‘American Democracy’: Controversiality, political involvement, and stakeholder evaluations

with Brayden King and Elizabeth Pontikes

The practice of corporate sociopolitical involvement (CSPI) is riddled with variance. This paper focuses on the role and impact of variance in two areas of CSPI: (1) firm action and (2) employee partisan leanings. Using data on employee satisfaction, we examine how firms’ participation in CSPI affects their ratings as an employer. We use a split-sample analysis to analyze firms within different ideological clusters, and we differentiate firm action by degree of controversiality. Our findings demonstrate a mixed impact of CSPI on employees. Employee satisfaction increased when employees were highly unified in their political ideology and that ideology aligned with the firm’s action. When employees’ ideology was mixed, or misaligned with the firm’s action, firms did not reap any rewards. However, beyond the lack of rewards, we find that firms with a mix of political ideologies respond negatively to firms when their action is more controversial than other firms’ actions. The paper concludes with a discussion of implications and needs for future research.