Values and visibility: How CEO activism influences private and public consumer choices

Abstract

Firms' and executives' stances on controversial issues affect consumer behavior. This “political consumerism” might be motivated by ideology and a desire to signal to peers, and thus vary for private and public purchases. We conduct an experiment with 1198 consumers to study how purchase visibility affects responses to CEO activism. Participants are randomly shown either generic product information or that plus a CEO statement supporting gun rights. They then choose between receiving the product or receiving cash, with half assigned to a condition where their choice is visible to someone they know. We find that CEO activism reduces demand among people who disagree with the CEO regardless of purchase visibility, indicating minimal signaling motives. Our results have implications for firms using politics to differentiate products. Managerial Summary Business leaders who speak out on controversial social and political issues may attract or repel consumers who agree or disagree with their stance. Consumers may react more intensely when others can observe their purchases or boycotts, allowing them to “signal” their beliefs. We experimentally manipulate whether the decision to purchase a product from a firm whose CEO vocally supports gun rights is observable and whether consumers are aware of the CEO's stance. We find that consumers change their behavior in response to CEO political activism regardless of whether their choices are visible to others. This suggests that CEO activism can impel boycotts and that firms can differentiate themselves by taking political positions even when their products are less known or consumed privately.