Chapter 09 - Influencing the Political Environment

Business and Society Stakeholders Ethics Public Policy

14th Edition Lawrence
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CHAPTER 9
INFLUENCING THE
POLITICAL ENVIRONMENT

INTRODUCTION

Businesses face complicated issues in managing their relationships with politicians and
government regulators. Managers must understand the political environment and be active and
effective participants in the public policy process. They need to ensure that their company is
seen as a relevant stakeholder when government officials make public policy decisions and must
be familiar with the many ways that business can influence these decisions. The opportunities
afforded businesses to participate in the public policy process differ from nation to nation.
Sound business strategies depend on an understanding of these differences, enabling businesses
to manage worldwide business–government relations effectively.

PREVIEW CASES

The American Legislative Exchange Council (ALEC) and solar energy

As the preview cases demonstrate, many businesses—big and small—have become active
participants in the political process to promote a variety of goals, from supporting organizations
charged with developing legislation to support economic development and job growth to
lobbying government regulators through a trade association to receive tax credits and grants.
They are not always successfully, however, as seen in the political partnership of businesses
with ALEC, which took on a new and controversial agenda. Yet, at other times, political action
can bolster the industry, as seen in the solar power industry’s political efforts. Which alliances
to join and political tactics to use may depend on the situation. In general, business recognizes
the necessity of understanding the political environment and of addressing political issues as

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Chapter 09 - Influencing the Political Environment

they arise. This is a constant challenge for business and mangers entrusted with managing the
political environment.

Teaching Tip: Preview Case

The preview case emphasizes the political challenges facing
business, large and small, in many different industries. New
issues emerge all the time so it might be beneficial for students
to search current media outlets for new political issues and
identify the businesses, large and small, who are involved in
these issues.

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Chapter 09 - Influencing the Political Environment

CHAPTER OUTLINE

I. PARTICIPANTS IN THE POLITICAL ENVIRONMENT

A. Business as a Political Participant

Teaching Tip: Arguments For and

Against Business in Politics
The question of whether businesses should be allowed to be
involved in the political environment is an excellent question for
an in-class debate. Students may want to focus on the ethical
aspects of the question: businesses have the right to be involved
versus it is unfair for businesses to be involved given their
potential economic power which create imbalances in the
process. Or, students may want to pose an “outcome-based”
argument, citing examples where business’s involvement has
benefited others or has harmed others. Figure 9.1 may be used
as a foundation for this debate.

B. Stakeholder Groups in Politics

C. Coalition Political Activity

Teaching Tip: Coalitions – Case Study

It may be helpful for students to identify a current (possibly
local) political issue involving business and explore the presence
of political collations – as discussed in the chapter for the move
toward longer daylight savings time. Which coalitions favor or
work against business? How were these coalitions formed?

II. INFLUENCING THE BUSINESS-GOVERNMENT RELATIONSHIP

A. Corporate Political Strategy

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Chapter 09 - Influencing the Political Environment

III. POLITICAL ACTION TACTICS

A. Promoting an Information Strategy

* Lobbying

Teaching Tip: Revolving Door

Is it ethical for a former regulator or legislator to accept a job
that requires her or him to lobby or influence those colleagues
still on the regulatory board or in Congress? Should a former
regulator or politician be free to take any job she or he wants, or
should there be greater controls on the revolving door practice?

* Direct communications

* Expert witness testimony

B. Promoting a Financial-incentive Strategy

* Political action committees

Teaching Tip: Financing a Campaign

A lively discussion might ensue focusing on Exhibit 9.C – The
Cost of Running for the Presidency. Why did Obama choose to
not accept any funding from political action committees, as did
Nader? Was this a wise choice? Obama decided not to accept
public (federal) funds, yet McCain did. Why did they make
different decisions to finance their campaigns? How did the
political contribution landscape change for the 2012 Presidential
election between Barack Obama and Mitt Romney?

* Economic leverage

C. Promoting a Constituency-Building Strategy

* Stakeholder coalitions

* Advocacy advertising

* Trade associations

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Chapter 09 - Influencing the Political Environment

* Legal challenges

Teaching Tip: Political Tactics

Various realistic or hypothetical examples of political elections,
regulatory reforms, or other political issues could be presented to
student groups asking them to develop effective strategies
emphasizing specific political tools. Then students in the other
groups could comment on and critique how effective the other
group’s strategies may be.
Inviting a local politician to class might be another way to assess
the effectiveness of the group’s strategies and use of political
tools.

IV. LEVELS OF POLITICAL INVOLVEMENT

Teaching Tip: Levels of Political Involvement

The investigation of a corporation’s political action history could
support or challenge the developmental levels of political
involvement model presented in this chapter. Or, inviting a
senior executive to class to speak on the firm’s political action
history could allow the students to seen the level of political
involvement in practice or question the model.

V. MANAGING THE POLITICAL ENVIRONMENT

Teaching Tip: Managing the Political Environment

The public affairs department is often the central focus of
political activity for a business organization. It might be helpful
for students to invite a guest public affairs officer to the class or
explore on the Internet public affairs functions of a major
company. The Foundation for Public Affairs is an excellent
resource for information.

