2. Influencing the Political Environment
Chapter 9
Influencing the Political Environment
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

3. The arguments for and against political involvement by business
Figure 9.1
The arguments for and against political involvement 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.

4. Corporate political strategy
Involves the activities taken by organizations to acquire, develop, and use power to obtain an advantage.
Three strategic types
Information strategy: where businesses seek to provide government policymakers with information to influence their actions.
Financial-incentives strategy: where businesses provide incentives to influence government policymakers to act in a certain way.
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.

5. Figure 9.2a
Political strategies, tactics, and characteristics: Information strategy
Tactics
Lobbying
Direct communication
Expert witness testimony
Characteristics
Targets government policymakers by providing information.
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.

6. Figure 9.2b
Political strategies, tactics, and characteristics: Financial-incentive strategy
Tactics
Political contributions
Economic leverage
Political consulting aid
Office personnel
Characteristics
Targets government policymakers by providing financial incentives.
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.

7. Figure 9.2c
Political strategies, tactics, and characteristics: Constituency-building strategy
Tactics
Stakeholder coalitions
Advocacy advertising
Public relations
Legal challenges
Characteristics
Targets government policymakers by providing information
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.

8. Political 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.

9. The 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.

10. Top 15 business lobbyist expenditures for 2000
Figure 9.3a
Top 15 business lobbyist expenditures for 2000
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

11. Top 10 association lobbyist expenditures for 2000
Figure 9.3b
Top 10 association lobbyist expenditures for 2000
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.

12. 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.

13. Political action committee activity
Figure 9.4
Number of PACs

14. 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 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.

15. Levels of business political involvement
Figure 9.5
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

16. Campaign finance reform
Soft money
Unlimited contributions to the national political parties by individuals or organizations for party-building activities.

17. Top soft money contributors to both political parties, 2001-2002
Figure 9.6
Top soft money contributors to both political parties,
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:

18. Top soft money overall donors, 2001-2002
Figure 9.7
Top soft money overall donors,
Donor
Total Contribution
Given to Democrats
Given to Republicans
Haim Saban, chair, Saban Entertainment
$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
Stephen L. Bing, producer, Shangri-La Entertainment
7,075,936
Service Employees International Union
4,914,240
4,872,618
41,622
Communications Workers of America
4,028,150
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

19. 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