Why Do Companies Go Woke?

WHY DO COMPANIES GO WOKE?
Nicolai J. Foss
Copenhagen Business School
[email protected]
Peter G. Klein
Baylor University
[email protected]
November 23, 2022
We thank the associate editor and reviewers and seminar audiences at the Copenhagen Business
School, Norwegian School of Economics, and Mises Institute for helpful comments on earlier
versions.
Electronic copy available at: https://ssrn.com/abstract=4285680

WHY DO COMPANIES GO WOKE?
Abstract: “Woke” companies are those that are committed to socially progressive causes, with a
particular focus on diversity, equity, and inclusion as these terms are understood through the lens
of critical theory. 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.
Why, then are so many firms embracing woke policies and attitudes? We suggest that going
woke is an emergent strategy that is largely shaped by middle managers rather than owners, top
managers, or employees. We build on theories from agency theory, institutional theory, and
intra-organizational ecology to argue that wokeness arises from middle managers and support
personnel using their delegated responsibility and specialist status to engage in woke internal
advocacy, which may increase their influence and job security. Broader social and cultural trends
tend to reinforce this process. We discuss implications for organizational behavior and
performance including perceived corporate hypocrisy (“woke-washing”), the potential loss of
creativity from restricting viewpoint diversity, and the need for companies to keep up with a
constantly changing cultural landscape.
Keywords: DEI, diversity, social responsibility, strategic change, organizational structure

INTRODUCTION
On August 27, 2016, NFL.com reporter Steve Wyche broke the story that San Francisco 49ers
quarterback Colin Kaepernick had kneeled during the playing of the U.S. national anthem in a
preseason game against the Green Bay Packers (Walker, 2017). Kaepernick’s example, meant to
protest alleged police brutality, caught on as other NFL players and professional athletes in other
sports engaged in this silent protest. A 2018 Nike ad featured Kaepernick with the text, “Believe
in something. Even if it means sacrificing everything.” 1
New York Times columnist Ross Douthat coined the term “woke capitalism” to describe
Nike’s response to Kaepernick’s activism (Douthat, 2018). Woke capitalism describes a system
in which large corporations (and supporting institutions such as government agencies, the
military, nonprofits, and the like) embrace progressive, politically left-wing practices, language,
and imagery (see also Wright, 2022). A “woke company” or “woke corporation” is a company
that supports “woke” ideologies and causes not only through internal practices—prioritizing
Diversity, Equality, and Inclusion (DEI) in hiring and promotion, sourcing from sustainable or
diverse suppliers, and donating to socially progressive causes—but also in branding, marketing,
and nonmarket strategies.
Today, woke causes enjoy support from large swaths of the business community (with a
bias towards large firms and firms in tech, entertainment, and media). For example, in July 2020
nearly a thousand companies including Verizon, Coca-Cola, Unilever, Lego, Microsoft, CVS,
Target, and Chipotle pulled their ads from Facebook to protest the social network’s refusal to
1
Nike followed up by launching a shoe featuring the (allegedly) first version of the US flag, the so-called Betsy
Ross; the shoe was pulled from the market after Kaepernick informed Nike he associated the flag with slavery. The
decision gave rise to heated discussion among the public as well as the business community and policy circles,
reflecting a deep divide on issues related to hot-button issues such as race and power. Some consumers burned their
Nikes in protest, but the company’s revenues increased.

remove a post by then-President Donald Trump. Facebook said the post (“When the looting
starts, the shooting starts”) did not violate its community guidelines. That same year, most major
corporations (as well as universities, professional sports leagues, and other institutions)
announced support for the Black Lives Matter movement. Every June, dozens of Fortune 500
companies change their social media logos to incorporate a version of the Pride flag—a practice
so ubiquitous it gives rise to complaints of “rainbow washing” or “pink washing,” a
performative, insincere embrace of LGBTQ+ causes (Vredenburg et al., 2020; Zheng, 2021;
Ritson, 2022).
Management scholarship has not yet focused on the intellectual origins of the woke
movement, how it differs from previous attempts at increasing diversity, and why so many
companies are embracing wokeness. First, as we discuss below, while the phenomenon of woke
corporations 2 shares some features with previous movements by firms to achieve broader social
aims such as the use of affirmative action in hiring and promotion (Dobbin, 2009), the embrace
of corporate social responsibility (Carroll, 2008), and the adoption of stakeholder governance
(Friedman & Miles, 2002), the woke movement has different historical and intellectual
foundations than those earlier practices. Ultimately, woke ideas and behaviors are grounded in
“critical theory” (Lindsay & Pluckrose, 2020; Delgado & Stefancic, 2021), the philosophical
movement that emerged from the Frankfurt School of philosophy and from French postmodernist
thinking. In its current incarnation, critical theory prioritizes subjective personal experience over
2
We talk about “woke corporations” and “woke companies” rather than “woke capitalism” because the former is
more precise and our unit of analysis is the business firm. One could speak of “woke capitalism” in the sense of a
woke commercial ecosystem which would include all the various actors that meet the demand for knowledge about
socially progressive causes in the business community and help turn that knowledge into company action (e.g., in
terms of hiring and promotion actions, advertising and so on). Thus, “anti-racist” authors and consultants such as
Robin DiAngelo and Ibram X. Kendi, who have become main flagbearers in the $8 billion per year corporate
diversity training industry (see Bohnet, 2017), can also be considered part of woke capitalism. Analyzing the
complete ecosystem is beyond the aims of this paper.

objective data, emphases group identity over individual characteristics, sees most social relations
through an oppressor-victim lens, and conceptualizes racism and sexism in terms of structural
inequalities rather than personal prejudice. 3
Second, the rapid adoption of wokeness over the last decade warrants investigation. If
corporate wokeness is simply a reflection of a rapid change in social and cultural mores, then
why are firms embracing it so quickly, when they often adapt slowly to (other) exogenous shocks
(Rumelt, 1995; Sydow et al., 2009; Klein et al., 2019)? Why is wokeness more heavily
concentrated in industries like entertainment, technology, and retail—and are woke business
practices mainly a reflection of changing values in society or is wokeness helping to drive social
and cultural change? From a corporate strategy perspective, one can ask if embracing woke
causes improves financial performance. If woke corporations are well placed to seize new
business opportunities, if woke signaling attracts high-valued employees, or if woke DEI policies
improve the internal workings of the corporation, then the embrace of woke ideas and practices
is simply another potentially productivity- or efficiency-enhancing phenomenon such as
outsourcing, internationalization, employee empowerment, the lean startup, the adoption of AI,
and many others. More generally, while the woke corporation is attracting increasing interest
among management scholars and other social scientists (e.g., Fan, 2019; Foss & Klein, 2022;
Rhodes, 2021; Rizzi, 2021; Sailofsky, 2021; Vredenburg et al., 2020; Warren, 2022; Wright,
2022), a general framework for analyzing the causes and consequences of corporate wokeness
has yet to appear.
3
Warren (2022) suggests the more neutral term “Corporate Social Initiatives,” arguing that “woke” has a negative
(stigmatizing) connotation. While “woke” is sometimes used ironically to criticize these initiatives, it has become
the standard label in conventional in popular discourse. Proponents of “woke” ideas often happily embrace the label
(e.g., Hunt, 2000), which, of course, also has a prehistory in the civil rights movements. We use “woke” as a neutral
term to describe the phenomenon described in the paper.

We argue that internal organization is a key factor for understanding why companies are
going woke. There is some work on the role of top managers in adopting woke stances (Asare,
2019; Just Capital, 2021; Kaufman, 2021). However, initiatives may also emerge at lower levels
in the organization (cf. Woolridge & Floyd, 1990; Burgelman, 1994), such as the HR
department, other high- and lower-level middle-managers, and among employees in various
functions, including support functions such as marketing and communications. Thus, going woke
can also be an emergent strategy that is largely shaped by lower-level initiative (Burgelman,
1983; Mintzberg & Waters, 1985).
We suggest that middle managers have played a critical role in promoting corporate
wokeness because they have been particularly likely to possess the ability, opportunity, and
motivation to do so. First, executives may delegate initiative related to woke causes to middle
managers, not only because executives usually lack expertise, but also as a form of “insurance”
against claims they are insufficiently committed to wokeness. Second, middle-managers may
push woke agendas that increase their authority or span of control (Pfeffer & Fong, 2005), for
example by positioning DEI initiatives as natural HR functions that are essential to managing a
division or a function. Third, middle managers may also call out “woke-washing” (i.e., claims
that the firm is supporting progressive causes externally but not taking them seriously internally),
thus contributing to the creation of a woke internal culture, which again may be beneficial for
instrumental as well as normative reasons, but also bolsters the internal power of these managers.
Underlying our claims is a basic framework that combines intra-organizational ecology
(March, 1994; Løvas & Ghoshal, 2000),agency theory (Jensen & Meckling, 1992; Aghion &
Tirole, 1997), and institutional theory (Scott, 1995): Variation (i.e., new woke initiatives) is
created at lower levels of the organization by middle managers and employees, partly for

instrumental reasons (e.g., to expand the actor’s influence or status) and partly for normative
reasons (i.e., a genuine commitment to the ideas). Top managers are likely to rubber-stamp such
bottom-up proposals (Aghion & Tirole, 1997), because they lack expertise, to reduce their
employment risk in increasingly competitive managerial labor markets, and because they may
benefit from multiple measures of their job performance which may be a cover for managerial
moral hazard. We draw on institutional theory to argue that the sources of variation as well as the
criteria of selection in intra-organizational evolution are partly external to the organization and
that outside cultural forces may affect internal positions of power and influence. Thus, external
pressure for woke initiatives such as diversity programs is a complement to, not a substitute for,
internal advocacy.
GOING WOKE: INCIDENCE AND MOTIVES
Corporations have had “affirmative action” and similar programs to attract and retain employees
from underrepresented groups for several decades (Dobbin, 2009), building on the Civil Rights
movement of the 1950s and 1960s. The 1980s anti-apartheid movement garnered substantial
business support (Williamson, 2021). However, the explosion of Interest in DEI programs,
including “anti-racism” initiatives, is more recent. As noted above, DEI initiatives based on
woke intellectual ideas differ from previous affirmative action–type programs in that they
redefine concepts like racism and sexism to refer, not the preferences and actions of individuals,
but to “structural” features of society that cannot be fixed by punishing overtly racist or sexist
acts or by persuading people in power not to make racial or gendered distinctions. 4
4
A succinct example of this transformation is the Anti-Defamation League in 2020 changing its definition of racism
from “the belief that a particular race is superior or inferior to another, that a person’s social and moral traits are
predetermined by his or her inborn biological characteristics” to “the marginalization and/or oppression of people of
color based on a socially constructed racial hierarchy that privileges white people.”