VI. BUSINESS POLITICAL ACTION: A GLOBAL CHALLENGE

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Chapter 09 - Influencing the Political Environment

GETTING STARTED

KEY LEARNING OBJECTIVES

1. Understanding the arguments for and against business participation in the political
process.

Some believe that businesses should be involved in politics because their economic stake in
government decisions is great, and they have a right to participate, just as do other stakeholders
in a pluralistic political system. But others believe that businesses are too big, powerful, and
selfish, and that they wield too much influence in the political arena.

2. Knowing the types of corporate political strategies and the influences on an

organization’s development of a particular strategy.

There are three political strategies: information, financial-incentives, and constituency-building.

Some firms implement strategies as needed, on an issue-by-issue basis, while other firms have a
long-term, ongoing political strategy approach.

3. Assessing the tactics businesses can use to be involved in the political process.

Some of the political action tactics available for business include lobbying, direct
communications, expert witness testimony, political action committee contributions, economic
leverage, advocacy advertising, trade association involvement, legal challenges, and
encouraging involvement other stakeholders.

4. Examining the role of the public affairs department and its staff.

Businesses manage their government interactions through a public affairs department. Most
public affairs officers report to the CEO or some high-level official, although how these
departments are structured is widely varied.

5. Recognizing the challenges business faces in managing business-government relations

in different countries.

The differing national rules and practices governing political activity make business’s political
involvement complex in the global environment. Many governments, like the United States, are
trying to restrict political contributions or make campaign financing more transparent.

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Chapter 09 - Influencing the Political Environment

KEY TERMS AND CONCEPTS

ad hoc coalitions, 186

advocacy advertising, 200

bundling, 202

corporate political strategy, 187

economic leverage, 199

527 organizations, 198

leadership PACs, 198

lobbying, 189

political action committees (PACs), 193

public affairs department, 203

revolving door, 190

soft money, 193

super PACs, 197

The Business Roundtable, 192

trade associations, 201

INTERNET RESOURCES

www.businessroundtable.org The Business Roundtable

www.commoncause.org Common Cause

www.consumeraction.gov Consumer Action

explore.data.gov/ethics Ethics.data.gov – government data center

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Chapter 09 - Influencing the Political Environment

lobbyingdisclosure.house.gov Lobbying Disclosure, U.S. House of Representatives

www.ncpa.org National Center for Policy Analysis

www.nfib.com National Federation of Independent Businesses

www.opensecrets.org Opensecrets.org

www.politicsonline.com PoliticsOnline: News, Tools & Strategies

pac.org Public Affairs Council

www.pdc.wa.gov Public Disclosure Commission

www.fec.gov U.S. Federal Election Commission

DISCUSSION CASE

STOP ONLINE PIRACY ACT – A POLITICAL BATTLE BETWEEN OLD AND NEW
MEDIA

Discussion Questions

1. Which of the political tactics discussed in this chapter are evident in this case?

The group of businesses referred to as the “old media” in this case tended to use traditional
political tactics to gather support for their position. Congressional lobbying, discussed in the
chapter as a mainstay of corporate political strategy, was clearly evident here. In addition to
significant contributions to fund a lobbyist, old media firms employed letter-writing campaigns,
sent e-mails and made telephone calls.

The “new media” firms utilized innovative forms of social media to advocate their position
on this issue. In an effort to bring the political issue to the attention of the public, as well as
elected officials in Congress, these firms used direct communication tactics, stakeholder coalition
building, and advocacy advertising. They also used the more traditional form of political
influence – lobbying.

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Chapter 09 - Influencing the Political Environment

2. Why were the political tactics used by the “new media” so effective in this case?

The political tactics used by the new media firms were successful because the public was brought
into the political conversation, representing a larger stakeholder network with greater potential to
influence Congress. In addition, social media efforts in the form of tweets, texts and e-mails
were quicker and becoming more popular as a form of communication. More and more
Congressional representatives had adopted social media as the preferred method for
communicating with their constituents and receiving input from these groups.

3. Would the effectiveness of these tactics vary, depending on the political issue at stake?

Yes, social media tactics may have been more successful in this instance since the political issues
in this case focused on technology and copyright ownership. Other, more traditional political
issues might still be addressed using the more traditional corporate political tactics. But, given
the growing number of politicians who have adopted social media as their preferred form of
communication with their constituents, the use of social media to discuss and inform the public
on political issues is likely to become more frequent or common regardless of the nature of the
political issue.

4. What can traditional companies learn from the new forms of political activity
described in this case?

Traditional companies need to learn an important lesson from this case -- the world is changing
and adopting social media as the preferred and more effective form of communication. Public
affairs departments, as discussed earlier in the chapter, are beginning to recognize how
interacting with stakeholders has evolved and how effective and efficient the social media can be
as a communication tool and powerful influencer in society and the political environment.

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