Business & Society
Ethics, Sustainability, and Stakeholder
Management
Eighth Edition
Archie B. Carroll
Ann K. Buchholtz
© 2012 South-Western, a part of Cengage Learning
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Chapter 12
Business
Influence on
Government
and Public
Policy
© 2012 South-Western, a part of Cengage Learning
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Learning Outcomes
1. Describe the evolution of corporate political participation.
2. Differentiate among the different levels at which business
3.
4.
5.
6.
lobbying occurs.
Explain the phenomenon of political action committees (PACs)
in terms of their historical growth, the magnitude of their
activity, and the arguments for and against them.
Define coalitions and describe the critical role they now assume
in corporate political involvement.
Discuss the Bipartisan Campaign Reform Act and other issues
surrounding campaign financing.
Outline the principal strategic approaches to political activism
that firms are employing.
© 2012 South-Western, a part of Cengage Learning
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Chapter Outline
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Corporate Political Participation
Coalition Building
Political Action Committees
Summary
Key Terms
Discussion Questions
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Corporate Political Participation
Political Involvement
• Participation in the formulation and
execution of public policy at various levels
of government.
 A 2010 Supreme Court ruling states that
the government should not regulate
political speech from corporations.
•
Has strengthened business’s power in political
activities and allows for unlimited political
spending by corporations.
© 2012 South-Western, a part of Cengage Learning
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Corporate Political Participation
(continued)
Lobbying
•
The process of influencing public officials to
promote or secure passage or defeat of
legislation.
PACs
•
Instruments through which business uses
financial resources to influence government.
Coalition Building
•
Business and other groups joining forces to
achieve common goals.
Political Strategy
•
To secure position of advantage regarding a
given regulation or piece of legislation.
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The Purposes of Lobbying
• Primary goal is to promote legislation that
is in their organization’s interests and
defeat legislation that is not.
• To target the election or defeat of national,
state, and local legislators.
 More businesses, as well as other specialinterest groups, are turning to lobbyists.
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Organizational Levels of Lobbying
Representation
Umbrella
Organizations
Trade
Associations
Broad
Midrange
Individual Company Narrow/
Specific
Lobbying
Examples
• Chamber of Commerce of the US
• National Association of
Manufacturers
• National Automobile Dealers Assn.
• National Association of Realtors
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Washington and State Capital Offices
Law firms
Public affairs specialists
PACs
Grassroots lobbying
© 2012 South-Western, a part of Cengage Learning
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What Business Lobbyists Do
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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
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Grassroots Lobbying
Grassroots Lobbying
• Mobilizing the “grassroots,” which are
individual citizens who might be most
directly affected by legislative activity, to
political action.
Cyberadvocacy
• Using the Internet to amass grassroots
support and enable grassroots supporters to
contact their legislators.
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Grassroots Lobbying (continued)
Astroturf Lobbying/Grasstops
Lobbying
• Fake groups that appear to be genuinely
grassroots but are largely created and
funded by a professional organization or
trade association.
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Trade Association Lobbying
• The Center for Political Accountability
revealed that trade associations helped
companies conceal and spend over $100
million in just one year.
• Industry-level lobbying is common.
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Umbrella Organizations
Two major U.S. umbrella
organizations
• Chamber of Commerce of the United
States
• National Association of Manufacturers
(NAM)
Other umbrella organizations
• Business Roundtable
• National Federation of Independent
Businesses (NFIB)
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Coalition Building
Coalition
• Forms when distinct groups or parties
realize they have something in common
that might warrant their joining forces for
joint action.
Building a coalition
1. Manage the sequence in which issues are
addressed.
2. Increase the visibility of certain issues.
3. Unbundle issues into smaller sub-issues.
© 2012 South-Western, a part of Cengage Learning
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Political Action Committees
• Political Action Committees (PACs) are
groups of like-minded businesses using
financial resources to influence
government.
• The principal instruments through which
business uses financial resources to
influence government.
 The Golden Rule of Politics: He who
has the gold, rules.
© 2012 South-Western, a part of Cengage Learning
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Top 10 PAC Contributors to Federal
Candidates
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Operating Engineers Union
International Brotherhood of Electrical Workers
AT&T, Inc.
National Beer Wholesalers Association
Honeywell International
American Association for Justice
National Community Pharmacists Association
American Bankers Association
Teamsters
Boeing Co.
Lockheed Martin
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Political Action Committees
Argument for PACs
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PACs are a reasonable means for business to
organize their contributions to candidates for
office.
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Business giving is offset by labor giving and
by the multitude of other special-interest
groups that also have formed PACs
Argument Against PACs
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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.
© 2012 South-Western, a part of Cengage Learning
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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 PACs are allied.
5. When PACs adapt lobbying techniques to
their contribution strategies.
© 2012 South-Western, a part of Cengage Learning
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The Hard Facts About Soft Money
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Soft money is a contribution made to
political parties instead of political
candidates.
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The Bipartisan Campaign Reform Act
of 2002 was a sweeping change of U.S.
campaign finance.
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The BCRA removed the influence of soft
money on candidates running for national
office.
© 2012 South-Western, a part of Cengage Learning
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The Hard Facts About Soft Money
(continued)
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Law regulates hard money, which are donations
made directly to candidates.
Strategists established 527s, which are allowed to
spend soft money on campaigns.
Bundling
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The collection of individual donations that are
then delivered to the candidate in a lump sum.
Another way of getting around campaign
finance reform.
 A recent Supreme Court ruling removed
all limits on campaign donations by
corporations.
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© 2012 South-Western, a part of Cengage Learning
Strategies for Political Activism
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Managers must address when and under what
conditions various approaches should be used.
The purpose of political strategy is “to secure
a position of advantage regarding a given
regulation or piece of legislation, to gain
control of an idea or a movement and deflect it
from the firm, or to deal with a local
community group on an issue of importance.”
Two major strategies:
1. Keep an issue off the public agenda and out of
the limelight.
2. Help to define the public issue.
© 2012 South-Western, a part of Cengage Learning
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Key Terms
• Astroturf lobbying
• Bipartisan Campaign
Reform Act (BCRA)
• Bundling
• Coalitions
• Company lobbying
• Contingency approach
• Cyberadvocacy
• 527s
• Golden Rule of Politics
• Grassroots lobbying
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Grasstops lobbying
Hard money
Lobbying
Political action
committees (PACs)
Political involvement
Positive activism
Regulatory life cycle
Soft money
Trade organizations
Umbrella organizations
© 2012 South-Western, a part of Cengage Learning
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