Business, Government, and Public Interactions
The business environment consists of the organization, the government, and the public. Due to capitalism, pluralism, and democracy, each entity has unique interests and utilizes unique means of fulfilling the needs. While the three units in the business environment influence have different needs and expectations, they influence each other’s operations. For instance, corporations require the public to make sales and profits, the public relies on corporations to fulfill their needs like food and clothing, the public relies on the government for protection against exploitation by businesses, and businesses rely on government for consumer protection against safety. With these unique needs, businesses, the government, and the public interact with each other separately.
Although the primary role of the government is to represent the public, the representation is often limited due to the conflict of interests. A system of pluralism is embraced to balance power between the government, business, and the public in order to ensure that no entity overpowers or exploits the other. For these reasons, there are public interest groups including government, for-profit, and non-profit groups to advocate for various needs of the public. There are government agencies including the Federal Trade Commission (FTC) and the Food and Drug Administration (FDA) in the U.S. that protect the public from illegal business. The representation of the public interests by the government agencies has proved to be inadequate due to the continuous exposure of the public to illegal business. Both for-profit and non-profit public interest groups work to enhance the representation of the public and serve as a link between the public and the government. These groups promote political participation and influence public policy for the good of the public. They achieve their goals through strategies like lobbying, engaging in election activities, and educating and mobilizing various public.
Businesses are increasing becoming active politically as the government influence on business activities and outcomes grows. Firms have established strategic actions that influence the political environment in order to maximize economic returns. This phenomenon is called corporate political strategy. It is aimed at enhancing the firm’s potential to boost its performance or competitive advantage. It is, however, important to note that the political strategies explore opportunities rather than restricting the government. Macro-environmental factor relate to public policies can positively or negatively influence firms’ competitive advantage. As a result, firms take advantage of political windows to influence the regulatory agency’s actions.
Corporate political strategy has raised concerns of how the phenomenon fits into a healthy democracy. There have been questions concerning the firm’s legitimate right or the limit of their influence on public policy and the societal advantages and disadvantages of business’ political involvement. For this reasons, there have been limits of firms’ political activities. Laws such as the 1995 Lobbying Disclosure Act regulate corporate-political actions. Other policies that regulate relationships between lobbyists and public officials are the 2007 Honest Leadership and Open Government Act and the 2006 Legislative Transparency and Accountability Act (Dahan & Hadani, 2013). At the micro level, businesses regulate their political activities through “Code of Ethics”. This self-regulation ensures that all practices comply with the company’s regulations to avoid harming other entities. Individuals or institutions who violate the set laws and regulations of corporate political activity are punished. The enforcement of these laws ensures that businesses’ political involvement is not excessive or harmful.
Dahan, N. & Hadani, M. (2013, Sep). The governance challenges of corporate political activity. Business & Society, 52(3), 365-387. Retrieved from https://www.researchgate.net/publication/258126560_The_Governance_Challenges_of_Corporate_Political_Activity