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Chapter8-InfluencingthePoliticalEnvironment.pptxChapter 8
Influencing the Political Environment
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Ch. 8: Key Learning Objectives
8-1 Understanding the arguments for and against business participation in the political process.
8-2 Knowing the types of corporate political strategies and the influences on an organization’s development of a particular strategy.
8-3 Assessing the tactics businesses can use to be involved in the political process.
8-4 Examining the role of the public affairs department and its staff.
8-5 Recognizing the challenges business faces in managing business–government relations in different countries.
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Business as a Political Participant
This debate involves the question of whether, and to what extent, business should legitimately participate in the political process.
This justice and fairness argument becomes even stronger when one considers the significant financial consequences that government actions may have on business.
Businesses see themselves as countervailing forces in the political arena.
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The Arguments for and Against Political Involvement by Business
From Figure 8.1
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| Why Business Should Be Involved | Why Business Should Not Be Involved |
| A pluralistic system invites many participants. | Managers are not qualified to engage in political debate. |
| Economic stakes are high for firms. | Business is too big, too powerful—an elephant dancing among chickens. |
| Business counterbalances other social interests | Business is too selfish to care about the common good. |
| Business is a vital stakeholder of government. | Business risks its credibility by engaging in partisan politics. |
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Corporate Political Strategy
Involves the activities taken by organizations to acquire, develop, and use power to obtain an advantage
To further a firm’s economic survival or growth.
May target limiting a competitor’s progress or ability to compete.
May exercise the business’s right to a voice in government affairs
Such as participation in the presidential advisory council. Companies develop an ongoing political strategy.
Example: Technology firms supporting the Honest Ads Act.
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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 support from other affected organizations to better influence government policymakers to act in a way that helps them.
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Business Strategies for Influencing Government
Figure 8.2
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Promoting an Information Strategy: Lobbying1
Lobbying: direct contact with a government official to influence the thinking/actions of that person on an issue or public policy.
Lobbyists role:
Communicate with and try to persuade others to support an organization’s interest.
Revolving door: when businesses hire former government officials as lobbyists and political advisors.
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Promoting an Information Strategy: Lobbying2
Under U.S. law and EU directive, lobbying activities are severely limited and disclosed publicly.
Lobbying firms and organizations employing in-house lobbyists must:
Register with the government.
Must file regular reports on their earnings or expenses.
Indicate the issues and legislation that were the focus of their efforts.
These rules are to guarantee that politicians are free from undue influence and represent the public interest.
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Total Federal Lobbying Spending and Number of Lobbyists, 1998 to 2017
Figure 8.3
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Promoting an Information Strategy: Direct Communications
Businesses invite officials to participate in activities that will improve government officials’ understanding of management and employee concerns.
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The Business Roundtable
Organization of CEOs of leading corporations (founded in 1972).
Promote direct communication between business and policymakers.
Studies various public policy issues.
Advocates for laws it believes “foster vigorous economic growth and a dynamic global economy.”
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Promoting an Information Strategy: Expert Witness Testimony
Businesses provide facts, anecdotes, or data:
to educate or influence government leaders at public forums like congressional hearings.
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Promoting a Financial Incentive Strategy: Political Action Committees
Independently incorporated organizations.
Solicit contributions and channel those funds to candidates seeking political office.
Active in industries that are highly regulated.
Example: financial services and health care industries.
Disadvantage:
Contributions are capped at fairly low levels.
Companies cannot give money directly to their affiliated PACs.
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Political Action Committee Activity
Figure 8.4
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Promoting a Financial Incentive Strategy: Super-PACs
As long as PACs did not contribute directly to other bodies, they could accept unlimited contributions from individuals/ unions/ corporations.
To support particular candidates or parties.
Example: the Senate Majority PAC and the Congressional Leadership Fund.
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Promoting a Financial Incentive Strategy: Tax-exempt Organizations
Tax-exempt Organizations: a third mechanism businesses can use to direct money to election campaigns.
Dark money: contributions made to the organizations where the donors’ names and amount of their contributions were not reported to the Federal Election Commission.
Have no contribution or spending limits.
Soft money: unlimited contributions to political parties by individuals or organizations for party-building activities was prohibited in 2002.
