CEO Activism and Consumer Behavior: Ideology or Signaling?

Abstract

Firms and executives taking stances on controversial issues have been found to affect consumer behavior. This "political consumerism" might be motivated by ideology or a desire to signal to peers. We run an experiment on 1,198 consumers to study how ideology and signaling affect responses to CEO activism. Participants are randomly shown either generic product information or the information plus a CEO statement supporting gun rights. They then choose whether to receive the product or cash, with half assigned to a condition in which their choice is observable to someone they know. We find that CEO activism reduces demand among people who disagree with the CEO regardless of whether purchases are observable. Our results have implications for firms using ideological differences to differentiate their products.

Keywords: political consumerism, CEO activism, positioning, consumer ideology, signaling

JEL Classification: D12, M31, M14