How Did Corporations Get Stuck in Politics and Can They Escape?
Corporations have long sought to promote their business interests through political engagement. Today, however, corporations are taking public positions on a multitude of contested political and social issues—through advertisements, statements, and promotions—positions that are unrelated to their business operations. In our forthcoming article, How Did Corporations Get Stuck in Politics and Can They Escape? (forthcoming […]
Jill E. Fisch is the Saul A. Fox Distinguished Professor of Business Law at the University of Pennsylvania Carey Law School, and Jeff Schwartz is the Hugh B. Brown Presidential Professor of Law at the University of Utah S.J. Quinney College of Law. This post is based on their recent paper, forthcoming in the University of Chicago Business Law Review. Related research from the Program on Corporate Governance includes Corporate Political Speech: Who Decides? (discussed on the Forum here) by Lucian A. Bebchuk and Robert J. Jackson, Jr.; The Untenable Case for Keeping Investors in the Dark (discussed on the Forum here) by Lucian A. Bebchuk, Robert J. Jackson, Jr., James Nelson, and Roberto Tallarita; and The Politics of CEOs (discussed on the Forum here) by Alma Cohen, Moshe Hazan, Roberto Tallarita, and David Weiss.
Corporations have long sought to promote their business interests through political engagement. Today, however, corporations are taking public positions on a multitude of contested political and social issues—through advertisements, statements, and promotions—positions that are unrelated to their business operations. In our forthcoming article, How Did Corporations Get Stuck in Politics and Can They Escape? (forthcoming University of Chicago Business Law Review), we term this form of engagement, “political posturing,” and we argue that it is bad for shareholders, stakeholders, and society.
Examples of political posturing are everywhere. Hundreds of corporations proclaimed their support for BlackLivesMatter. Dozens publicly opposed the Supreme Court’s Dobbs decision, which overturned Roe v. Wade. Coca Cola and Delta prominently criticized Georgia’s restrictive voting laws. Disney took a stand against Florida’s “Don’t Say Gay” law. Today, we know where corporations stand on almost every politically contentious issue.
There are several reasons corporations suddenly developed political views. Activists, employees, and investors began to call for companies to take a stand. Corporations obliged, not only to quell these voices, but to use politics as a way to market their products. Gillette, for instance, ran an advertising campaign highlighting forms of toxic masculinity and asking, in reference to its famous slogan, whether this is “the best a man can be.” The campaign thus sought to use politics to sell razors rather than the razors’ attributes. Corporations are also trapped in a collective action problem, where they fear that if they fail to take a position, they will lose ground to competitors that do. Social media, where taking a stance is the only way to get noticed and silence is denounced as complicity, amplifies these effects.