The woke worldview is based on ideas from critical theory, an amalgam of the ideas of
the “Frankfurt school” associated with thinkers such as Theodor Adorno, Herbert Marcuse, and
Jürgen Habermas and mostly French post-modernist writers like Michel Foucault. The ideas of
these thinkers, all ultimately rooted in Marxism, were developed in a mostly US academic
context into Gender Theory, Critical Race Theory, intersectionality theory, and related
viewpoints that underlie wokeism as an intellectual movement (Wright, 2022). The main tenet of
this movement is the primacy of subjective, “lived experience” over logical argument and data, a
stance ultimately rooted in the epistemological position that all knowledge is positional (i.e.,
truth claims are assessed relative to the power and social position of the person making the
claim). In terms of explanation of social phenomena, wokeism puts the emphasis on group
characteristics and power conferred by social structures rather than individual behavior and
responsibility and sees most social relations in terms of a victim-oppressor dynamic. Like the
foundational thinkers in critical theory, wokeism is radically egalitarian and moralizing and
usually manifests itself politically as left-wing activism, calling for “deconstructing” established
beliefs and systems to bring about a new social order.
DEI informed by such ideas is thus more than an attempt to create a more diverse
workforce or a flatter pay structure inside companies, as was sought by the earlier affirmative
action movements. DEI initiatives seek to change how people interact, to reduce the power of
ostensibly privileged groups, to “center” the ideas and activities of marginalized groups, and so
on. This makes it part of the broader woke movement that supports radical, structural social and
economic change including reparations, breaking down traditional social structures, and even

replacing capitalism itself with some form of socialism. 5 Many DEI programs are directly
grounded in controversial philosophical foundations such as Critical Race Theory (Pluckrose &
Lindsay, 2021) although often defended in more anodyne terms about increasing the
participation of underrepresented groups (e.g., Smith, 2021).
How Many Companies Are Going Woke?
DEI activities are the most visible indicators of a firm’s commitment to woke ideas and
practices. Precise figures on corporate spending on DEI are unavailable but one widely circulated
estimate has US companies spending $9.3 billion on programs in 2022, projected to rise to $15.4
billion by 2026. 6 Rufo (2022) reports that every firm in the Fortune 100 has a formal DEI
program in place, illustrating the spread of such initiatives across industries and regions. Data
from LinkedIn Suggest a 71% increase in management roles related to diversity from 2017 to
2021 (Schifter, 2021). After the death of George Floyd in 2020, Walmart pledged $100 million
to establish a Center for Racial Equity while Google helped organize the Fifteen Percent Pledge
in which large retailers including Macy’s, Nordstrom, Crate and Barrel, Old Navy, and Ulta
promise to source 15% of their products from Black-owned suppliers. Most of the major US tech
companies have pledged millions of dollars to racial justice charities such as Black Lives Matter.
In April 2021 more than 100 global companies signed an open letter in the Washington Post,
organized by the Black Economic Alliance, objecting to changes in Georgia’s voting-rights laws.
Issues related to sexual orientation and identity are an increasing part of conversations on
DEI. In March 2022, in response to public debates on bathroom use and sports participation by
5
As author Ibram X. Kendi put it in a 2019 interview, “in order to truly be antiracist, you also have to truly be anti-
capitalist” (Democracy Now, 2019).
6
The figure comes from the consulting firm StrategyR at https://www.strategyr.com/market-report-diversity-and-
inclusion-forecasts-global-industry-analysts-inc.asp.

transgender persons, more than 200 large corporations in sectors including technology (Apple,
Amazon, Dell, Google, HP, Microsoft, PayPal, SAP, Uber), financial services (Capital One,
Citigroup, Wells Fargo), manufacturing (3M, General Motors), entertainment (Disney), retail
(Johnson & Johnson, Nike, PepsiCo, Target), and transportation (American Airlines, United
Airlines) signed a statement condemning proposed laws in various U.S. states “that single out
LGBTQ individuals—many specifically targeting transgender youth—for exclusion or
differential treatment,” adding that “[l]aws that would affect access to medical care for
transgender people, parental rights, social and family services, student sports, or access to public
facilities such as restrooms, unnecessarily and uncharitably single out already marginalized
groups for additional disadvantage” (Berg-Brousseau, 2022).
Why Go Woke?
As noted above, despite its salience in management practice and in popular culture, the
phenomenon of firms going woke has not yet received much attention in the management
research literature. We suggest that existing management theories can shed light on the
antecedents and consequences of wokeness. We are particularly interested in the motives for
going woke. “Firms going woke” is, of course, shorthand for decisions taken by different actors
at various levels, not only within corporate hierarchy but also among firms’ stakeholders.
Theories of organization, strategy, and governance are thus essential to understanding the
emergence and diffusion of corporate wokeism.
To frame the discussion, consider the parallel discussion of reasons for firms to adopt
CSR, ESG, or a broad stakeholder model. As mentioned earlier, these literatures have different
intellectual origins than the woke movement and deal with a different set of policies and
10

outcomes, though there are some overlaps. 7 The comparison is still useful, however, because
wokeism and the embrace of CSR and stakeholder models follow similar patterns of emergence
and diffusion. Both sets of literatures can also be analyzed using similar frameworks, such as
distinguishing normative from instrumental motives for adoption and asking whether the firm
actually adopts the workplace practice in question or simply claims to adopt it as a form of
symbolic action or strategic signaling to external stakeholders.
Instrumental and normative motives. Instrumental CSR or stakeholder approaches
describe firms as stating publicly their commitments to CSR or the values and wellbeing of a
broad set of stakeholders, not because corporate decision-makers value these things, but because
they believe these statements can improve financial performance (Bettinazzi & Feldman, 2020;
Choi & Wang, 2009; Henisz et al., 2014; Hillman & Keim, 2001). Such improvement can arise
from attracting better workers or suppliers (Barney, 2018), accommodating or staving off
government regulation or public boycott (Detomasi, 2008; Schrempf-Stirling et al., 2013),
appealing to customers who value the same goals (Baron, 2008; Siegel & Vitaliano, 2007), or
attracting particular investors (Maldonado-Bautista et al., 2021). Embracing CSR or stakeholder
management may also allow firms to gain or maintain legitimacy in a situation where peer
companies are also adopting these practices (Husted et al., 2016; Beddewela & Fairbrass, 2016;
Roszkowska-Menkes & Aluchna, 2017). By contrast, normative approaches to CSR and
stakeholder governance posit that companies embrace these practices because owners, managers,
7
The rapid increase in DEI activities, including “anti-racism” initiatives, could be seen as a new interpretation or
extension of traditional CSR and stakeholder governance concerns. Both movements emphasize the social, political,
and environmental impacts of corporate decisions, are critical of conventional, shareholder-oriented models of
capitalism, and are often identified with the political Left. Both sets of concerns can be driven by instrumental and
normative motives. Wokeism is unique in two ways, however. As noted above, wokeism is grounded
philosophically in critical theory, while CSR and stakeholder governance are not tied to any particular political
philosophy. Moreover, wokeism focuses on a specific set of issues: race, gender, sexual orientation and identity, and
other characteristics as manifest in an oppressor-victim dynamic (Grasso, Reynolds & Grover, 2020).
11

