Managerial activism: what happens when business and politics meet - voila! Marketing and digital

In the video: the protesters are advancing on Kaplan, the police tried to stop the procession without success (Yenon Yatach)

Israel is in the midst of a large-scale public protest.

We are used to linking protests to social activists, activists, associations, and perhaps even to the Histadrut, but this time - and unusually in Israel - businessmen and companies are taking a clear public position even though it is controversial and beyond that they are even taking concrete actions that support their media moves.

In a few weeks, we have seen how hundreds of businesses express support for equality and are not willing to line up with bills that would create discrimination among their customers;

Anat Gaz, the CEO of Israel's first unicorn founded by a woman, Papaya Global, announced that the company will take money out of Israel; Barak Elam, CEO of NICE, expressed a firm and public opposition to the legal reform in a huge poster that was hung on the company's building and, of course, on social media;

Uri Levin, CEO of Discount Bank, came to the demonstration and warned against the economic consequences of the legal reform; dozens of CEOs of high-tech companies support and even encourage strikes by their employees.

The Faber company, whose building is right in the heart of the protest complex, has expanded and opened free internet for all protesters, so that they can broadcast to the networks what is happening in the protests.

Since then, a sign of support with the inscription "Democracy is greater than politics" is emblazoned on the building and the company's logo is illuminated in the colors of pride.

The company's representatives go around the demonstrations and hand out bottles of water and stickers to the protesters.

The Fiverr building in Tel Aviv with the sign supporting the social protest. (Photo: Fiverr)

So what is managerial activism anyway?

The phenomenon of managerial activism or branding activism, also called CEO activism or corporate activism, is a relatively new phenomenon and a sort of practical derivative of employer branding.

It describes a situation in which a business company or its managers express a position or take a controversial action on a social or political issue.

Historically, until the last five years, there were very few companies that engaged in managerial activism.

Exceptions include Benetton, The Body Shop, Ben & Gerry's and Patagonia.

But this reality has begun to change in recent years, among other things due to the increase in social polarization, the rise of President Trump, and two significant protest movements in the US: Me Too and Black Lives Matter.

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Notable campaigns of managerial activism

The "activist" campaign that opened the door for others was Nike's 2018 campaign led by Colin Kaepernick, a black American football player identified with the NFL's protest of kneeling during the playing of the national anthem to bring awareness to the issue of police violence against blacks.

Kaepernick's conduct provoked great anger from the conservative side of the political map and great support from the liberal side.

Nike's decision to put him at the center of the campaign created a charged public debate regarding the social issue, but also regarding Nike's conduct as a commercial company.

Was Nike's move the right business?

When can managerial activism help a company and when can it hurt it?

Nike's choice to launch a campaign was one of several strategies that companies can take.

Beyond that, it is possible to make a statement to the media or on social networks, publish an opinion piece, donate to associations or politicians who promote the social or political goal at hand, or change business behavior as a protest, for example by closing businesses or choosing not to expand to a certain country.

The campaign did provoke anger, but at the end of the day, Nike was seen as a company with an authentic move that corresponded with the target audience, and the results were very positive - both in the public discourse, both in sales and in the share price.

Since then, we've seen Salesforce curtail operations in North Carolina in response to the state's conservative stance on gender and transgender issues;

Amazon offering its employees support on the issue of abortion in response to the change in the legal status of abortion in the US; Wal-Mart removing semi-automatic weapons from the shelves in response to a shooting attack; Delta Airlines canceling financial benefits for members of the gun lobby (NRA); Chick-fila supporting organizations that are passionately opposed to B, and many more good ones who followed Nike's path and stuck to their values.

The question of business viability

Regarding the question about the business viability of managerial activism, it is worth learning from the research in the field.

To understand how "hot" the field is, while the first academic article on the subject was published only in 2016, by the end of 2022 96 articles have already been published, telling a story of managerial and marketing complexity and presenting conflicting results.

For example, a study based on hypothetical experiments found that following a brand's taking an activist position, consumers who support the controversial issue bought slightly more than the amount they bought before the managerial activism to support the company, but this support was 60% null compared to consumers opposing the position who decided to reduce their consumption.

An example from the consumer world showed the opposite effect: the CEO of Goya, the largest Hispanic-owned food company in the US, angered many when he praised President Trump, who was hostile to Hispanics and immigrants in general.

As a result, two competing campaigns were created, #boycottgoya and #buygoya - which two weeks after they started led to a 17% increase in sales.

One study that examined the effect of managerial activism on the stock price of public companies in the US found a negative relationship while another study that examined the effect on employees whose company engaged in managerial activism found a positive relationship. It is interesting to see that another study finds that human memory is very short-term and that after three months , even if we were angry with the company, we return to purchase its products. This is especially true when consumers have no substitutes and when they really like the brand.

In order to put order in the new research field these days I am involved in conducting a meta-analysis - "research on studies" - which allows, With the help of collecting and analyzing all the articles in the field to understand the relationship between two variables - managerial activism and its effectiveness - and in addition to identify intervening variables that strengthen or weaken the relationship.

Across a very large sample of nearly 5 million different stakeholders, most of them consumers but also investors and employees, a small positive effect was found for managerial activism on a variety of influence variables such as purchase intention (consumers), employee commitment to the organization (employees) and share price (investors) .

The effect is strengthened in cases where the company's reputation and perception are in line with the socio-political issue at hand, when the company's behavior is perceived as authentic, for companies with a smaller market share, and when the socio-political issue is less controversial.

Regarding the last aspect, since most of the studies were conducted in the USA, and following the surveys there regarding the perception of the extent of disputes around a variety of social and political issues, it was found that managerial activism around religious issues and political positions or politicians will lead to a negative effect, while activism on gender and racism issues will lead to a positive effect.

In conclusion

There is still much to learn about managerial activism, to understand how it operates in different parts of the world over time and not only during a one-time activist event, and how following managerial activism it is possible to make employees or consumers who do not support the socio-political issue, at least appreciate the company's readiness to stand up for the values that are important to her.

Professor Amir Greenstein is a lecturer and researcher in the field of marketing, Northeastern University and VU Amsterdam

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