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Faculty Insights

Should Brands Get Involved in Politics? WSB Experts Respond

By Clare Becker

April 10, 2017

Mixing business and politics can be a high-wire act for some firms. A WSB faculty roundtable on companies confronting boycotts, moderated by National Public Radio’s Yuki Noguchi during her visit as a Business Writer in Residence, debated the pros and cons of taking sides. Summarized here are thoughts from WSB faculty members who participated in the panel, including Joan Schmit, professor of risk and insurance, Neeraj Arora, professor of marketing, Tom O’Guinn, professor of marketing, and Page Moreau, professor of marketing. Schmit: An organization’s reputation often is its most valuable asset. Resources are required to create and maintain a positive reputation, which can be damaged when stakeholders perceive the organization’s actions as differing dramatically from those stakeholders’ expectations. A key element to safeguarding an intended reputation, therefore, is to know who the organization intends to be and then to act in a way that is consistent with the reputation.

Joan Schmit
Joan Schmit, professor of risk and insurance. PHOTO: PAUL L. NEWBY II

The question of whether or not to get into political discourse, as a result, is dependent on the organization’s underlying mission, vision, and values. An organization that has taken a stance on a political topic as part of its business strategy, should hold firm to that perspective if it wants to fulfill people’s expectations of it. For example, many fast food establishments hire immigrants. With recent efforts to limit immigration into the United States, some of these establishments have been explicit in their support of broader rather than narrower immigration policies. Other organizations, such as General Electric, have been explicit in stating that they are global organizations that need to be flexible in moving with changes in global political and economic activities. They choose instead to take no position on immigration or similar policy issues.
The bottom line is that organizations should, in my view, get involved in politics to the extent that doing so is consistent with their underlying reputation and their stated values. It adds potential “risks” that need to be understood.
Arora: In today’s world it’s hard for a brand to not be embroiled in political debates. The list of examples is endless and includes tech giants such as Microsoft, Apple, and Google (because of the travel ban); retailers such as Amazon (for carrying the Ivanka Trump brand), Nordstrom (for dropping the Ivanka Trump brand), and Target (for supporting the LGBT community); and brands in consumer packaged goods such as Kellogg’s (for dropping advertising on Breitbart).
Neeraj Arora
Neeraj Arora, professor of marketing. PHOTO: PAUL L. NEWBY II

All else equal, I maintain that brands should stay out of politics. In recent times, the above examples illustrate that this may not be always be feasible. If forced to take a stance, I think brands should have a forward-looking, long-term perspective in any decision that has possible political repercussions. One should remember that consumption activism is typically fickle and strong brands often survive such blips. For example, I think brands such as Kellogg’s and retailers such as Nordstrom’s will both be fine in the long term.  When in doubt, brands should be guided by their moral compass and do what’s right. Having a long-term perspective helps. As the Washington character in Hamilton the musical would say, “history has its eyes on you.”  I am convinced that history will look positively on companies such as Starbucks, Amazon, and Airbnb for their advertising message of inclusiveness in these politically divided times.
O’Guinn: Commerce has always been political. It is ahistorical to believe otherwise: from the colonial tea parties to the Greensboro Woolworth lunch counter to advertisers dropping Bill O’Reilly. The difference is the matter of degree. Many CEOs and CMOs have stated they now feel that they have to take stances, particularly when the morality is clear and they desire to be on the right side of history. Think: gay marriage, apartheid, Muslim bans, blatant sexism, etc. The CEO of GE, not known for his political stances, has recently joined the ranks of Starbucks, Apple, Amazon, the NBA, the NCAA just to name a few. Brands are cultural products, politics are cultural, so, branding is political. In a socially networked world dominated by millennial thought, doing the right thing is required. Evidence shows that it is usually good business. Besides, doing the right thing matters in and of itself. What’s so funny about peace, love, and inclusion? Inclusion is a bigger set of consumers, than exclusion.
Page Moreau, left, and Tom O’Guinn
Page Moreau, left, professor of marketing, and Tom O’Guinn, professor of marketing. PHOTO: PAUL L. NEWBY II

Moreau: While companies have always had to make strategic decisions to protect or enhance their brands’ reputations, the current political climate has made their choices increasingly important. And, any misstep they make can be quickly amplified by social media. Uber, for example, lost a half million users in the week following Trump’s Muslim ban because they were seen as trying to capitalize on the New York taxi drivers’ protest. While the long-term impact on Uber’s business is unknown, the company’s response to the politicized environment led to significant consumer backlash.
In these unprecedented times, consumer insights are critical. Companies need to know how their brands provide meaning to their consumers and whether or not that meaning is relevant to the political issues at hand. Their marketing decisions should reflect this understanding. A firm like Target, who serves consumers at all points on the political spectrum, clearly puts more at risk when taking a loud stand on a political issue than a firm such as Starbucks, whose customer base skews liberal. For example, Target’s public position on North Carolina’s “bathroom bill” has generated considerable backlash from their conservative consumers. In contrast, Starbucks’ vocal stands on issues such as marriage equality and immigration were expected by the majority of their consumers, and a failure to enter the fray on either of these political issues may have hurt them.
Read about another faculty panel on tax, trade, and regulations and the School’s Business Writer in Residence program.