Clear answer in intro, yes or no? Legitimate? Right thing to do or not? Show evidence and proofs. Normative ethics, Virtues ethics (use mainly)
Key issues relating to the question have been developed
Original and clear argument
Logical and convincing discussion
Ideas and assertions substantiated through use of high quality reference material and key academic perspectives
Corporate Political Activity and Non-Marketing Strategy
While considering the concept of the politics and corporates, it is recognized that both the areas are getting closer and closer, as corporate executives become more proactive in the area of the politics and focus on their non-marketing strategies (Baron, 1995). Legislations passed by the government affect number of aspects of corporate sector, and these political negotiations consider success, failure, and licence to conduct business operations which results in increased activities of the public affairs.
As there are number of executives which mix the business with the politics and from last few years this trend is increasing day by day. There are number of researchers which examined whether this practice results in the increased business performance, and the results found by them are conflicting in nature. It must be noted that, business organizations which mix with the politics usually get some good returns, but it is necessary to understand that it involves huge risk for the organization and cause severe losses to the company.
This report discusses the topic “whether it is legitimate for the senior executives of the organization to engage in the public discourse related to the political issues”. Lastly this paper states the brief conclusion which states it is not legitimate for the senior executives to mix business with politics, but in case this mixing is done then it must be done up to the fair level and with the caution also (Lux, Crook & Leap, 2012).
Corporate political activity (CPA) is defined as organization’s non-marketing strategy, and it is generally considered as the firm’s efforts for the purpose of managing the institutional or societal areas related to the economic competition (Boddewyn, 2003). These efforts conducted by the organization influence the economic advantages get by the firm, and there are number of scholars which defined these activities as the organization external and integrated strategies (Baron, 1995). Additionally, CPA includes the engagement of the organization in public relations, corporate social marketing, and activities for the purpose of managing their external environments. Scholars stated that organizations engaged in the non-marketing strategies and political activities certainly for the purpose of enhancing their performance (North, 1990). Usually, decision of executives to mix business with the politics is defined as the investment decisions of the firm. Organization only allocates their resources to the political parties if they believe that they get the better returns in comparison of the other investments. Investments in particular strategies such as branding, positioning, etc. seems less attractive, if CPA includes the advantage related to the policy overshadow the cost. This paragraph clearly reflects that senior executives of the organization conduct these non-marketing strategies for the purpose of getting economic advantages.
Effect of Senior Executives' Involvement in Political Activities
Extant research suggests that factors related to the market industry, institutional, internal level, directly influence the approach in which CPA is considered as the economic advantage. It must be noted that all these components are present at the external and internal environment of the organization, and influence the CPA approach of the organization (Tripathi, 2000). It is necessary to understand that political activities directly or indirectly cause effect on the performance of the organization. These activities cause both good and bad type of effect on the performance of the business. As senior executives, which use the CPA for getting unfair advantage for them and their business, and use their political relations for unfair purpose. All these things create the environment of the unfair competition in the market, in which one organization gets the undue benefits from their political relations (Lux, Crook & Woehr. 2011). This paragraph highlights the effect cause on the organization because of the involvement of the senior executives in the political activities.
CPA are emerged in number of forms in the organization, as it includes allocated funds to the political parties, involved in the direct campaign contributions, give support to the trade associations, lobbying, hire the former public officials, etc. Lobbying is defined as seeks to influence the legislator on the particular issue, and this is considered as the dominant form of the political participations by the corporations. The most important academic view in the academic context of the CPA is that organizations try to undertake the political activity for the purpose of securing advantage for them by combing the opportunities and necessities. Advantages get by organizations are so clear in this context, as they give power to the modern governments to influence the national economies in such way as it cause direct impact on the sales and returns of some specific industries and companies (Baron, 2003). It can be said that, senior executives of the organization try to secure advantage for themselves by taking part in the political activities.
It must be noted that, a healthy academic literature is present in context of the campaign contributions by the organizations to the candidates, especially those contributions which are provided by the corporate political action committees (PACs). The most common approach in context of these contributions by the PAC is that they provide help to the corporations by providing them greater access to the legislators and other officials of the public. It is necessary to understand that activities in context of the PAC mainly relates to the organization’s size, concentration, level of regulation, and sales to the government. It is clear from the above facts, cost-advantages provisions directly influence the decisions taken by the corporations for the purpose of establishing and using the PAC’s (Seele, 2017).
Emergence of Private Authority and Unequal Power
From the above stated facts, it is clear that organizations and executives of the organization indulge with the candidates, so that they get direct access to the legislatures and other members of the politics. These candidates help the executives in getting the economic advantages in exchange of other benefits.
