When a company’s management
decides to take a partisan position publicly on a political issue, especially
one that is contentious, decreased revenue, whether from potential or actual
consumers individually who disagree with the company’s position, or from an
organized boycott from groups that stand against the position. Anger may be a
stronger motivator than ideological agreement, in which case any increase in
purchases would be less than the lost revenue. This asymmetry itself is
interesting from the standpoint of human nature, and strongly suggests that
CEO’s steer their respective companies, which managements operate on behalf of
the stockholders anyway, away from taking controversial positions on social or
political issues that do not directly and significantly pertain to the
bottom-line (i.e., profitability) in the short- or medium-term. In short,
wading into societal issues is, generally speaking, not good for business. What
then about a company like the ice-cream manufacturer, Ben & Jerry’s, which
from its inception had social/political activism as a salient part of the
company’s mission?
The full essay is at "Corporate Governance and Political Activism."
