How Do Consumers Feel When Companies Get Political? – Harvard Business Review

Executive Summary

Researchers surveyed 168 managers across industries, as well as advanced MBA students, to find out how business activism affects consumer perceptions. They found that people are less swayed by corporate advocacy than has been widely reported. When participants were told a company had conservative values, it was more negatively perceived, but when they were told a company had liberal values, their opinions of it remained neutral. They also found that women perceived organizations that are involved in political activity more negatively than men. Finally, they discovered that participants generally acknowledged that political advocacy is both a way for companies to connect with customers and promote their brand. Using advocacy to advertise to target audiences isn’t seen as manipulative pandering. Rather, it’s seen as common practice.

There was a time when companies, big and small, shied away from politics. The prevailing wisdom was that endorsing a cause was bad business. Better to stay away from advocacy, focus on sales, steer clear of sentiments, and avoid offending one side or the other. When businesses contributed to political campaigns, they often contributed equally across parties. Hedging political bets was the order of the day.

Things have changed.

The change started with the corporate social responsibility movement of the 1980s, when more companies began considering the impact their practices had on society and the environment. There was advocacy, but it was about products and processes, not politics. No one could take umbrage at a company that produced hormone- or BPA-free products or whose supply chain banned firms that employed abusive labor procedures. These were rooted in ethics as opposed to political ideologies.

As society became politically polarized, companies became more activist. With a 24-hour news cycle and social media fanning polarization, it’s more problematic for organizations and their CEOs to remain neutral. Consider what’s happened in the past decade: Hobby Lobby — a chain of craft stores that challenged a federal mandate stating companies pay for insurance coverage for contraception — took their case all the way to the Supreme Court and won. Nike featured the controversial athlete and social crusader, Colin Kaepernick, in an ad campaign. Retailers like Walmart and Dick’s Sporting Goods stopped selling certain weapons in response to tragic mass shootings nationwide.

Some say this is the right path for business to take, as it can solidify bonds with important stakeholders. Others say advocacy should be avoided at all costs for the exact opposite reason — it can alienate employees and customers.

A lot has been written about both sides. But which is right? Does political advocacy have the power to change consumers’ minds? Does it really affect stakeholder attitudes? Are people willing to apply for jobs at organizations whose beliefs oppose their own? Are people growing more cynical about how pervasive politics have become in their day-to-day lives? Do their political affiliations influence how they perceive corporate advocacy?

The answers to these questions could have a real impact on businesses. That’s why we set out to study them.

We surveyed 168 managers across industries, as well as advanced MBA students. Overall, 52% identified as women, 40% as men (8% did not respond). Forty-one percent were 20 to 29 years old, 39% were 30 to 39, and 20% were 40 or above. We also asked participants to share their political identifications (see the two lists below).

Self-identified political beliefs:

• Very liberal: 19%
• Liberal: 23%
• Moderate: 30%
• Conservative: 18%
• Very conservative: 9%

Self-identified party affiliation

• Democratic: 34%
• Independent: 50%
• Republican: 16%

We first presented all participants with a simple, factual description of a fictitious mid-sized food service company, Jones Corps. Basics about the company — its products, vision statement, revenue numbers, and employee benefits (insurance, 401(k), free breakfast) — were included. We also laid out their non-political philanthropy efforts, including supporting Boys and Girls Club, Adopt-a-Highway, and matching employee charitable donations.

Participants were then asked to answer a series of questions to derive their baseline opinions about the organization, including consumer preference, employment preference, and how the company’s non-business activities impacted people’s perception of the organization as a whole. Questions included: Would you buy a product from this company? Would you work for this company? How committed do you think this company is to its values?

Then we pitched a curve ball. All participants got further information, but one half was told Jones Corps had very conservative values and the other half was told Jones Corps had very liberal values. We told participants causes the company supported or did not support, including abortion rights, gun rights, and LGBTQ+ rights, as well as their political donations. We also described the personal values of the CEO. Participants were then asked the above questions, as well as additional questions on whether or not participants believed Jones Corps’ non-business advocacies were genuine or mere marketing ploys to draw in customers.