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Promoting a Financial Incentive Strategy: Direct Contribution by Corporations
Citizens United v. the Federal Election Commission
Decision allowed companies for the first time to contribute directly to political campaigns.
Critics said it would “corrupt democracy.”
McCutcheon v. Federal Election Commission
Abolished all limits on election spending by corporations as well as unions.
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Promoting a Financial Incentive Strategy: Executive and Employee Personal Contributions
Encourage their executives/ employees to make personal contributions to the campaigns of candidates whom they are interested in.
Individuals are able to significantly influence the political process if they have money.
Example: Fewer than 400 families contributed almost half of the money for candidates in the 2016 presidential campaign.
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Promoting a Financial Incentive Strategy: Economic leverage
When a business uses its economic power to threaten to leave a city, state, or country unless a desired political action is taken.
To persuade a government body to act in a certain way that would favor the business.
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Promoting a Constituency Building Strategy1
Often called a Grassroots Strategy
Objective is to shape policy by mobilizing the broad public in support of a business organization’s position.
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Promoting a Constituency Building Strategy2
Types of strategies:
Stakeholder coalitions
Influence politics by mobilizing various organizational stakeholders to support its political agenda.
Advocacy advertising and public relations
Advertisements that focus on a company’s views on controversial political issues.
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Promoting a Constituency Building Strategy3
Types of strategies:
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 to challenge the legal legitimacy of the new regulation.
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Levels of Business Political Involvement1
Figure 8.5
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Levels of Business Political Involvement2
Bundling: the company takes all of the contributions to the candidates, clearly indicating that the contributions are from the firm’s stockholders.
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Managing the Political Environment
The role of the public affairs department:
To manage the firm’s interactions with governments at all levels.
To promote the firm’s interests in the political process.
Typical public affairs executive duties:
Direct lobbying with federal or state politicians.
Host visits by politicians to the company’s locations.
Attend funding raising activities.
Participate in coalition building.
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Business Political Action Abroad
Managers must be aware of the opportunities for and restrictions on business involvement in the political processes in other countries.
Issues:
participation in the political environment.
campaign financing.
fair ethical climate throughout the public policy process.
Example: EU antitrust case and the Right To Be Forgotten controversy at Google.
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Accessibility Content: Text Alternatives for Images
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Business Strategies for Influencing Government Text Alternative
It contains two oval structures on either ends of the illustration. The structure on the left is labeled business, and the structure on the right is labeled government. There are three boxes with content positioned between these structures.
The first box is labeled information strategy. There are three points listed under this heading that read as follows:
Lobbying.
Direct communication.
Expert witness testimony.
An arrow arises from the right end of the structure labeled business. This arrow runs across the width of the illustration and points at the structure labeled government.
The second box is labeled financial-incentives strategy. There are four points listed under this heading that read as follows:
Political contributions.
Economic leverage.
Political consulting aid.
Office personnel.
An arrow arises from the right end of the structure labeled business. This arrow runs across the width of the illustration and points at the structure labeled government.
The third box is labeled constituency-building strategy. There are four points listed under this heading that read as follows:
Stakeholder coalitions.
Advocacy advertising.
Public relations.
Legal challenges.
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Total Federal Lobbying Spending and Number of Lobbyists, 1998 to 2017 Text Alternative
Both graphs share the same y-axis that is positioned at the center of this illustration. It contains twenty markings. From the top to the bottom, these markings read 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, and 2017.
For the graph on the left, the x-axis is labeled total lobbying spending (in billions of dollars).
For this graph, the data for total lobbying spending reads as follows:
In the year 1998, 1.44 billion dollars; in 1999, 1.44 billion dollars; in 2000, 1.56 billion dollars; in 2001, 1.64 billion dollars; in 2002, 1.81 billion dollars; in 2003, 2.04 billion dollars; in 2004, 2.18 billion dollars; in 2005, 2.42 billion dollars; in 2006, 2.61 billion dollars; in 2007, 2.85 billion dollars; in 2008, 3.30 billion dollars; in 2009, 3.50 billion dollars; in 2010, 3.54 billion dollars; in 2011, 3.32 billion dollars; in 2012, 3.31 billion dollars; in 2013, 3.24 billion dollars; in 2014, 3.24 billion dollars; in 2015, 3.22 billion dollars; in 2016 3.15 billion dollars; in 2017 3.37 billion dollars were spent on lobbying.
