The Logic of ‘Woke Capitalism’

Hundreds of large corporations and top executives signed a two-page ad in Wednesday’s editions of The New York Times and The Washington Post, declaring their opposition to any legislation that restricts voting in America. It’s the latest political statement by U.S. corporations, following the passage of an electoral law in Georgia—previously condemned by the Atlanta-based Delta Airlines and Coca-Cola—containing provisions that make it more difficult for many citizens to vote. Many prominent Republican politicians have since criticized these companies as “woke capitalism,” with top Republicans, including Donald Trump, calling for boycotts of Delta and Coca-Cola. That would seem to threaten these corporations with potentially major losses of revenue from Republican customers. So why are corporations taking progressive positions on controversial political issues?

For Neil Malhotra—the director of the Center for Social Innovation at Stanford University, who has researched the relationship between consumers’ values and their buying choices—corporations are making a calculated business decision with the social and political stands many of them are now taking. They’re coming under pressure from many large shareholders and employees, groups largely made up of professionals who hold liberal or progressive social views; and they know, meanwhile, that their customers traditionally don’t choose products or services based on a company’s social or political statements.

Michael Bluhm: Given that more than 74 million people voted for Donald Trump, and some 40 percent of Americans support Republicans, it seems strange that corporations would risk alienating almost half their potential customers. Why are corporations so publicly aligning themselves with the Democratic Party on issues such as voting access and Black Lives Matter?

Neil Malhotra: One way to answer that is to go back in history to think about how corporations see their role in society. Business leaders and corporations were once very civically involved, [but] a turning point came in the 1970s. There’s a very famous Milton Friedman article in The New York Times that said the social responsibility of business is to maximize profits. If you’re a manager of a corporation, you have one job, which is to do what the owners of the corporation want, which is the shareholders. And if you do anything else, you’re using the shareholders’ money for your own interests, which is immoral—and, in Friedman’s view, should be illegal. So in the 1980s, you get this mantra of shareholder value as the singular focus of what a corporation should be doing.