Political Polarization Worsens in Corporate America: New Study

Executive teams of large U.S. corporations are becoming increasingly partisan, resulting in “a political polarization of corporate America,” according to a new study from the National Bureau of Economic Research. This polarization has implications for the values of firms as well, the study found.

While workplace diversity in recent years has received a lot of attention, particularly in relation to gender and color, political diversity is clearly moving in the opposite direction.

Historically, the workplace has been more politically diverse, offering opportunity for cross-party relationships compared to other settings, such as the family, neighborhood, or voluntary organizations.

But it’s no longer the case at the corporate leadership level, according to researchers from Boston College, University of Chicago, and Cornell University. They conducted their study by analyzing voter registration records for senior executives at S&P 1500 companies between 2008 and 2020.

In contrast to previous studies, the new study argues that voter registration data, rather than political contributions, is more reliable for inferring political preferences of executives.

Partisanship is defined by the researchers as the extent to which a single political party dominates political views within the same executive team. And they found that over the years, C-suites of public U.S. firms are increasingly dominated by one political party.

“More specifically, our measure of partisanship is the probability that two randomly drawn executives are affiliated with the same political party. We find a 7.7-percentage-point increase in the partisanship of executive teams over our sample period,” they wrote in a paper.

The rise in partisanship is mostly a result of executives’ increasing tendency to associate with those who share their political beliefs, according to the authors.

“Our results show executives who share the same political party are 34% more likely to work in the same firm,” they wrote.

Most Business Leaders Vote Republican

The study