The Washington PostDemocracy Dies in Darkness

Top business executives have gotten even more Republican, study finds

From 2008 to 2020, C-suites at the country’s biggest companies grew more politically polarized, according to new research

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U.S. boardrooms have become more Republican and more partisan over the past decade, according to a new study.

The study, published last month in the National Bureau of Economic Research, drew on voter registration data on more than 3,700 executives from nearly a thousand S&P 1500 firms. And it comes as corporations are under pressure to take stands on politically charged issues such as voting rights, gun violence and abortion.

In 2020, the share of Republican executives was 68 percent, up from 63 in 2008 (but down from 75 percent in 2016.)

It’s not new that boardrooms are predominantly Republican, said Elisabeth Kempf, associate professor of finance at Harvard Business School and one of the study’s authors. But what is more revealing is the 8 percent increase in political homogeneity, Kempf said, “more clustering of Democrats with Democrats and more clustering of Republicans with Republicans.”

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The trend suggests that “the growing tendency of U.S. individuals to socialize and form relationships and friendships with politically like-minded individuals extends also to the highest-level decision-makers in the workplace,” the study states.

The finding that boardrooms have grown more conservative flies in stark contrast to cries of “woke capitalism” by some Republicans in recent years, who have accused certain American corporations of pandering to liberal consumers and foisting social justice agendas on the public. In December, Florida Gov. Ron DeSantis (R) introduced the Stop W.O.K.E. Act to target “corporate wokeness” in the workplace, and in May Sen. Marco Rubio (R-Fla.) introduced the “No Tax Breaks for Radical Corporate Activism Act” to prevent employers from deducting expenses for medical travel for abortion and gender-affirming care.

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It also reflects a generational divide over consumer values and expectations. While a sense of shared values has become increasingly important to younger consumers, who want companies to engage on social issues that have traditionally gone beyond the scope of C-suite deliberations, older generations tend to think it’s “inappropriate” for businesses to weigh in, according to M.K. Chin, associate professor of management at Indiana University. Chin, who was not involved in the study, has spent years studying the intersection of political ideology and corporate leadership.

“CEOs are facing tougher decision-making situations,” Chin said. “In the past, they were kind of exempt for not taking any actions on these social issues. Now there are different expectations from different generations, different pressures from different areas.”

Already companies’ stances on political issues are leading them into uncharted territory, with businesses such as Netflix, Procter & Gamble and Target announcing travel reimbursements for employees seeking abortion in the wake of the Supreme Court ruling striking down Roe v. Wade, taking on legal and financial risks in the process.

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The researchers defined partisanship as “the degree to which political views within the same executive team are dominated by a single party.” They measured it through the probability that two randomly drawn executives shared a political affiliation.

The most likely explanation for the rise in political partisanship is that “executives seem to match based on political affiliation,” said Margarita Tsoutsoura, associate professor of finance at Washington University in St. Louis and another author. “A secondary reason is that the share of Republican executives increases, so executives become more homogeneous.”

Part of the divide is geographic, researchers noted, with executives in Texas and Ohio becoming more Republican, and executives in California and New York becoming more Democratic.

The sense of growing division is not unique to boardrooms: a March analysis from the Pew Research Center found that Democrats and Republicans are “farther apart ideologically today than at any time in the past 50 years.” But the spike in political polarization among executives was more than double that of local registered voters in the same period, the study’s authors observed.

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“Consumers have increasing expectations for companies to take a side,” Tsoutsoura said. “This could be because with the growing political partisanship, the political ideology of people seems to play a bigger role on how they think about their identity.”

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Although greater political alignment in the boardroom could be an asset to organizations in terms of more efficient communication and execution of company strategies, the effect will probably limit the perspectives of corporate decision-makers, Chin said.

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“Groupthink is going to happen more easily,” Chin said. “They could suffer from a narrow scope of scanning environment, a narrow scope of new ideas and strategies.”

It can also weigh on corporate performances. The researchers found that executives in the political minority were more likely to leave, and that “departures of executives who are misaligned with the political views of the team’s majority are more costly for shareholders than departures of politically aligned executives.”

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