Corporations and social issues

Corporations are expected to wield their power and voice their positions on social issues more than ever. You have seen it lately with Black Lives Matter, racism, police brutality, hate speech or privacy, to name just a few. Failure to satisfy customers on social issues may result in backlash and material harm to their business. Take Facebook and Twitter as examples. Facebook’s stock price dropped quite a bit after a slew of advertisers announced their pause on advertising on Facebook’s platforms for a month or longer. Twitter became a target of Republican lawmakers and the President after it hid and put a label on some of Trump’s tweets.

In societies that are as divisive as what we are in now, companies are in the “damned if I do, damned if I don’t” position. These are tough decisions that are almost guaranteed to piss off some people. To those who take a stand on issues, kudos to you. As to those who didn’t, I want to make a case that we should exercise judgement on a case-by-case basis and give them some understanding.

Later last year, Daryl Morey, the general manager of Houston Rockets, tweeted his support for Hong Kong’s independence from China. The tweet didn’t sit well with the Chinese authority which quickly took actions including suspending games and planned cooperation with the NBA. The backlash from China resulted in Daryl walking back of his comment, Houston Rockets distancing itself from the saga and the NBA issuing a statement to cool down the situation. Another example concerns Apple. It took down a popular podcast app called Pocket Casts from the App Store in China. The main reason is because The Cyberspace Administration of China forced it to. Despite being a $1.4 trillion company whose core belief is that passionate and creative people can change the world, Apple complied with the demand.

The decisions above showed that the executives believed it was in the best interest of their companies to succumb to pressure from China and compromise. Some may frown on China’s demands, but they know they must not upset the Chinese government if they want to do business in China. And what international company doesn’t want to do business in a country with the second biggest economy in the world, fairly cheap labor and more than 1.3 billion people in population?

As the decision makers, executives have fiduciary duties to shareholders and responsibilities to their employees while having their own personal virtues as a person. In the perfect world, there would be no conflict between being an executive and being a human. Unfortunately, the world we live in is anything, but perfect. Different stakeholders have different points of view which, in many cases, are truly irreconcilable. That puts executives in an unenviable position. They have to make a decision no matter what, knowing that they simply can’t please everyone.

There is a saying in racing that goes: to finish first, you first need to finish. To meet these social responsibilities, these corporations need to make sure that they can exist financially first. We all respect those who stand up to the strong for the weak. Corporations’ voice is a lot more powerful than that of an average person, but even they are not all too powerful against governments.

In summary, critics and consumers are entitled to criticize corporations and keep them honest. Misbehavior such as tax evasion, use of slaves or child labor should be universally condemned. But when it comes to highly controversial topics and issues, while we all can have opinions and to some extent, may be right to criticize corporations, it’s important to know that none of us would likely make a better judgement ourselves if we were in the shoes of the criticized executives. Big changes often require a lot more than just a single individual or company to take place.

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