Many retailers are facing difficult decisions amid a politically charged environment. Boycotts and social media backlash have stepped up pressure on companies to drop Trump products. Just this month, Nordstrom pulled the Ivanka Trump brand, citing declining sales, and Neiman Marcus, Sears, and Kmart also dropped Trump-branded items. The grocery chain Wegmans is also facing threats of a boycott over its carrying Trump wines. Meanwhile, Trump supporters have reportedly vowed to stage boycotts of their own of companies such as Starbucks and Budweiser.
The New York Times wrote that the Nordstrom situation “highlights the tightrope companies must walk in this hyper-politicized environment.” This includes CEOs, many of whom are in the public spotlight. Here, two Northeastern faculty members in the D’Amore-McKim School of Business—Parker Ellen, assistant professor of management and organizational development, and Yakov Bart, assistant professor of marketing—examine the impact of boycotts and social media backlash as well as how companies and top executives react to social influence.
Do consumer boycotts work? What is the ultimate impact of such campaigns?
Ellen: I think they can be successful, but I would say they’re analogous to using pressure and coalitions, two tactics that research shows are less effective means of influence because they tend to generate a great deal of resistance, due to their more hostile nature. This is especially true if aggressive tactics are used in initial influence attempts. Rational persuasion (using logical arguments) and inspirational appeals (tying requests for change to shared values) are a much more effective tactics. So, if the goal is to get firms to enact any sort of lasting change, there likely are better ways to go about it than a boycott. Also, identifying loose support for, or opposition to, Trump as a call to consumers to boycott is likely less effective than identifying substantive issues that can alter the reputation of the firm. The former may have some short-term impact, but it’s probably limited. The latter arguably can do far more long-term damage to the brand.
Recently, Uber CEO Travis Kalanick stepped down from Trump’s business advisory council, and Under Armour CEO Kevin Plank’s comments that Trump being a “pro-business president” is a real asset for America led to social media backlash and criticism from star athletes. Are CEOs under the microscope now more than ever, and are there factors top executives must now consider more closely?
Ellen: CEOs need to craft and manage impressions. Given that information about them, what they do, and what they say is now more available and easily shared than ever, they certainly need to be mindful of the implications to their personal reputations. Additionally, as the public face of their organizations, CEOs’ words and actions can have direct implications on firm reputation. I think this is amplified when the CEO is a founder or is very charismatic, as people have difficulty separating the person and the firm in these situations. To me, Kalanick’s move definitely reflects this. Much less covered was the fact that Kalanick reportedly was one of the tech CEOs to quickly speak out about supporting drivers affected by the travel ban. However, coverage was swift and broad about concerns that he and Uber were attempting to capitalize on protests of the travel ban at JFK, which had the potential to shape perception of him and Uber. As a result, he stepped down from the business advisory council, citing (in a letter to employees) the public perception that his service there was an endorsement of Trump’s travel ban policy.
Your research focuses on social influence in organizations, and you have underscored that companies have long prioritized the need to craft and maintain their brands. In your view, do consumers care whether the CEO or an organization makes these moves as a “principled stance” or simply to save face or capitalize on public opinion?
Ellen: It depends. In some instances, the outcome is of primary concern and I don’t think it matters as much why the organization or CEO made the move as long as the desired result was achieved. In other instances, people might use their perceptions of the motive to formulate their opinions of the organization or CEO. However, in many instances, people use their existing perceptions of the organization or CEO to make attributions about intent, and these attributions then reinforce the existing reputation. For example, Uber seems to have a reputation of being aggressive. So, when it drops surge pricing during the JFK taxi protest, a lot of people interpret that action through the lens of their aggressive reputation and view it as an opportunistic move, rather than one designed to avoid gouging consumers. This is why crafting and maintaining the impression that organizations and CEOs want is so important, and why so much internal attention is given to it.
Social media has proven to be a powerful tool for both consumers and companies. What is important to keep in mind when we see how consumers are using social media to comment on situations in which politics and business intersect?
Bart: Many brands are getting carried away by what they observe on social media platforms these days—often strongly worded consumer comments and campaigns. However, companies need to remember that consumers are still much more likely to have a brand-related conversation offline than online. Importantly, content and tone of these more easily observable online conversations often differ from largely unobserved offline discussions, as online comments could be offered by different people with different motivations. Perhaps this is one reason why, despite multiple “buy Trump” and “boycott Trump” social media campaigns, the impact on sales and company valuations so far remains very limited.
Aside from remaining neutral and not taking deliberate steps, are there ways in which consumer companies can take some form of action—on either side—in this “hyper–politicized environment” and somehow come out unscathed? Or is backlash, even if only temporary, inevitable?
Bart: For a major consumer brand, taking a simple for- or against-Trump stand would indeed be just asking for trouble. Even if the consumers that the brand targets happen to belong primarily to a single political camp—which is rare for a major consumer brand with a broad customer base—these consumers may not be convinced that the brand should be taking any political side at all. Some may even suspect that the brand is just taking advantage of the current political landscape and may get turned off by that. However, companies and institutions should not withdraw from communicating their stands on issues related to various initiatives, proposals, and decisions coming from any of our government branches, if these issues happen to be important and fundamental elements of their brand identities. One recent example is the multiple universities across the country, including Northeastern, pushing back against the immigration-limiting executive order—this makes sense as the order is widely inconsistent with the very core of their value propositions.