Business & Society Business & Society Ethics, Sustainability, and Stakeholder Management Eighth Edition Archie B. Carroll Ann K. Buchholtz © 2012 South-Western, a part of Cengage Learning 1

Chapter 12 Business Influence on Government and Public Policy © 2012 South-Western, a part of Cengage Learning 2

Learning Outcomes © 2012 South-Western, a part of Cengage Learning 1. Describe the evolution of corporate political participation. 2. Differentiate among the different levels at which business lobbying occurs. 3. Explain the phenomenon of political action committees (PACs) in terms of their historical growth, the magnitude of their activity, and the arguments for and against them. 4. Define coalitions and describe the critical role they now assume in corporate political involvement. 5. Discuss the Bipartisan Campaign Reform Act and other issues surrounding campaign financing. 6. Outline the principal strategic approaches to political activism that firms are employing. 3

Chapter Outline Corporate Political Participation Coalition Building Political Action Committees Summary Key Terms Discussion Questions 4 © 2012 South-Western, a part of Cengage Learning

Corporate Political Participation Political Involvement Participation in the formulation and execution of public policy at various levels of government.  A 2010 Supreme Court ruling states that the government should not regulate political speech from corporations. Has strengthened business’s power in political activities and allows for unlimited political spending by corporations. © 2012 South-Western, a part of Cengage Learning 5

Corporate Political Participation (continued) Lobbying The process of influencing public officials to promote or secure passage or defeat of legislation. PACs Instruments through which business uses financial resources to influence government. Coalition Building Business and other groups joining forces to achieve common goals. Political Strategy To secure position of advantage regarding a given regulation or piece of legislation. © 2012 South-Western, a part of Cengage Learning 6

The Purposes of Lobbying Primary goal is to promote legislation that is in their organization’s interests and defeat legislation that is not. To target the election or defeat of national, state, and local legislators.  More businesses, as well as other special- interest groups, are turning to lobbyists. 7 © 2012 South-Western, a part of Cengage Learning

Organizational Levels of Lobbying 8 © 2012 South-Western, a part of Cengage Learning

What Business Lobbyists Do Get access to key legislators Monitor legislation Establish communication channels with regulatory bodies Protect firms against surprise legislation Draft legislation, slick ad campaigns, direct-mail campaigns Provide issue papers on anticipated effects of legislative activity Communicate sentiments of client on key issues Influence outcome of legislation Assist companies in coalition building around issues Help members of Congress get reelected Organize grassroots efforts 9 © 2012 South-Western, a part of Cengage Learning

Grassroots Lobbying Mobilizing the “grassroots,” which are individual citizens who might be most directly affected by legislative activity, to political action. Cyberadvocacy Using the Internet to amass grassroots support and enable grassroots supporters to contact their legislators. 10 © 2012 South-Western, a part of Cengage Learning

Grassroots Lobbying (continued) Astroturf Lobbying/Grasstops Lobbying Fake groups that appear to be genuinely grassroots but are largely created and funded by a professional organization or trade association. 11 © 2012 South-Western, a part of Cengage Learning

Trade Association Lobbying The Center for Political Accountability revealed that trade associations helped companies conceal and spend over $100 million in just one year. Industry-level lobbying is common. 12 © 2012 South-Western, a part of Cengage Learning

Umbrella Organizations Two major U.S. umbrella organizations Chamber of Commerce of the United States National Association of Manufacturers (NAM) Other umbrella organizations Business Roundtable National Federation of Independent Businesses (NFIB) 13 © 2012 South-Western, a part of Cengage Learning

Coalition Building Coalition Forms when distinct groups or parties realize they have something in common that might warrant their joining forces for joint action. Building a coalition 1.Manage the sequence in which issues are addressed. 2.Increase the visibility of certain issues. 3.Unbundle issues into smaller sub-issues. 14 © 2012 South-Western, a part of Cengage Learning

Political Action Committees Political Action Committees (PACs) are groups of like-minded businesses using financial resources to influence government. The principal instruments through which business uses financial resources to influence government.  The Golden Rule of Politics: He who has the gold, rules. 15 © 2012 South-Western, a part of Cengage Learning

Top 10 PAC Contributors to Federal Candidates Operating Engineers Union International Brotherhood of Electrical Workers AT&T, Inc. National Beer Wholesalers Association Honeywell International American Association for Justice National Community Pharmacists Association American Bankers Association Teamsters Boeing Co. Lockheed Martin 16 © 2012 South-Western, a part of Cengage Learning

Political Action Committees Argument for PACs PACs are a reasonable means for business to organize their contributions to candidates for office. Business giving is offset by labor giving and by the multitude of other special-interest groups that also have formed PACs Argument Against PACs PACs expect something in return other than good government and this can lead to differing treatment for those who give and those who cannot, such as the poor. 17 © 2012 South-Western, a part of Cengage Learning

Conditions Needed for Effective PAC Contributions 1.When the issue is less visible. 2.During the early stages of the legislative process. 3.When the issue is narrow, specialized, or unopposed. 4.When PACs are allied. 5.When PACs adapt lobbying techniques to their contribution strategies. 18 © 2012 South-Western, a part of Cengage Learning

The Hard Facts About Soft Money Soft money is a contribution made to political parties instead of political candidates. The Bipartisan Campaign Reform Act of 2002 was a sweeping change of U.S. campaign finance. The BCRA removed the influence of soft money on candidates running for national office. 19 © 2012 South-Western, a part of Cengage Learning

The Hard Facts About Soft Money (continued) Law regulates hard money, which are donations made directly to candidates. Strategists established 527s, which are allowed to spend soft money on campaigns. Bundling The collection of individual donations that are then delivered to the candidate in a lump sum. Another way of getting around campaign finance reform.  A recent Supreme Court ruling removed all limits on campaign donations by corporations. 20 © 2012 South-Western, a part of Cengage Learning

Strategies for Political Activism Managers must address when and under what conditions various approaches should be used. The purpose of political strategy is “to secure a position of advantage regarding a given regulation or piece of legislation, to gain control of an idea or a movement and deflect it from the firm, or to deal with a local community group on an issue of importance.” Two major strategies: 1.Keep an issue off the public agenda and out of the limelight. 2.Help to define the public issue. 21 © 2012 South-Western, a part of Cengage Learning

Key Terms Astroturf lobbying Bipartisan Campaign Reform Act (BCRA) Bundling Coalitions Company lobbying Contingency approach Cyberadvocacy 527s Golden Rule of Politics Grassroots lobbying Grasstops lobbying Hard money Lobbying Political action committees (PACs) Political involvement Positive activism Regulatory life cycle Soft money Trade organizations Umbrella organizations © 2012 South-Western, a part of Cengage Learning 22