Starbucks Chairman Howard Schultz talks to the media (Source: Wikimedia Commons)
Ideas for Leaders #611

CEOs Can Galvanize Public Opinion – and Help Business

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Key Concept

More CEOs are speaking out on social issues unrelated to their business. A new study shows that this activism can galvanize public opinion – and doesn’t hurt sales. 

Idea Summary

When Indiana passed its Religious Freedom Restoration Act (RFRA) in March of 2015, Apple CEO Tim Cook’s response was swift and unequivocal. “Apple is open for everyone. We are deeply disappointed in Indiana's new law,” he tweeted.

While supporters insisted that the law was only intended to allow business owners and others to make decisions based on their religious beliefs, opponents declared that the law allowed businesses to refuse to serve lesbian, gay, bisexual and transgendered (LBGT) people.

Tim Cook is not the only CEO to comment on issues that are not related to the core business of the firm. Starbucks’ Howard Schultz is well known for taking positions on social issues. On the conservative side, Chick-fil-A CEO Dan Cathy has spoken out against gay marriage. Do activist CEOs have an impact on the public perception of the issues on which they are commenting?

To answer this question, Aaron Chatterji of Duke’s Fuqua School of Business and Michael Toffel of Harvard Business School conducted a field experiment based on surveys to more than 3400 respondents across the country.

All respondents were asked if they supported the law. Many (but not all) of the respondents were told about the concern that the law was discriminatory against lesbians and gays. This is an example of ‘framing’ an issue — in this case, framing the law in terms of discrimination.

In one group of surveys, the researchers left the framing statement unattributed — that is, the question simply noted that some people were concerned about discrimination. Other surveys attributed the framing statement to a politician (the mayor of Indianapolis), to another businessperson (the CEO of the Indiana-based Angie’s List), or to Apple CEO Tim Cook.

The results revealed the impact of CEO activism. When the question was not framed — that is, the issue of discrimination was not mentioned — 50% of respondents said that they supported the law. However, only 38% to 42% of respondents said they supported the law when it was framed around the discrimination issue. This result held steady whether the discrimination concern was unattributed, or was attributed to the mayor or to the CEO of Angie’s List. When the framing statement was attributed to Tim Cook, 40% of respondents said they supported the law.

The results thus show that a statement by a CEO can frame an issue as effectively as statements by politicians or unattributed statements.

The next issue the researchers explored — through a set of questions sent to a different set of respondents — was whether a CEO’s activism influenced customer purchases: that is, will customers be more likely to buy an Apple product if they know of Cook’s activism?

As with the first round of surveys, the distinguishing element of the second round was the preamble statement. All respondents were asked whether they would likely purchase Apple products in the near future. For some respondents, this question was preceded by Cook’s comments on his management philosophy. For other respondents, the purchasing question was prefaced by a sentence describing Cook’s discrimination concerns about Indiana’s new law. Finally, a third set of respondents were simply asked whether they would likely to purchase Apple products in the near future without any additional comment or statement.

Results from the second round of surveys showed that respondents were exposed to Cook’s views on the new law were more inclined to buy Apple products in the near future than respondents who had not been exposed to Cook’s opinions. 

Business Application

Because of his or her visibility, a CEO’s activism can have an impact on public opinion. Chatterji and Toffel note that this impact is felt mostly with those who share the CEO’s values. Analysis of their data showed that opponents of same-sex marriage were not inspired by Cook’s activism to either change their opinions of the law or to purchase Apple products in the near future. However, because Cook’s public stance did inspire supporters of same-sex marriage to purchase Apple products, the net impact of his activism was positive.

In sum, a CEO can galvanize public opinion around an issue, and can even help his business in the process. However, CEOs should be aware that their activism might still be a two-edged sword, promoting purchasing intent among supporters of their positions, but risking the erosion of purchasing intent among opponents.

CEOs or business leaders may be willing to take this chance for causes they feel strongly about — knowing that their voices can make a difference.

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Authors

Institutions

Source

Idea conceived

  • March 2016

Idea posted

  • July 2016

DOI number

10.13007/611

Subject

Real Time Analytics