Politicization Isn’t Sustainable Corporate and journalistic virtue-signaling sows discord and can endanger an organization’s bottom line. Christos A. Makridis
https://www.city-journal.org/corporate-world-politicization-not-sustainable
As the definition of “social responsibility” continues to expand, the corporate world is undergoing an identity crisis. Executives regularly come under fire from subordinates or vocal activists who demand that their companies wade into politics. More often than not, these accusations come from well-organized but small-in-number political activists, rather than regular customers or the highest-performing employees. While virtue-signaling strategies might create some short-term benefits—attracting activist-minded workers, appeasing social media mobs—these decisions come at a cost. As the media have politicized more content, polarization has increased nationally. Meantime, companies that deviate from their central purpose run the risk of simultaneously overstepping and failing to deliver on their core responsibility: meeting marketplace demand. Politicization threatens not only society but also the long-term future of organizations involved in it.
New research that I coauthored investigates how the politicization of scientific issues, for example, affects user engagement in journalism. Drawing on over a decade of articles in the Guardian, we find that increasing the political content of articles about climate change leads to a decline in the number of readers, comments, and recommendations in those articles. While political articles receive greater engagement than non-political ones, politicizing otherwise neutral topics appears to backfire, in the form of sizably lower user engagement—about one-fifth of the increase that a political article normally would produce. We also find that the most politicized articles are those pertaining to topics that have previously been politicized—like throwing fuel on a fire.
Our paper is one among a number of findings suggesting that virtue signaling is ineffective. For example, some research shows that companies boosting their corporate giving to charities that advance the CEO’s interests end up reducing the firm’s value through reductions in the shareholder valuation of firm cash holdings. Other research shows that low-performing CEOs can defer getting replaced by donating to charities affiliated with a large fraction of the firm’s board members. How many executives have issued virtue-signaling statements to distract from their own poor management?
The implication for organizational decision-makers, whether in business or journalism, is to leave politics to its own domain. Notwithstanding any potential short-term benefits, politicizing heretofore neutral issues ultimately backfires—not to mention its adverse effects on our already-polarized society. Companies should stick to their mission, whether that’s providing exemplary service in a restaurant or creating user-friendly software. Their business, and their country, will thank them.
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