On February 28, consumers across the country took part in an ‘economic blackout’, halting all spending to protest cuts to diversity, equity and inclusion (DEI) initiatives. Earlier in the month, Target lost 10% of its store traffic after backtracking its DEI programs, and multiple companies, including Harley Davidson, Tractor Supply, Walmart and Ford suffered from consumer backlash after conservative activist Robbie Starbuck highlighted their DEI initiatives.
There’s clearly no ‘safe’ public position to take on such a visible and contentious topic, but is corporate neutrality on social issues possible? A new study from the Strategic Management Journal suggests that even silence can prompt backlash on such a salient issue.
Marco Shaojun Qin, Xueming Luo and Todd Schifeling of Temple University, along with
independent researcher Yang Wang, came to this conclusion after studying the effects of company silence during Blackout Tuesday on Instagram in 2020. They examined Twitter and Instagram accounts for 312 companies in the fashion industry for four weeks before and after the event. The 178 companies that did not participate saw follower growth slow 33% and likes drop 12%.
In peer groups with high participation in Blackout Tuesday, the downturn in followers and clicks nearly doubled for silent companies. The authors explained this effect as a function of visibility: Silence becomes more conspicuous in a group with increased peer engagement on an issue.
“If a company’s peers stay silent, then there is a ‘safety in numbers’ effect that normalizes a silent firm’s behavior,” said Qin.
When peer activism concentrates on one side of an issue, some consumers on the other side can react favorably to silence. But peer concentration makes it harder for upset consumers to select an individual company to punish. And consumers’ negative responses far surpass any positive support. This is true for consumers across liberal and conservative ideologies.
Silent mass-market businesses also suffered larger declines in consumer support than niche companies. The authors again pointed to visibility as the key driver.
“Visibility is central to stakeholder responses,” said Schifeling. “Companies in smaller markets attract less attention, and the intention behind inaction by a niche company can be opaque.”
Consumers might also give companies the benefit of the doubt more often in niche markets because of their smaller audience size and tighter alignment with companies.
“Liberal stakeholders who support an issue will be more likely to presume that a silent niche firm also has a liberal stance. Conservatives will be more likely to presume
that the firm also has a conservative stance,” said Wang.
Overall, this study demonstrates that when a social issue captures enough of public attention, the possibility for neutrality disappears. As polarization grows, consumers are less likely to ever assume corporate neutrality. Although it’s tempting to avoid controversial social issues, silence comes with costs that businesses should consider when deciding whether to take a stand.
