Chapter 9: Influencing the Political Environment

chapter 9Influencing the PoliticalEnvironmentCopyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinCh. 9: Key Learning ObjectivesUnderstanding the arguments for and against business participation in the political processKnowing the types of corporate political strategies and the influences on an organization’s development of a particular strategyAssessing the tactics businesses can use to be involved in the political processExamining the role of the public affairs department and its staffRecognizing the challenges business faces in managing business–government relations in different countries9-*The Arguments for and against Political Involvement by BusinessFigure 9.19-*Business as a Political ParticipantMany business executives and managers see their role in the political process as vital to the progress (and possibly survival) of their company2011 Harris poll showed concern about business influence:88% of public polled felt business had too much political power87% felt political action committees (a favorite business political tactic) were too powerfulAt the same time only 5% of respondents felt small business had too power in the political environment9-*Stakeholder Groups in PoliticsVarious stakeholder groups, representing many varied concerns and populations, have a voice in politics and the public policy processLabor unions have a longstanding role in U.S. politicsAFL-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 initiative9-*Influencing the Business-Government RelationshipBusiness leaders and scholars agree that firms must participate in the political processStakes are too high for business not to be involvedGovernment acts on issues that affect basic operations of companiesCompanies therefore must formulate a Corporate Political Strategy Involves the activities taken by organizations to acquire, develop, and use power to obtain an advantage9-*Types of Corporate Political StrategyThree strategic typesInformation strategyBusinesses seek to provide government policymakers with information to influence their actionsFinancial-incentives strategyBusinesses provide incentives to influence government policymakers to act in a certain wayConstituency-building strategyBusinesses seek to gain from other affected organizations to better influence government policymakers to act in a way that helps them9-*Business Strategies for Influencing Government Figure 9.29-*Promoting an Information Strategy LobbyingLobbyists communicate with and try to persuade others to support an organization’s interest or stake as they consider a particular law, policy, or regulationRevolving door: when businesses hire former government officials as lobbyists and political advisorsDirect communicationsBusinesses invite officials to participate in activities that will improve government officials’ understanding of management and employee concernsExpert witness testimonyBusinesses provide facts, anecdotes, or data to educate or influence government leaders at public forums like congressional hearings9-*Total Federal Lobbying Spending and Number of Lobbyists (1998 – 2011)Figure 9.3 9-*The Business RoundtableOne of the most effective organizations for promoting direct communication between business and policymakersOrganization of CEOs of leading corporationsStudies various public policy issues and advocates for laws it believes foster vigorous economic growth and a dynamic global economyConsiders issues like corporate governance, education, health care, and civil justice reform9-*Promoting a Financial Incentive StrategyPolitical action committeesIndependently incorporated organizations that can solicit contributions and then channel those funds to candidates seeking political officeEconomic leverageOccurs when a business uses its economic power to threaten to leave a city, state, or country unless a desired political action is taken9-*Political Action Committee ActivityFigure 9.5 9-*Promoting a Constituency Building StrategyStakeholder coalitionsBusinesses try to influence politics by mobilizing various organizational stakeholders to support its political agendaAdvocacy advertisingAdvertisements that focus on a company’s views on controversial political issuesTrade associationsCoalitions of companies in the same or related industries used to coordinate businesses’ grassroots mobilization campaignsLegal challengesBusiness seeks to overturn a law after it has been passed9-*Levels of Business Political InvolvementFigure 9.59-*Managing the Political EnvironmentThe 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 processEight of the 10 most frequently performed activities by public affairs officers and departments involve a political action tacticMore than half of the senior public affairs executives, 55 percent, sit on the corporation’s strategic planning committee9-*Business Political Action: A Global ChallengeCritical that managers be aware of the opportunities for and restrictions on business involvement in the political processes in other countriesOther 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 processHas resulted in campaign finance reform in many other countries9-*Business Political Action AbroadLobbying in ChinaQuestionable actions by individuals employed at lobbying firms prompted government to close officesInterest Groups in JapanMajor actors like big business, agriculture, and labor participate in the public policy processParliamentary elections in LebanonCandidates offered their competitors huge sums to withdraw from the race 9-*