employees, or other decision-makers believe them to be true and just (Donaldson & Preston,
1995; Donaldson, 1999).
Using parallel reasoning, we can distinguish instrumental and normative adoption of
woke ideology and practice. If workers, customers, suppliers, regulators, and others whose
actions affect the value of the firm are woke, then a profit-maximizing firm will be woke, or try
to look woke, even if owners or managers are indifferent or even hostile to woke ideology. Some
firms may also benefit from a woke orientation if this aligns with the orientations of important
stakeholder groups. It’s difficult to say how much corporate wokeness is instrumental in this
sense, partly because it is unclear if going woke is good for business—as the dueling expressions
“Go Woke, Go Broke” and “Be Woke or Go Broke” suggest (Harinam, 2020). The fact that
woke practices are applied inconsistently—for example, companies that embraced the Black
Lives Matter movement in 2020 continued to manufacture products and court consumers in
China, despite that country’s crackdown on civil rights in Hong Kong and continued persecution
of Uyghurs and other ethnic minorities—suggests that wokeness is at least partly instrumental.
Woke practices can also be embraced on purely normative grounds. Firms with important
woke stakeholder groups are also likely to be led by owners and top managers who are
committed to woke ideas and who my may embrace woke practices (in hiring, public relations,
and overall strategy and investment decisions) even if it hurts the bottom line. 8 Similarly, middle
managers may feel pressured to conform to woke ideals and practices. As discussed below,
during the civil rights era, middle managers frequently imposed policies that went beyond what
was intended by movement leaders (Dobbin & Kalev, 2013), suggesting that middle managers
8
Studies of executives’ political affiliations suggest that ideology affects not only the firm’s nonmarket strategy
such as lobbying (Unsal et all., 2016) but also its capital structure, levels of R&D and other investments, merger and
acquisition policy, and HRM practices (Hutton et al., 2014; Elnahas & Kim, 2017; Gupta et al., 2019).
12

hold considerable discretion in this area. At the same time, as woke ideals and practices get
institutionalized, they may also be constraining, even to those nominally inclined to support
them. In this case, middle managers may adopt and conform to these ideals and practices for
instrumental reasons (Bernheim, 1994).
External stakeholders. The distinction between instrumental and normative motives for
adopting woke ideology and practice applies not only to the firm itself, but also to the firm’s
various stakeholder groups. For example, it is well-known from the CSR literature that
management, workers, and external stakeholders such as investors often hold different CSR
orientations. Indeed, research on stakeholder governance highlights divergent interests among
stakeholder groups and shows how the strength of different stakeholder claims varies as
conditions change (Klein et al., 2019). Hence, stakeholder groups may hold different motivations
for adopting woke ideology and practice. This may create tensions and conflict between
stakeholder groups, such as when a stakeholder group criticizes a company for engaging in
woke-washing.
Much of the attention concerning woke-washing has centered on external stakeholders, in
particular consumer activists. One example is critics of Starbucks for praising “communities”
while allegedly evading paying taxes in countries like Sweden (Jones, 2019). Although such
cases have received much media attention, less is known about the demand for wokeness among
firms’ stakeholder groups.
Regarding investors, there is little evidence on the ideological preferences of corporate
shareholders (who, after all, constitute a heterogeneous group). A recent study of investor
ideology among business angels and venture capitalists found that startups prioritizing a broad
set of stakeholder interests had a harder time raising capital than those focused on economic
13

outcomes and financial performance, but that this relationship was moderated by investor
ideology, with left-leaning financiers less concerned about tradeoffs between profitability and
broader societal goals (Maldonado-Bautista et al., 2021). Government-affiliated institutional
shareholders such as state pension funds have been strong advocates for corporate social justice. 9
Government actors also express demand for woke practices in their roles as customers and
regulators. Public procurement contracts increasingly include social-justice objectives
(McCrudden, 2007; Hartlapp, 2020).
For these reasons, even corporate executives or board members with little interest in
wokeness may find it profitable, or at least prudent, to adopt woke practices or at least to signal
to employees, customers, and other stakeholders a commitment to social justice along with
efficiency and financial performance. Of course, these practices and signals come with
significant risk—in particular, the risk of alienating non-woke customers, investors, and
employees. For example, workers are increasingly aware of companies’ stances on social and
political issues and take this into consideration in deciding where to work (Roth et al., 2021).
Internal stakeholders. While much media discussion of corporate wokeness has focused
on external pressure—campaigns on social media, petitions, etc.—pressure can also come from
internal stakeholder groups (cf. Dobbin et al., 2011). Thus, when the news broke in 2020 among
employees at Penguin Random House Canada that the publishing house would publish Jordan
Peterson’s Beyond Order: 12 More Rules for Life, some staffers strongly objected. “One staffer,
9
For example, top officials of the California State Retirement System (CalSTRS) recently called for “activist
stewardship,” highlighting CalSTRS’s participation in a “Reenergize Exxon” campaign designed to pressure Exxon
via its ownership of $300m of Exxon stock not only to increase its commitment to environmental issues but also to
combat social issues such as racial, gender, and income inequality (Eccles et al., 2021). Norway’s sovereign wealth
fund, the world’s largest, expects its portfolio companies to comply with the U.N. Sustainable Development Goals
which emphasize poverty alleviation, gender equality, and similar social justice objectives. The preferences and
behaviors of such important institutional investors suggests that woke corporate behavior is partly due to demands
from capital suppliers.
14

who linked their shock directly to their ‘love’ for PRHC’s commitment to diversity and
inclusion, told Maclean’s that the Peterson announcement ‘felt like a slap in the face to
everything that [the company] had said and had agreed to do just beforehand’ in the wake of
George Floyd’s May 25 death under the knee of a Minnesota police officer” (Bethune, 2021). 10
The book was eventually published. By contrast, a similar walkout that same year by employees
at Hachette Book Group imprints Grand Central Publishing and Little, Brown in protest of Grand
Central’s decision to publish Woody Allen’s memoir Apropos of Nothing—Allen’s son Ronan
Farrow, who had written of the actor’s alleged sexual abuse of his daughter Dylan, led the
walkout—resulted in Allen’s book being dropped. Plans by Penguin Random House to publish a
book by U.S. Supreme Court Justice Amy Coney Barrett resulted in petition with 600 signatures,
including 75 by the firm’s own employees, demanding that the book be canceled because of
Barrett’s vote in the 2022 Dobbs decision on abortion rights (Trachtenberg, 2022).
In sum, the drivers of the woke corporation may be partly internal. 11 This suggests a
focus on internal organizational structure and the individuals that populate it. The institutional
literature on mimetic isomorphism theorizes how organizations imitate the practices of other
organizations, but noticing and implementing new cultural, ideological, and institutional
innovations is done by individuals at different hierarchical levels (Dobbin et al., 2011). These
10
The possibility of normative and instrumental motives for wokeness co-existing within a firm is suggested by the
fat that another “employee, far more mindful of PRHC’s commitment to turning a profit, saw the staff anger and
anxiety from a different angle: ‘It’s the posturing. The company has profited from its moral stance,’ they said,
referring to the number and stature of racialized and other minority authors PRHC has published and also in the way
so many people employed there ‘feel an investment in the company, and that it has the same kind of moral standards
and the same political standards as they do’” (Bethune, 2021).
11
Schumpeter (1942) argued that feelings of grievance against the capitalist order—paradoxically produced by the
success of capitalism—would lead to increasing assault on the capitalist system led by the “intellectual class” in
“whose interest it is to work up and organize resentment, to nurse it, to voice it, and to lead it” (Schumpeter, 1942:
160). However, Schumpeter did not foresee the role of managers in transforming the nature of capitalism.
15

actors may have different motivations, abilities, and opportunities for noticing and implementing
these internally. We discuss this at greater length in the next section.
THE ROLE OF INTERNAL ORGANIZATION
Woke Strategy as the Product of Intra-organizational Evolution
We argue that that the woke corporation phenomenon cannot be fully understood without
paying attention to internal organization, particularly how the firm’s mechanisms for producing
variation and selection are organized (March, 1994). Our intra-organizational ecological
perspective highlights the production of new woke practices and behaviors, often promoted by
middle managers and support staff such as HR and corporate branding personnel with
responsibility for DEI and public messaging around social justice issues, and how these
personnel are selected and evaluated by top managers. However, both the production of variation
in woke practices and the criteria for selecting among these practices are influenced by external
forces—not only new ideology and culture, but also pressure from external stakeholder groups.
Thus, the making of woke strategies is like strategy formulation in general: strategies emerge
over time, often from lower echelons in the organization, rather than always being the result of
rational and forward-looking deliberation at the top-management level (e.g., Mintzberg, 1994;
Mintzberg and Waters, 1985). Strategic initiatives and criteria for selecting among them are
partly shaped by prevailing general cultural and political beliefs. Middle managers play a key
role that process.
Middle Managers as Sources of Woke Variation
Classic writings on organizational structure give middle managers operational, not
strategic, responsibility (Scott, 1975). Their main function is strategy implementation,
monitoring, and control, as well as handling information streams up and down the hierarchy.
16

