Why This Professor Became Active on CEO Activism

August 1, 2017
Professor Ronnie Chatterji

Professor Aaron “Ronnie” Chatterji was thinking about CEO activism before it went mainstream.

In 2010, before chief executive officers started speaking out about same-sex marriage, gun control and immigration, Chatterji was a senior economist on the White House Council of Economic Advisors, exchanging private opinions with business leaders.

“I noticed how their public statements often were confined to bread-and-butter business issues,” the Fuqua professor said. “But in conversation with them, I got a sense of how their opinions on social issues also came into play in their businesses. And I got really interested in what forms CEOs expressed those opinions.”

That interest crystallized in 2015 when Apple CEO Tim Cook and others spoke out against the Religious Freedom Restoration Act, an Indiana state law that allowed for discrimination against same-sex couples.

“That was what spawned my research,” Chatterji said. “Since then, I’ve been surprised by how significant an issue this has become.”

Chatterji measured the effect Cook’s activism had on potential Apple customers. He found people who agreed with Cook’s stance on the issue were more likely to buy Apple products if they knew about his views.

“When CEOs make social statements, their potential consumers are paying attention,” Chatterji said. “People who agree with them already might develop more affinity toward the company, and that's important when brands are trying to establish personal relationships with customers.”

“Neutrality used to be admirable, but now ... it’s really hard to maintain the middle."

 Chatterji says in recent years, increasingly sharp political divisions in the United States have driven more business leaders to take public positions on controversial topics at both the state and federal levels.

“Neutrality used to be admirable, but now, as more and more issues become political, to be in the middle can be seen as worse than taking a side,” Chatterji said. “CEOs are being forced to make binary decisions, a choice between 0 and 1. And if both sides are keeping score in a polarized environment, it’s really hard to maintain the middle.”

Evidence of that pressure can be seen on the various White House business councils President Donald Trump has convened. Some CEOs have dropped out, others have stayed, even if they disagree with the president on certain issues.

“Those things have come together and created a template to study this stuff that I never would have imagined,” Chatterji said. “It’s going in so many different directions now, it gives us more to study.”

Chatterji has plans to dive deeper into the mechanisms behind CEO activism as well as the effects.

“I want to understand more about how CEOs choose what issues to speak out on, and maybe come out with prescriptive advice on what they should speak out on,” he said. “I’m sure there are many who are speaking out from personal conviction, but I also think a lot of them have learned to appreciate social problems through their employees. More than a few of the CEOs I’ve talked to have mentioned that sometimes it’s employees who bring these issues to their attention, if not directly, then from the CEO seeing something an employee is going through. It also gives them more credibility if their own employees are dealing with an issue they are speaking out about.”

“There’s no strategic toolkit for people to make these decisions."

Chatterji acknowledges there is risk in taking a stand. “If you stand up for something and your own house isn’t in order, you could have a target on your back,” he said. “When CEO activists speak out, they should try to make sure their own company is in compliance with the stand they’re taking. If you speak out in support of same-sex marriage and the policies at your own company aren’t friendly to the LGBTQ community, that could come back to bite you.

“Beyond the internal processes, I also want to know how firms deal with the consumer backlash that may happen, how much data analytics they do on the front end to determine where their consumers and other stakeholders are with their political views.”

These leadership complexities inspired Chatterji to develop a class, Strategy Beyond Markets, set to launch in spring 2018. It will explore the intersection of business and politics and how CEOs can approach speaking out on issues not directly related to their business.

“There’s no strategic toolkit for people to make these decisions,” he said. “Aside from activism, CEOs are dealing with very complex social issues, even the health impacts of their own businesses in cases like the NFL and concussions. All these things are impacting business in a huge way and there isn’t a class that introduces students to these issues. The class will give show them how to find reliable information in a polarized media environment and challenge them to make strategic decisions in political environments.”

Chatterji consulted current and former students as he developed the course. He wanted their insight on facilitating productive conversations about contentious political issues.

“That’s a challenge and it’ll be a work in progress,” he said. “There’ll be some structure around the discussion. I’m hoping for civic -- and civil -- discourse. There’s a lot of interest in these issues but not a lot of understanding of how we can talk about them. The great thing about a class is that we can have these discussions by focusing on evidence and data, rather than where someone stands on this or that issue.”

Chatterji called the class “Exhibit A” in the case for how research can naturally influence the classroom.

“When I see something in the real world for which there’s no template or received wisdom, then I know that if I can find some answers through my research, I can share them in the classroom,” he said. “There’s an appetite for this subject; students are ready to learn more about it.”