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Corporate activism has no takers in India

File photo: Twitter CEO Jack Dorsey Photograph:( Reuters )

Ahmedabad, Gujarat, India Jan 25, 2019, 03.29 PM (IST) Written By: Sanvit Shah

Corporate leaders taking a public stand on partisan socio-political debates is becoming increasingly common in western democracies, especially in the US. From Starbuck’s Howard Schultz to Kenneth Frazier of Merck, many CEOs and corporate leaders have started publicly taking a strong political position on contemporary issues.

For long, corporates across the globe have played role in shaping and moulding policy and political debates, but that was either through funding of political or social campaigns or self-interest lobbying, but the phenomena of CEO activism is relatively new, argue professor Aaron Chatterji and professor Michael Toffel.

With more and more corporate leaders in the arena of activism, there is also growing cynicism as to why business leaders take such positions that don’t have any direct impact on their bottom lines.

Many are not sure as to why business leaders have suddenly started speaking up - are they really speaking up of their conscious or is it just another ‘innovative’ strategic exercise? Whatever is the reason, business leaders taking a strong position on partisan socio-political issues is the new trend.

A 2016 study by Weber Shandwick and KRC Research showed that 65 per cent of consumers in India wanted CEOs or companies to express opinion or take action on an issue that may be controversial, the highest among 21 markets studied in the research.

However, there will be no takers of corporate activism in the largest democracy - India. Businesses and corporates in India are still viewed with a deep sense of scepticism, and the primary reason is the haunting legacy of East India Company – and the impact of the nexus of economic and political power. The so-called ‘socialist approach’ after Independence and the period of ‘license raj’ just added to the public distrust of corporates and businesses, except for the handful of corporate houses for their historical contributions, philanthropy or association with the Independence movement. 

Even, in the post-liberalisation period, corporate linkage with corruption – be it 2G spectrum scam or large scale bank defaults – has only reinforced the public cynicism. While, there is growing acceptance of capital, free markets and entrepreneurial spirit, widespread suspicion regarding the interests of corporations still prevails.

The suspicion is not only about the corporates but also about the leaders. Barring a handful of founders or influential CEOs, most other business leaders in India lack credibility to weigh in on partisan socio-political issues; leaving little room for them to effectively engage in corporate activism.

Several attempts of corporate activism have often been accompanied by direct or indirect economic pressure. In the US, in protest to Indiana’s Religious Freedom Restoration Act, Bill Oesterle, the then CEO of home services marketplace Angie’s List, cancelled a $40 million project of expanding company’s Indianapolis based headquarters, which otherwise would have created around 1300 jobs. In a similar incident, Dan Schulman of PayPal cancelled plans of a new global operations centre in Charlotte, marking a protest to North Carolina’s controversial bathroom law. 

However, there are scarce hopes that such strategies or tactics of exerting influence by leveraging deep pockets would work in India, rather, would be counterproductive. The potential backlash to any of the partisan position in policy debates would be more on the fact that such ‘attempts of influences’ are contradictory to the spirit of democracy, than to the position itself.

In November 2018, Jack Dorsey, co-founder and CEO of Twitter, became the centre of controversy after his photograph with ‘Smash Brahmanical Patriarchy’ placard went viral during his trip to India. After the digital outrage over the issue, Twitter apologised and Jack in his petition to Rajasthan High Court clarified, “[he] is unaware of the history and complexity of the caste system in India. He has no idea whatsoever as to what connotation the expression ‘Brahmanical patriarchy’ has and does not subscribe to the view that Brahmins are a patriarchal community”. The incident serves as a powerful lesson for corporate leaders that they need to be well aware of the issue before they publicly take a position.

In India, the fear of the corporates’ influence on public policy and socio-political debates far outweighs its potential or actual influence, the same can be argued for the corporates’ fear of backlash. It’s often a major reason, especially with increasing penetration of social media, why corporate leaders avoid taking a clear position on anything even distantly partisan. And the social responsibility remains limited to statements on non-partisan subjects revolving around poverty and malnutrition.

In policy matters, corporates’ contribution to the public discourse is often limited to discussion on union budget, taxation policies or labour laws – subjects seemingly related to the bottom lines of the businesses, apart from industry-specific backdoor lobbying.

In India, it’s hard to find examples of influential business leaders taking a position on partisan socio-political issues such as reservation/quotas in education and public employment. And, there are no signs of change, leaving corporate activism with no takers in the largest democracy.

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Sanvit Shah

The author is strategy and management consultant at CarEd Advisory, and is interested in exploring political economy and foreign policy

Story highlights

The fear of the corporates’ influence on public policy and socio-political debates far outweighs its potential, the same can be argued for the corporates’ fear of backlash.