A company’s political ideology predicts its commitment to social responsibility

Abhinav Gupta

The U.S. Supreme Court has ruled that corporations are, essentially, people. They enjoy many of the same rights and responsibilities as individual Americans. But do profit-seeking enterprises also have discernible political ideologies?

They do indeed, according to a Strategic Management Journal study by Abhinav Gupta, an assistant professor of strategic management at the UW Foster School of Business.

Writing in the London School of Economics (LSE) Business Review blog, Gupta and co-authors Forrest Briscoe and Donald Hambrick outline their finding that employee donations to the two major American political parties serve as an accurate indicator of an organization’s political ideology.

This organizational ideology, in turn, predicts the employer’s commitment to corporate social responsibility (CSR) behavior in a variety of domains, including equality for women and LGBT employees.

Gupta and his colleagues find that liberal-leaning companies engage in more CSR behaviors than conservative-leaning companies do—and even more so when other firms in the industry have weaker CSR records, when the company relies heavily on human resources, and when the company’s CEO has a long organizational tenure.

The authors suggest their finding offers renewed skepticism for the notion of firm hierarchies as rigid top-down dictatorships.

“Our study shows that influence is more distributed, and value-laden decisions are made and shaped by people at every level of the org chart,” they write. “Politically astute middle- and lower-level employees can—and will—influence company decisions to reflect their beliefs and judgments.

Read the entire LSE Business Review post.