Formulating the Firm's Political Action Strategy: A Corporate Budgeting Perspective

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Formulating the Firm's Political Action Strategy: A Corporate Budgeting Perspective

The U.S. corporate community increasingly is defining for itself a more active role in the shaping of public policy, with particular reference to those policies that have direct effects on American businesses. Kotler[12] even extends the mandate of strategic management to include managing the environment as well as managing such controllable factors as the marketing mix; toward this end, he advocates the use of political power and the formation of public opinion as logical extensions of modern marketing.

Developing the ability to influence public policy begins with a sensitivity to the emergence and diffusion of strategic issues. Such issues are strategic in that they are relevant to the firm's objectives or the ability of the firm to accomplish them [1], their sources and processes are external to the organization, and their effects may be imposed through legislation or regulatory requirements. Being proactive and influencing public policy making in a dynamic environment are likely to increase the opportunity to become involved in shaping a developing public issue. Yet today's complex and dynamic environment suggests the need for systematic procedures by which strategic issues may be identified early in their development and by which rapid responses may be formulated[1]. In this paper we address the rationale and framework for response by the corporation such that effective programs may be developed for influencing the social environment.

Unless an effort to intervene is made that is appropriate to its stage of evolution [2], a strategic issue may become codified in law or affect the public's attitude toward a firm. One such example of an intervention is that of Indiana mine operators who chose to work with the state legislature in drafting strip mining legislation; the result was the creating of a more informed and equitable resolution to the inevitable regulatory efforts of environmental groups[19]. Another example is that of the tobacco industry whose response and intervention, when confronted with the smoking-and-health controversy, included defensive maneuvers[15].

In general, strategic issues may influence in important ways the long-term interests, viability, independence of action, or even the survival itself of the firm or industry[9, 20, 25]. They reflect an emerging change in the relationship between a firm and the society it seeks to serve, a change that may be appropriate but that nonetheless may offer profound change in the firm's operations or its legitimacy[15].

There are various important and powerful vehicles for such changes in the relationship between corporation and government or between firm and external constituencies. One is that of political action, represented by legislation or regulatory constraints imposed by governmental bodies. These political actions rarely are unexpected, for often they are preceded by substantial public debate or by significant shifts in societally-based values, expectations, or perceptions.

The proactive organization is likely to value the ability to accommodate, counteract, defuse, or contain such issues, whichever is appropriate. Taking such actions may be the only way to limit the potential damage that strategic issues ultimately may do to the autonomy and operations of the firm. Yet the corporation must take difficult, but necessary, steps when attempting to implement a political action program. These steps include developing an awareness of the emergence of political issues, determining which of these issues are relevant to the interests of the firm, and deciding which actions are appropriate for responding to the issues.

A public issues management perspective is likely to benefit from an orientation toward strategic goals and criteria; a useful decision model would include an analysis of both costs and benefits prior to mounting any action on political issues. …