Businesses' Political Participation: Pros, Cons & Tactics

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  • 0:01 Business Political…
  • 0:40 For Business…
  • 2:39 Against Business…
  • 5:00 Political Tactics by Business
  • 7:55 Lesson Summary
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Lesson Transcript
Instructor: Jennifer Lombardo
Businesses need to actively participate in the political process to protect their vested interests. In this lesson, we will cover the pros, cons and tactics of companies partaking in political participation.

Business Political Participation

Businesses have a right to be profitable and sell their products and services. The point where it becomes tricky is when business intersects with politics. How involved do businesses need to be in the political process? In this lesson, we will discuss the arguments for and against business participation in the political process. In addition, we will identify tactics that businesses can use to get involved in the political process. Sometimes businesses have to decide how involved they want to get in political activities to advance the needs of their companies. Let's take a look at some business examples.

For Business Participation in Politics

There are many reasons why businesses need to be active in the political process. For starters, companies depend upon the government to support their agendas. Companies also participate in politics due to:

  • Competitive reasons: Powerful special interests groups are allowed to participate in the political process, so businesses should have the same rights. In fact, allowing businesses to participate protects the public from a special interest group monopoly. For example, the purpose of the special interest group American Wind Energy Group is to promote the use of alternative wind energy. If nuclear or coal businesses could not participate, then the special interest group for wind would have an unfair advantage.
  • Economic reasons: Government actions can have a greater impact on businesses than special interest groups, so it is a necessity for companies to be able to participate in the political process due to economic reasons. For example, in the early 2000s, many consumers were circumventing purchasing software directly from manufacturers. Instead, they were sharing unauthorized digital copies, causing manufacturers to lose vast amounts of money. The manufacturers came together to lobby the government to create fines and penalties for stealing intellectual properties in order to protect their economic investments.
  • It is their right: Business is an important government stakeholder and has a right to engage in the process. Government creates many new regulations that can drastically affect business. It is the right of companies, as stakeholders, to understand, comment and participate on new regulation development. For example, Congress recently created new regulation to raise the minimum wage for contractors to $10.10. This will have a dramatic effect on business, and companies have a right to leave comments and give feedback to the law via the Federal Register.

Against Business Participation in Politics

There are many reasons why businesses need to be active in the political process, but there are also reasons why the participation can be problematic. Common arguments against business political participation bring up some of the following points:

  • Managers are not skilled at politics: Most managers are not highly trained in law and might not be able to appropriately participate in politics. For example, most companies would not know where to start to develop a relationship with legislatures. So companies typically end up hiring lobbyists who specialize in influencing government regarding issues pertinent to companies. The United States Chamber of Commerce (USCC), one of the largest lobbying groups in the United States, is an example of a business-oriented lobbying group. They commonly oppose actions against climate change and financial regulation, while supporting free trade, off shoring and globalization.
  • Business is too selfish to worry about the common good as their only concern is to make profits. For example, back in the 1970s, a top fast food company paid a quarter of a million dollars to President Nixon's reelection campaign. In return, the company was able to get legislation passed that allowed the fast food restaurants to pay teenage workers 20% less than minimum wage. Smart companies realize that participating in politics results in a more successful company. For example, Mary Kay is a women's cosmetic company that used their lobbying power to help pass the Violence Against Women Act. The act showed the company was dedicated to supporting women's issues and helped their overall business image, as well as profits.
  • Business risks credibility: Businesses who engage in partisan politics risk credibility. Although businesses have an ethical obligation to report political contributions to shareholders, they can choose whether or not to disclose this information to the public. Some businesses don't disclose any political contributions. How many families and teenagers would have picketed or boycotted the fast food company mentioned previously if they knew how the legislation was passed?

Political Tactics by Business

There are a few specific tactics used by business in order to participate in the political process. Let's take a look at a few major tactical strategies:

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