate.
My study sought to examine some of the potentially conflicting consequences associated with CEOs’ public responses to social activist challenges. For instance, a CEO’s public response to a social activist challenge could influence the pressures received from the focal social activists confronting the firm while also sending a signal about the firm as a target for additional challenges by making it appear more or less receptive to social activism and social issues. To examine this tension, I designed a laboratory experiment in which participants assumed the role of social activists demanding that a fictitious firm cease its offshore drilling operations. Participants then received either a defensive or accommodative response from the firm’s CEO. I found that while CEOs issuing an accommodative response to a social activist challenge could curb this immediate source of pressure, they simultaneously sent a broader signal that the firm is inclined to accommodate future pressures from social activists. As such, my findings demonstrate the important role of CEOs in managing social activism in and around their firms and the strategic consequences of doing so, especially in the public forum.
Based on this, my advice to CEOs is as follows:
1) Be aware that multiple stakeholders and audiences are paying attention to what you say;
2) Consider the short-term costs/benefits of publicly rebuffing/accommodating social activists against the possible long-term costs/benefits of doing so;
3) If your intention is to accommodate a social activist’s demand without inviting other challenges, then it might be beneficial to do so quietly and away from the public eye. Or at the least, weigh the potential benefits to your firm’s legitimacy against the possibility that it may become a more attractive target for other social activists “out there”.
CEOs are increasingly shaping public discourse related to important societal issues. But they do so under the scrutiny of multiple stakeholders, especially that of social activists. While there are many possible benefits to working with social activists (Odziemkowska, 2021), firms have limited resources and thus must be strategic in choosing which activists to work with and which societal issues to prioritize. As such, CEOs must be aware that their words have strategic and potentially costly implications for their firms as it relates to social activism and, therefore, plan accordingly.
References:
Bridoux, F., & Stoelhorst, J. W. 2014. Microfoundations for stakeholder theory: Managing stakeholders with heterogeneous motives. Strategic Management Journal, 35(1): 107-125.
Krause, R., & Miller, T. L. 2020. From strategic leaders to societal leaders: On the expanding social role of executives and boards. Journal of Management, 46(8): 1315-1321.
Neville, F. 2022. Examining the conflicting consequences of CEO public responses to social activist challenges. Business & Society, 61(1): 45-80.
Odziemkowska, K. 2021. Frenemies: Overcoming audiences’ ideological opposition to firm-activist collaborations. Administrative Science Quarterly, 67(2): 469-514.
Zavyalova, A., Pfarrer, M. D., Reger, R. K., & Hubbard, T. D. 2016. Reputation as a benefit and a burden? How stakeholders’ organizational identification affects the role of reputation following a negative event. Academy of Management Journal, 59(1): 253-276.