How social issues can shape competitive response
This study presents a theory to understand when and why companies should take a stance on a contentious issue.
The challenge:
While existing research generally assumes that corporate social responsibility (CSR) is seen as universally positive, firms are increasingly being drawn, willingly or unwillingly, into highly polarising social issues, such as gun control, LGBTQ+ rights and abortion. While this can enhance a company’s social responsibility profile, it can also risk alienating certain stakeholders. Despite the importance of this phenomenon, existing work in organisational theory, strategy and economics is largely silent on it and offers little guidance on why, when and how firms should engage with such hot-button issues.
This study presents a theory to understand when and why companies should take a stance on a contentious issue.
The challenge:
While existing research generally assumes that corporate social responsibility (CSR) is seen as universally positive, firms are increasingly being drawn, willingly or unwillingly, into highly polarising social issues, such as gun control, LGBTQ+ rights and abortion. While this can enhance a company’s social responsibility profile, it can also risk alienating certain stakeholders. Despite the importance of this phenomenon, existing work in organisational theory, strategy and economics is largely silent on it and offers little guidance on why, when and how firms should engage with such hot-button issues.
The research:
This study presents a theory to understand when and why companies should take a stance on a contentious issue. The researchers suggest that companies can benefit from taking a stance when the issue is of high public interest, markets are competitive, and the CSR actions are largely symbolic. They introduce the concept of “corporate social counterpositioning,” where rival companies use socio-political polarisation to differentiate themselves by taking opposing stances on a contentious issue.
The impact:
The paper makes a novel and important contribution to market strategy. Whereas the literature tends to focus on first-mover advantage in terms of being seen to “do the right thing” for ESG reasons, the research highlights optimal second-mover strategy. It shows that, if the issue is sufficiently polarising, an optimal approach can be to adopt a position diametrically opposed to that of the first mover. The paper cites the example in the US of Chick fil-A and Black Rifle Coffee Company, whose respective responses to McDonalds’ and Starbucks’ CSR positioning maximised their profits; suggesting that visibly aligning around polarising issues is better for profits than doing so around non-polarising issues. By distinguishing different issue attributes, the research provides a systematic framework to predict how a firm’s rivals are likely to respond to its CSR efforts, and under what conditions.
