New study shows individuals prefer when firms stay apolitical on polarizing issues

(Press-News.org) Customers often prefer companies aligned with their values, but it has been less clear how they react to firms taking a stance on a polarizing topic. A new study published in Strategic Management Journal explores how individuals respond to firms' communications around a polarizing political issue: whether firms take an apolitical stance, say nothing, or choose an ideological stance. The findings highlight how firm and communication characteristics influence the ways in which individuals' opinions of the firm are affected by management’s political activism, and how individuals may prefer firms to stay neutral.

The research team — Tommaso Bondi of Cornell University, Vanessa C. Burbano of Columbia University, and Fabrizio Dell'Acqua of Harvard Business School — were curious to better explore how the ways in which a company takes a political stance affects individuals’ responses. They also wanted to include options of not taking a stance, either expressly or passively, as a choice that CEOs can make.

“That particular distinction was an important one to delineate,” Burbano says. “It's not necessarily the same for a company to explicitly say, ‘We're not going to wade into politics,’ versus staying silent, [which are] potential strategic choices for firms.”

For their research, the team focused on three questions: How does a firm's expected political leaning influence individuals’ responses to its political communication? Do people react differently to the communication of a stance that is backed by the promise of a monetary commitment versus not? And, lastly, the researchers wanted to differentiate between the strategic choice of communicating an explicitly apolitical stance versus staying silent, thus asking: Do individuals prefer communication of an apolitical stance to either communication of an ideological stance or remaining silent, and if so, under what circumstances?

The researchers conducted two survey-based vignette experiments between November 2020 (prior to the U.S. presidential elections) and January 2021 (right after the storming of the U.S. Capitol building), a time period when CEOs were actively communicating stances on political issues. In the first study, the researchers manipulated the information provided to survey respondents about a hypothetical firm's stance regarding an issue, as well as firm characteristics likely to influence individuals' expectations about the firm's positioning (i.e., whether the firm is left-leaning, right-leaning, or centrist). In the second study, the team also manipulated whether the firm’s communication of a partisan stance is backed by the promise of monetary support.

The researchers found that, for an issue with split opinions, a CEO’s partisan communication in either direction will result in negative perceptions of the firm on average. So while individuals who agree with the stance respond positively and individuals who disagree with the stance respond negatively, the negative effects generally outweigh the positive. In addition, the negative average effect is even stronger for firms that are expected to be neutral in their positioning.

Communicating an apolitical stance, the team found, actually increases individuals' perceptions of the firm on average, in particular among Republicans and Independents, when the firm is otherwise expected to lean in one ideological direction or another. The researchers found no additional benefit from communicating an apolitical stance if the organization was considered neutral.

“Silence may not be perceived as neutral,” Bondi says. “If you're a tech firm in California or an oil firm in Alaska, you might still be perceived as political, because there are prior assumptions made by individuals. In that case, it brings a benefit to the firm to just very clearly say, ‘We are absolutely indifferent between these two options.’”

The researchers also determined that, for a less polarizing political issue about which opinion is largely homogeneous, communicating a political stance that aligns with the prevailing opinion on the issue increases positive opinion of the firm on average, compared to either silence or communicating an apolitical stance. Additionally, referencing monetary backing of the political stance serves to strengthen the effects of the stance, whether positive or negative.

The findings suggest that individuals do not want firms to talk about polarizing politics in business: either staying silent when expected to be politically neutral or communicating an apolitical stance when expected to lean in one ideological direction led to the most positive perceptions of the firm.

“You could benefit from being perceived as apolitical,” Burbano says. “If there is a way to adjust people's perceptions from viewing you as a partisan, ideologically aligned company to one that is apolitical and focused on doing what's best for its customers, our study suggests that that's probably the best path forward.”

To read the full context of the study and its methods, access the full paper available in the Strategic Entrepreneurship Journal.

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