According to recent studies and polls like the Trafalgar poll, ‘Go Woke, Go Broke’ might become more than a catchphrase, as almost 80% of people across all political spectrums indicated they were more likely to conduct business with an organization that maintained its political neutrality.
Growing evidence indicates that businesses supporting awakened capitalism typically alienate customers, scare away potential employees, and lose money for investors as far-left ideas become more entrenched in American society.
The economic effects of woke capitalism will take decades to fully assess, as with other cultural revolutions, but firms and investors that rely on quarterly growth and profits cannot wait that long. The financial information for businesses that “go woke” is, regrettably, patchy and primarily anecdotal.
However, some data suggests that businesses need to shake off their woke malaise.
The fatal problem of woke capitalism is that crucial decisions should not be based on rigorous scientific business management standards, but rather on its ideologically motivated ideals.
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Consider a Trafalgar poll of more than 1,000 probable voters that was performed in February 2023. Almost 80% of people across all political spectrums indicated they were more likely to conduct business with an organization that maintained its political neutrality or accepted the diversity of its employees’ and clients’ opinions.
The majority of people, regardless of party affiliation, including 77 percent of Democrats, 83 percent of Republicans, and 77 percent of independents, want all viewpoints to be heard. Despite the fact that support for corporate political neutrality increases with age, almost 70% of young people between the ages of 25 and 34 and 73% of those between the ages of 35 and 44 favor businesses that avoid politics and back opposing viewpoints.
Woke Capitalism Hurts Business
Many American firms are becoming woke in order to participate in the polarizing political and social debate, despite the public’s dislike of woke capitalism.
Dave Seminara, a journalist and opinion contributor to the Wall Street Journal, maintains the most complete and current list of awakened businesses. He started assembling it in April 2021, when a broad coalition of businesses protested Georgia’s election integrity law.
Since then, as businesses have adopted progressive stances on a wide range of divisive subjects, including abortion, sexuality, parental rights in education, and others, the list has increased dramatically.
In spite of the fact that family households spend significantly more money than single households, it seems strange that so many corporations oppose these grassroots, family-values causes. The following generation of potential customers is raised by families.
Serial entrepreneur and RedBalloon creator Andrew Crapuchettes remarked, “Corporations are taking their eye off the ball and ignoring what’s best for business.” RedBalloon is a job platform that links companies and job seekers looking for a place where they belong.
“Most diaper companies support Planned Parenthood. Regardless of where you stand on the abortion issue, if you’re a diaper company, you want more babies, not fewer babies. Supporting Planned Parenthood is bad for business,” he said.
Politically Neutral Companies Perform Best
A study by 2nd Vote Value Investments on large-cap and mid-cap companies comparing their level of participation in social and political problems to their return on investment provides additional support for the idea that being politically and socially aware hurts corporate performance.
The group evaluated businesses on a scale from most liberal to most conservative on six issues, including support for a secure civil society, the environment, education, abortion rights, Second Amendment rights, and other fundamental liberties.
According to the data, companies that were politically and socially apolitical outperformed the S&P 500 and the Russell 1000 index, which both experienced declines from the second half of 2021 to the first quarter of 2023, falling by 1.8 percent and 3.2 percent respectively. On the other hand, neutral companies saw a gain of 2.9% throughout that time.
In a 10-year review of over 200 companies that remained neutral during that time, the group discovered that neutral company portfolios provided a much higher return of 334 percent, as opposed to the market’s total gain of 230 percent.
According to Mike Edleson and Andy Puzder, “proponents of so-called woke capitalism claim that companies can do ‘well’ financially by doing ‘good’ politically,” the study disproves this assertion. The findings show that, as common sense would predict, businesses that prioritize earnings perform better than those that don’t.
CEOs and Boards Abdicate Responsibility
In order to address the topic of “Why Do Companies Go Woke?” (pdf below) Nicolai Foss of the Copenhagen Business School and Peter Klein of Baylor University decided that more thorough academic research on woke capitalism was necessary.
They identified awakened corporations as those devoted to socially liberal issues with an emphasis on the so-called diversity, equity, and inclusion (DEI) programs that sprang from the Frankfurt School and French postmodernist thought. These ideologies give personal experience more weight than factual information.
“There is little evidence of systematic support for woke ideas among executives and the population at large, and going woke does not appear to improve company performance,” they wrote. “If corporate wokeness is simply a reflection of a rapid change in social and cultural mores, then why are firms embracing it so quickly, while they often adapt slowly to other exogenous shocks?”
Corporate decision-making is often guided by thorough studies of prospective costs and benefits, but in the case of awakened capitalism, companies have hopped on the bandwagon without giving it much thought.
“Traditionally, you have a corporate policy set by the executive team then middle-managers are tasked to execute the policies that are handed down,” Klein said in an interview. “But we found woke policies are originating from a cadre of middle-management ideologues. They are a minority within the organization but have outsized power and influence.”
Senior executives, he claimed, acting out of fear of reaction, had handed the reigns to true believers despite not having received any formal training in woke ideals. Going woke could result in a short-term benefit but at a huge long-term cost to the business.
They run the danger of alienating clients as well as potential workers who want to work without having to worry about their political, religious, or skin color preferences. Millions of job seekers have been drawn to RedBalloon by this woke alienation because it provides independence from oppressive woke corporate cultures.
“Non-woke employees are living and operating in a hostile work environment. They’re not free to speak up. They’re not free to express opinions. That can’t be good for productivity or employee well-being. Companies need to build cultures where everybody feels welcome, but they’re doing exactly the opposite when they go woke,” Klein shared.
And he thinks that losing invention and creativity will be the biggest long-term cost that businesses will incur as a result of being more awakened.
“The loss of viewpoint diversity is an impediment to creativity. There is a lifecycle argument here. Once companies have a dominant market share — after they’ve created and innovated — where will the next new idea come from in corporate cultures where everyone is forced to think the same way? Is Disney more creative and innovative now than in Walt’s day? No. Disney keeps following the same old stale formula,” Klein said.
ESG Policies Aren’t the Same as DEI
Going woke is different from environmental, social, and governance (ESG) strategies that are in line with good corporate citizenship, governance, and ethical behavior, Klein swiftly emphasized. But leftists are not the only ones who believe that.
“When in a position of running a company and employing people, you have a great responsibility. Companies have to be good citizens and stewards of the planet. They must operate ethically. These ideas, along with diversity, equity, and inclusion (DEI), are actually conservative Christian principles,” RedBallon’s Crapuchettes observed.
It’s Not Too Late to Reverse Woke Capitalism
The good news is that corporate America has recently experienced woke capitalism. A driving force in business since 2015, Ross Douthat, a New York Times columnist, introduced the idea of “woke capitalism” into the language.
However, businesses still have the option to turn around and give their stakeholders’ demands and beliefs priority. The work that employees complete, not their skin tone, race, or background, should be praised. Consumers demand improved goods and services at reasonable rates, and shareholders want a return on their investments.
Going woke causes businesses to fail, according to early indications. Before your organization becomes yet another statistic supporting the go-woke-go-broke axiom, they ought to turn around right now.
The article shows the most sought-after entry-level jobs in 2023 using data from Indeed.com.