In recent years, scholars and other observers have expressed starkly different understandings of the political landscape of corporate America. While the conventional wisdom has cast large American businesses as a conservative stronghold, others have reached the opposite conclusion, arguing that corporate America is increasingly dominated by the left. In a new working paper, I reconcile these conflicting views with new data on the revealed political preferences of 97,469 corporate directors and executives at 9,005 different U.S. companies over a 22-year period from 2001 to 2022. This reflects the most comprehensive study to date of the ideological positions of the individuals running America’s largest businesses.
The results of my analysis reveal important shifts over recent years in the ideological views of these individuals. To measure corporate director and executive ideology, I use an original, supervised machine-learning protocol to merge two widely used databases: BoardEx, which contains rosters of corporate directors and executives, and the Database on Ideology, Money in Politics, and Elections, which contains ideological scores for donors in U.S. elections based on a campaign finance measure developed by the Stanford political scientist Adam Bonica.[1] Tracking the donation-based ideological scores of these individuals over time, I find that between 2001 and 2022, the average ideology of these individuals moved meaningfully to the left, starting from a modest conservative tilt and eventually landing around the middle.
This leftward shift is large relative to the ideological distribution of corporate elites, amounting to about 42 percent of a standard deviation. Consistent with popular narratives in certain quarters, the average ideology of the people who run America’s largest companies has become considerably more liberal. Contrary to the perception that the left has taken over big business, however, conservatives remain common in the ranks of corporate elites. Corporate America is thus neither red nor blue; it is purple.
I also document heterogeneity across different industries and corporate roles. Certain industries, such as energy, have been and remain largely conservative, while others, such as technology, have moved considerably to the left. Meanwhile, individuals in different corporate roles follow different ideological distributions, with chief executive officers (CEOs) skewing the most conservative and senior managers skewing the most liberal. Most CEOs continue to lean conservative, even as liberal CEOs have become increasingly common, whereas senior managers have changed from a roughly even split to a strong liberal skew. Overall, individuals in all roles have become more liberal.
Taking a firm-level perspective, I document similarly large changes when aggregating ideology up to the company level, as well as changes in ideological diversity within firms.
To shed light on the reasons for these changes, I adopt a machine learning approach. Using the data itself to estimate the data-generating process for individual ideology and employing counterfactual simulations to estimate the impact of broader changes in the corporate landscape on the average ideology of corporate elites, I find that the causes of the leftward shift appear to be multifaceted, with relevant factors including changes in both individual characteristics and the identities of the largest firms. Increased gender and racial diversity seem to have played particularly important roles in this shift, as women and people of color tend to be more liberal, and these individuals have become increasingly common in corporate America. I also identify the importance of changes in the locations from which corporate elites are drawn, with an increasing number coming from liberal areas. Ultimately, though, about half the leftward shift appears to have come from other factors related to the passage of time, suggesting broader forces at work.
Surprisingly, despite the apparent role of increased diversity in moving average ideology left, I find no evidence that exogenously increasing the proportion of female directors at a firm translates into a more liberal board. Using a difference-in-differences (DID) design to study the political impact of California’s gender diversity mandate for corporate boards, I find that this mandate had little effect on the average ideology of corporate boards, even though the mandate did significantly increase the representation of women among directors. This finding is surprising because women tend to be more liberal than men – a generalization that holds even for corporate directors – suggesting either that the new women directors added in response to the law have been more conservative than the average woman director or that boards have simultaneously increased the proportion of conservative men, perhaps as part of a broader political strategy to maintain ideological balance in boardrooms. Conducting separate analyses by gender, I find evidence consistent with the latter explanation.
Finally, I develop a new dataset on public stances taken by companies on state legislation involving lesbian, gay, bisexual, transgender, and queer (LGBTQ) issues to study how the ideology of individual corporate elites influences political behavior at the firm level. Consistent with companies responding to stakeholder views, I find that firms with more conservative directors and executives are much less likely to take public stances supporting LGBTQ rights. To more plausibly establish causality, I use an instrumental variables design, instrumenting for average individual ideology with the average for other firms in the same industry. The results hold under this quasi-experimental design.
The transformation documented in the paper has profound implications for American politics. The leftward drift of corporate elites could fundamentally reshape the coalitions supporting each political party, potentially yielding important policy changes as well. But, as my results demonstrate, corporate America has still not transformed from a conservative stronghold into a liberal one, as many companies remain staunchly conservative and others are ideologically divided. The political landscape of corporate America thus remains nuanced. In the paper, I discuss in greater detail the implications of these findings and directions for future research.
ENDNOTES
[1] Bonica, Adam. 2014. “Mapping the Ideological Marketplace.” American Journal of Political Science, 58: 367-386. https://doi.org/10.1111/ajps.12062. Bonica assumes a spatial utility model for donations, whereby donors generally give to ideologically proximate candidates and committees, and jointly estimates scores for both donors and recipients from a contingency matrix of donation amounts. These “CFScores” are essentially based on who donates to whom, with more liberal donors and recipients generally receiving lower scores and more conservative donors and recipients generally receiving higher scores. Importantly, unlike measures based on voter registration or the proportion donated to each party, the CFScore measure allows for distinctions within parties, and they account for donations made to ideological groups that are not officially affiliated with a political party. Indeed, the model does not even use the recipient’s political party as an input.
This post comes to us from Reilly S. Steel, an academic fellow and lecturer in law at Columbia Law School, a postgraduate research fellow at the Millstein Center at Columbia Law School, and a Ph.D. candidate in political science at Princeton University. It is based on his recent paper, “The Political Transformation of Corporate America, 2001-2022,” available here.