WLast week, the paper focused on the role of employees in some U.S. companies’ withdrawal from Russia and cited internal backlash at Disney over CEO Bob Chapek’s initial failure to take a stance on LGBTQ+ rights in Florida. did.
Both are examples of American corporate action on moral grounds, which some observers have called “unprecedented.” Coming back, what are the situations that might cause this? And what are the most effective ways to pressure companies to speak out on social issues?
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To find out the answer, we spoke to Stephanie Cleary, assistant professor of business administration at Wharton. Her research suggests that a key element of corporate behavior is what she calls “social recognition,” which she studied in the context of corporate responses to the killing of George Floyd. It is something. Below are excerpts from a recent conversation. Edited for space and clarity, where she discussed its content and its impact.
What is social approval and why is it important?
Social approval is the idea that companies and associated entities, such as boards of directors, feel empowered by other groups, collectives, or others in society to engage in socially based work. is. It can be anything related to taking a stance on a social issue or responding to a social cause. The social recognition process is about companies and boards of directors feeling as if they have the right to do this work that many companies haven’t done as deeply before.
What is an example of social approval?
To understand social approval, it’s first important to understand who’s doing it, giving companies a power they never felt before. This can be any number of entities. Let’s start with the law and policy makers. One example I often think about in research on board diversity is that around 2019, California passed a law requiring companies headquartered in the state to have at least one woman on their board of directors. This is the background. The fact that boards then enacted this law as a reason to increase board diversity and took on the responsibility to speak out under the law brought even more women and underrepresented minorities onto boards. This is an example of feeling empowered to do this work, such as hiring. .
Another example is the Black Lives Matter movement after the murder of George Floyd. What I found in my research is that boards now feel sanctioned to do more than just recruit directors to their boards. This is what California law did. What happened after the killing of George Floyd was that Black boards and their boards were empowered to address diversity issues more broadly and become more involved in the company’s DEI work as a board responsibility. That’s what I felt.
What else is on the list of social approval mechanisms?
Apart from laws and the Black Lives Matter movement, we have peer authorization, social sanction from our peer groups. There are many organizations that business leaders collaborate with, including the Business Roundtable, the Chamber of Commerce, the Silicon Valley Leadership Group, and the Executive Leadership Council. There are now so many groups of business leaders looking for ways to create an enterprise-wide agenda. By developing this collective voice, any company can feel empowered to engage in diversity activities.
What lessons can be learned from your research in terms of how to steer organizations in the right direction when it comes to social issues?
What those of us who care about social issues need to understand is that there is a lot of anxiety among people in business. What do we need to do if we want to bring anxiety to a manageable level to start addressing these social issues? Companies with the highest levels of anxiety are either If you are empowered to tackle social problems by , you will probably be more confident in tackling them. For corporate leaders, business leader collaboration is part of a more effective form of social recognition, perhaps because they are colleagues.
Indeed, effective forms of social recognition come from people: employees and social movements. However, these are a little removed from the decisions that businesses have to make on a daily basis. It is very important for leaders to be able to discuss it among their colleagues. Peer group social approval is something we should encourage more of.
The second one is related to the role of the employee, i.e. the activity of the employee. What I’ve been observing for a while is that companies try to ignore the fact that they have a lot of employees who are passionate about these issues.
Just the other day, I was on the phone with an unknown company and we were talking about hiring a director of social activities. I thought this was very interesting. This is the equivalent of companies hiring her own ESG director or diversity, equity and inclusion director. What would it look like to have a director and department for social activities, treat this as a critical business issue like marketing, communications, and finance, and strengthen that department to help companies respond effectively to these issues? Is not it?
What does the social recognition framework tell us about corporate responses to Russia’s attack on Ukraine?
In terms of government bans as a social sanction, I think it’s important to note that there was President Biden’s move to ban U.S. imports of Russian oil, natural gas, and coal. rear Many American companies had already begun ceasing operations in Russia. Shell seems to be a good example of a company that needed this kind of social approval to address this social problem in a meaningful way. Before the ban, the country was actively purchasing Russian crude oil. They admitted that they did not fully understand the consequences of their actions and what they needed to do going forward until they had “continued discussions with the government about the need to isolate society from Russia’s energy flows.” Ta.
Viewed from the perspective of the ESG movement as social recognition, some have suggested that these corporate responses are somehow linked to corporate ESG efforts. If this were the case, this would certainly suggest a case of social approval. In other words, the ESG movement gives companies the right to suspend operations and services in Russia. Another point to consider is that you may have felt socially empowered by the ESG movement to respond to some social issues (climate change, racial justice, etc.) in the past. Companies may feel increasingly empowered. approve yourself To counter Russia’s attack on Ukraine. Therefore, social approval for some social issues may lead to approval for companies to address other social issues, suggesting a type of spillover effect.
From your perspective, are these companies’ responses unprecedented or noteworthy?
I think the responses of these companies are worthy of attention. Because not all of them seem to stem from active threats against companies, such as boycotts or protests. This does not mean that these companies do not recognize the risks unless they cease operations in Russia. In fact, it’s more likely. But what’s particularly interesting about these companies’ responses to Russia’s attack on Ukraine is that the issue is deeply rooted in the political realm. And historically, companies seem reluctant to take a stance on these types of issues.
Read our full conversationThis includes discussions about the role of employees, how organizations can choose which social issues to address, and the difference between companies taking action rather than just doing PR. Masu.
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