“Middle management does things which translate strategies defined at higher levels into actions
at operating levels. This involves: (1) defining tactics and developing budgets for achieving a
strategy; (2) monitoring the performance of individuals and subunits; and (3) taking corrective
action when behavior falls outside expectations” (Floyd & Woodridge, 1994: 48). In a
traditionally organized managerial hierarchy, decision-making authority flows from top to
bottom, with each layer faithfully implementing commands from above. Senior management
defines objectives, sets targets, and engages in strategic sensemaking (Daft & Weick, 1984). Of
course, all organizations, even large corporations, have incorporated some degree of delegation,
decentralization, and emergent order, seeking the right blend of “market” and “hierarchy” (Foss
& Klein, 2022). But the initiation of change at different levels of the corporate hierarchy is
usually seen as a means to implement a general directive from the top.
However, middle managers can drive strategic change. As illustrated in the well-known
case of the transformation of Intel’s core business from memory chips to processors (Burgelman,
1994), middle managers may have the motivation, ability, and opportunity to formulate and
execute strategic change. Similar mechanisms may be at play in the case of the woke
corporation.
Note that middle managers have historically played a significant role in the push for
companies to embrace concepts of social justice in the workplace and marketplace. 12 U.S.
companies introduced civil rights and equal opportunity programs in the 1960s, transforming
12
Classic treatments of bureaucracy such as Burnham (1941), Schumpeter (1942), and Mises (1944), attribute the
swelling middle-management ranks to a variety of internal and external factors. Mises (1944) points to the role of
public policy, in particular restrictions on labor-market practices as well as regulatory compliance, as driving the
increase in middle-management functions such as legal departments and public relations offices. The threat of
arbitrary antitrust or regulatory activity, he claims, forces firms to become adept at “diplomacy and bribery” (p. 72).
Burnham (1941) predicted the takeover of “managers” by which he meant, not entrepreneurial captains of industry,
but a class of salaried, technocratic professionals with degrees who were closer to their counterparts in government
than to the rugged individualists that headed companies in an earlier age.
17

them into diversity management programs in the 1980s. Some of these programs were modeled
after the “Sullivan Principles,” introduced in 1977 by the Rev. Leon Sullivan as guidelines for
U.S. companies doing business in Apartheid South Africa, then broadened into a general set of
affirmative action and nondiscrimination programs (and rebranded in 1999 as a United Nations
social justice initiative).
From the beginning, “[t]he programs firms adopted, from race relations training to sexual
harassment grievance procedures to culture audits, were devised not by Congress or by the
executive branch, but by personnel experts keen to expand their purview in the firm” (Dobbin &
Kalev, 2013: 253). U.S. civil rights and equal opportunity laws prohibited discrimination based
on race or gender but did not specify how firms should accomplish these objectives. Corporate
executives hired full-time equal-opportunity experts and tasked them with interpreting and
applying the new rules; as Dobbin and Kalev (2013: 254) put it, without guidance from
Congress, “personnel experts crafted programs based on weapons in their professional arsenal,”
namely detailed written guidelines, formal training procedures and recruitment programs, and
similar manifestations of Weberian bureaucracy.
Woke policies appear to follow a similar pattern, in that commitment to DEI as
commonly practiced today is not usually a government requirement, but a set of beliefs and
practices created by companies (and encouraged by external parties such as the media and the
universities). While some managers, executives, and employees may feel constrained in what
they can write or say on the job, these constraints are largely internally imposed. Moreover, as
with affirmative action policies, responsibility for social justice programs and initiatives was
generally delegated downward from the executive suite to lower levels of the organization.
Companies generally created specialist bureaus and departments to manage diversity
18

management programs (Meyer & Scott, 1992: 275), as they did for other aspects of regulatory
compliance. Given organizational inertia, these specialist positions became permanent and
diversity programs became permanent parts of most company’s hiring, training, and promotion
activities.
How Middle Managers Drive the Change to the Woke Corporation
Why do top managers support the introduction of woke practices and behaviors by
middle managers? We highlight the roles of middle manager delegation, network position, and
motivation. 13 We argue that these three factors have complementary effects on internal
advocacy: delegation confers control (Aghion & Tirole, 1997) over information channels
between internal and external networks (Soda et al., 2018), and such control allows middle
managers to become entrenched. In the context of woke policies, middle managers have
specialized knowledge, may control critical aspects of the firm’s internal and external
communications, and are often shielded from effective internal review due to the lack of metrics
for woke performance. Embracing wokeness can thus provide authority, job security, and career
opportunities.
We use the term “middle manager” to describe salaried managers who hold intermediate
positions in the corporate hierarchy, with supervisory responsibilities over employees and
subordinate managers in particular operational areas and reporting to general managers at higher
levels of the organization. While organizational scholars such as Mintzberg (1983) and Dobbin et
al. (2011) distinguish between middle managers and directors of support functions such as HR
and advertising (what Mintzberg calls “technostructure”), we include the latter in our definition
13
These roles correspond to the familiar triad of motivation, opportunity (i.e., network positions), and ability (i.e.,
delegation) (Kellner, Cafferkey, & Townsend, 2019).
19

of middle manager because we are interested in the mechanisms by which those with delegated
authority who, in principle, are responsible for executing strategic directions from above, can act
autonomously as drivers of strategic drift.
In other words, while the HR function may be formally responsible for DEI initiatives
such as diversity training, diversity hiring, making sure the company logo features the rainbow
colors at the appropriate time, and so on, other forms of middle management are also engaged in
managing human resources and their actions will have to reflect DEI and similar concerns.
Moreover, initiative in favor of woke internal policies may stem from these line managers as
well as from HR. Middle managers in the narrow sense, while ostensibly serving in the
conventional brokerage role, are actually creating policy, often in ways that diverge from the
preferences of top managers, employees, and customers.
Delegation. When faced with new external or internal pressures, particularly on issues for
which they lack professional competence or that threaten their identity, executives are often
happy to delegate responsibility for such issues to middle managers who can serve as
intermediaries between top-level decision-makers and those internal and external stakeholders
most directly affected by the issues (Kellogg, 2014). For example, DEI programs generally lie
outside the expertise and experience of executives, and they carry the risk of negative publicity
from insufficient commitment to social justice. For these reasons, top managers delegate the
responsibility for DEI programs to those who profess to have superior knowledge in such
programs (Jensen & Meckling, 1992).
The specialist role also allows woke middle managers (as defined above) to assume
boundary roles that link the organization’s internal networks with external knowledge and
information (Tushman, 1977) about woke cultural, political, and ideological ideas. They can
20

point to the needs imposed by changing external cultural and ideological norms and the demands
of external stakeholders that carry these norms. Fligstein (1987) argues that internal actors may
gain resources and power when changes of norms in the external environment become apparent
and even pervasive and can be claimed to necessitate internal change. In this sense, corporate
wokeness is both a response to exogenous, cultural change and a contributing factor to this
change.
Network positions. These arguments suggest that woke middle managers may serve an
arbitrage function, being “likely to strive to access, control, and use others’ knowledge and
information in a proprietary fashion. In this way, they tend to maximize the acquisition of
relevant knowledge and information accessed through their network of contacts, avoid sharing
this knowledge and information with others, and try to directly benefit from their integration”
(Soda et al., 2018: 899). This makes the woke middle manager more effective in designing and
implementing DEI initiatives, public relations campaigns, and similar programs about which
both senior managers and employees have little knowledge and expertise.
One mechanism by which middle managers influence strategy is by bringing alternatives
to the attention of executives and offering new initiatives for consideration. Another is shaping
the perceptions of top managers by presenting and interpreting information in particular ways
(Floyd & Woodridge, 1994; Soda et al., 2018). More generally, middle management performs
essential brokerage and bridging functions. Brokerage involves both arbitraging information
flows between higher and lower levels of the organization and encouraging collaboration among
participants in a hierarchical structure (Soda et al., 2018). Bridging consists of using network ties
to fill structural holes (Burt, 1992). In both cases, middle managers are helping to shape
corporate strategy as well as execute it.
21

Motivation. Because performance on DEI tasks may be difficult for senior managers,
employees, and external stakeholders to measure, a commitment to DEI can be a form of middle-
manager entrenchment. While senior managers may seek to entrench themselves via
idiosyncratic diversification or acquisition strategies (Amihud & Lev, 1981), middle managers
can reduce their employment risk by investing in manager-specific assets Shleifer & Vishny,
1989; Li, 2009). DEI programs can represent this type of manager-specific investment for DEI
specialists.
Moreover, to the extent that achieving social-justice objectives represent ill-defined tasks,
this vagueness helps intermediaries keep and even enhance their own professional standing. As
Kellogg (2014: 916, 926) notes, “managing information rather than transferring it, matching
meanings rather than translating them, and maintaining interests rather than transforming them”
allows “lower-status [persons to] carve out their own jurisdictions.” One way that woke middle
managers maintain control and hierarchical position is by using idiosyncratic vocabulary and
constructs (“microaggressions,” “whiteness,” “centering,” “cisgender,” “BIPOC,” etc.) that serve
as in-group status markers (Mange, Lepastourel, & Georget, 2009) and make it difficult for
outsiders, including top managers, to understand, and hence challenge, woke beliefs,
pronouncements, and instructions. Buchter (2021: 21) argues that these ideas are easy to sell
internally because they are offered as “free and ready-to-use content and model programs that
reflect changes the activists want to see.” She shows “how insider activists used these
implementation resources to denounce organizations’ superficial commitments or employees’
homophobic practices, thereby compelling organizations to change” (Buchter, 2021: 21).
While there have been several attempts to construct CSR and ESG scorecards so that
performance can be more consistently evaluated across companies, there are yet no attempts to
22

provide clear and transparent measures of wokeness that woke stakeholder groups could use to
assess companies. Instead, commitment to wokeness is highly subjective and largely determined
by spontaneous reactions on social media or in the mainstream press. Of course, if wokeness
serves as a form of entrenchment, then we would expect woke middle managers to avoid
pressing for transparent accountability metrics.
The Role of Top Managers
In our framework for analyzing the intra-organizational evolution of the woke
corporation, advocacy for new DEI initiatives may be seen as new variation. Models of such
evolution typically describe the selection environment as a mix of competition between
initiatives and the responsibility of top management to pick among them (March, 1994).
Organizational evolution is shaped by the interplay of variety-generating forces and the selection
environment while hereditary mechanisms (routines, rules, policies, and culture) preserve the
surviving initiatives over time (until they are selected against).
Top managers influence the evolutionary process not only by picking preferred
initiatives, but also by shaping the generation of variety at lower levels, what Løvas and Ghoshal
(2000) call “guided evolution.” Their model, like most models of intra-organizational evolution,
abstracts from the external environment. However, the external environment influences both
internal variety generation and selection. Fligstein (1987), Dobbin and Sutton (1998), Dobbin et
al. (2011), and other organizational sociologists have stressed how internal advocacy and even
fixtures of the business landscape such as the modern HR department are shaped by external
changes in prevailing institutions, norms, and ideology. Thus, much of intra-organizational
variety-generation can be traced to the external environment. However, the external environment
also shapes the process of selecting new internal variation and adopting it as practice or strategy.
23

