Corporate activism in politics creates business strategy dilemmas

  • The recent Nike advertisement featuring former San Francisco 49er Colin Kaepernick garnered the company much attention, but it also alienated part of its customer base. Photo: Mark Lennihan /Associated Press / Copyright 2018 The Associated Press. All rights reserved.

One cannot open a newspaper or online source without increasingly encountering news related to corporate activism. Businesses that include both publicly traded and private companies, and small-business owners, seem to have decided to make themselves relevant in the political arena.

The recent Nike example of using the controversy over U.S. national anthem protests to make a provocative ad has agitated individuals who do not support the symbolism associated with former San Francisco 49ers quarterback Colin Kaepernick’s kneeling.

Other examples include Kellogg’s decision to pull some advertisements from, which then called for a boycott of the company’s products. Kellogg’s immediate revenues were arguably affected by this decision.

And how about the Red Hen restaurant owner in Virginia who asked White House press secretary Sarah Huckabee Sanders to leave the establishment? As a consequence, the restaurant had to close for many weeks and protesters have frequently picketed the establishment. Is this welcome publicity for the restaurant in the long run?

And let’s not discount the public hoopla associated with In-N-Out Burger after the company donated to the Republican Party. Many threatened to boycott its products after this became public. And there are many more examples.

These activities are perhaps motivated by the great political divide in which we find ourselves. Like it or not, the United States is generally split on the political spectrum: 26 percent Republican, 27 percent Democrat and a whopping 44 percent independent, according to Gallup. And small-business owners and corporate managers are people, too, with their own political party preferences. Should they let their political leanings influence their business decisions?

Corporations and small business owners can design a marketing strategy (as Nike seems to have done) that will attract one group and hope that the fallout from the other group will not impact sales. So far, Nike’s strategy seems to be panning out: Sales have increased considerably since the advertisements made it to the airways. Higher sales can enhance the welfare of all stakeholders.

Clearly, recent corporate action on such issues transcends mere political activism. Why would Nike risk alienating a subset of its consumers? Why would Red Hen do the same? Why would In-N-Out Burger make a donation to one party over the other? In all fairness, they said they donated to both party candidates.

It could arguably be justified if the businesses happen to be in oligopolistic or monopolistic industries. But these firms are in…

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