The findings were surprising.

Participants who were told the company had conservative values viewed it in a significantly worse light. Their opinion of Jones Corps dropped 33%. The company was not only seen as less committed to social responsibility and its community, but also as less profitable. Participants were 25.9% less likely to buy its products and 25.3% more likely to buy from a competitor. In addition, job seekers were 43.9% less likely to apply for a position there.

Because conservative activity was viewed so poorly, the reverse seemed likely for liberal activity. That wasn’t the case. Participants who were told the company had liberal values viewed it as neither good nor bad. There was no significant change in any opinions or intended behaviors.

We expected to see some differences in how Democrats and Republicans reacted to political activity. Did one have a stronger reaction than the other? That a company engaged in conservative or liberal political activity did not affect Republicans’ opinions of that company, but it did for Democrats. (As previously reported, Democrats didn’t care one way or another if a Jones Corp engaged in liberal activities.) That means the 33% drop in opinion when Jones Corps engaged in a conservative agenda was entirely driven by participants who identified as Democrats.

We also thought that age might impact participants’ reactions. But when we broke it down by people in their 20s, 30s, and 40s or older, the only difference was that those 40 or older were less likely to buy products after learning of political advocacy.

More differences came up when men and women were compared. As a whole, the opinion of Jones Corps decreased for both men (19.5%) and women (19.4%) when told that the business had participated in political activity. Additionally, women saw the company as less committed to social responsibility. The difference in reaction from the genders also hit the wallet. Women were nearly 10% less likely to buy products from the company after knowing about the political activity across the board.

Our last finding was by far the least expected. We asked participants whether political advocacy was genuinely held by companies — our fictitious one, as well as a few real-world examples — or whether it was designed to build loyalty among like-minded customers. We thought the answers would be mutually exclusive — that advocacy would be viewed as either genuinely held or designed to build loyalty. But overall the political beliefs of companies were seen to be both genuinely held and designed to build loyalty by the majority of participants.

Overall, these results reveal a societal shift about what is and is not acceptable for companies to endorse.

The fact that participants viewed engaging in liberal advocacy as neither good nor bad suggests that they thought doing so was merely normal business.  This lack of cynicism, frankly, perplexed us. We live in an age where trust in fundamental institutions — be they church, state, or business — is steadily waning, especially among millennials (which was 75% of the sample). Perhaps this can be explained by our supposition that political advocacy has been absorbed to the extent that it is seen as a natural extension of a business model. Further, participants generally acknowledged that political advocacy is both a way for companies to connect with customers and promote their brand. Using advocacy to advertise to target audiences isn’t seen as manipulative pandering. Rather, it’s seen as common practice.

The previously held taboo of crossing commercialism with politics may be well gone.

There was an exception, however. Women reacted more negatively to political activity than men. This could be caused by a number of factors. Women may be more tuned to these issues because they reflect a progressive value system in which women are invested. With women purchasing the majority of consumer products and increasing their economic contribution, companies should be aware of how their advocacy could impact the bottom line.

The overarching story is that people in our sample were less swayed by corporate advocacy than has been widely reported. Whether or not this drives consumer’s behavior in a serious way is yet to be seen, but an anecdote might be helpful here.

At George Washington University there is a food hall that has five restaurants. Four of them are either individually owned or small chains. The fifth is a Chick-fil-A, famous for its conservative values, which they follow up with concrete behavior and donations. At the first four restaurants, there is hardly ever a line. At Chick-fil-A there is always one, stretching as far as 30 people. That this occurs at one of the most politically active universities in the country is a puzzle. Does this mean that a good sandwich trumps values?

Maybe, maybe not.

One thing is clear: It’s a new business environment. As we head into another election season, companies need to consider how they get involved. The impact of political activity may not be universally felt, but its impact is here to stay.