New study shows neutrality on social issues can still alienate consumers

On February 28, consumers across the country took part in an ‘economic blackout’, halting all spending to protest cuts to diversity, equity and inclusion (DEI) initiatives. Social media backlash from both conservatives and liberals regarding DEI has plagued brands for over a month, prompting the question, “Should companies just stay silent on the topic?”

A new study from the Strategic Management Journal suggests that on such a visible and contentious issue, silence still prompts backlash.   

Marco Shaojun Qin, Xueming Luo and Todd Schifeling, all of Temple University, along with independent researcher Yang Wang, studied the effects of company silence during Blackout Tuesday on Instagram in 2020. They examined Twitter and Instagram accounts for 312 companies in the fashion industry for four weeks before and after the event. The 178 companies that did not participate saw follower growth slow 33% and likes drop 12%.  

“When a subject is so salient to the public, the possibility for neutrality disappears, and stakeholders will increasingly interpret silence as derision,” said Qin, one of study’s authors. “The effects we discovered are substantial and imply that the classic notion that firms can be protected by staying silent on sociopolitical issues may no longer hold in today's world.”

The authors also suggested consumers gave companies the benefit of the doubt more often in niche markets because of their smaller audience size and tighter alignment with companies.

“Liberal stakeholders who support an issue will be more likely to presume that a silent niche firm has a liberal stance. Conservatives will be more likely to presume that the firm has a conservative stance,” said Wang.

In peer groups with high participation, the downturn in followers and clicks nearly doubled for companies that stayed silent. Silent mass-market businesses also suffered larger declines in consumer support than niche companies.  

“Visibility is central to stakeholder responses,” said Schifeling. “It intensifies the more an industry engages on an issue — making corporate silence more obvious. It’s also key to protecting companies in smaller markets. They attract less attention, and the intention behind inaction by a niche company can be opaque.”

Because BLM leaders organized Blackout Tuesday in support of their cause, lack of participation could reasonably be inferred as opposition. The authors conducted multiple robustness checks to test against this potential bias.

The study helps explain why so many companies and CEOs are engaging in corporate activism on issues that do not seem to relate to their business strategy when it often triggers negative public responses. BLM presents an extreme example of public reaction, but likely a valid one amid the current sociopolitical discourse in the United States. As polarization grows, consumers are less likely to ever assume corporate neutrality. Although it’s tempting to avoid controversial social issues, corporate silence comes with costs.   

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