While pressure for going woke can come from a variety of internal and external
stakeholders, the ultimate decision to accept woke policies (by design or benign neglect) lies
with the CEO. Some top executives may genuinely value woke ideas and practices. However,
given that public opinion on woke practices is highly divided—survey data suggest roughly half
of Americans think there is too much emphasis on “political correctness,” that “cancel culture” is
a problem in society, and that universities should not shun controversial speakers (Khazan,
2021)—it seems unlikely that the majority of corporate directors, executives, and senior
managers identify with woke ideology. 14 However, in the face of asymmetric information, non-
woke executives will tend to select in favor of new initiatives forwarded by internal woke
advocates. Having delegated effective control to lower specialists, executives essentially rubber-
stamp these proposals (Aghion & Tirole, 1997).
The external environment reinforces the tendency of executives to accept internal woke
proposals originating with middle management. First, executives may fear the reactions of
particular stakeholder group—not necessarily those that control critical inputs or are the firm’s
key customers, but those who are best organized and most vocal. Second, accepting middle
managers’ woke initiatives may contribute to managerial entrenchment by executives. One
mechanism is the shift from “hard” performance metrics like profitability or market value to
“softer” measures such as contributions to diversity or social justice more broadly that can
protect managers from internal or external discipline (Cespa & Cestone, 2007). This mechanism
has been examined in the context of CSR and ESG activities which, by substituting more
14
There is little direct evidence of how CEOs feel about wokeness. A 2021 poll of US and French businesspeople
(described as “business decision-makers” but not precisely defined) found that 61% in the US and 60% in France
agreed with the statement, “Do you agree or disagree that certain social science theories, specifically progressive
ideas on race, gender, post-colonialism, and ‘cancel culture’ are undermining society and are not necessary?”
(Zogby, 2021).
24

ambiguous performance measure for the standard accounting and financial performance metrics,
can lead to higher levels of managerial discretion including opportunistic earnings management
(García‐Sánchez et al., 2020). Likewise, as with middle managers, adding soft measures of woke
company performance to the set of measures against which executive performance is measured
may be advantageous to CEOs. These measures are easily manipulable—as noted earlier, there is
no generally recognized corporate woke index—and may partially substitute for conventional
performance metrics, serving as cover for moral hazard.
Going woke can also help to reduce CEO employment risk, another reason for CEOs to
rubber-stamp woke proposals coming from below. CEO employment risk has increased over the
last few decades because of increased labor-market competition, internationalization, and the
increasing influence of shareholders (Frydman, 2019). Signaling a commitment to woke
practices may make a CEO appear more valuable. Again, by analogy, there is evidence that
managerial labor markets increasingly consider CSR as an important criterion for evaluating
CEO capability (particularly in the context of increasing stakeholder orientation), and that CEOs
seek to reduce their job risk by making the companies they manage invest more in CSR (Li,
Chang, Xie, & Foss, 2022). If woke attitudes and practices become established as signals of
managerial capability, CEOs will embrace them. In sum, even if executives are not particularly
inclined for normative reasons to go woke, they may still—out of instrumental self-interest—
select woke internal initiatives, practices, and behaviors. 15
15
Note that our reasoning suggests that internal and external forces pulling towards wokeness are complementary.
This is in line with Fligstein’s (1987) reasoning that internal advocacy is strengthened by external institutional
change and contrary to Dobbins et al. (2011) who see these as substitutes.
25

DISCUSSION
Summary of Our Thesis
This paper is motivated by the theoretical and empirical puzzle that companies are
increasingly committed to pursuing social justice and embracing other elements of “woke”
ideology even when these are not obviously demanded by consumers, employees, or other key
stakeholders. This behavior may reflect sincerely held values and beliefs among the firm’s
owners and top decision-makers. It could also be a form of “virtue signaling,” designed to appeal
to influential activists, politicians, regulators, and others in a position to impose costs on firms
that do not embrace the favored positions. We think a more complete explanation for companies
going woke should consider the internal dynamics that lead firms to take actions that benefit
particular internal constituencies, even if these represent a minority of the firm’s key
stakeholders. Specifically, HR specialists who manage diversity training programs, advertising
teams that design social-justice marketing campaigns, and similar actors seem to play an outsized
role in promoting wokeness.
To support this claim, we have offered a theory of strategic change in which middle
managers and associated support personnel not only execute strategic direction from top
managers, but also shape firm strategy via autonomous strategic initiatives, notably with respect
to woke programs and activities. Our theory combines key ideas from intra-organizational
ecology, agency theory, and institutional theory. We specifically argue that middle managers and
support personnel have both the motivation, the opportunity, and the ability to launch internal
woke initiatives/projects—they are often better situated to pick up emerging political and cultural
trends such as woke, they can frame woke as a natural extension of CSR and stakeholder
engagement, they can claim expertise, and controlling the internal woke agenda may entrench
26

them. When senior managers, influenced by institutional pressure, rubber-stamps such initiatives,
emerging strategy driven from the middle levels of the organization becomes realized strategy.
The strength of our explanation is that makes sense of the often-noted phenomenon of
middle managers, HR managers, etc. seemingly being instrumental in making firms go woke. It
also helps to explain why many firms have so quickly bought into woke agendas. Of course,
while we think our framework fits the general pattern of woke corporate emergence over the last
decade, the details have yet to be examined with systematic empirical evidence.
Is middle-manager entrenchment harmful? To the extent that other stakeholder groups are
indifferent to, or supportive of, woke ideology, it makes sense for them to delegate control of
woke programs to these specialists, particularly if the latter share a firm normative commitment
to social justice and related causes and activities. However, such delegation may come with
hidden costs such as entrenchment, power imbalances, and organizational rigidity. Moreover, the
promotion of corporate wokeness limits viewpoint diversity which is typically bad for creativity
and innovation.
Impacts of Wokeness on Firms, Industries, and the Economy
While our discussion has focused on the nature and determinants of corporate wokeness,
research is also needed on the consequences of the woke movement. Part of our motivation for
contributing to this symposium is our concern that corporate wokeness has a number of
potentially harmful effects which are excluded from most public (and private) discussions of DEI
policies, partly for reasons discussed above—specifically, that woke individuals and groups tend
to dismiss all criticism as politically motivated (remember the core belief that truth is subjective
and truth claims can only be evaluated in terms of the “power” of those who make them). 16
16
See also Waldman and Sparr (2022) for a similar discussion in the context of HR policy more specifically.
27

Below we sketch out some of these concerns. Of course, our arguments and evidence are
suggestive, not dispositive, and we look forward to more rigorous empirical analysis to
investigate these claims.
Viewpoint diversity, innovation, and hiring practices. The social psychology literature
highlights the importance of viewpoint diversity in fostering creativity (Duarte et al., 2015).
Although wokeism is a constantly evolving body of ideas, it still imposes a strong in-group/out-
group dynamic and is strongly policed and enforced by its adherents in settings in which “even
small departures from the social norm … seriously impair … status” (Bernheim, 1994: 841).
Thus, it strongly limits the range of acceptable discourse within organizations, including those
with large workforces among which one would expect considerable viewpoint diversity. The
resulting ideological and political homogeneity can reduce creativity and innovation in
organizations. 17
The case of Google engineer James Damore is a well-known example. In July 2017
Damore posted an essay to an internal Google message board, “Google’s Ideological Echo
Chamber,” challenging the claim of Google’s diversity training programs that all outcome
differences among groups can be attributed to discrimination. Damore was fired for allegedly
violating Google’s internal code of conduct, after which he filed a complaint for unfair
termination with the National Labor Relations Board. Damore’s case has become emblematic of
an extremely woke culture within Silicon Valley. 18
17
Hudson and Morgan (2022) show that political liberalism promotes conformity (“homophily”) within boards of
directors of US companies and across boards with interlocking directorships.
18
Our argument suggests a negative correlation between wokeism and innovation, controlling for other determinants
of innovation such as industry, technology, geography, etc. While Silicon Valley firms are obviously highly
innovative, our argument implies that Big Tech firms are less innovative, on the margin, then they would otherwise
be with less wokeness.
28

Cases such as Damore’s have potentially strong implications for HR issues. His firing
sent a signal not only to current Google employees but also to prospective hires. Politics matters
to hiring decisions; for example, an experiment by Gift and Gift (2015) showed that employers
are more likely to hire politically like-minded applicants. Signaling wokeness is thus likely to
influence the composition of the pool of potential employees.
Imposing ideological restrictions on employees, independent of their productivity and
other contributions to value creation, might be viewed as an example of the employer indulging a
taste for discrimination, as in Becker’s (1957) model of the labor market. By restricting the pool
of eligible workers to those who are woke, employers engaging in this form of discrimination
increase their labor costs relative to competitors who are more open to alternative worker
ideologies, putting them at a competitive disadvantage. As with other forms of labor-market
discrimination the size of this penalty depends on competitive conditions, employment law, and
other labor-market frictions (Lang & Kahn-Lang Spitzer, 2020). For example, in Big Tech,
where most firms share a commitment to woke ideology, the penalty is likely to be small. In
manufacturing, it may be more significant.
Organizational costs of woke. Economic theories of organization describe costs
associated with information processing, agency, and influence activities, using these to reason
about internal organization (Milgrom & Roberts, 1992). When companies go woke, they risk
increasing these internal costs of organization. Recent experimental research (List & Momeni,
2020) suggests that an unintended consequence of a firm level CSR-orientation is that employees
may put less effort into the job due to a “moral licensing” effect: feelings of moral superiority in
one dimension give them psychological permission to violate ethical norms in other dimensions.
29

