Mixing Business and Politics

You may have seen the recent research from the University of Tennessee, in which Russell Crook, David Woehr and Sean Lux have found that yes, indeed, mixing business and politics makes good financial sense. If you would like a copy of the full academic report – 44 pages – just drop me an email.

Research Findings

The researchers looked at 7,000 firms over various time periods and not surprisingly, found that the bigger a company gets, the more likely it is to engage in political activity.  What’s interesting about their commentary is that they conclude that more corporate political activity is bad political activity.  (and they are professors of Business Administration) They state that “this activity constrains natural market forces, and is at best undesirable.  And with the new Supreme Court ruling (Citizens United) it is only going to get worse.” (God help our business undergraduates if they think they can run a business without engaging in politics)

I read the entire report.  Interestingly, they don’t focus on any grassroots activities—only PAC and lobbying.  I suspect this is because those appear to be more nefarious (I don’t believe they are, but I think the researchers believe they are nefarious activities) than grassroots activity, which is hard to argue against.

So, I think one of the flaws in the research is that they don’t even look at the impact of corporate stakeholders engaging in the process and making their concerns known to elected officials.  After all, that would be good news, wouldn’t it?

The Bottom Line

I found three take- aways from this that we should remember as we move our programs forward:

1.  It is a nice reminder that many in academia, still do not, no matter how much we “educate” them or engage in image improvement campaigns, view business, and especially big business, as a positive force. They have a platform to expound upon this belief system. It’s time to stop the hand-wringing over this and be proactive.

2.  There is an ROI for engaging in political activity.

3. To rebut the  arguments that more corporate political activity is somehow bad and increases public corruption, I’ll refer you to a fantastic piece from the Center for Competitive Politics, authored by Laura Renz. The Center is an organization led by former FEC Commissioner Brad Smith. This piece takes an empirical look at political contribution limits and public corruption to see whether there is a relationship. I believe this is required reading for anyone who has to recruit for PAC and/or  lobby.  Memorize this report if you haven’t already. … corruption