The impact of corporate sociopolitical activism on a company’s bottom line depends on how the activism aligns with the firm’s stakeholders, according to new research.
, such as gun control and LGBTQ rights, says study co-lead author Nooshin Warren, assistant professor of marketing in the University of Arizona Eller College of Management.has significant effects on firm value and stock market performance, which vary depending on how the activism aligns with the views of a firm’s customers, employees, and state regulators.
Researchers surveyed 1,406 people and asked them to label each corporate activism event on a scale from “very liberal” to “very conservative.” A second survey of 375 people helped researchers identify a given company’s typical customers as having more liberal or conservative views. The team gauged the political leanings of company employees through political contribution data from the US Federal Election Commission.
“The strongest effects come from alignment with consumers’ values, and consumers are obviously the most vital source of revenue for a firm,” Warren says. “Punishment from a government can have a sudden and significant impact on a company as well. Employees, although very important, have less of an immediate impact.”The researchers measured changes in stock market value in the five-day window surrounding a corporate activism event.