Why businesses need to be social and political actors

Research indicates that businesses are among the most trusted institutions. With trust comes the expectation for leaders to speak out on socio-political issues. In this repost, Henning Meyer examines the move away from the Friedman Doctrine, due to consumer, employee and external pressures.

 
The ground is shifting in business management and how companies fit into modern capitalist economies more generally. Since Ross Douhat coined the term in a New York Times article in 2018, there has been a controversial discussion about “Woke Capitalism”. Critics such as Helen Lewis see it as a driver for cancel culture that does not challenge the main problem – existing power structures. Other commentators such as Will Hutton effectively equate “woke” with “stakeholder” capitalism. Whatever your view on this topic, it seems clear that you cannot ignore it.

The title of this post already gives away my own opinion. But why do I believe that businesses need to rethink their role as social and political actors in addition to their economic function?

Let’s start with CEOs themselves. Aaron K. Chatterji and Michael W. Toffel in their 2018 Harvard Business Review article on “The New CEO activists“ point to a variety of reasons why CEOs had increasingly spoken up on controversial political issues that were unrelated to their firm’s direct activities. These are:

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Πηγή: blogs.lse.ac.uk