Damned If You Do and Damned If You Don’t: A Theoretical Examination and Extension of CEO Activism

Abstract

The traditional responsibility of a CEO—prioritizing firm performance and shareholder returns—has become increasingly intertwined with expectations to actively engage with sociopolitical issues. These competing expectations have created a scenario where engaging, not engaging, or incorrectly engaging in CEO activism all carry the risk of alienating at least some stakeholders and undermining CEO and firm reputation and performance. Further, extant research has primarily focused on whether CEOs engage in activism rather than disentangling the heterogeneous ways by which they do so. We address these shortcomings and augment existing theory by comprehensively considering distinct CEO activism engagement strategies, their outcomes, and the moderators influencing relations between the two. Moreover, we illuminate the highly heterogeneous nature of CEO activism to better capture the phenomenon’s complexity. We first introduce the CEO Activism Decision Matrix—a typology of four unique activism engagement strategies based on the behavioral dimensions of CEO Talk (leveraging communicative power) and CEO Action (leveraging economic power), successfully addressing the heterogeneity in activism behaviors that existing theory has overlooked. We then present an integrative conceptual model that outlines the short- and long-term consequences and relevant moderators of CEO activism engagement and offer detailed recommendations for future research, including methodological guidance on operationalizing variables and designing research that can infer causality. Altogether, we demonstrate that although CEOs may find themselves “damned if you do, and damned if you don’t” engage in activism, they also have the potential to drive meaningful career, firm, and societal change based on how they choose to engage.