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

Chapter 9 - Influencing the political environment. The purpose of this chapter is: 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.

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 9­2 The Arguments for and Figure 9.1 against Political Involvement by Business 9­3 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 9­4 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 9­5 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 9­6 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 9­7 Figure 9.2 Business Strategies for Influencing Government 9­8 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 9­9 Figure 9.3 Total Federal Lobbying Spending and Number of Lobbyists (1998 – 2011)   9­10 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 9­11 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 9­12 Figure 9.5 Political Action Committee Activity   9­13 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 9­14 Figure 9.5 Levels of Business Political Involvement 9­15 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 9­16 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 9­17 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 9­18 ... in different countries 9 2 The Arguments for and Figure 9. 1 against Political Involvement by Business 9 3 Business as a Political Participant  Many business executives and managers see their... leaders at public forums like congressional hearings 9 9 Figure 9. 3 Total Federal Lobbying Spending and Number of Lobbyists ( 199 8 – 2011)   9 10 The Business Roundtable  One of the most effective... 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