Do Consumers Really Value Corporate Social Advocacy?

When dozens of major companies announced rollbacks to their diversity, equity, and inclusion (DEI) initiatives earlier this year, consumers responded with outright brand boycotts. In an era of increased private sector engagement with social issues, understanding where top companies stand has become a priority for the general public.

For firms, taking a stand on hot-button social issues has become more than a public relations puzzle—it may be integral to developing an effective modern business strategy. Enter the era of socially-conscious consumerism.

Yet, the extent to which individual consumers monetarily value corporate social advocacy remains unclear. This relationship is the core focus of a new research project led by economist Jacob Conway, Assistant Professor of Economics at the University of Chicago Booth School of Business.

Conway harnessed several analysis tools to capture how consumers’ personal values shape their purchasing decisions. He and his team sifted through thousands of trending search engine results and news articles to identify firm names and keywords tied to social views—think reproductive rights, gun control, or LGBTQ+ issues.

The search pointed to more than one hundred prominent events during which firms took salient stances on controversial social issues. Conway focused on these flashpoints as opportunities for deeper analysis of consumer reactions. At moments of heightened social engagement, how firms respond—making public statements, engaging in debate, or keeping silent—might critically define their financial well-being.

Training AI to Read Between the Lines

In charged moments where companies chose to place their values in public view, people responded by using their purchasing power to express disdain or support. But who is most likely to change their spending habits in these moments? Getting a grasp on which communities most resonate with corporate advocacy efforts became a second focal point of Conway’s research.

The project first developed a machine learning (ML) model designed to predict social values based on spending habits and demographics. Donation records—to PACs, charitable organizations, and other non-profits —were used as a proxy for an individual’s values.

Donor data was fed to the model to identify patterns and make predictions about individuals’ social values. Once fully trained, the model was applied to a larger group of people who had not made donations. Then, Conway validated the predictions by looking at how these non-donors changed their purchasing behavior after companies took public stances.

Being able to link social views to their effects on marketplace behavior helps paint a clearer picture of perspectives on controversial issues nationwide. It also renders abstract concepts like values more tangible by tying them to concrete data.

That’s why Conway also trained an ML model to predict consumption at these firms had they not taken a social stand, using data from similar companies that didn’t take such stances to make these predictions. Comparing actual consumption to this “no-stance” counterfactual identified the change caused by the firms’ stances, both overall and for different groups of consumers.

“When surveyed, people claim to care about the social views they associate with specific companies, yet there is little hard data on how company and personal values lead to behavior change when making purchases,” Conway explained. His analysis found that consumers whose values aligned with the firms’ stances increased their spending, while those opposed avoided purchasing from these firms.

Is it merely the most socially-engaged subset of the population whose spending aligns with their moral compass?

Crucially, this wasn’t just true among people already inclined to support social causes with donations. In fact, the bulk of the consumption shifts came from non-donors—ordinary shoppers who don’t signal their values through activism, but who nonetheless express them in what they choose to buy.

This upends a common assumption: that only vocal activists shape corporate behavior. Instead, even quiet consumers—those who might never fill out a survey or attend a rally—are quietly but powerfully voting with their wallets.

A Paradigm Shift: Consumer Power

For firms, the question of whether, when, and how to take a stance signals a more existential shift in priorities. Beyond individual companies, this research offers a broader insight into modern capitalism. The traditional Friedman doctrine says a firm’s only responsibility is to maximize shareholder value.

In contrast, business leaders have more recently expressed a growing belief in “stakeholder capitalism”—that companies must consider the needs and values of their employees, communities, and especially, consumers. Conway’s analysis connects these schools of thought, as it shows that the extent to which firms align their values with those of their consumers can affect the bottom line.

The same paradigm shift that has facilitated the participation of private companies in public social discourses has also made them more beholden to the demands of an increasingly engaged public. Conway hopes the research can spark a new kind of conversation between firms and the public. “Consumers may not vote on shareholder proposals,” he said, “but they vote every day with their dollars. And those decisions shape what kinds of behaviors firms find profitable.”

And it turns out, firms that chose to take a stand on leading social issues have, on average, increased their revenues by doing so. Perhaps social advocacy pays, after all.

Put Your Money Where Your Mouth Is

Building on this work, future research could explore how specific consumer groups—across age, class, or region—react to corporate engagement with public issues. Another angle worth investigating is how the broader regulatory environment, corporate governance structures, and internal policies shape how firms publicly express their values.

An empowering takeaway for now? Individual purchases matter. Each transaction sends a message. When companies listen, they’re not just following the money—they’re following their customers’ values.

Read the full research publication here. Last updated October 2024.