On February 28th, consumers nationwide participated in what was termed an ‘economic blackout’, refraining from all spending to protest reductions in diversity, equity, and inclusion (DEI) initiatives. This sparked considerable backlash on social media from people across the political spectrum, presenting brands with a challenging question: Should companies remain silent on such divisive issues?

A study published in the Strategic Management Journal suggests that silence on prominent and contentious issues can still lead to backlash. The research, conducted by Marco Shaojun Qin, Xueming Luo, and Todd Schifeling of Temple University, together with independent researcher Yang Wang, focused on the impact of corporate silence during the Blackout Tuesday event on Instagram in 2020. They monitored the Twitter and Instagram accounts of 312 fashion industry companies for four weeks before and after the event. Their findings revealed that companies that did not participate saw a 33% slowdown in follower growth and a 12% decrease in likes.

Marco Shaojun Qin elaborated on the findings, stating that when an issue is highly salient to the public, the space for neutrality vanishes, and stakeholders are likely to interpret silence as a form of disdain. “The effects we discovered are substantial and imply that the classic notion that firms can be protected by staying silent on sociopolitical issues may no longer hold in today’s world,” Qin noted.

The study also highlighted that consumers in niche markets tend to give companies the benefit of the doubt, likely because of the smaller audience size and tighter alignment with the companies. Yang Wang explained, “Liberal stakeholders who support an issue will be more likely to presume that a silent niche firm has a liberal stance. Conversely, conservatives are more likely to presume that the firm has a conservative stance.”

In sectors with high participation, the study found that the downturn in followers and engagement nearly doubled for companies that remained silent. This was particularly pronounced among mass-market businesses, which suffered more significant declines in consumer support than their niche counterparts. Todd Schifeling emphasized the importance of visibility in shaping stakeholder responses. “Visibility is central to stakeholder responses,” he said. “It intensifies the more an industry engages on an issue—making corporate silence more obvious. It’s also key to protecting companies in smaller markets. They attract less attention, and the intention behind inaction by a niche company can be opaque.”

This research provides valuable insights into why many companies and CEOs increasingly engage in corporate activism on issues that may not directly relate to their business strategy, often triggering negative public responses. The case of Blackout Tuesday, organized by BLM leaders, shows how non-participation can be reasonably inferred as opposition. The findings are particularly relevant amid the current sociopolitical discourse in the United States; as polarization grows, consumers are less likely ever to assume corporate neutrality. Although it’s tempting for corporations to avoid engaging in controversial social issues, the research underscores that such silence comes with significant costs.

More information: Marco Shaojun Qin et al, When corporate silence is costly:Negative consumer responses to corporate silence on social issues, Strategic Management Journal. DOI: 10.1002/smj.3683

Journal information: Strategic Management Journal Provided by Strategic Management Society