The Economist has published a lead article on the need for CEOs to get involved in political debates. Against the backdrop of rising tensions between the Unites States and China and increased societal polarization, companies’ business decisions are subjected to greater political scrutiny from the public as well as the state. Recent attempts in Idaho to legislate against the Chinese-owned video-sharing platform TikTok or the debate around friendshoring of semiconductor factories come to mind.
All this, the newspaper argues, erodes an “unspoken agreement” between corporations and the state that has held firm for some 50 years in the West: companies focus on maximizing shareholder value while politicians set the rules but stay out of most business decisions. The roots of this shift are traced back to the Trump era, when business leaders began to pronounce on societal issues to signal to their consumers their aversion to populist rhetoric.
But such outspokenness can be risky: some, like Disney’s Bob Chapek, have suffered strong blowback from politicians and parts of the public. Some CEOs have tried to avoid criticism by staying close to the government’s policy goals, others stay out of politics altogether—think Jack Ma, founder of the e-commerce giant Alibaba who has abandoned his former candidness in the face of pressure from China’s Communist Party.
In the Economist’s view, neither of these approaches work. Instead, business leaders ought to take a stance on political issues when they have a direct relevance to their company’s business interests. This could include advocating for the open, democratic societies that enable businesses to thrive in the long term.
The editorial team believes that the Economist’s conclusions do not go far enough: companies should not only enter the public realm when their business interests are directly concerned but with a broader view to strengthening democracy and societal institutions.