Even large companies have a hard time resisting peer pressure.
Disney CEO Bob Chapek spoke out against Florida’s anti-LGBTQ+ bill after criticism of his silence began trending on social media. Microsoft has suspended sales and services in Russia after issuing a sharply worded statement condemning President Vladimir Putin’s “unjustified, unprovoked and illegal” invasion of Ukraine. And Goldman Sachs has pledged $10 million to address racial and social injustice after the 2020 police killing of George Floyd.
“What we’re seeing in many companies right now is a very strong reaction to external advice and recommendations and pressure to work harder on social issues,” said Wharton management professor Stephanie Cleary.
Cleary, who studies organizational behavior, identifies this response as “social approval,” a type of permission given by external groups to business leaders to take internal action. Executives are becoming increasingly aware of, and more likely to engage with, the close connections between social issues, corporate responsibility for those issues, and the bottom line. External pressure isn’t the only mechanism for eliciting a response from executives, she says, but it’s become an effective mechanism these days.
Historically, most companies focused on business goals and away from political or social conflicts. But that has changed over the past 15 years, and especially in the past two years since Floyd’s death, as investors and consumers have demanded greater transparency and trust. They want to know where companies stand and what they are doing on a wide range of large-scale issues, from reducing carbon emissions to closing the gap between rich and poor. This is one reason why ESG (environmental, social and corporate governance) is at the top of many corporate agendas.
“What I’ve found in my research is that companies are starting to recognize the connection between what they do and what’s happening in society, that they’re not separate entities,” Cleary said. To tell. “These are new and emerging, but certainly promising.”
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