MBA Research

Trend #34: Polarization

It’s no secret that political, social, and economic polarizations are growing at home and abroad. This month’s Action Brief highlights how polarization helps to define and shape the business world.

Business Implications

Individuals holding all conservative or all liberal political views have doubled in the last decade. Political polarization in the U.S. is increased by the loss of middle-wage jobs to foreign countries. In areas hit hard by these job losses, political views swing to the right or to the left depending on the reason for the job losses. In addition, growing minority and socially concerned populations help sway the election of politicians representing the far left or the far right based on the issue. Increasing partisan legislators can result in a slow-down of the legislative activity needed for businesses to operate and thrive. 

As job and economic polarization increase and the middle class shrinks, sales of goods are affected. While high-end retailers are seeing sales surge, many retailers geared toward the middle class are struggling to stay open. Retail establishments with actual stores are also closing because of the trend to buy items on-line. The same trend is playing out in the restaurant industry with higher end restaurants thriving, while foot traffic at mid-tier establishments has decreased. Businesses in every retail sector are reevaluating their markets based on economic polarization.

Political and economic polarizations in other countries also affect American business operations overseas. Risks can include potential take-over by a hostile government, financial and economic insecurity of consumers, potential repatriation of earnings, security of workers and consumers and even obstruction of normal day-to-day business operations.

Americans are also more polarized around social issues. Businesses are increasingly willing to take a stand on these topics even at the risk of alienating some customers. LGBTQ issues are currently front and center. Target announced last month that it would allow staff and customers to choose restrooms and fitting rooms consistent with their gender identities. While this move increased the notion of Target as a partner in social justice for some people, others used the stance as a reason to boycott Target.

Before taking positions that may disaffect some customers, companies should consider what-if scenarios to lessen the unanticipated fallout to their brand and bottom line. Social media can escalate polarizing issues in a matter of hours. So, businesses should pay attention to feedback, but not react too quickly as sentiments on social media can quickly shift.

Implications for Students

Students can learn about different types of polarization by studying issues and case examples that affect businesses today such as  climate change, trade agreements, political leaning of press and media,healthcare reform, and same-sex marriage. Studying how and why these issues can be divisive and how they impact businesses differently will help students see that the outcomes of polarization are hard to predict up front. A good case example is found in this article about Old Navy’s recent advertisement featuring an interracial couple:

Helping students make the connection between common behaviors that can create polarization on a personal level (e.g., viewing opposing opinions as threats) and a system-wide level, can be beneficial. Asking them to identify social media posts made by themselves or others that are or could be polarizing is a good way to emphasize the power of one person to be either a builder of bridges or walls.  Students should be reminded that regardless of their views on a particular issue, they can still treat those with differing views with respect and dignity. They can foster understanding by communicating rationally and debating or protesting the issues without violence.