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Chapter 9 Influencing the political environment

Why Business should be involved
-a pluralistic system invites many participants
-economic skates are high for firms
-business counterbalances other social interests
-business is a vital stakeholder of government
why business should not be invloved
-managers are not qualified to engage in political debate
-business it too big, too powerful
-business is too selfish to care about the common good
-business risks its credibility by engaging in partisan politics
Business as a Political Participant
many business executives and managers see their role in the political process as a vital to the progress (and possibly survival) of their company
Stakeholder Groups in Politics
-various stakeholder groups, representing many varied concerns and politicians have a voice in politics and the public policy process

-labor unions have a longstanding role in the US politics

-ALF-CIO, a federal of unions and the Teamster Union have formed political action committees to influence electoral races and legislation

-Ad hoc coalitions: a diverse business organizations and interest groups band together in support or opposition to a specific legislative or regulatory initiative

Influencing the business – government relationship
-business leaders and scholars agree that firms must participate in the political process

-stakes are too high for business not to be involved

-government acts on issues that affect basic operation of companies

-companies therefore must formulate a corporate political strategy

-involved the activities taken by organizations to acquire, develop, and use power to obtain an advantage

Information strategy
businesses seek to provide government policymakers with information to influence their action

-direct communication
-expert witness testimony

Financial-incentive strategy
businesses provide policymakers incentives to act in certain way

-political contributors
-economic leverage
-political consulting aid
-office personnel

Constituency – building strategy
businesses seeks to gain from other affected organizations to better influence government policymakers to act in a way that helps them

-stakeholder coalitions
-advocacy advertising
-public relations
-legal challenges

lobbyists communicate with and try to persuade others to support an organization’s interest or skate as they consider a particular law, policy, or regulation

-revolving door: when businesses hire former government officials as lobbyists and political advisors

Direct communication
businesses invite officials to participate in activities that will improve government officials understanding of management and employee concerns
Expert witness testimony
businesses provide facts, anecdotes, or data to educate or influence government leaders at public forums like congressional hearings
The Business Roundtable
-one of the most effective organizations for promoting direct communication between business and policymakers

-organization of CEOs of leading corporations

-studies various public policy issues and advocates for laws in believes foster vigorous economic growth and a dynamic global economy

-consider issues like corporate governance, health care, and civil justice reform

Political action committees
independently incorporated organizations that can solicit contributions and then channel those funds to candidates seeking political office
Economic leverage
occurs when a business uses its economic power to threaten to leave a city, state, or country unless a desired political action is taken
Stakeholder coalitions
businesses try to influence politics by mobilizing various organizational stakeholders to support its political agenda
Advocacy advertising
advertisements that focus on a company’s views on controversial political issues
Trade associations
coalitions of companies in the same or related industries used to coordinate business’ grassroots mobilization campaigns
Legal challenges
business seeks to overturn a law after it has been passed
Levels of business political involvement
Level 3: aggressive organizational involvement – direct and personal

-executive participant
-involvement with industry working groups and task forces
-public policy development

Level 2: organizational involvement – indirect yet personal

-organizational lobbyist
-employee grassroots involvement
-stockholders and customers encouraged to become involved

Level 1: Limited organizational involvement – indirect and impersonal

-contributions to political action committee
-support of a trade association or industry activities

Managing the political environment
-the role of the public affairs department is to manage the firm’s interactions with governments at all levels and to promote the firm’s interests in the political process

-8 out of 10 most frequently performed activities by public affairs officers and departments involve a political action tactic

-more than half of the senior public affairs executives, 55% sit on the corporation’s strategic planning committee

A global challenge
-critical that managers be aware of the opportunities for and restrictions on business involvement in the political processes in other countries

-other governments struggle with same issue as US – participation in the political environment, campaign financing, and maintaining a fair ethical climate throughout the public policy process

-has resulted in campaign finance reform in many other countries

Business political action abroad
lobbying in China
-questionable actions by individuals employed at lobbying forms prompted government to close offices

Interest groups in Japan
-major actors like big business, agriculture, and labor participate in the public policy process

Parliamentary elections in Lebanon
-candidates offered their competitors huge sums to withdraw from the race

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