An increasingly regular line of attack against corporate America, one embraced largely by Republicans, is accusing them of pushing a "woke" agenda. The most famous recent examples of this include Bud-Light, Chick-fil-A, and Country Music Television (CMT). All of these brands, previously seen as reliably conservative bastions of commerce, have been accused of pushing a liberal ideological agenda on Americans. What this critique fails to recognize is that corporations are incapable of ideological machinations. These businesses are nothing more than profit-seeking entities whose behavior can be explained by looking only to what their executives believe will maximize shareholder value.
Corporations themselves are unfeeling and unthinking legal fictions, existing only on paper as a means to conduct business. Granted, they are staffed with executives who think, feel, and have ideological preferences. However, these executives are constrained in their behavior by the institutional design of corporations that gives them the singular goal of maximizing shareholder value.
While corporate executives are not always successful in the endeavor of growing the company's bottom line, it is unquestionably the motive behind their decision making. For one, thanks to stock options and structured salaries based on share prices, most of these people are almost always financially rewarded when their decisions achieve the primary corporate goal of maximizing shareholder value. So, when stock prices go up, their compensation rises in lockstep. As such, assuming that executives are pursuing ideology over profits requires one to believe that they are outright choosing to act against their own financial interest.
What's more, corporate executives and the board members overseeing them can face lawsuits from shareholders for acting against the best interests of the corporation. Courts have in turn taken to interpreting the "best interests of the corporation" as that which maximizes shareholder value. Again, the institutional rules in play for corporations strongly guide them to put profit over politics.
All this is to say that corporations don't see in red or blue, they only see in green. This exact sentiment was expressed by an attorney for Dominion Voting Systems during a disposition for the Dominion trial. Business magnate Rupert Murdoch agreed with the point the attorney made, all to explain Fox News' decision to give so much coverage with so little pushback to election denialism.
Given the enormous defamation settlement that came of this lawsuit, one might conclude that Fox made a costly mistake—but they did not make this mistake in service to an ideological cause. At its core, their decision was driven by the fear that their audience would migrate to competitors if they didn't deliver messaging that conservatives craved, thereby undermining their profits. Ideology informed the means by which Fox operated as it sought to maximize profits but it was not an end in itself.
Fox is an outlier in the corporate world in that most of these businesses are accused of pushing "woke" liberal causes. The most famous recent examples of this are Bud-Light hiring a transgender social media influencer to promote their brand, Chick-fil-A openly expressing support for Diversity, Equity, and Inclusion, Target embracing Pride Month, and now CMT pulling a music video by Jason Alden that was seen by some as expressing support for lynching. More examples abound and continue to come forward on a regular basis such that it seems difficult to contest the idea that corporations are pandering to those of a liberal persuasion far more than they are to conservatives.
If corporations aren't subject to ideological whims of their own, why are so many choosing to embrace a socially liberal policy? The answer to that lies in the underlying sociological shift in our nation's population over the last several decades that has seen unprecedented increases in affluence, education, and awareness. As these three features increase in the aggregate, societies tend to embrace a more secular and socially liberal mindset.
Another way to put it is that caring about things like the environment, gay rights, diversity, and other values often associated with liberalism are most often the purview of the privileged. Millennials and Gen Z both grew up under the affluence provided by the wealthy Baby Boomer generation, are the most educated generations in American history, and are defined by living most if not all of their lives in the hyper-connected Information Age. That these two generations are then substantially more liberal on social issues than those that preceded them is of no surprise.
Corporations, in hoping to maximize profit, do not want to serve a narrow and shrinking demographic as doing so is a recipe for small and shrinking profits. Old, religious, white, rural Americans who do not possess a college degree are a demographic in dramatic numerical decline. This is exactly why companies are so eager to embrace socially liberal values, as doing so endears them to a growing base of consumers that can allow them to maximize shareholder value over the long term.
Nicholas Creel is an assistant professor of business law at Georgia College & State University.
The views expressed in this article are the writer's own.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