Shirking results. Companies that go woke may experience similar moral hazard and for similar
reasons.
As argued above, the woke agenda may be a distinct source of internal power in
organizations. Resources invested in signaling wokeness internally to increase internal power are
examples of what economists call influence costs (Milgrom & Roberts, 1988), the costs of
manipulating policy makers to one’s advantage. HR units that lobby for increased diversity
throughout the organization may be doing so for normative reasons, but instrumental motives
related to power and entrenchment may also be at play.
Going woke may also increase costs related to conflict (beyond the familiar agency
conflicts highlighted in the organizational economics literature). Managing conflict and the
emotions and behaviors it causes has long been central to organization theory and organizational
behavior (cf. Kolb & Putnam, 1992). However, these literatures have tended to focus on conflicts
caused by different material interests among organizational units and overlapping roles. These
costs can also stem from differences concerning how internal exchanges are framed and
interpreted (Foss & Weber, 2016) or differences concerning the overall strategy of the company
(Kaplan, 2008). In other words, conflicts may stem from different beliefs, broadly conceived.
The Damore episode is an example of how such conflict can escalate. The decision by Coinbase
CEO Brian Armstrong in 2020 to ban discussions of politics within the company was explicitly
motivated by the desire to keep organizational conflict at bay.
The challenges of monitoring the woke frontier. The identity politics that lie at the core
of wokeism represents a constantly evolving ideological frontier characterized by a multitude of
positions, each with their own highly specialized terminology and jargon (Pluckrose & Lindsay,
2020). Woke ideas and programs lack concreteness, boundary conditions, and clearly articulated
30

principles. One reason for the dynamics of wokeism is what Bradley and Campbell (2018) call a
“purity spiral,” in which group members compete to be recognized as the purest proponent of the
group’s essential values. This leads to frequently changing internal agendas as the internal bar of
moral righteousness is constantly being raised in a game of purer than thou.
The result is a quickly advancing, yet diffuse woke frontier which is hard to track,
making it difficult for companies and managers to orient themselves in a constantly changing
landscape of values. The range of acceptable positions may change rapidly, and the subsequent
uncertainty is akin to the regulatory and institutional “regime uncertainty” (Higgs, 1997) that
decreases investment and hampers long-term strategic planning (Bylund & McCaffrey, 2017).
Conclusion
The emergence of woke corporation (and the broader phenomenon of woke capitalism) is
one of the most important phenomena of the last decade, but it remains poorly understood. We
urge management scholars to apply theories of organizational design, strategy formulation, and
organizational change—as well as theories from organizational behavior, human resource
management, production and operations, nonmarket strategy, and other fields not touched upon
here—to understand this movement. Most of the discussion on woke capitalism has taken place
in the popular press, on social media, and in government offices. It’s time for management
research to inform these debates in a more systematic way.
31

REFERENCES
Aghion, P. & Tirole, J. (1997). Formal and real authority in organizations. Journal of Political
Economy, 101, 1-29.
Amihud, Y. & Baruch, L. (1981). Risk reduction as a managerial motive for conglomerate
mergers. Bell Journal of Economics, 12, 605-617.
Armstrong, B. (2020). Coinbase is a mission-focused company. 27 September 2021. Accessed at
https://blog.coinbase.com/coinbase-is-a-mission-focused-company-af882df8804
Baron, D. P. (2008). Managerial contracting and corporate social responsibility. Journal of
Public Economics, 92(1-2), 268-288.
Becker, G. S. (1957). The Economics of Discrimination. University of Chicago Press.
Beddewela, E., & Fairbrass, J. (2016). Seeking legitimacy through CSR: Institutional pressures
and corporate responses of multinationals in Sri Lanka. Journal of Business Ethics,
136(3), 503-522.
Berg-Brousseau, H. (2022). 200+ Major U.S. Companies Oppose Anti-LGBTQ+ State
Legislation. https://www.hrc.org/press-releases/200-major-u-s-companies-oppose-
anti-lgbtq-state-legislation
Bernheim, D. (1994). A Theory of Conformity. Journal of Political Economy, 102: 841-
877.
Bethune, B. (2021). Jordan Peterson’s upcoming book has opened up a clash of values at its
publisher. McLean’s, 25 February 2021. Accessed at
https://www.macleans.ca/culture/books/jordan-petersons-upcoming-book-has-opened-up-
a-clash-of-values-at-its-publisher/
32

Bettinazzi, E. L., & Feldman, E. R. (2021). Stakeholder orientation and divestiture activity.
Academy of Management Journal, 64(4), 1078-1096.
Bloom, A. (1987). The Closing of the American Mind: How Higher Education Has Failed
Democracy and Impoverished the Souls of Today's Students. New York: Simon and
Schuster.
Boxenbaum, E., & Jonsson, S. (2017). Isomorphism, diffusion and decoupling: Concept
evolution and theoretical challenges. The Sage Handbook of Organizational
Institutionalism, 2, 79-104.
Bradley, B. & Manning, J. (2018). The Rise of Victimhood Culture: Microaggressions, Safe
Spaces, and the New Culture Wars. London: Palgrave MacMillan.
Buchter, L. (2021). Escaping the ellipsis of diversity: Insider activists’ use of implementation
resources to influence organization policy. Administrative Science Quarterly, 66: 521-
565.
Burgelman, R. A. (1994). Fading memories: a process theory of strategic business exit in
dynamic environments. Administrative Science Quarterly, 39, 24-56.
Burgelman, R. A. & Grove, A. S. (2007). Let chaos reign, then rein in chaos—repeatedly:
Managing strategic dynamics for corporate longevity. Strategic Management Journal, 28,
965-979.
Burnham, J. (1941). The Managerial Revolution: What is Happening in the World. New
York: John Day Co.
Bylund, P. L., & McCaffrey, M. (2017). A theory of entrepreneurship and institutional
uncertainty. Journal of Business Venturing, 32(5), 461-475.
33

Carroll, A. B. (2008). A history of corporate social responsibility: Concepts and practices. In
Oxford Handbook of Corporate Social Responsibility, ed. Crane, A., Matten, D.,
McWilliams, A., Moon, J., Siegel, D.S. Oxford University Press.
Cespa, G., & Cestone, G. (2007). Corporate social responsibility and managerial entrenchment.
Journal of Economics & Management Strategy, 16(3), 741-771.
Christakis, N. (2021). An interview with Yale University’s Nicholas Christakis. Charles Koch
Foundation Impact Stories, November 9. https://charleskochfoundation.org/stories/an-
interview-with-yale-universitys-nicholas-christakis/
Choi, J., & Wang, H. (2009). Stakeholder relations and the persistence of corporate financial
performance. Strategic Management Journal, 30(8), 895-907.
Corey, E. C. (2017). The first church of intersectionality. First Things, August.
https://www.firstthings.com/article/2017/08/first-church-of-intersectionality
Daft, R. & K. Weick. (1984). Towards a model of organizations as interpretation systems,
Academy of Management Review, 9(2), 284-295.
Delgado, R. & Stefancic, J. (2021). Critical Race Theory: An Introduction. New York: New
York University Press.
Democracy Now (2019). How to be an antiracist: Ibram X. Kendi on why we need to fight
racism the way we fight cancer. August 13.
https://www.democracynow.org/2019/8/13/ibram_x_kendi_class_race_capitalism
Detomasi, D. A. (2008). The political roots of corporate social responsibility. Journal of
Business Ethics, 82(4), 807-819.
Dobbin, F. (2009). Inventing Equal Opportunity. Princeton: Princeton University Press.

34

Dobbin, F. & Kalev, A. (2013). The origins and effects of corporate diversity programs. In The
Oxford Handbook of Diversity and Work, ed. Quinetta M. Roberson, 253-281. New
York: Oxford Univ. Press.
Dobbin, F., Kim, S., & Kalev, A. (2011). You can’t always get what you need: Organizational
determinants of diversity programs. American Sociological Review, 76(3), 386-411.
Dobbin, F. & Sutton, J.R. (1998). The strength of a weak state: The rights revolution and the rise
of human resources management divisions. American Journal of Sociology, 102: 441-
476.
Donaldson, T. (1999). Making stakeholder theory whole. Academy of Management Review,
24(2), 237-241.
Donaldson, T. & Preston, L. E. (1995). The Stakeholder Theory of the Corporation: Concepts,
Evidence, and Implications. Academy of Management Review, 20: 65-91.
Douthat, R. (2018). The Rise of Woke Capital. New York Times, 28 February. Accessed at
https://www.nytimes.com/2018/02/28/opinion/corporate-america-activism.html
Duarte, J., Crawford, J. T., Stern, C., & Haidt, J. (2015). Political Diversity Will Improve Social
Psychological Science. Behavioral and Brain Sciences, 38: 1-58.
Eccles, R., Mastagni, A., & Jenkinson, K. (2021). Introduction to Activist Stewardship. Harvard
Law School Forum on Corporate Governance Blog, March 1.
Fan, J. S. (2019). Woke capital: The role of corporations in social movements. Harvard
Business Law Review 9, 441-494.
Fligstein, N. (1987). The intraorganizational power struggle: Rise of finance personnel to top
leadership in large corporations, 1919-1979. American Sociological Review, 52: 44-58.

