Survey investigates “bathroom bill” to clarify the meaning of CEO’s socio-political activity

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Business leaders have traditionally avoided participating in sensitive social and political debates. But more and more, the CEO is taking a visible public position on the fiercely contested issue and is working on what has become known as the CEO’s socio-political activity.

A new study at the University of Notre Dame investigated the reaction to the controversial 2016 “bathroom bill” in North Carolina and revealed how the CEO behaved. Activism It affects the attitudes and behaviors of employees.

The CEO’s activism can be a net plus for the company, but “How do employees react when the CEO speaks? CEO’s socio-political activism inside and outside the company. Impact only if the majority of employees agree with the CEO.from now on Quarterly management science From lead authors Adam Wowak and John Busenbark, professors of business administration at the University of Notre Dame Mendoza Business College, and Donald Hambrick of Pennsylvania State University.

According to this survey, employee reactions to activism depend on the alignment of their own idealistic values ​​with the CEO’s public position. If they agree, employees will react positively, strengthen their commitment to the company, and support the CEO’s idealistic position. If the stance goes against the values ​​of the employee, they pull away and experience a diminished commitment and support for the CEO’s goals.

The study focuses on the North Carolina “Bathroom Bill,” which was signed in 2016 and rolled back existing anti-discrimination protection against LGBTQ individuals, including the ability to use public toilets for gender identity. I did. The bill has been the subject of intense debate among politicians, journalists and activist groups, but has attracted the attention of groups that have traditionally avoided participating in social debates, the CEOs of listed companies. Nearly 100 CEOs of listed companies have signed a highly publicized letter against the bill. In doing so, he showed support for a liberal position on this issue.

The team investigated the effectiveness of the CEO’s activities by comparing the companies that the CEO signed the opposition with the companies that the CEO was asked to sign but declined. Their sample included 74 “signing companies” and 251 “unsigned companies.”

Researchers measure an employee’s organizational commitment by assessing changes in a company’s glassdoor rating during the period before and after the letter, and of the employee’s political contributions to democratic recipients during the period before and after the letter. He supported liberalism by assessing change. The period of the letter.

“Our results suggest that speaking about controversial social topics can benefit the CEO’s company, which most employees are on the CEO’s side in the first place. Only in cases, “Wowak said. “Until a few years ago, CEOs rarely participated in social debates. Social convention We aim to avoid such behavior as there is a risk of alienating stakeholders who disagree with the CEO. However, until now, the actual results were unknown. “

The team’s core prediction was to be more liberal (on average) Staff The population responds positively to the CEO’s liberal activities, while the more conservative employee population responds less favorably. They also examined the impact of the CEO’s efforts on employee support for the underlying idealism, measured by investigating employee political contributions to democratic recipients. In both cases, the results confirmed the team’s theory.

For the CEO, the impact is clear, Wowak says.

“Employees are aware of and respond to the CEO’s activities,” he said. “Therefore, taking a position that goes against the general view does not go well internally, so it is important to reasonably and accurately measure where an employee stands in the spectrum of idealism.”

Wowak says the results can also impact corporate governance and social impact.

“The board will benefit from a better understanding of the pros and cons of CEO activism,” he said. “It’s true that if the majority of employees don’t agree with the CEO, choosing one or the other in a public debate can backfire, but our result is that the CEO takes a stance of agreement. , Suggesting that activism allows employees to feel more connected to the company. Perhaps even more interesting, our results show that the CEO’s activities influence the behavior of employees outside the workplace. It shows that there is a possibility. The CEO seems to be in a position to influence the level of personal political involvement of employees. ”

The price of taking a stance: how corporate socio-political activities affect profitability

For more information:
How do employees react when Adam J. Wowak et al, CEO speaks? Internal and external influences of the CEO’s socio-political activism, Quarterly management science (2022). DOI: 10.1177 / 00018392221078584

Quote: In the survey, the CEO was taken from https: // on February 22, 2022, looking at the “Bathroom Bill”. The impact of the socio-political activity of (February 22, 2022) is revealed.

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Survey investigates “bathroom bill” to clarify the meaning of CEO’s socio-political activity

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