Corporate social counterpositioning: How attributes of social issues influence competitive response

Research Summary: Whilst existing research generally assumes corporate social responsibility (CSR) is seen as universally positive, firms increasingly adopt practices, and take stands, on highly polarizing social issues (e.g., gun-control, LGBTQ rights, abortion). To better understand this phenomenon, we develop a theory about when firms will emulate, ignore, or oppose each other's CSR efforts, based on attributes of the underlying social issue (its salience and polarization), the level of market competition, and the substantiveness of CSR. Our theory predicts several distinct equilibrium outcomes, including the potential for social counter-positioning, whereby rival firms take advantage of socio-political polarization to horizontally differentiate by taking opposing stances on a polarizing issue. Counterpositioning is more likely when salience is high, but agreement is low, when markets are competitive, and when CSR is largely symbolic. Managerial Summary: Firms increasingly find themselves drawn, willingly or not, to taking stances on a controversial social issue (e.g., gun rights, abortion), though doing so risks alienating (some) stakeholders. In this paper, we develop a theory of why, when, and how firms should take a stance on a polarizing issue. We argue that firms profit from doing so when (1) the issue is salient, (2) markets are competitive, and (3) the actions are mostly symbolic. We also show that taking a stance on polarizing issues creates opportunities for the firms' competitors to counter their ideological positioning, strengthening weaker rivals in the process. Thus, in competitive markets, taking clear stances on polarizing, salient issues can segment the market, increasing the profits of all firms, and, potentially, intensifying polarization.