Corporate chieftains have traditionally been reluctant to speak out on controversial social issues, particularly when they’re not related to their business. Why alienate potential customers?
They may want to rethink that. New research suggests that CEOs who speak out not only bolster support for their cause, but improve their company’s sales as well.
Last year, Apple CEO Tim Cook took issue with a law in Indiana that allowed businesses to discriminate against gay and lesbians customers as a matter of religious freedom. Support for the law fell when Cook opposed it. In addition, consumers became more likely to buy Apple products once they learned his position, according to a survey conducted by a pair of business professors and reported in a Harvard Business School working paper this month.
Given a generic statement about the proposed law, 50% of respondents said they supported it. That support fell to 40% when respondents were told Cook opposed it. Support for the law also fell when people were told other CEOs and politicians opposed the bill. The survey was conducted over the Internet using a market research firm; about 600 people responded to each question.
When asked how likely they were to buy Apple products, interest rose from 2.7 to 3.02 on a five-point scale when potential buyers were told Cook’s position on the Indiana law. Cook’s views didn’t discourage people from buying Apple products even if they disagreed with him. But people who agreed with him became more likely to purchase Apple devices, authors Aaron Chatterji, of Duke, and Michael Toffel, of Havard, write.
This finding implies that when CEOs take public stands on controversial issues, they can galvanize support for their company from those who share the same viewpoint. In this manner, CEO activism’s primary effect is through signaling which side of a public debate CEOs and, by implication, their companies are on.
Addressing social issues can backfire if CEOs anger potential customers with differing view points, as Chick-Fil-A’s Dan Cathy did when he opposed gay marriage and triggered a boycott. Confusing them also hurts, as Howard Schultz of Starbucks did when he urged baristas to prompt conversations about race relations, Chatterji and Toffel write. But when handled properly, CEOs should be able to speak their minds without fear.