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When Is CEO Activism Conducive to the Democratic Process?

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Abstract

Activism undertaken by CEOs has been on the rise in recent years. Research on this practice has been primarily concerned with determining the conditions under which a CEO’s public statements on sociopolitical issues are beneficial or detrimental to her firm’s business performance. We complement this instrumental perspective on CEO activism with an ethical investigation of the implications of CEO activism for the democratic process. Drawing on political philosophy, we show that the answer to the question of whether CEO activism is conducive to the democratic process depends on the view of democracy that is adopted. From the perspective of liberalism, the sole requirement that an instance of CEO activism must fulfill is that it is lawful, provided that the applicable law sufficiently protects people’s essential rights. However, from the viewpoint of republicanism, this is not a sufficient condition. Besides being law-abiding, CEOs should be “civic-minded” when intervening in public debates, i.e., concerned with the quality and fairness with which those debates are conducted. Based on the literature on republicanism, we suggest four possible criteria that civic-minded CEOs can apply to gauge the democratic conduciveness of a possible public intervention: added insight, timeliness, constructiveness, and transparency. Our article complements the predominantly instrumentally oriented literature on CEO activism and contributes, more broadly, to the literature that explores the normative dimensions of corporate political involvement, as well as to a growing strand of research that draws on philosophical theory to inform business leaders’ ethical decision-making.

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Notes

  1. Throughout this paper, the terms “moral” and “normative” are used to characterize questions and issues pertaining to what is morally “good” or “bad”.

  2. The lack of commonly accepted behavioral standards, which is typical for emerging social practices such as CEO activism, is often put forward as a reason for engaging in applied ethics, i.e., the branch of ethics that examines, with recourse to philosophical theories, questions of “good” or “bad” in specific areas of practical concern. However, it is to be noted that the lack of shared behavioral rules is not the only reason why reliance on existing moral norms may prove insufficient to help us to identify the morally preferable course of action. Other reasons why studying and reflecting upon moral matters is valuable include, but are not limited to, the existence of situations in which existing moral norms contradict one another (so called “moral dilemmas”), as well as, more fundamentally, the possibility this process creates to question the worth of prevailing moral norms (i.e., to engage in “moral reflexivity”).

  3. There are other schools of thought in the theory of democracy. Another prominent current in political thought, which has been influential in the literature analyzing the implications of corporate political involvement for the democratic process, is deliberative democracy. Deliberative democracy bears both similarities and differences with liberalism and republicanism. For example, like republicanism, deliberative democracy attaches importance to the deliberative processes by which collective will formation is achieved. At the same time, akin to liberalism, deliberative democracy attributes a central role to constitutional law for governing political discussions. See Habermas (1994) for a comparison of these three models of democracy.

  4. Republicans thus tend to criticize “majority tyranny” on slightly different grounds than do liberals, who condemn it, first and foremost, for being an unacceptable infringement of unalienable civil rights.

  5. In Honohan’s (2003, p. 228) words, “In a republican politics of deliberation, all individuals and groups are entitled to make proposals, advance views in their best light, and offer their reasons for these—there are no barriers to the claims and demands that they can make”.

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This work is supported by the Foundation HEC Paris.

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Authors and Affiliations

  1. Department of Human Resources Management and Business Law, TBS Business School, 1 Place Alphonse Jourdain CS 66810, 31068, Toulouse, France

    Aurélien Feix

  2. Strategy and Business Policy Department, HEC Paris, 1 Rue de La Libération, 78350, Jouy-en-Josas, France

    Georg Wernicke

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  1. Aurélien Feix
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Correspondence to Georg Wernicke.

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Appendix A: Approach Adopted to Define Criteria for Assessing the Democratic Conduciveness of an Instance of CEO Activism

Appendix A: Approach Adopted to Define Criteria for Assessing the Democratic Conduciveness of an Instance of CEO Activism

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Feix, A., Wernicke, G. When Is CEO Activism Conducive to the Democratic Process?. J Bus Ethics 190, 755–774 (2024). https://doi.org/10.1007/s10551-023-05446-5

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