Lecture Business and society: Stakeholders, ethics, public policy (14/e): Chapter 9 - Anne Lawrence, James Weber

chapter 9
Influencing the Political
Environment
McGraw­Hill/Irwin

Copyright © 2014 by The McGraw­Hill Companies, Inc. All rights reserved.


Ch. 9: Key Learning Objectives
 Understanding the arguments for and against business
participation in the political process
 Knowing the types of corporate political strategies and the
influences on an organization’s development of a
particular strategy
 Assessing the tactics businesses can use to be involved in
the political process
 Examining the role of the public affairs department and its
staff
 Recognizing the challenges business faces in managing
business–government relations in different countries

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The Arguments for and
Figure 9.1 against Political Involvement
by Business

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Business as a Political Participant
 Many business executives and managers see their role
in the political process as vital to the progress (and
possibly survival) of their company
 2011 Harris poll showed concern about business
influence:
 88% of public polled felt business had too much political power
 87% felt political action committees (a favorite business
political tactic) were too powerful
 At the same time only 5% of respondents felt small business
had too power in the political environment

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Stakeholder Groups in Politics
 Various stakeholder groups, representing many
varied concerns and populations, have a voice in
politics and the public policy process
 Labor unions have a longstanding role in U.S. politics
 AFL-CIO (a federation of unions) and the Teamster Union
have formed political action committees to influence
electoral races and legislation

 Ad hoc coalitions
 Diverse business organizations and interest groups band
together in support or opposition to a specific legislative or
regulatory initiative
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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 operations of
companies

 Companies therefore must formulate a Corporate Political
Strategy
 Involves the activities taken by organizations to acquire, develop,
and use power to obtain an advantage

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Types of Corporate Political Strategy
 Three strategic types


Information strategy
•



Financial-incentives strategy
•



Businesses seek to provide government policymakers with
information to influence their actions

Businesses provide incentives to influence government
policymakers to act in a certain way

Constituency-building strategy
•

Businesses seek to gain from other affected organizations to
better influence government policymakers to act in a way that
helps them

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Figure 9.2 Business Strategies for
Influencing Government

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Promoting an Information Strategy
 Lobbying
 Lobbyists communicate with and try to persuade others to
support an organization’s interest or stake as they consider a
particular law, policy, or regulation
• Revolving door: when businesses hire former
government officials as lobbyists and political advisors

 Direct communications
 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
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Figure 9.3

Total Federal Lobbying
Spending and Number of
Lobbyists (1998 – 2011)

 

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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 it believes foster vigorous economic growth
and a dynamic global economy
 Considers issues like corporate governance,
education, health care, and civil justice reform
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Promoting a Financial Incentive
Strategy
 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

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Figure 9.5

Political Action Committee
Activity

 

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Promoting a Constituency Building
Strategy
 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 businesses’ grassroots mobilization
campaigns

 Legal challenges
 Business seeks to overturn a law after it has been passed

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Figure 9.5 Levels of Business Political
Involvement

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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
 Eight of the 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
percent, sit on the corporation’s strategic planning
committee

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Business Political Action: 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 issues as U.S. 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
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Business Political Action Abroad
 Lobbying in China
 Questionable actions by individuals employed at lobbying
firms 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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