35

Floyd, S. W. & Woodridge, B. (1994). Dinosaurs or dynamos? Recognizing middle
management's strategic role. Academy of Management Executive, 8(4): 47-57.
Foss, N. J., & Klein, P. G. (2022). Why Managers Matter: The Perils of the Bossless Company.
New York: PublicAffairs.
Foss, N. J., & Weber, L. (2016). Putting Opportunism in the Back Seat: Bounded Rationality,
Costly Conflict and Hierarchical Forms. Academy of Management Review, 41: 41-79.
Friedman, A. L., & Miles, S. (2002). Developing stakeholder theory. Journal of Management
Studies, 39(1), 1-21.
Friedman, M. (1970, September 13). The social responsibility of business is to increase its
profits. New York Times Magazine, 32-33, 122-124.
Frydman, C. (2019). Rising through the ranks: The evolution of the market for corporate
executives, 1936–2003. Management Science, 65(11), 4951-4979
García‐Sánchez, I. M., Hussain, N., Khan, S. A., & Martínez‐Ferrero, J. (2020). Managerial
entrenchment, corporate social responsibility, and earnings management. Corporate
Social Responsibility and Environmental Management, 27(4), 1818-1833.
Georgiev, G. (2019). $350 mln. in 6 Months—The Cost of the 2019 Gillette Advertising Fiasco?
Medium, Nov. 20. https://bit.ly/3aW73bE
Gift, K., & Gift, T. (2015). Does politics influence hiring? Evidence from a randomized
experiment. Political Behavior, 37(3), 653-675.
Ginsberg, B. (2011). The Fall of the Faculty: The Rise of the All-Administrative University
and Why It Matters. New York: Oxford University Press.
36

Greene, J. P., & Paul, J. D. (2021. Diversity university: DEI bloat in the academy. Heritage
Backgrounder No. 3641.
Gupta, A., Nadkarni, S., & Mariam, M. (2019). Dispositional sources of managerial discretion:
CEO ideology, CEO personality, and firm strategies. Administrative Science Quarterly,
64(4), 855-893.
Hartlapp, M. (2020). Measuring and comparing the regulatory welfare state: Social objectives in
public procurement. The ANNALS of the American Academy of Political and Social
Science, 691(1), 68-83.
Hayek, F. A. (1949). The Intellectual and Socialism. In Hayek, F.A. (1967). Studies in
Philosophy, Politics and Economics. London: Routledge and Kegan Paul.
Henisz, W. J., Dorobantu, S., & Nartey, L. J. (2014). Spinning gold: The financial returns to
stakeholder engagement. Strategic Management Journal, 35(12), 1727-1748.
Higgs, R. (1997). Regime uncertainty: why the Great Depression lasted so long and why
prosperity resumed after the war. Independent Review, 1(4), 561-590.
Hillman, A. J., & Keim, G. D. (2001). Shareholder value, stakeholder management, and social
issues: what's the bottom line? Strategic Management Journal, 22(2), 125-139.
Huber, G. P., & Lewis, K. (2010). Cross-understanding: Implications for group cognition and
performance. Academy of Management Review, 35(1), 6-26.
Hudson, K., & Morgan, R. E. (2022). Ideological homophily in board composition and interlock
networks: Do liberal directors inhibit viewpoint diversity? Corporate Governance: An
International Review, 30(3), 272-289.
Hunt, K. (2020). How “woke” became the word of our era. The Guardian, 27 June.
37

Husted, B. W., Montiel, I., & Christmann, P. (2016). Effects of local legitimacy on certification
decisions to global and national CSR standards by multinational subsidiaries and
domestic firms. Journal of International Business Studies, 47(3), 382-397.
Hutton, I., Jiang, D., & Kumar, A. (2014). Corporate policies of Republican managers. Journal
of Financial and Quantitative Analysis, 49(5-6), 1279-1310.
Jones, O. (2019). Woke-washing: How brands are cashing in on the culture wars. The Guardian,
23 May, 2019. Accessed at https://www.theguardian.com/media/2019/may/23/woke-
washing-brands-cashing-in-on-culture-wars-owen-jones
Just Capital (2021). Americans Agree CEOs Have a Role to Play in Addressing Income
Inequality, Believe Workers Are Being Left Behind. https://bit.ly/3v5eG6f
Kaplan, S. (2008). Framing Contests: Strategy Making Under Uncertainty. Organization
Science, 19: 729-752.
Kauffman, E. (2021). “Woke” CEOs: Risky Business or the Next Great Awakening? Wall Street
Journal, May 3, 2021. https://on.wsj.com/3RPOxSY
Kellner, A., Cafferkey, K. & Townsend, K. (2019). In Townsend., Cafferkey, K., McDermott,
A.M. & Dundon, T., eds. London: Edward Elgar Publishing.
Kellogg, K. C. (2014). Brokerage professions and implementing reform in an age of experts.
American Sociological Review, 79(5), 912-941.
Khazan, O. (2021). America’s real ‘wokeness’ divide. The Atlantic, November 11.
Klein, P. G., Mahoney, J. T., McGahan, A. M., & Pitelis, C. N. (2019). Organizational
governance adaptation: Who is in, who is out, and who gets what. Academy of
Management Review, 44(1), 6-27.

38

Klein, P. G., Holmes, R. M., Foss, N. J., Terjesen, S., & Pepe, J. (2021). Capitalism, Cronyism,
and Management Scholarship: A Call for Clarity. Forthcoming in Academy of
Management Perspectives.
Kolb, D. M. & Putnam, L. L. (1992). The Multiple Faces of Conflict in Organizations. Journal
of Organizational Behavior, 13, 311-324.
Kuhn, T. S. (1962). The structure of scientific revolutions. University of Chicago Press:
Chicago.
Lang, K., & Kahn-Lang Spitzer, A. (2020). Race discrimination: An economic perspective.
Journal of Economic Perspectives, 34(2), 68-89.
Li, X. (2009). Managerial entrenchment with strategic information technology: A dynamic
perspective. Journal of Management Information Systems, 25(4), 183-204.
Li, S., Chang, Y., Xie, J., & Foss, N.J. (2022). “Flying Under the Radar” or “Riding the Wave”?
CEO Employment Risk and Firm Engagement in Corporate Social Responsibility.
Working Paper, Hong Kong Polytechnic University.
Liu, C. (2021). Why do firms fail to engage diversity? A behavioral strategy perspective.
Organization Science, 32(5), 1193–1209.
Løvas, B. and Ghoshal, S. (2000). Strategy as guided evolution. Strategic Management Journal,
21(9), 875-896.
Maldonado-Bautista, I., Klein, P. G., & Artz, K. W. (2021). The Role of Political Values and
Ideologies of Entrepreneurs and Financiers. Entrepreneurship Theory and Practice,
10422587211010496.
39

Mange, J., Lepastourel, N., & Georget, P. (2009). Is your language a social clue? Lexical
markers and social identity. Journal of Language and Social Psychology, 28: 364-380.
McCrudden, C. (2007). Buying social justice: Equality, government procurement, & legal
change. OUP Oxford.
March, J. G. (1994). The evolution of evolution. In Baum, J. A. C. & Singh, J. V. Evolutionary
Dynamics of Organizations. Oxford: Oxford University Press.
Meyer, J. W., & Scott, W. R. (1992). Organizational environments: Ritual and rationality.
SAGE Publications.
Milgrom, P. & Roberts, J. (1988). An economic approach to influence activities in organizations.
American Journal of Sociology, 94, S154-S179
Milgrom, P., & Roberts, J. (1992). Economics, Organization and Management. New York:
Pearson.
Mintzberg, H. (1983). Structures in Five. New York: Pearson.
Mintzberg, H., Lampel, J., Quinn, J. B. & Ghoshal, S. (2003). The strategy process: concepts,
contexts, cases. Harlow: Pearson.
Mintzberg, H. & Waters, J. A. (1985). Of Strategies, Deliberate and Emergent. Strategic
Management Journal, 6, 257-272.
Pfeffer, J. & Fong, C. T. (2005). Building Organization Theory from First Principles: The Self-
Enhancement Motive and Understanding Power and Influence. Organization Science, 16:
372-388.
40

Pluckrose, & Lindsay, J. (2020). Cynical Theories: How Activist Scholarship Made Everything
About Race, Gender, and Identity—and Why This Harms Everybody. Pitchstone
Publishing.
Rhodes, C. (2021). Woke Capitalism: How Corporate Morality is Sabotaging Democracy.
Bristol: Bristol University Press.
Ritson, M. (2022). Transforming logos for Pride has lost brand impact and become “rainbow-
washing.” Marketing Week, June 9. https://www.marketingweek.com/ritson-
transforming-logos-rainbow-washing/
Rizzi, G. A. (2021). The Activist CEO in the Era of Woke Capitalism: From Shareholders'
Agent to Agent of Change. Ph.D. dissertation, The Pennsylvania State University.
Roszkowska-Menkes, M., & Aluchna, M. (2017). Institutional isomorphism and corporate social
responsibility: towards a conceptual model. Journal of Positive Management, 8(2), 3-16.
Roth, P. L., Arnold, J. D., Walker, H. J., Zhang, L., & Van Iddekinge, C. H. (2021).
Organizational political affiliation and job seekers: If I don’t identify with your party, am
I still attracted? Journal of Applied Psychology, forthcoming.
Rumelt, R. P. (1995). Inertia and transformation. In Resource-based and evolutionary theories
of the firm: Towards a synthesis (pp. 101-132). Springer, Boston, MA.
Rufo, C. (2022). The DEI Regime. City Journal, July 13. https://www.city-journal.org/the-
diversity-equity-and-inclusion-regime
Saad, G. (2017). Intellectual Diversity on American University Campuses. Huffington Post,
December 6. https://www.huffpost.com/entry/intellectual-diversity-on_b_6525538
41

