When George Floyd was murdered by a U.S. police officer in the summer of 2020, several major multinational corporations like Coca-Cola and Google made written and financial commitments to furthering racial equity and the Black Lives Matter (BLM) movement.
However, when a similar case – the murder of João Alberto Silveira Freitas, a Black man beaten by security guards in Porto Alegre, Brazil, occurred a few months later, many U.S.-based corporations with a presence in the country did not respond so consistently. Google and PricewaterhouseCoopers, for example, remained largely silent in the wake of the killing, while Coca-Cola joined a collective corporate initiative to “combat structural racism” in Brazil.
The same inconsistency has been seen in corporations that choose – or don’t choose – to take action on LGBTQ+ rights, climate change, or other issues that are global in scope. This inconsistency comes with major reputational risks, at the cost of financial growth.
This inconsistency in taking a social stance for multinational corporations operating abroad is behind new research from Lori Yue, an associate professor at Columbia Business School, and Ishva Minefee, an assistant professor at the University of Illinois Urbana-Champaign. Through their research, Yue and Minefee have developed a theoretical framework that could help business leaders recognize the significance of maintaining consistent sociopolitical activism and establishing clear organizational values.
When it comes to sociopolitical issues, “an executive should clearly know their organization’s core culture. They should ask, ‘do we have a culture?’ and, ‘are we on the progressive side, conservative side, or somewhere in the middle, or are we political at all?’ They should be prepared to know, broadly, the stance their organization should take,” Yue says.
While the study does not use empirical data, Yue and Minefree’s framework clearly analyzes institutional complexity across three levels – within a host country, between home and host countries, and beyond the home and host countries — figuring how it ultimately shapes the actions of leaders and their organizations.
As business and society continue to overlap and political polarization rises, remaining silent on sociopolitical issues becomes increasingly more difficult. Yue shared key insights from her and Minefee’s study for leaders looking to more-deftly navigate their organizations’ global strategy.
CBS: What often determines consistency or inconsistency in corporations’ sociopolitical activism globally?
Lori Yue: A lot of it is related to values. Values are what corporations regard as good and desirable, and an organization’s values should be relatively consistent. Our baseline proposition is that if an organization has already taken a stance on the issue at home, they should be more likely to do the same thing in a host country. But home and host countries will have institutional differences – they differ in the social institutions, political institutions, and economic institutions. It's possible that a sociopolitical issue could be more controversial in the host country.
The result of that is a multinational corporation may be hesitant to take a stance if the host country itself is very divided on an issue. What is good and desirable in one country may not be the case in the other country.
CBS: What are the reputational risks that corporations have when stakeholders perceive an inconsistency in their activism?
Yue: Corporations have been criticized for hypocrisy in recent years. Certain stakeholders, like consumers, think you are behaving in this way just to gain support, and that your organization doesn’t really believe in that value. As an example, during Pride Month, companies celebrated Pride Month in the U.S., but not in other countries. They drew criticism – consumers felt they were doing rainbow washing and so it caused reputational damage.
CBS: What would you say then to a leader who might think to just abstain from sociopolitical activism entirely, rather than risk the corporation being punished for inconsistency?
Yue: Social political activism is actually very risky. By taking a stance on an issue that is debated in society, it's very likely to trigger backlash against the brand. Research is mixed – there's no conclusive evidence about whether firms should do it or not – it depends on the situation. In some situations, it's hard to avoid taking a stance because stakeholders want you to take a stance.
CBS: Assuming stakeholders continue to value consistency in sociopolitical actions, what key moves should leaders be making going forward?
Yue: Leaders should be clearly defining their organization's core values and culture to guide sociopolitical stances. Also, understand that you can localize your approach to activism without compromising core values.
Once a leader understands their core values, they can create different strategies that can accommodate the same core value – these strategies don’t have to be strictly the same. They can sometimes, for example, take symbolic action rather than substantive actions. Both are supportive but the importance and meaning of that could be different. There is a wiggle room there.
Additionally, transparency and communication among stakeholders is very important. It’s necessary for multinational corporations to proactively address the accusations of inconsistency. You can explain why you're doing so inconsistently. Perhaps a company must comply with local laws. Regardless of the reason, you must engage stakeholders in the dialogue – understand what social movement organizations, NGOs, consumers, and employees want and engage them in the process. Address their concerns and try to have collaboration.
