When (not) to talk politics in business: Experimental evidence

Research Summary Chief executive officer (CEO) political activism is increasing, but its strategic implications remain unclear. We conduct two survey‐based experiments to shed light on how individuals respond to CEO activism. We differentiate between communicating an apolitical stance versus saying nothing ‐ an unexplored distinction to date. We furthermore examine whether characteristics which could influence perceived credibility of the stance ‐ whether it is consistent with expectations and whether it is backed by monetary commitment ‐ influence responses. We thus contribute to a deeper understanding of whether and how individuals’ perceptions of the firm are affected by CEO activism. Managerial Summary It is critical for managers to understand the implications of engaging in CEO political activism, a practice which has been on the rise in recent decades. Actively communicating an apolitical stance versus passively staying silent about an issue are two separate strategic choices available to managers which have been unexplored in the literature to date. This paper sheds light on how individuals respond to firms' communicating an apolitical stance, saying nothing, or taking an ideological stance in either direction on a political issue; and how this varies depending on whether the stance is perceived as consistent with expectations and whether it is backed by monetary commitment. It thus helps managers navigate stance‐taking on political issues.