A study of S&P 500 companies found that a chief executive’s political affiliation was associated with whether a company’s competitive actions followed industry patterns or took a different direction. The research was conducted by Krishnan Nair and Eric Y. Lee, assistant professors in the Department of Management at Texas A&M’s Mays Business School.
The researchers examined firms from 2010 through 2019 and compared each company’s combination of competitive activities with those of other businesses in the same industry. The actions included acquisitions, alliances, entering new markets, introducing products, cutting prices, pursuing legal action, opening facilities and marketing.
Companies led by Republican CEOs generally used strategies that were more similar to those of industry peers. The study found that these CEOs conformed about 18% more than Democratic CEOs in the competitive actions they pursued. However, the pattern also varied according to the political makeup of each industry.
Republican CEOs showed more conformity in industries with relatively fewer Democratic CEOs, while Democratic CEOs became more conforming as the share of Democratic CEOs increased.
To identify CEO political affiliation, the researchers reviewed publicly disclosed contributions to Democratic and Republican candidates and party committees. They used RavenPack data to track companies’ competitive activities reported in the media. The study, published in the Academy of Management Journal, considered political identity as well as ideology as possible factors in corporate strategy.
