CEO Activism: How executives can take sides on social issues

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Credit: istockphoto.com/baona

Credit: istockphoto.com/baona

When the state of Indiana in the U.S. passed its Religious Freedom Restoration Act (RFRA) in 2015, corporate leaders from Salesforce to Angie’s List to Apple were quick to speak out. The law allowed individuals and companies to cite infringement of their religious freedom as a legal defense. Opponents of the law argued that it allowed for discrimination against LBGT people, for example by allowing business owners to refuse service to certain customers on religious grounds. The outcry from these CEOs and other influential parties across the U.S. prodded Indiana legislature to enact a second bill providing protections for the LGBT community.

The response to the RFRA is not an isolated example. CEOs are speaking up about social and political issues with more and more frequency.

Researchers Michael Toffel of Harvard Business School and Aaron Chatterji of Duke’s Fuqua School of Business attribute the trend in part to the rapid demographic and social change the U.S. is currently experiencing, noting that similar behavior was common during periods such as Prohibition and the civil rights movement. Their study of CEO activism, which focuses on Tim Cook’s response to the RFRA, found that his stance had a substantial effect on public opinion. After Tim Cook came out against the act, fewer people supported it and more people were interested in a trip to the Apple store.

However, not all executive activists have enjoyed the same positive reception. For example, when Chick-Fil-A President Dan Cathy spoke out against gay marriage in 2012, he earned plenty of support, but even more backlash. Ultimately, the company issued a statement saying that, “Going forward, our intent is to leave the policy debate over same-sex marriage to the government and political arena.”

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