Selective Patronage

Abstract

This essay examines corporate leadership’s potential to address socio-political issues through the historical lens of the Civil Rights Movement. Specifically, it analyzes the far-reaching legacy of Reverend Leon H. Sullivan, ranging from his selective patronage movement, longstanding service on the General Motors board of directors, and development of the Sullivan Principles to combat Apartheid in South Africa and promote fair labor practices globally. His use of various modes of economic coercion illustrates how corporate leadership can promote change within the corporation and society at-large. It also reveals some challenges and limitations that remain relevant today.

The contemporary environment presents more opportunities for corporate activism. The new wave, with its ESG emphasis, is influenced by the convergence of the public-private spheres; evolution of corporate social responsibility efforts; expansion of corporate political rights; information technology and social media amplification of activist demands; shareholder empowerment and related legal innovations; and shifts in the equity ownership landscape toward institutional investors. Despite these favorable conditions, challenges persist: the absence of democratic legitimacy; accountability gaps; a lack of representativeness and diversity among corporate leadership and ownership; political backlash from stakeholders; and economic rationales for acquiescing to the status quo.

Nonetheless, corporate political activism carries key advantages. It can sidestep legislative and regulatory gridlock and other types of government failure. Global operations extend its reach. Its appeal to mixed motives (e.g., economic, political, and moral) lend it flexibility and potentially greater buy-in. The legacy of Reverend Leon H. Sullivan demonstrates the prudent use of corporate power to influence society as well as the limitations of other advocacy venues. It illustrates and recognizes that corporate activism is not enough. Broad systemic change will require sustained, collaborative pressure from other institutional, social, and public actors.

Keywords: ESG, corporate social responsibility, shareholder, activism, civil rights, boards of directors, corporate governance, institutional investor, boycott, apartheid