1 Business Influence on Government and Public Policy Business and Society: Ethics and Stakeholder Management, 7e Carroll & Buchholtz Copyright ©2009 by South-Western, a division of Cengage Learning. All rights reserved Prepared by Deborah Baker Texas Christian University Chapter 12

2 Chapter 12 Learning Outcomes 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: Historical growth Magnitude of their activity Arguments for and against them

3 Chapter 12 Learning Outcomes (continued) 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.

4 Chapter 12 Outline  Corporate Political Participation  Coalition Building  Political Action Committees  Summary  Key Terms  Discussion Questions

5 Introduction to Chapter 12 The chapter focus is on business’s political attempts to influence government and public policy, and whether these strategies are legal and ethical.

6 Corporate Political Participation Political Involvement Participation in the formulationand execution of public policy atvarious levels of government

7 Corporate Political Participation Lobbying PACs Coalition Building Political Strategy The process of influencing public officials to promote or secure passage or defeat of legislation Instruments through which business uses financial resources to influence government Business and other groups joining forces to achieve common goals To secure position of advantage regarding a given regulation or piece of legislation

8 The Purposes of Lobbying  Gain legislative support or institutional approval for some objective  Obtain reinforcement of established policy or the defeat of proposed policy shifts  Targets the election or defeat of national, state, and local legislators

9 Organizational Levels of Lobbying Umbrella Organizations Trade Associations Company-Level Lobbying Broad Midrange Narrow/ Specific Narrow/ Specific Representation Chamber of Commerce of the US National Association ofManufacturers Chamber of Commerce of the US National Association ofManufacturers National Automobile Dealers Assn National Association of Realtors National Automobile Dealers Assn National Association of Realtors Washington and State Capital Offices Law firms Public affairs specialists PACs Grassroots lobbying Washington and State Capital Offices Law firms Public affairs specialists PACs Grassroots lobbying Examples Figure 12-1

10 What Business Lobbyists Do for Clients  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 Figure 12-3

11 Grassroots Lobbying Mobilizing the “grassroots”—individual citizens who might bemost directly affected by legislativeactivity—to political action Cyberadvocacy Using the Internet to amassgrassroots support, and enablegrassroots supporters tocontact their legislators

12 Coalition Building 1. Manage the sequence in which issues are addressed 2. Increase the visibility of certain issues 3. Unbundle issues into smaller subissues

13 Golden Rule of Politics: “He who has the gold, rules.” Political Action Committees (PACs) are groups of like-minded businesses using financial resources to influence government. Political Action Committees

14 National Association of Realtors National Beer Wholesalers Association National Association of Home Builders National Automobile Dealers Association International Brotherhood of Electrical Workers Operating Engineers Union American Bankers Association Laborers Union American Association for Justice Credit Union National Association Top 10 PAC Contributors to Federal Candidates ( ) Figure 12-4

15 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. PACs are a reasonable means that business may use to organize their contributions to candidates for office. Arguments For PACs Arguments Against PACs Political Action Committees

16 Political Action Committees 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 PAC’s are allied 5.When PAC’s adapt lobbying techniques to their contribution strategies

17 Soft Money The Hard Facts About Soft Money  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

18 Political Action Committees Strategies for Political Activism  Containment Strategy Keeps an issue off the public agenda and out of the limelight Helps to define an issue  Regulatory Life Cycle Approach Formation, formulation, implementation, administration and modification of a firm’s political strategy

19 Contingency Approach Contingency approach considers variables of: 1.The number of salient issues in a legislative district 2.The amount of information a legislator possesses concerning voter preferences After considering the above, then determine: 1.The salience of the issue to the legislator’s constituency 2.The identification of the expected position of voters on the issue

20 Strategies for Political Activism The political activities are contingent on: 1. Modes of corporate responses Defensive Accommodative Positive activism 2. Internal corporate conditions 3. Anticipated political risks

21  Political involvement  Lobbying  Umbrella organizations  Trade organizations  Company lobbying  Grassroots lobbying  Astroturf lobbying  Cyberadvocacy  Coalitions  Political action committees  Golden rule of politics  Bipartisan Campaign Reform Act  Soft money  Hard money  Bundling  Regulatory life cycle  Contingency approach  Defensive mode  Accommodative mode  Positive activism Key Terms