For the graph on the right, the x-axis is labeled number of lobbyists.
There were 10,684 lobbyists in the year 1998; 12,936 in 1999; 12,535 in 2000; 11,838 in 2001; 12,125 in 2002; 12,920 in 2003; 13,167 in 2004; 14,066 in 2005; 14,514 in 2006; 14,840 in 2007; 14,154 in 2008; 13,672 in 2009; 12,931 in 2010; 12,655 in 2011; 12,185 in 2012; 12,109 in 2013; 11,800 in 2014; 11,544 in 2015; 11,175 in 2016; and 11,529 in 2017.
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Political Action Committee Activity Text Alternative
The figure contains six columns and eleven rows.
Column 1 is titled PAC name, column 2 is titled 2007 to 2008, column 3 is titled PAC name, column 4 is titled 2011 to 2012, column 5 is titled PAC name, and column 6 is titled 2017 to 2018. The figure provides three sets of data about PACs across the three date ranges.
The first set of data in columns 1 and 2 for the years 2007 to 2008 from bottom to top reads as follows:
Row 10 American Association for Justice spent 1,433,500 dollars;
Row 9 Honeywell International spent 1,466,127 dollars;
Row 8 Operation Engineers Union spent 1,483,926 dollars;
Row 7 Northrup Grumman spend 1,553,000 dollars;
Row 6 American Crystal Sugar spent 1,583,500 dollars.
Row 5 Prosperity Actin spent 1,740,000 dollars;
Row 4 Lockheed Martin spent 1,783,500 dollars;
Row 3 National Air Traffic Controllers Association spent 1,804,000 dollars;
Row 2 National Beer Wholesalers Association spent 1,911,000 dollars;
and at the top of this list Row 1 AT and T spent 1,911,500.
The second set of data in columns 3 and 4 for the years 2011 to 2012 from bottom to top reads as follows:
Row 10 Laborers Union spent 2,555,850 dollars;
Row 9 American Association for Justice spent 2,700,500 dollars;
Row 8 Operating Engineers Union spent 2,704,067 dollars;
Row 7 International Association of Fire Fighters spent 2,734,900 dollars;
Row 6 National Auto Dealers Association spent 2,864,000 dollars;
Row 5 National Beer Wholesalers Association spent 2,869,000 dollars;
Row 4 American Bankers Association spent 2,918,143 dollars.
Row 3 AT and T spent 3,108,200 dollars;
Row 2 International Brotherhood of Electrical Workers spent 4,020,900, the top amount for this section.
The third set of data in columns 5 and 6 for the years 2017 to 2018 from bottom to top reads as follows:
Row 10 Boeing spent 1,069,000;
Row 9 every Republican Is Crucial PAC spent 1,101,000 dollars;
Row 8 Credit Union National Association spent 1,168,000 dollars;
Row 7 American Bankers Association spent 1,182,750 dollars;
Row 6 Lockheed Martin spent 1,271,500 dollars;
Row 5 International Brotherhood of Electrical Workers spent 1,293,150 dollars;
Row 4 American Association for Justice spent 1,298,500 dollars;
Row 3 AT and T spent 1,360,000 dollars;
Row 2 National Beer Wholesalers Association spent 1,491,500 dollars;
Row 1 Honeywell International spent 1,768,562, the largest amount for this group.
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Levels of Business Political Involvement1 Text Alternative
There are three headings, and there are points listed under each individual heading. There is an upward-pointing arrow positioned on the left side of the illustration indicating the rise from level 1 at the bottom to level 3 at the top.
The first heading reads level 3: aggressive organizational involvement–direct and personal. There are three points listed under this heading that read as follows:
Executive participation.
Involvement with industry working groups and task forces.
Public policy development.
The second heading reads level 2: moderate organizational involvement–indirect yet personal. There are three points listed under this heading that read as follows:
Organizational lobbyist.
Employee grassroots involvement.
Stockholders and customers encouraged to become involved.
The third heading reads level 1: limited organizational involvement–direct and impersonal. There are two points listed under this heading that read as follows:
Contribution to political action committee.
Support of a trade association or industry activities.
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