By Oliver Hahl
August 16, 2017

President Donald Trump’s reaction to the violence in Charlottesville highlights the risk that CEOs and their businesses take by continuing to associate with the president. Consider Wednesday’s disbanding of the president’s two CEO councils—the Strategic and Policy Forum and American Manufacturing Council—organizations that allowed business leaders to interact with the executive branch on economic growth. Even if the original intent of the councils was apolitical, the president’s continued reliance on countercultural expressions resulted in controversy, which in turn imperiled the mission of the councils and threatened the reputations of their members, ultimately leading to the councils’ dissolution.

If this is why the councils disbanded, how will it affect the likelihood of CEOs choosing to associate with Trump moving forward?

Even before joining Trump’s initiatives, business leaders knew the president was willing to violate established cultural norms. Throughout his candidacy and presidency, Trump’s countercultural stances have drawn the ire of much of the political and cultural establishment. In recent research entitled, “The Authentic Appeal of the Lying Demagogue,” colleagues Ezra Zuckerman, Minjae Kim, and I show that this strategy, fueled with demagoguery and even lies at times, engenders support among those who have previously felt left out of government and now sense that they finally have an authentic champion. Our research shows that such actions are perceived as a symbolic gesture in opposition to an unhearing establishment. Counter-normative expressions serve Trump well and because of that, he will rely on them when seeking to bolster support.

Up until now members of the business councils could tolerate Trump’s behavior and stay out of political controversy. They tried to turn a blind eye toward the events in Charlottesville, as they seemed unrelated to American jobs or the economy. But they could not turn a blind eye to Trump’s reaction. The president did not simply flout PC culture norms this time around. His unwillingness to effectively denounce white supremacy groups not only emboldened organizations like the re-emerging Ku Klux Klan and neo-Nazis, it violated the premise that such groups are enemies to the state.

The ultimate disbanding of the councils shows the risk the CEOs saw in continuing to associate with Trump. They do not want to be complicit with an agenda to normalize (if not support) such hate groups. Any CEOs who continue to work with Trump can now be more easily contrasted with those who have departed in defiance. Pressure from consumer boycotts, shareholder reaction, or even employee dissatisfaction can follow as a result.

Although it is clear that the meaning of associating with Trump has changed in the last few days, it is not inevitable that this meaning will stick to the CEOs should they decide to align themselves with him in the future. Business leaders will henceforth need to explain their association as either a positive for shareholders or as a way to positively influence the president. No matter the justifications put forth, these CEOs would be putting themselves in a precarious position, as Trump’s strategy to implicitly support white nationalist groups is not likely to end anytime soon.

CEOs must weigh their ability to manage the public’s impression of them and their companies against Trump’s reliance on increasingly controversial stances. As long as the stench of white supremacy continues to linger with this administration, they will face a significant risk interacting with the White House going forward.

Oliver Hahl is an assistant professor of organizational theory and strategy at the Tepper School of Business at Carnegie Mellon University.

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