Corporate Political Advocacy and Sales: Evidence from a Quasi-Experiment

Speaker: 

LU Shijie, an Assistant Professor of Marketing in the Bauer College of Business, University of Houston. He received a Ph.D. in business administration from the University of Southern California. His research focuses on online advertising, user-generated content, competitive strategy, and piracy, and has appeared in Marketing Science, Management Science, Journal of Marketing, and Journal of Consumer Research. He currently serves on the editorial review board of the Journal of Marketing Research, and will serve on the editorial review board of the Marketing Science starting in 2022.

Venue: Tencent meeting, meeting ID: 875 532 492

Abstract:

We use data from a large U.S.-based specialty retail brand and a similar control brand before and after an involuntary revelation of the focal brand’s political position to study if and how corporate political advocacy (CPA) affects sales. We find that the total sales dollar amount and quantity of the focal brand increase by 17.1% and 12.7% after the event relative to the control brand. Further, sales increase more in places where the local political preference aligns more with the focal brand’s position. We also find that the change in the customer base rather than basket size drives the effect of CPA, suggesting an informative function of CPA by communicating the brand’s political ideology to potential consumers who share a similar ideology. Lastly, only changes in the sales of conspicuous rather than inconspicuous products vary by the local political preference. This observation is consistent with consumers’ use of consumption as a signaling device to communicate their political ideologies to others.