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Bridge Michigan
Michigan’s nonpartisan, nonprofit news source

Q&A: Should CEO’s address social issues or stick to selling sneakers?

Jerry Davis
University of Michigan Professor Jerry Davis will speak May 14 on “The Rise of Corporate Activism” at U-M’s Positive Business Conference. The virtual event, organized by U-M’s Ross School of Business, starts May 13. (Submitted photo)

When Republican legislators initiated 39 changes to state election laws, many Michigan business leaders weighed in: Supporting free and fair elections, they said, had to be a priority in the state.

That feedback, typically coming as statements from CEOs, followed criticism in Georgia that business leaders there had waited until after restrictive voting laws were passed before they spoke up.

While Michigan’s voting-change proposals have not yet advanced in the legislative process, the situation here is part of a national continuum as large, leading businesses increasingly weigh in on social issues, including issues involving race.

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As a result, corporate politics are increasingly transparent to the public, said Jerry Davis, a professor of sociology and business administration at the University of Michigan. His research looks into corporate governance, finance and society, which most recently has led him to consider how corporate social responsibility may be changing.

Politics will be inescapable in the corporate sector, Davis said, as companies navigate from single-topic social issues, like transgender bathroom bills in stores, to broader topics like racial justice and voting rights.

“They're supposed to be operating in a different sphere, making sneakers,” he said. Yet, he added, “they have the heft to be heard.”

Davis recently spoke with Paula Gardner, Bridge Michigan business editor, on the role corporations play in politics and public affairs. Here are excerpts from the conversation:

Bridge: You’ve looked at corporate actions over many years, but it seems like the Jan. 6 riot at the U.S. Capitol represented a turning point before we got to election rights.

Davis: Within two or three days (after January 6), dozens of companies declared, “We will not provide political funding to anyone who voted against certifying the election.” And it was interesting that they split into a couple of different groups, so some of them said, “We are pausing our political donations,” some said, “We will never donate to these people again,” others said, ‘We are pausing all of our donations to these people and everyone else until we can figure this whole mess out.’

And then there's some others like Home Depot, who said, “Full-speed ahead, we’re going to give money to the same election-deniers.”

So they're identified as taking a particular position on this.

They have to be consistent as the issue evolves.

I don’t know that CEOs would agree with this, but once you've (acted in response to the riots), what happens when, state by state, they're trying to make it much more difficult to vote, particularly targeting particular voters who live in urban areas?

How do you respond in Texas, in Georgia, in Michigan, when the Republican Party, basically driven by false claims about a stolen election, passes laws that will affect your workforce?

I think the average person thinks a company would fear a boycott. But they seem pretty common at this point, and I question how much traction most of them get.

It's hard to find a company that isn't being boycotted at this point. My feeling is that consumer boycotts don't do all that much good.

(Companies) think about employees, though. That's really tough. People won't come to work or they're more likely to move to another company, or they're harder to recruit to your place when (workers) don't agree with your values.

The companies that have been pretty vocal tend to also have pretty diverse workforces where the laws are likely to have a pretty direct effect.

How unique is this for corporate America right now?

I can't think of any moment in history when corporations were called on to join in a crusade like this. It’s one thing to say, we’re going to let Colin Kaepernick be a spokesperson or Chick-fil-A might once be against marriage equality, but this is about a core of democracy. How that became a partisan issue is interesting. This feels like a new chapter in the world of corporate engagement with politics.

So much of society is fragmented along political parties. Can corporate voices persuade us all of something, or will influence remain as fragmented as so many other things?

It's easy to foresee a path where we end up with blue companies and red companies. 

What leverage do companies have when they take a stand, beyond campaign contributions?

One of the bigger things that they can do is choosing where to locate their facilities and where their employees are based. 

Surprisingly for a tech company, Oracle is moving its HQ to Texas from Silicon Valley. It turns out that Oracle is one of the most Republican donating companies in Silicon Valley, which is known to be more liberal.

Oracle's move, I think, is likely driven by lower taxes and the cheaper place to live, but it might not have been irrelevant that Texas is maybe a politically more welcoming place.

Reaction in Michigan to the voter rights legislation seemed to be more of an alert — telling the Legislature that the CEOs are watching — than a warning. What’s the likelihood that the reaction will get stronger?

It’s definitely traditionally been true that privately owned companies have a lot more leeway to be a lot louder and can move farther toward one end (of the political spectrum). The example from the left side would be Patagonia, they sued (former President Donald) Trump around national parks. That left not a lot of ambiguity around where they say, “We are do-gooder environmentalists, and that's the way we're going to be politically.” 

If you don't like that, don't buy their stuff and don't go to work there, because that's really who they are.

Doing that is a lot harder to do for a publicly traded corporation that has shareholders ...They can say, “Look, for heaven sakes, you make sneakers, you make cars. You are a retail store. Stay out of politics. Why are you using my money as a shareholder, why are you putting my pension fund at risk by going out on a limb and saying these things?”

The companies can face pushback from elected officials, too.

When Delta (which is based in Georgia and one of its largest employers) cut its 5 or 10 percent discount for National Rifle Association members (in 2018), it was a pretty trivial connection. Yet it became a public issue for them. The Georgia Legislature said, fine, we were considering a tax break for you. If you don't reinstate this, you're losing your tax break. Delta didn’t reinstate it. They were taking a potentially costly stand. 

They’re being threatened again (over the airline’s criticism of the Georgia voting laws).

Legislatures are not hapless. Texas is going berserk. They're coming up with these codicils to the law that says, “...and any corporation that opposes this bill or makes a political opinion, it will double their taxes.”

It sounds like you’re saying that reactions to corporate moves are still unpredictable. 

This is really fraught territory. In some places, any opinion that they give will be perceived as confrontational and there will be constituencies like shareholders who will think, knock it off, we're not in that business. 

What’s your bottom line on all of this as the voting legislation moves forward?

I feel that (corporate leaders who are speaking up) are trying to be on the right side of history. If there were a moment for corporate executives to act, this is it... Voting rights are so fundamental to democracy. It’s like, speak now or forever hold your peace.

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