Influencing the Political Environment

2. Chapter 9 Influencing the Political Environment Participants in the Political Environment Influencing the Business-Government Relationship Political Action Tactics Levels of Political Involvement Campaign Finance Reform: A Special Issue Business Political Action—A Global Challenge

3. Why Business Should Be Involved A pluralistic system invites many participants. Economic stakes are high for firms. Business counterbalances other social interests. Business is a vital stakeholder of government. Why Business Should Not Be Involved Managers are not qualified to engage in political debate. Business is too big, too powerful. Business is too selfish to care about the common good. Business risks its credibility by engaging in partisan politics. Figure 9.1 The arguments for and against political involvement by business

4. Corporate political strategy Corporate political strategy Involves the activities taken by organizations to acquire, develop, and use power to obtain an advantage. Three strategic types • Information strategy: where businesses seek to provide government policymakers with information to influence their actions. • Financial-incentives strategy: where businesses provide incentives to influence government policymakers to act in a certain way. • Constituency-building strategy: where businesses seek to gain from other affected organizations to better influence government policymakers to act in a way that helps them.

5. Figure 9.2a Political strategies, tactics, and characteristics: Information strategy Tactics • Lobbying • Direct communication • Expert witness testimony Characteristics • Targets government policymakers by providing information. Source: Adapted from Amy J. Hillman and Michael A. Hitt, “Corporate Political Strategy Formulation: A Model Approach, Participation, and Strategy Decisions,” Academy of Management Review, 24 (1999), Table 1, p. 835.

6. Figure 9.2b Political strategies, tactics, and characteristics: Financial-incentive strategy Tactics • Political contributions • Economic leverage • Political consulting aid • Office personnel Characteristics • Targets government policymakers by providing financial incentives. Source: Adapted from Amy J. Hillman and Michael A. Hitt, “Corporate Political Strategy Formulation: A Model Approach, Participation, and Strategy Decisions,” Academy of Management Review, 24 (1999), Table 1, p. 835.

7. Figure 9.2c Political strategies, tactics, and characteristics: Constituency-building strategy Tactics • Stakeholder coalitions • Advocacy advertising • Public relations • Legal challenges Characteristics • Targets government policymakers by providing information Source: Adapted from Amy J. Hillman and Michael A. Hitt, “Corporate Political Strategy Formulation: A Model Approach, Participation, and Strategy Decisions,”Academy of Management Review, 24 (1999), Table 1, p. 835.

8. Political action tactics 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. Direct communications with policymakers • Businesses often participate in activities that will improve government officials’ understanding of management and employee concerns. Expert witness testimony • Businesses may want to provide facts, anecdotes, or data to educate or influence government leaders through public congressional hearings.

9. The Business Roundtable • One of the most effective organizations for promoting direct communication between business and policymakers. • It is an organization of CEOs of leading corporations. • It 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.

10. Figure 9.3a Top 15 business lobbyist expenditures for 2000

11. Figure 9.3b Top 10 association lobbyist expenditures for 2000 Source: Compiled from the Lobbyist Database, Center for Responsive Politics. www.opensecrets.org/lobbyists

12. 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.

13. Political action committee activity Figure 9.4 Number of PACs

14. 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. Public relations and trade associations • Businesses may include a politically charged comment in a speech given by a senior company executive or even run a well-funded, long-running public relations campaign. Legal challenges • Business seeks to overturn a law after it has been passed.

15. Figure 9.5 Levels of business political involvement Level 3: Aggressive Organizational Involvement • Executive participation • Involvement with industry working groups and task forces • Public policy development Level 2: Moderate Organizational Involvement • Organizational lobbyist • Employee grassroots involvement • Stockholders and customers encouraged to become involved Level 1: Limited Organizational Involvement • Contribution to political action committee • Support of a trade association or industry activities

16. Campaign finance reform Soft money Unlimited contributions to the national political parties by individuals or organizations for party-building activities.

17. Figure 9.6 Top soft money contributors to both political parties, 2001-2002 Source: www.opensecrets.org/news/campaignfinancing.

18. Figure 9.7 Top soft money overall donors, 2001-2002

19. Campaign financing reform abroad • Limits on expenditures • Contribution limits • Disclosure regulations • Bans against certain types of contribution • Bans against certain types of expenditures • Measures designed to encourage donations • Subsidies in-kind • Public subsidies