People gathered at John F. Kennedy International Airport in Queens, New York in January to protest against President Donald Trump’s attempts at placing an immigration ban on individuals from Iraq, Syria, Iran, Sudan, Libya, Somalia and Yemen, all predominantly Muslim countries. while others read that it tries to adapt to whatever market conditions warrant (a “results orientation”).
These statements established participants’ political expectations of the company. We predicted that for a values-orientated company, taking a stand would align with expectations but that abstaining would violate expectations.
Participants then read a short article reporting that the company had either just taken a stand on proposed gun control legislation (we randomised what side of the issue the company took) or had abstained from making a comment. After shopping, participants reported their in-store experience and whether or not they had bought anything that they hadn’t planned to purchase before entering the store. We used the unplanned purchase to indicate the impact of the political stand on the customer-company relationship.
In general, unplanned purchases remained consistent no matter how the company reacted to the political issue. That is, about 18% of participants made an unplanned purchase whether they read that the company had taken a position or not.
But when we accounted for expectations set by the company, the effects were stunning. For a valuesorientated company, 24% of participants made an unplanned purchase when it took a stand, but that dropped to just 9% when it abstained – violating expectations. For a results-orientated company, the effect was reversed: Unplanned purchasing was 26% when it abstained and dropped to 13% when it took a stand (again, violating expectations).
Even after accounting for the personal view of the participant and whether his or her state voted Republican or Democratic in the 2016 election, purchasing behaviour was significantly affected if the company went against prior expectations.
Costs of staying silent
A woman holds a sign at an antiTrump protest in San Diego. Additional experiments reveal that consumers behave this way because they find it hypocritical for a company that claims to be “guided by core values” to then withhold its position on a political issue. The implication appears to be that the company is hiding something and therefore trying to deceive its customer base. Conversely, reinforcing expectations may forge trust and enhance relationships with customers.
For a real-world quasi-experiment on the potential costs of staying silent, we need look no further than Lyft’s and Uber’s respective responses to Trump’s executive order. Lyft reacted by publicly opposing the order and pledging $1m to the American Civil Liberties Union. Uber was more equivocal. In a Facebook post, CEO Travis Kalanick acknowledged concerns and said he would raise the issue “this coming Friday when I go to Washington for President Trump’s first business advisory group meeting”. As part of a poll I administer periodically to gauge reactions to companies that take political stands, a group of leading scholars were asked to grade Lyft and Uber on their respective approaches. The panel was generally favourable toward Lyft, although conservative panellists questioned whether its actions would have a lasting impact on the political issue at hand. However, Uber was criticised by scholars of all political persuasions for not confronting the issue. Panellists thought Uber was taking some leadership by reacting quickly, but its lacklustre response was not consistent with its purported beliefs as a bold game-changer. It is little surprising, then, that the move motivated many customers to uninstall the Uber app from their phones. Uber received so many requests, in fact, that it had to implement a new automated process to handle all the deletions. The company later announced in an email to defecting customers that the executive order was “wrong” and “unjust”. Kalanick also resigned from Trump’s business advisory council.
Feet to the fire
The danger of inaction – as Uber’s experience shows – is real. In remaining silent on important societal issues, executives may be harming performance more than they think.
It is no longer enough to engage government solely through private channels, although that will certainly be necessary as well. Consumers are willing to hold executives’ feet to the fire if they believe the executives are betraying corporate values.
This may be especially true for companies that forcefully advocated for free trade, access to a global talent pool, action on climate change and inclusivity for all orientations and religious backgrounds during Barack Obama’s tenure. My research suggests that both liberals and conservatives could view it as a breach of trust to abandon those beliefs by acquiescing to a swing of the political pendulum.
Though our current political environment in the US is polarised and contentious, most people still find failures of sincerity more troubling than differences of opinion. As long as a company is not being deceptive by obfuscating its beliefs, consumers can be surprisingly tolerant of a company that holds an opposing view.
So to corporate executives: Your constituents are watching. They acknowledge that your company has a distinct set of values. They are asking for you to be forthright. And they want to know that you have the gumption to stand up for your stated values.