Skip to main content
EDIT

USC Marshall Professor Researches Where Politics Meets Business

USC Marshall Professor Researches Where Politics Meets Business

Emily Nix’s new research analyzes whether it’s more beneficial for companies to issue political statements or remain silent.

by: Alexander Bernard
02.21.24
Emily Nix's headshot

Featured

  • Emily Nix

    Emily Nix
    • Assistant Professor of Finance and Business Economics
Stay Informed + Stay Connected
MARSHALL MONTHLY BRINGS YOU ESSENTIAL NEWS AND EVENTS FROM FACULTY, STUDENTS, AND ALUMNI.
SIGN UP

Milton Friedman was UNEQUIVOCAL: Businesses should stay away from politics.

That was in 1970. In 2024, many companies aren’t heeding the economist’s advice. From PLEDGES to assist in out-of-state abortions to pride month TWEETS, countless corporations are publicly proclaiming their political ideals. But to what end? Conventional wisdom suggests that companies’ best interests lie in neutrality and broad demographic appeal, especially in a polarized political environment.

EMILY NIX, assistant professor of finance and business economics, is investigating the direct fallout of corporate political statements. Nix believed many CEOs or firms issue announcements without a full understanding of the consequences.

“Increasingly firms are engaging in political and social topics of the day, and they’re coming out with announcements for or against,” Nix said. “I think a lot of CEOs — it’s not clear to them. What are the pros? What are the cons? Should they be engaging in this sociopolitical speech?”

Nix and her CO-AUTHORS hoped to shed light on the consequences of corporate political activism. Following the United States Supreme Court’s historic Dobbs v. Jackson decision that overturned Roe v. Wade, hundreds of firms released statements emphasizing their support of a woman’s right to choose. These announcements ranged from vocal advocacy to actual offers of medical coverage and travel expenses if employees were forced to cross state lines to acquire reproductive care.

This landmark moment in American politics provided the spark that Nix and her co-authors needed. By analyzing recruiting and application numbers on INDEED, Nix was able to observe some of the effects of post-Dobbs announcements. Her team saw a substantial increase in the amount of web traffic on the job postings of firms who released public statements.

“This increase in clicks is equivalent to what you would get if you raised posted wages by 12%,” Nix explained.

But there’s a tradeoff, says the professor. Though the announcement may increase recruiting numbers, analysis using GLASSDOOR data suggested existing employee satisfaction decreases. According to Nix, this decline can largely be seen in male-dominated job titles, particularly on issues where men are less likely than women to be supportive of a progressive stance, such as abortion rights.

Nix also noted that some types of companies aren’t even recorded in the data because they would never experiment with a political statement.

I think a lot of CEOs — it’s not clear to them. What are the pros? What are the cons? Should they be engaging in this sociopolitical speech?

— Emily Nix

Assistant Professor of Finance and Business Economics

“An oil rig in Texas doesn’t even show up in our sample because they don’t want to announce [anything controversial],” Nix explained. “And there’s a good reason they don’t announce. Probably all of their current or prospective employees would hate [the announcement].”

Any political statement seems to provoke a mix of benefits and drawbacks. On the one hand, companies who make an announcement are attracting more talent than their competitors who refrain from such a statement. On the other side, firms that dabble in politics risk alienating and eventually losing their existing employee base.

What prompts these announcements then? Is it purely financially motivated or are these proclamations influenced by CEO and founder beliefs?

“I can’t read the mind of every single CEO, but my guess is that some of the CEOs do feel a moral obligation to act on certain issues,” Nix said. “But there’s also an argument to be made that as a CEO, it is irresponsible to your shareholders to do so at the cost of profitability … So I think you do have to be aware of what impact any of these statements might have on your bottom line.”

The decision might come down to the political breakdown of the surrounding workforce. A Texas oil rig might be unwilling to support abortion rights and anger its conservative-leaning employees and prospective candidates. In contrast, a tech company in Silicon Valley might attract more skilled workers by appealing to the liberalism of its candidate pool.

These are all the potential financial consequences, but Nix is concerned about something less concrete. As workers gravitate to companies that share their principles, the open exchange of ideas may soon disappear.

“The workplace used to be a place where we met people who didn’t agree with us and we had discussions and we talked to them,” Nix noted. “You might have lots of reasons to think that could be a good thing. If that’s going away, I have a bit of concern about that changing us as a society.”

As the country heads into a presidential election year, the gap between the right and the left will likely grow more stark, more drastic, as each side digs their heels into the dirt. Businesses will have to make a choice, weighing the pros and cons of making a political statement in a divided country. Nix and her co-authors’ research may illuminate this calculation for firms, providing a road map for tackling the United States’ most volatile issues.

RELATED