Threading the Needle: How Firms Frame their Stances on Polarizing Social Issues

Corporate activism, or the active involvement of business in contested social and political issues, presents strategic challenges for organizations. Companies that speak out on socially contested issues may face backlash from stakeholders who disagree, leading to reduced stakeholder support or even mobilization against the firm. Despite these risks, corporate activism is on the rise. While existing work seeks to explain this quandary by identifying predictors of the decision to speak out, we suggest that part of the answer may lie in how firms speak out on polarizing social issues to minimize these risks. We leverage press releases and Twitter accounts of Fortune 500 companies that expressed a stance on LGBT rights between 1999 and 2019, as same-sex marriage progressively became legal across the United States. Through a difference-in-differences design, we find that prior to same-sex marriage being legalized in their home state, firms default to touting their track record on LGBT rights, without wading into contentious debates. Once marriage equality comes to pass, however, firms tend to shift their stances towards activism, advocating for broader societal change. Further, we find this general trend to be moderated by firm-level and stakeholder characteristics. Our findings thus point to an irony: corporate “activism” in the pursuit of broader social change often takes place only after polarizing social issues have been settled.