CEO activism, the practice of CEOs or other executives taking a public stance on social, political, or environmental issues not directly related to their companies’ businesses, has been on the rise these past few years. Moreover, several well-publicized polls have shown that somewhere between 64 and 77 percent of consumers believe that leaders should engage in this behavior. We wondered, however, whether CEO activism might change people’s opinions about social issues and lead them to support a campaign around those issues.
After the murder of George Floyd in 2020, we asked our research team to search corporate websites and social media accounts and databases of corporate press releases for CEO statements related to racism, racial inequality, and Black Lives Matter (BLM). We did this for all Fortune 500 corporations and Certified B Corporations(“B Corps”). We found that around 46 percent of the Fortune 500 firms and 21 percent of the B Corps issued some kind of statement, which means that in total we found 525 CEO statements, all issued in the May-July 2020 period. Some of these statements were letters to employees that were subsequently posted to social media or company websites, others were open letters to customers, clients, and the general public.
We coded information in these statements according to several categories, one of which we now call a confession. A confession was when a CEO, a company leader speaking on behalf of the CEO, or the company itself admitted to sins involving racial equity. One particularly illustrative example is the statement issued by Coca-Cola noting that “…corporate America hasn’t made enough progress and nor has The Coca-Cola Company, [which has made] mistakes, including the grave one with the largest discrimination lawsuit in U.S. history in 1999/2000. As the judge said, our biggest issue was not that we made mistakes and that there were individual cases, but that when we knew, we didn’t act to remedy and improve.”
Importantly, in most cases, the organizations were not directly accused of poor practices on race. However, we suspect that the events of 2020 shined a light on the effects of systemic racism in the U.S. (and other countries), and this not only nudged organizational leaders to look at their own practices, but also made them realize that the general public had come to assume that they, like other institutions, had simply not done enough to mitigate the effects of institutional racism.
We found that 42 percent of our 525 statements included a confession. We were so struck by this that we reread each of the statements that contained a confession and discovered that there are actually two types of confession: Some companies confess to acting counter to racial equity, while other companies confess to their lack of awareness or knowledge about racial inequity. We dub these two types confession of commission and confession of omission, respectively.
Once we uncovered this trend, we wondered whether people reading these statements would express feelings of support for BLM and act on those feelings. In other words, we wondered whether CEOs’ statements would mobilize support for the issue.
To examine this question, we conducted an online survey of 1,046 participants, who were representative of the United States population in age, gender, racial and ethnic identity, income, and education. We recruited these participants from Prolific Academic.
Each was asked to read one of the 525 racial equity statements, 42 percent of which contained some kind of confession. The statements were randomly assigned to the participant, so that nearly all these statements were rated by our participants, including those that did not include a confession. Stated differently, 42 percent of our respondents read statements that included a confession, and 58 percent read statements that did not.
Participants were then asked, “Judging from the quality of this statement, how much do you support the statement?” Participants rated their level of support using a seven-point scale from “strongly oppose” (=1) to “strongly support” (=7). The mean level of support is 3.85 out of 7 (the standard deviation is 2.11).
Beyond expressed support, we also wondered whether people would act on that support. Thus, we first gave people a $1 bonus (that is, above and beyond their participation payment) and asked them whether they would like to donate some or all of their bonus to BLM. The mean amount of donation was 43.88 cents (the standard deviation is 30.22 cents and the range is from 0 cent to 100 cents). Next, we asked people whether they would consider writing a letter to a policy maker in support of BLM. Because the letter was optional and participants did not get extra payment for writing it, the task realistically captured how strongly participants supported the movement after reading the statement. The mean length of the letter is 40.14 words (the standard deviation is 16.69 words and the range is from 0 word to 98 words).
We then examined any differences in level of expressed support, donation amount, and letter length between those who read statements without a confession, those who read statements with a confession of omission, and those who read statements with a confession of commission.
We found that, when people were shown statements containing either a confession of omission or commission, they were much more likely to indicate that they supported the statement. Specifically, when there was no confession, the average level of support was 3.39 out of 7, compared with 4.88 when there was a confession of omission and 5.64 when there was a confession of commission.
We also found that people who were shown statements that included confessions donated more money to the BLM. When there was no confession, the average amount of donation was 32.60 cents, compared with 70.19 cents when there was a confession of omission and 83.24 cents when there was a confession of commission.
They also wrote longer letters on behalf of BLM. When there was no confession, the average length of the letter was 35.84 words, compared with 47.59 words when there was a confession of omission and 62.89 words when there was a confession of commission.
Of course, we must caution that these data came from a survey, thus we did not control for other aspects of these BLM statements. While we did control for various characteristics of the firm, it could be that statements that contain confession are more persuasive for other reasons. We are currently working on controlled experiments (see our latest draft) to see if we can isolate the same effect.
Our results suggest that people appreciate the honesty found in a confession, and this appreciation can nudge people to take actions on behalf of the general movement for racial justice, specifically the Black Lives Matter movement.
This post comes to us from Sarah A. Soule and Lambert Zixin Li at Stanford University, Graduate School of Business. It is based on their recent article, “The Power of Public Confession: Mobilization and Reputation Effects of Disclosing Socially Irresponsible Performance,” available here.