Bottom Line Impacted When CEOs Take Positions on Contentious Issues

Research funded by the Arthur W. Page Center for Integrity in Public Communication at Penn State University quantifies what many have suspected: when corporations take positions on controversial issues it impacts their bottom line.

In a study measuring responses to three divisive topics—gay marriage, health care reform and emergency contraception—researchers found that 80 percent of the variance in a person’s intention to purchase from corporations was attributed to his or her views on social/political issues and on the theory of planned behavior variables.

“Based on our study it seems clear that when an organization either willingly takes a stance on a public issue, or is somehow associated with having a viewpoint on an issue, there are financial repercussions,” says Melissa D. Dodd, assistant professor of advertising and public relations at the University of Central Florida.

Dodd and Dustin W. Supa of Boston University surveyed 519 persons designed to represent a random national sample of U.S. consumers, aged 18 and older. All were asked their beliefs about corporate social responsibility, purchasing from socially responsible organizations, purchasing behaviors, and organizational stances on social and political issues.

Then they were randomly exposed to questions in one of four categories: (1) gay marriage, (2) health care reform, (3) emergency contraception and (4) a “control group” focusing on general attitudes toward corporate social responsibility. The first three groups were presented with paraphrased statements of corporate executives on controversial topics.

For gay marriage, the statements were from Starbucks (in favor) and Chick-fil-A (against). For health care reform, they were from Walmart (in favor) and Whole Foods Market (against), and for emergency contraception, it was Nike (in favor) and Hobby Lobby (against). Respondents recorded their level of agreement with the statements on a five-point scale.

Using multivariate regression analysis, the researchers found that four-fifths of the variance in purchase intention could be determined by the theory of planned behavior and the answers in response to the social/political issues. The theory of planned behavior, validated in many studies, says that people intend to do something when they evaluate the behavior positively, when they experience social pressure to perform it, and when they have means and opportunity to do so.

In short, the study finds that greater agreement with a corporate stance results in a greater intention to purchase from a corporation. And, lesser agreement with a corporate stance results in a lower intention to purchase from a corporation. This was true for all three social/political issues examined in the study and demonstrates the real impact of controversial corporate stances—a particularly salient issue as demonstrated by recent controversy in the Citizens United case.

Dodd and Supa believe their research model can be useful to “…organizations that seek to navigate how their perceived values and activities impact stakeholder groups who may often have competing goals.”

“For organizational leadership and stockholders, there may be no higher-level goal than can be found in supporting financial performance,” they write. On the other hand, company leaders may view their engagement in corporate social advocacy to be “good” because it aims for a betterment of society. “But the fact remains that engagement in corporate social advocacy does impact financial objectives for the organization.”

Future research by the study’s authors is focused on the issue of gun control and seeks to align corporate stances on social/political issues as an overarching organizational goal. When conceptualized as a corporate goal, specific action steps aimed at moving the attitudinal needle of individuals can be explored, and the overall impact of corporate stances on society can better be measured.

The study is published in the November 2014 issue of Public Relations Journal, an open-access electronic research journal focusing on the fields of public relations and communications. Its purpose is to aid the transfer of knowledge from the educational community to the professional community.

The paper, “Conceptualizing and Measuring ‘Corporate Social Advocacy’ Communication: Examining the Impact on Corporate Financial Performance,” can be viewed on the website of Public Relations Journal by members of the Public Relations Society of America.