Corporate Citizenship in the Global Economy
Part II: Business and Politics
Instructor: Gani Aldashev
Course objectives
Beyond the market environment, around a firm there exists its non-market environment: regulation,
politics, activists, and so on. Managers without an adequate understanding of these subjects can
prepare an unbalanced business strategy, with potentially harsh consequences for the operation of their
enterprises.
This part of the course is an introduction to the non-market business environment. It starts by defining
the non-market environment of business and describing what an integrated business strategy is. Then,
the course will provide tools from political economy literature that are necessary for building effective
non-market strategies in different institutional setting. Third, it presents the non-market strategies of
business in public politics sphere, with applications to regulation and environmental protection.
Further topics will be “private politics” - the operation of firms and of an industry under the pressure
by activists – and the positive analysis of corporate social responsibility.
A fundamental part of the course is the construction and formal presentation of case studies of
corporate crises in seven different countries (U.S., Germany, Japan, South Korea, Singapore, China,
and Russia). Students will be divided into six study groups and will gradually build up the case using
the tools presented during the course. The final part of the course will consist of formal presentations
by each study group (the final output for each group is a 25-page report on the case, including a 3-page
executive summary, and a PowerPoint presentation consisting of 12-15 slides that summarizes and
presents the case to a potential business audience).
Readings
The main support for the course is the set of PowerPoint slides and handouts from business and
economics sources. The course is mainly based on selected chapters from Baron, D. Business and Its
Environment, 5th ed., Prentice-Hall, 2003 (these chapters will be made available during the course for
photocopying). The cases studies are based on selected chapters from Milhaupt, C., and Pistor, K.,
Law and Capitalism, University of Chicago Press, 2008.
Exam
The evaluation for this part of the course will consist of two parts: the case study will count for 60%
and a two-hour closed-book final exam (covering only this part of the course) that will count for 40%.
Outline
1. Market and non-market environment of business (19/03)
2. Integrated strategy (20/03)
3. Tools from political economy (26-27/03)
a. Collective action, prisoner’s dilemma, and free-rider problem
b. Majority-rule institutions and the median voter theorem
c. Legislative bargaining
d. Lobbying
e. Campaign contributions
f. Bureaucracy
4. Business and public politics (17/04)
5. Business and private politics (13/05)
6. Corporate social responsibility (14/05)