Sailofsky, D. (2021). Masculinity, cancel culture and woke capitalism: Exploring Twitter
response to Brendan Leipsic’s leaked conversation. International Review for the
Sociology of Sport, forthcoming.
Schifter, M. (2021). 7 ways companies are advancing racial justice in business. June 18. World
Economic Forum. https://www.weforum.org/agenda/2021/06/7-ways-companies-are-
advancing-racial-justice-in-business
Schneider, C. (2021). UC Berkeley spends $25M a year, pays 400 employees to advance “equity
and inclusion.” The College Fix, April 8. https://bit.ly/3BfxkML
Schrempf-Stirling, J., Bosse, D. A., & Harrison, J. S. (2013). Anticipating, preventing, and
surviving secondary boycotts. Business Horizons, 56(5), 573-582.
Scott, W. R. (1975). Organizational Structure. Annual Review of Sociology, 1, 1-20.
Shivaram, D. (2021). McDonald's CEO apologizes after saying 2 slain children were failed by
their parents. NPR.org, November 9.
Shleifer, A., & Vishny, R. W. (1989). Management entrenchment: The case of manager-specific
investments. Journal of Financial Economics, 25(1), 123-139.
Siegel, D. S., & Vitaliano, D. F. (2007). An empirical analysis of the strategic use of corporate
social responsibility. Journal of Economics & Management Strategy, 16(3), 773-792.
Smith, A. (2021). Why critical race theory is essential to an honest education in America.
https://www.humanrightspulse.com/mastercontentblog/why-critical-race-theory-is-
essential-to-an-honest-education-in-america
42

Soda, G., Tortoriello, M., & Iorio, A. (2018). Harvesting value from brokerage: Individual
strategic orientation, structural holes, and performance. Academy of Management
Journal, 61(3), 896-918.
Sydow, J., Schreyögg, G., & Koch, J. (2009). Organizational path dependence: Opening the
black box. Academy of Management Review, 34(4), 689-709.
Trachtenberg, J. A. (2022). Penguin Random House stands by plan to publish Amy Coney
Barrett’s book. Wall Street Journal, October 31.
Tushman, M. L. (1977). Special Boundary Roles in the Innovation Process. Administrative
Science Quarterly, 22: 587-605.
Vredenburg, J., Kapitan, S., Spry, A., & Kemper, J. A. (2020). Brands taking a stand: Authentic
brand activism or woke washing? Journal of Public Policy & Marketing, 39(4), 444-
460.
Waldman, D. A. & Sparr, J. L. (2022). Rethinking Diversity Strategies: An Application of
Paradox and Positive Organization Behavior Theories. Academy of Management
Perspectives (forthcoming).
Walker, R. (2017). One year later, Steve Wyche reflects on breaking the Colin Kaepernick story.
The Undefeated, Aug 28. Accessed at https://theundefeated.com/features/one-year-later-
steve-wyche-colin-kaepernick-story/
Wang, X. H. F., Kim, T. Y., & Lee, D. R. (2016). Cognitive diversity and team creativity:
Effects of team intrinsic motivation and transformational leadership. Journal of Business
Research, 69(9), 3231-3239.
43

Warren, D. E. (2022). “Woke” corporations and the stigmatization of corporate social initiatives.
Business Ethics Quarterly, 32(1), 169-198.
Wooldridge, B. and Floyd, S. W. (1990). The Strategy Process, Middle Management
Involvement, and Organizational Performance. Strategic Management Journal, 11, 231-
24.
Weick, K. E. (1976). Educational organizations as loosely coupled systems. Administrative
Science Quarterly, 1-19.
Williamson, K. D. (2021). Woke capitalism: A history. National Review, June 10.
Wolfe, R. A., & Putler, D. S. (2002). How tight are the ties that bind stakeholder groups?
Organization Science, 13(1), 64-80.
Wright, P. (2022). Woke Corporations and Worldview: Making Moral Proclamations from
Shaky Moral Foundations. Academy of Management Perspectives (forthcoming).
Young, T. (2019). The rise of the woke corporation. Spectator, 9. March. Accessed at
https://www.spectator.co.uk/article/the-rise-of-the-woke-corporation
Zheng, L. (2021). Your Rainbow Logo Doesn’t Make You an Ally. Harvard Business Review.
https://bit.ly/3PLqySK
Zogby Analytics (2021). Decision makers in the U.S. and France are not keen on certain
progressive ideas and ‘cancel culture’; a majority agree progressive ideas on race, gender,
and cancel culture are undermining society. https://bit.ly/3b7YYR3
44

Nicolai J. Foss ([email protected]) is a Professor of Strategy and Organization at the Copenhagen
Business School. His main research interest is extending the transaction cost economics and
resource-based views. Foss is a member of Academia Europaea and is a Clarivate highly cited
scholar.
Peter G. Klein ([email protected]) is W. W. Caruth Chair and Professor of
Entrepreneurship at Baylor University. He is interested in the links between entrepreneurship,
organization, and strategy, with applications to innovation and public policy. He is Past Chair of
the Academy of Management’s Entrepreneurship Division.
45

Why Do Companies Go Woke?

Uploaded by

Copyright:

Available Formats

Why Do Companies Go Woke?

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Why Do Companies Go Woke?

Uploaded by

Copyright:

Available Formats

What is the main topic discussed in the document?

What is the main topic discussed in the document?

What is the definition of a 'woke company' according to the text?

What is the definition of a 'woke company' according to the text?

WHY DO COMPANIES GO WOKE?

November 23, 2022

Electronic copy available at: https://ssrn.com/abstract=4285680

performance including perceived corporate hypocrisy (“woke-washing”), the potential loss of

constantly changing cultural landscape.

Keywords: DEI, diversity, social responsibility, strategic change, organizational structure

Electronic copy available at: https://ssrn.com/abstract=4285680

in something. Even if it means sacrificing everything.” 1

and nonmarket strategies.

Electronic copy available at: https://ssrn.com/abstract=4285680

so ubiquitous it gives rise to complaints of “rainbow washing” or “pink washing,” a

Electronic copy available at: https://ssrn.com/abstract=4285680

inequalities rather than personal prejudice. 3

is simply another potentially productivity- or efficiency-enhancing phenomenon such as

has yet to appear.

Electronic copy available at: https://ssrn.com/abstract=4285680

1983; Mintzberg & Waters, 1985).

Underlying our claims is a basic framework that combines intra-organizational ecology

Electronic copy available at: https://ssrn.com/abstract=4285680

GOING WOKE: INCIDENCE AND MOTIVES

acts or by persuading people in power not to make racial or gendered distinctions. 4

Electronic copy available at: https://ssrn.com/abstract=4285680

beliefs and systems to bring about a new social order.

Electronic copy available at: https://ssrn.com/abstract=4285680

participation of underrepresented groups (e.g., Smith, 2021).

How Many Companies Are Going Woke?

Electronic copy available at: https://ssrn.com/abstract=4285680

LGBTQ individuals—many specifically targeting transgender youth—for exclusion or

groups for additional disadvantage” (Berg-Brousseau, 2022).

emergence and diffusion of corporate wokeism.

Electronic copy available at: https://ssrn.com/abstract=4285680

symbolic action or strategic signaling to external stakeholders.

Instrumental and normative motives. Instrumental CSR or stakeholder approaches

government regulation or public boycott (Detomasi, 2008; Schrempf-Stirling et al., 2013),

attracting particular investors (Maldonado-Bautista et al., 2021). Embracing CSR or stakeholder

Roszkowska-Menkes & Aluchna, 2017). By contrast, normative approaches to CSR and

Electronic copy available at: https://ssrn.com/abstract=4285680

1995; Donaldson, 1999).

Using parallel reasoning, we can distinguish instrumental and normative adoption of

Electronic copy available at: https://ssrn.com/abstract=4285680

instrumental reasons (Bernheim, 1994).

orientations. Indeed, research on stakeholder governance highlights divergent interests among

Much of the attention concerning woke-washing has centered on external stakeholders, in

firms’ stakeholder groups.

Regarding investors, there is little evidence on the ideological preferences of corporate

Electronic copy available at: https://ssrn.com/abstract=4285680

broader societal goals (Maldonado-Bautista et al., 2021). Government-affiliated institutional

regulators. Public procurement contracts increasingly include social-justice objectives

(McCrudden, 2007; Hartlapp, 2020).

Electronic copy available at: https://ssrn.com/abstract=4285680

Electronic copy available at: https://ssrn.com/abstract=4285680

these internally. We discuss this at greater length in the next section.

THE ROLE OF INTERNAL ORGANIZATION

Woke Strategy as the Product of Intra-organizational Evolution

role that process.