1. Influencing the Political Environment
Chapter 9
Influencing the Political Environment
McGraw-Hill/Irwin
Copyright © The McGraw-Hill Companies, All Rights Reserved.

2. 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 use
Recognizing the challenges facing business in managing business–government relations in different countries
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3. The Arguments For and Against Political Involvement by Business
Figure 9.1

4. Business as Countervailing Force in Politics?
Many business executives and managers see their role in the political process as vital to the progress (and possibly survival) of their company
2005 Harris poll showed concern about business influence:
90% of public polled felt business had too much political power
85% felt political action committees (a favorite business political tactic) were too powerful
At the same time only 16% of respondents felt public opinion had much power in the political environment

5. Role of Interest Groups and Coalitions
Interest groups, representing varying concerns and populations, have a voice in the political process
Labor unions have a longstanding role in U.S. politics
Recent increase in AFL-CIO dues of 4cents/month to support political activity raised $7million
Unions are not unified in their support for a particular party
Ad hoc coalitions
Diverse business organizations and interest groups band together in support or opposition to a specific legislative or regulatory initiative

6. 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 their
Corporate Political Strategy
Involves the activities taken by organizations to acquire, develop, and use power to obtain an advantage

7. Types of Corporate Political Strategy
Three strategic types
Information strategy
Businesses seek to provide government policymakers with information to influence their actions
Financial-incentives strategy
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

8. Business Strategies for Influencing Government
Figure 9.2

9. 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
Direct communications with policymakers
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

10. 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

11. 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

12. 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
Could be politically charged comment in a speech by senior executive or a public relations campaign
Trade associations
Coalitions of companies in the same or related industries—to coordinate their grassroots mobilization campaigns
Legal challenges
Business seeks to overturn a law after it has been passed

13. Levels of Business Political Involvement
Figure 9.5

14. Campaign Finance Reform
In 1990’s critics feared the growing amount of money pouring into elections would become a corrupting influence
Public outcry resulted in calls for Campaign Finance Reform legislation passed in 2002
Largest provision was ban on soft money
Unlimited contributions to the national political parties by individuals or organizations for party-building activities
$470 million in election
Have been series of legal challenges to 2002 reforms

15. Global Challenges to Business Political Action
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, as shown on next slide

16. 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