SU Marketing Research Shows Corporate Sociopolitical Activism Can Hurt Brand Value
SALISBURY, MD---“Get woke, go broke.”
That has been the mantra for many critics of companies that, in recent years, have taken stances on sociopolitical issues including race, sexual orientation, gender and environmental issues.
But is it actually true?
According to a study co-authored by marketing faculty from Salisbury and West Virginia universities, companies speaking out on such issues aren’t exactly “going broke,” though they do often see a downturn in stock prices.
Recently published in the scholarly journal Business and Society under the title “#Activism: Investor Reactions to Corporate Sociopolitical Activism,” the study focused on 260 incidents of “corporate sociopolitical activism” (“CSA”) on Twitter.
Its co-authors, Drs. Simbarashe Pasirayi and Patrick Fennell of SU and Kayla Follmer of West Virginia University, determined that “CSA efforts decrease firm value by an average of 0.22%, indicating that wading into social or political issues is a risky strategy.”
That 0.22% may seem like a small number, but it can represent a loss of millions of dollars, “all from a single tweet,” Fennell noted.
However, CSA isn’t inherently a bad thing. “Further analysis highlights the importance of clearly articulating stances on social issues that align with the firm’s core values,” the researchers said.
Examples include Patagonia’s #ProtectOurWinters campaign to advocate for political solutions to climate change, aligning with the outdoor clothing company’s corporate value to cause no unnecessary environmental harm; and Ben and Jerry’s use of the #BlackLivesMatter and #MarchForOurLives hashtags in alignment with the ice cream manufacturer’s core values, which include social justice.
Conversely, corporations that express support for social movements that do not connect with the history of their core values, such as Walmart’s use of the #MarchForOurLives hashtag, can weaken stakeholder buy-in and send mixed signals to investors, their research showed.
The full study is available online.
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