Professor Theuns Pelser - Social Activism by CEOs
Professor Theuns Pelser - Social Activism by CEOs

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Professor Theuns Pelser - Social Activism by CEOs


Four South African companies, comprising KPMG, FNB and Barclays Africa, have suspended their relationship with Oakbay Investments, a company owned by the Guptas, a family of Indian-born businessmen, due to concerns over their association with President Jacob Zuma. Chief executive Trevor Hoole said he had decided to stop auditing Oakbay Investments after consulting regulators, clients and KPMG's internal risk departments.

The great theologian Martin Luther once said, "There are three conversions a person needs to experience: The conversion of the head, the conversion of the heart, and the conversion of the purse." Certainly, of all people, Martin Luther knew this. Part of the content of his 95 Theses nailed to Wittenberg's door was a corrective against the church's handling of money and indulgences - rooted in greed.  And as such our choices about money are indicators of our spiritual condition.

Although it is established that a company is a legal entity, we should consider it a moral agent, byway of the people in charge of the company. A company's hierarchy of decision-making and their rules for determining whether a decision is in the interest of the company, as opposed to the interest of the individual making the decision, makes a company a moral agent.

Chatterji, an associate professor at Duke, and Toffel, a professor at Harvard, have previously studied how companies manage their ethical reputations. There's long been a convention of companies contributing to the social good.  McDonald's, for instance, touts a charity for sick children. Oil and gas company BP eschew to uphold human rights and protect the environment.

These kinds of behaviours are not absolutely altruistic. Through their corporate responsibility activities, companies hope to generate an acceptance that attracts customers and relaxes stakeholders.

Recently, Chatterji and Toffel ran some online experiments to try to understand the impact of this social activism by CEOs.  They used the example of Tim Cook and gay rights. In their first experiment, the researchers wanted to see if they could sway people's opinions of the US state Indiana's religious freedom law. One group was asked if they support the law. About 50 percent said they supported it. Other groups were told that some people thought the law was discriminatory. With that knowledge, support for the law fell to 40 percent.

What was interesting was that it didn't matter if the researchers used Tim Cook's name or not in the experiment. All they had to do was mention that the law might condone gay discrimination, and support
for the law dropped. In the next experiment, though, the researchers found that Cook's activism didn't hurt Apple's business - instead, it helped.  When people were told that the Apple CEO had spoken out against Indiana's religious freedom law, they were more likely to say they intended to buy Apple products. By contrast, when people were told about one of Tim Cook's opinions on management philosophy, it had
little effect on purchase plans.

In an age in which we are increasingly isolated in neighborhoods, social networks and workplaces that serve as 'echo chambers' for our ideological beliefs, corporate neutrality is outdated. As brands seek to personalise their relationships with consumers, it is better to be passionately loved by a few than inoffensive to many.


Professor Theuns Pelser - Social Activism by CEOs

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