What is the role of a corporation in a democracy? If you asked Milton Friedman, the answer would be none at all. He famously said in the 1970s that the only corporate social responsibility a company has is to turn a profit for its shareholders.
Some 40 years later, the answer to that question looks very different. Companies are increasingly stepping up to fill what they perceive to be a void left by polarized and paralyzed government. In the past year, we’ve seen Patagonia advocating to protect national parks from the Trump administration and Dick’s Sporting Goods banning the sale of assault weapons after the Parkland shooting. These organizations wield a lot of power, both financially and in swaying public opinion.
Forrest Briscoe, a professor of management in Penn State’s Smeal College of Business, has been studying the gradual closing of the gaps between business, government, and civil society and talks with us about what it means for employees, for companies, and for consumers.
The echo chambers we experience among our friends and our media may be bleeding over into the workplace — which has some serious implications for democracy. In a tight job market, a company’s political beliefs may even be a deciding factor when someone is considering multiple job offers.
The space between business, government, and civic life is closing faster than you think. We argue that it’s not necessarily a bad thing, but something that we should be aware of as workers, consumers, and democratic citizens.
[5:00] How have we gone through this change of corporations being single minded on profit to now being concerned with activism?
Forrest: We’ve come from a time where the idea of business doing something other than business would detract from their efforts of profit. A key characteristic which has changed over time is the fact that business and government aren’t these completely separated spheres like they used to be years ago.
[6:36] What are the factors that would impact a businesses decision to get involved with a certain cause?
Forrest: Sometimes companies will be forced to change because they’re being targeted by activists. However, we’re now seeing those at the top of companies wanting to actually reach out to these social movements. So we’re seeing effects work in both directions. Also, companies might see profit opportunities by embracing a certain cause or campaign. Another persuasion tactic is this use of benchmark competition that some movements have tapped into. For example, we see that LBGTQ groups have created rankings of the most friendly companies to their cause. This touches upon an driving interest amongst businesses, which is to beat their competition in some benchmark test.
[13:00] Do you think there is a danger in companies becoming too homogenous in political views as they get more and more involved in politics?
Forrest: Yes, and this is something we’ve been trying to study in our research. Any institution can have a varying amount of diversity along lines of political ideology. If this is paired with functional communication, it can be productive like a democracy. However, without the right culture, you can have a Balkanized effect where the company struggles with constant conflict along these ideological differences. I also worry about companies becoming too aligned with partisan ideas. If this continues, we could see a worsening of the partisan divided if our companies join the divide along with those in government.
[16:00] Can you address the consumer side of this issue?
Forrest: With boycotts, I think their increased numbers, but remoteness as to actual buying habits could reduce their overall effectiveness. There is also a new phenomenon known as “buycotts” where people are supporting those who they agree with ideologically by only doing business with the.