For the purpose of being effective, CPA requires securing the access of organization to the legislatures of the public policy, and organization must have influence over them and such influence must be converted into the favourable public policy decisions or the ability of the organization change the adverse legislation. The leading strategic management of the organization in terms of the public policy environment is that of the market place in which different demanders of the public policy fights for the favourable public policy decisions (Basu & Plazzo, 2008). In such place of market, there are chances that negotiation related to price between the buyers and sellers may occurred, and this negotiation is considered as an exchange of resources which are of equal value. This can be understood with the help of example, organization get the favourable public policy decision which improves the corporate performance of the organization, and in this context organization gives valuable resources to the public policy makers such as funds, free trips, etc. Through these practices, senior executives of the organization indulge in the negotiation with the law makers and influence the public policy.
This type of activities are considered as the form of corruption, as for providing benefit to the one segment all other segments are ignored by the legislatures. This is both illegal and unethical, as it cause damage or threaten to cause damage to the society, communities, general public, and other segments of the corporates. It is clear that such practices encourage the illegal and unethical business practices, and it can be considered as the severe danger to the economy of the nation (Scherer & Palzazzo, 2011).
Above stated facts, states that it is completely unfair to involved the senior executives of the organization in the law making procedure of the organization.
It must be noted that, there are number of scholars who defined the CPA as the emergence of the private authority, and also as a substitute of the authority related to the public institutions while dealing with the public issues. It is important to understand that whether this phenomenon fits in the healthy democracy or not, and whether firms have legitimate right to influence the politics. As different arguments are stated by the scholars in this context, as some stated that CPA is the part of the emergence wider trend of the civil regulation, and they complement the shortfalls occurred in the state regulations (Vogel, 2010). While other scholars highlight the unequal power of the corporate interest, as CPA results in the public decisions which fail to provide the advantage of the common interest. They further stated that all these activities ultimately results in the economic disturbance and loss to the nation (Lawton, McGuire & Rajwani, 2013). There are number of governance issues in context of the CPA and some of these issues are stated below:
Governance Issues of Corporate Political Activity
High-Discretion Managerial Activity: CPA is considered as the managerial activity, which mainly focuses on the non-market strategies conducted by the organization. There is no regulatory standard in context of the CPA, as it is completely depends on the discretion of the management. Management of the organization conduct this activity in their own way and sometimes practices conducted by them goes unethical.
Degree of complexity: It must be noted that managerial activity is simple in nature, and it is generally broken down under simple tasks. Each task can be specified and monitored for the purpose of ensuring the continuous compliance. However, CPA is defined as the complex managerial activity which is conducted on the discretion of the management of the organization. However, it is difficult for the organizations to manage the complex activity, as it is not programmable and very difficult to monitor because there are number of contextual factors and in this number of parallel and sequential tasks are involved (Scherer, Rasche & Palazzo, 2016). Therefore, it can be said that, managerial performance becomes challenging in terms CPA, as there are number of factors which needs to evaluate and understand.
Uncertainty: Uncertainty is the factors which creates the information incompleteness, and also restrict those contractual provisions which covers all the contingencies. There are number of reasons because of which activity uncertainty happen such as uncertainty occurred over the sequential paths which means chains of tasks and events which are not predictable, etc. In context of CPA, it is implemented in the area of the politics, where it is difficult for the outsiders to assess its actual impact on the process of the public policy. CPA is the process which is inherently uncertain in nature, and it is not possible to predict the directions of this process (Dahan & Hadani, 2013).
As agenda of the political parties changed on quick basis, and this generally happens because of the national events and influence of the media. Therefore, it can be said that process of the public policy making was handled by number of authorities, and all these authorities and institutions have power to influence the policy. Uncertainty of this process also happens because of the high level of casual ambiguity in context of the public policy result. All these things are result of the massive web of interactions among the multitude of actors in the extended period of time. Further, it can be said that it is really difficult for the organizations and especially for the board of company (which merely includes the professionals related to the public affairs) to predict what is going to be decided by the policy makers.
High level of Risk: it is necessary to understand that CPA is the high risk activity which can cause severe damage to the performance of the organization, and it is necessary for the organization management to ensure effective implementation of these non-market strategies. As stated above, it is not possible to predict the directions of the CPA, because of which organization cannot frame exact strategy for the same. Therefore, it can be said that CPA is the high risk activity which can cause severe loss to the company.
These governance issues clearly reflect that it is not legitimate on part of the senior executives to involve in the political activities for the purpose of influencing the public policies, as it cause threat to the nation’s economy.
After considering the facts of this paper, it is clear that it is not legitimate for the senior executives to involve in the political activities. Corporate political activity (CPA) is defined as organization’s non-marketing strategy, and it is generally considered as the firm’s efforts for the purpose of managing the institutional or societal areas related to the economic competition. This type of activities are considered as the form of corruption, as for providing benefit to the one segment only and all other segments are ignored by the legislatures. This is both illegal and unethical, as it cause damage to the society, communities, general public, and other segments of the corporates. It is clear that such practices encourage the illegal and unethical business practices, and it can be considered as the severe danger to the economy of the nation.
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