Influencing the Political Environment
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Transcript of Influencing the Political Environment
Influencing the Political Influencing the Political EnvironmentEnvironment
Participants in the Political Environment Influencing the Business-Government Relationship Political Action Tactics Levels of Political Involvement Campaign Finance Reform: A Special Issue Business Political Action—A Global Challenge
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The arguments for and against political The arguments for and against political involvement by businessinvolvement by business
Why Business Should Be Involved
A pluralistic system invites many participants.
Economic stakes are high for firms.
Business counterbalances other social interests.
Business is a vital stakeholder of government.
Why Business Should Not Be Involved
Managers are not qualified to engage in political debate.
Business is too big, too powerful.
Business is too selfish to care about the common good.
Business risks its credibility by engaging in partisan politics.
Figure 9.1
Corporate political strategyCorporate political strategy
Corporate political strategyInvolves the activities taken by organizations to acquire, develop, and use power to obtain an advantage.
Three strategic types1. Information strategy: where businesses seek to provide
government policymakers with information to influence their actions.
2. Financial-incentives strategy: where businesses provide incentives to influence government policymakers to act in a certain way.
3. Constituency-building strategy: where businesses seek to gain from other affected organizations to better influence government policymakers to act in a way that helps them.
Political strategies, tactics, and characteristics: Political strategies, tactics, and characteristics: Information strategyInformation strategy
Tactics Lobbying Direct communication Expert witness testimony
Characteristics Targets government policymakers by providing information.
Figure 9.2a
Source: Adapted from Amy J. Hillman and Michael A. Hitt, “Corporate Political Strategy Formulation: A Model Approach, Participation, and Strategy Decisions,” Academy of Management Review, 24 (1999), Table 1, p. 835.
Political strategies, tactics, and characteristics: Political strategies, tactics, and characteristics: Financial-incentive strategyFinancial-incentive strategy
Tactics Political contributions Economic leverage Political consulting aid Office personnel
Characteristics Targets government policymakers by providing financial
incentives.
Figure 9.2b
Source: Adapted from Amy J. Hillman and Michael A. Hitt, “Corporate Political Strategy Formulation: A Model Approach, Participation, and Strategy Decisions,” Academy of Management Review, 24 (1999), Table 1, p. 835.
Political strategies, tactics, and characteristics: Political strategies, tactics, and characteristics: Constituency-building strategyConstituency-building strategy
Tactics Stakeholder coalitions Advocacy advertising Public relations Legal challenges
Characteristics Targets government policymakers by providing information
Figure 9.2c
Source: Adapted from Amy J. Hillman and Michael A. Hitt, “Corporate Political Strategy Formulation: A Model Approach, Participation, and Strategy Decisions,”Academy of Management Review, 24 (1999), Table 1, p. 835.
Political action tacticsPolitical action tactics
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 often participate in activities that will improve
government officials’ understanding of management and employee concerns.
Expert witness testimony Businesses may want to provide facts, anecdotes, or data to educate
or influence government leaders through public congressional hearings.
The Business RoundtableThe Business Roundtable
One of the most effective organizations for promoting direct communication between business and policymakers.
It is an organization of CEOs of leading corporations. It 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.
Top 15 business lobbyist expenditures for 2000Top 15 business lobbyist expenditures for 2000
Figure 9.3a
General Electric $16,020,000
Edison Electric 12,000,000
Philip Morris 11,270,000
Lockheed Martin 9,740,000
Ford Motor 8,008,000
Boeing 7,820,000
AT&T 7,400,000
Schering 7,320,000
SBC Communications 7,208,000
Exxon Mobil 7,077,963
Fannie Mae 7,000,000
Northrup Grumman 6,882,720
Sprint 6,720,000
Microsoft 6,360,000
Verizon Communications 6,360,000
Top 10 association lobbyist expendituresTop 10 association lobbyist expenditures for 2000 for 2000
Figure 9.3b
U.S. Chamber of Commerce $24,881,660
Business Roundtable 21,480,000
Seniors Coalition 9,022,096
National Association of Realtors 8,920,000
Association of American Railroads 8,760,160
American Council of Life Insurance 7,712,090
Pharmaceutical Researchers & Manufacturers of America 7,480,000
Health Insurance Association of America 6,860,000
National Committee for Preserving Social Security 6,740,000
Security Industry Association 6,564,586
Source: Compiled from the Lobbyist Database, Center for Responsive Politics. www.opensecrets.org/lobbyists
Promoting a financial-incentive strategyPromoting 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.
Political action committee activityPolitical action committee activityFigure 9.4
050010001500200025003000350040004500
1974 1979 1984 1989 1994 1999 2003
Corporate Labor Trade/membership/health Non-connected
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Promoting a constituency-building strategyPromoting 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 and trade associations Businesses may include a politically charged comment in a
speech given by a senior company executive or even run a well-funded, long-running public relations campaign.
Legal challenges Business seeks to overturn a law after it has been passed.
Levels of business political involvementLevels of business political involvement
Level 3: Aggressive Organizational Involvement Executive participation Involvement with industry working groups and task forces Public policy development
Level 2: Moderate Organizational Involvement Organizational lobbyist Employee grassroots involvement Stockholders and customers encouraged to become involved
Level 1: Limited Organizational Involvement Contribution to political action committee Support of a trade association or industry activities
Figure 9.5
Campaign finance reformCampaign finance reform
Soft money
Unlimited contributions to the national political parties by individuals or organizations for party-building activities.
Top soft money contributors to both Top soft money contributors to both political parties, 2001-2002 political parties, 2001-2002
Figure 9.6
Donor Total Contribution
Given to Democrats
Given to Republicans
Freddie Mac $3,355,615 $1,750,000 $1,605,615
AT&T 3,330,961 1,564,250 1,766,711
Philip Morris 2,872,752 621,560 2,251,192
Microsoft 2,719,906 852,343 1,867,563
Ameriquest Capital 2,546,000 1,546,000 1,000,000
Archer Daniels Midland 2,041,500 901,500 1,140,000
Citigroup 1,884,397 653,820 1,230,577
American International Group 1,823,250 621,900 1,201,350
Anheuser-Busch 1,767,816 726,914 1,040,902
Global Crossing 1,634,954 1,280,500 354,454
Source: www.opensecrets.org/news/campaignfinancing.
Top soft money overall donors, 2001-2002Top soft money overall donors, 2001-2002
Donor Total Contribution
Given to Democrats
Given to Republicans
Haim Saban, chair, Saban Entertainment $9,252,936 $9,252,936 $0
American Federation of State, County, & Municipal Employees
7,484,000 7,483,500 500
Fred Eychaner, president, Newsweb Co. 7,387,936 7,387,936 0
Stephen L. Bing, producer, Shangri-La Entertainment 7,075,936 7,075,936 0
Service Employees International Union 4,914,240 4,872,618 41,622
Communications Workers of America 4,028,150 4,028,150 0
United Brotherhood of Carpenters & Joiners 3,946,209 3,926,209 20,000
American Financial Group 3,503,108 125,000 3,378,108
American Federation of Teachers 3,422,150 3,412,150 10,000
Pharmaceutical Research & Manufacturers Association
3,392,087 143,000 3,249,087
Figure 9.7
Campaign financing reform abroadCampaign 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