Magazine Fall 2018 Issue

Finding the Middle Ground in a Politically Polarized World

To gauge whether — and how — to jump into the political fray, business leaders should consider an issue’s importance to company financial performance and relevance to stated values.

N. Craig Smith and Daniel Korschun Reading Time: 7 min 

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Finding the Middle Ground in a Politically Polarized World

Consumers and employees now expect companies to engage on social, environmental, and economic issues that are part of the political discourse (think immigration, climate change, and trade). Given how politically polarized the world has become, that can put business leaders in a bind.

Here’s the dilemma as it’s usually understood: They can take a political stand and risk upsetting some consumers or employees, igniting oppositional behavior such as boycotts and strikes, and damaging the company’s reputation. Or they can remain silent, ceding the moral high ground and allowing others to write the narrative.

One company that found itself caught in this dilemma is Delta Air Lines. After a deadly shooting at a high school in Parkland, Florida, the company reexamined a discount it had offered to members of the National Rifle Association (NRA). Delta’s solution was, in a sense, to employ both extremes; it ended the discount in question but announced the action as a reflection of its “neutral status.” In the end, Delta got little reputational benefit for claiming neutrality, and NRA-friendly lawmakers pulled $50 million in tax benefits as retribution.

Framing the debate over corporate political activism in terms of this binary choice — take a stand or remain silent — ignores the reality that companies often seek less-extreme options and have different motivations for becoming active politically. In short, they need a more nuanced set of alternatives.

Figuring Out How to Engage

How might a company identify its alternatives? Our respective research on ethical leadership and corporate political activism suggests that when leaders decide how to engage politically, they need to consider the degree to which the issue is materially important to the company’s financial performance and how relevant it is to stated corporate values.

Customers, employees, and other stakeholders recognize that companies, as for-profit entities, are motivated in part by the bottom line. If a political issue could materially affect it, people will generally view the issue as appropriate for the company to address in some way. For example, they would expect a pharmaceutical company to speak out against health care legislation that could harm the business.

Many companies declare commitments to issues such as diversity or poverty alleviation in their values or mission statements. When they do so, stakeholders naturally expect them to honor those commitments.

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About the Authors

N. Craig Smith holds the INSEAD Chair in Ethics and Social Responsibility at INSEAD in Fontainebleau, France, and is a specialist professor at the INSEAD Corporate Governance Centre. His latest book, with Eric Orts, is The Moral Responsibility of Firms (Oxford University Press, 2017). Daniel Korschun is an associate professor of marketing at Drexel University’s LeBow College of Business and a 2018 Fulbright scholar. He tweets @danielkorschun.

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Comments (2)
A K
I hope to add to this discussion, by merely reminding folks of President Kennedy's words.

"We should not be hasty in condemning all compromise as bad morals. For politics and legislation are not matters for inflexible principles or unattainable ideals. Politics, as John Morley has acutely observed, "is a field where action is one long second best, and where the choice constantly lies between blunders,"; and legislation, under the democratic way of life and the Federal system of Government, requires compromise between the desires of each individual and group and those around them. Henry Clay, who should have known, said compromise was the cement that held the Union together: "All legislation …is founded upon the principle of mutual concession…Let him who elevates himself above humanity, above its weaknesses, its infirmities, its wants, its necessities, say, if he pleases, "I will never compromise;" but let no one who is not above the frailties of our common nature disdain compromise. 
It is compromise that prevents each set of reformers-the wets and the dry, the one-worlders and the isolationists, the vivisectionists and the anti-vivisectionists-from crushing the group on the extreme opposite end of the political spectrum. The fanatics and the extremists and even those conscientiously devoted to hard and fast principles are always disappointed at the failure of their Government to implement all of their principles and to denounce those of their opponents. But the legislator has some responsibility to conciliate those opposing forces within his state and party and to represent them in the larger clash of interests on the national level; and he alone knows that there are few if any issues where all the truth and all the right and all the angles are on one side."  (John Fitzgerald Kennedy - Profiles in Courage)
Natanael de Souza
We were just discussing this a few hours ago, in marketing college. To find a middle ground is difficult ...