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In What Sense Can We Think of the Firm as a Political Actor?

Paper Type: Free Assignment Study Level: University / Undergraduate
Wordcount: 3148 words Published: 30th Nov 2020

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Firms and businesses are important in shaping the economic situation in a country, and therefore also the political situation because of how interlinked the two subjects are. From employment levels to GDP, these factors are important in shaping political ideas and economic policies. Infocore believes that political actors are those who obtain some political power and engage in activities that influence decisions and media coverage (Wolfsfeld, 2015). Therefore, we can see how a firm is a political actor by the way it influences politics and economic policies made by policymakers.  The wealthier a firm is, the more it can inject into the economy and have the ability to shape some aspects of their economy. Hence why it can be seen as a political actor as it can shape some economic policies to an extent especially, large corporations who gain massive profits, as it gives them an opportunity to lobby policymakers, stabilise the economy and provide for citizens, something the government may not be able to do alone. Throughout this essay I am going to explain how we can see corporations and banks as political actors, mainly through their influences on citizens, Corporate social responsibility and lobbying. I have given some examples throughout the essay, but also focused on a corporation, Huawei, who is a hot topic today politically.

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Some states find difficulty in regulating the economy, and with some firms that are globalised, stronger and wealthy they are able to provide for the public, which can portray them as political actors. (Neron, 2009) argues that corporate actions start to get more political and serve a larger purpose when they focus on things beyond profit maximisation and start to control vast ‘human, organisational and financial resources’ in human life page 336.  He argues that the way businesses become political responsible is by increasing social and environmental value and competing in the global marketplace (Neron, 2009) page 155. (Anastasiadis 2013) argues that firms in developing countries are more likely to be political actors as they have a greater role in the public sector and can use this to their advantage to serve the public by taking responsibility for public concern and producing goods to gain greater support. When looking at these views from outside a firms perspective, I can agree that firms, especially large corporations hold significant importance in a society where it creates employment, creates wealth and even better trade relations due to their ability to create economies of scale which can benefit the economy’s growth as a whole. For example, Walmart Stores, the largest company in the world have employed around 2.2 million people in 2018 around the world and the most in Mexico and China (Duffin, 2019). Something that a government or state alone would find difficult to achieve, which is why firms can be seen as political actors. The fact that some corporations are able to succeed in achieving these and impacting a country so much may be because of their wealth and ability to make these decisions through lobbying however may also be because political systems and governments in developing countries are weak therefore strong firms are able to step in and act in order to ‘save the public’.

The firm’s engagement in Corporate social responsibility can also portray firms as political actors. DEFINE CSR Their involvement with CSR challenges its separation of public and private domains which is how firms become political actors (Scherer, Palazzo and Matten, 2013). Multinational corporations are more likely to be regarded as governmental activities as they engage in a range of things like education, protecting human rights and public health and operating in failed state agencies (Scherer, Palazzo and Matten, 2013)page 148. With issues like climate change and poverty there are many corporates which are complying with rules that are not necessarily compulsory and comply to values that firms are making up themselves. This makes us question whether or not CSR firms comply with the law or shape the law which can be key in explaining how they can be seen as political actors. (Dimin, 2011) argues that corporate states see private enterprise as the most important in the interest of the nation. This is important to realise, as 69 of the richest 100 entities on the planet are corporations, not governments, which makes them more powerful than ever in becoming political actors and taking over government roles (Global Justice Now, 2018).

In Kenya, (Anastasiadis 2013) states that firms provide for the local government page 265. In developing countries, it is more likely that firms have been under attack or destroyed and limited due to poor economic situations or political situations which have destroyed the economy. These political tensions and wars make it more difficult for firms to run, so they need to take matters in their own hand to improve the situation in their country and find a way to survive and operate in a stable market, which leads them to being more politically active. For example, Kenya Honey is an organisation that purchases agricultural products directly from farmers and distributes it, ensures that there is environmental preservation through bee pollination and fair income to farmers, which can also be seen as an act of CSR (Rasche et al, 2007) page 155. This is important in explaining how this firm has acted as a political actor because roles that should be regarded as the state’s responsibility have been shifted to companies as it fills in gaps in global governance through firms’ involvement in CSR (Frynas, Stephens, 2015).

Corporates can also be seen as political actors by the way they negatively influence society.Nick Dearen, director of global justice, explains how firms’ involvement may not always be positive as he states that the wealth and power of corporations is at the heart of global problems like inequality and climate change (Chapman, 2018). This is an important statement in seeing how corporations can be political actors, because instead of looking to the government for help tackling global issues, corporations are now relied on as the most successful firms have become so powerful and wealthy that how they run has become important in affecting issues like climate change which are hot topics in politics today. (Rasche et al 2007)also argues that MNC’S are able to influence human rights situations negatively as well as positively – amnesty international 2003. They also state that many corporates have committed human rights abuses page 164. A key example is DeBeers who were accused by human rights groups of buying diamonds from African revels and rulers to help pay for their wars (Cowell, 2000). These wars mean violence against citizens which is a massive political issue, has made the firm involved politically just through the buying and selling of goods. (Rasche et al, 2007) also suggests that not all companies have the right intentions as there is a distinction between philanthropy and wanting political responsibility ppg 155.

As well as corporations, banks also have a key role in being political actors. For example, JP Morgan Chase breached its CSR by enacting a ‘sons and daughter’ program that violated FCPA. JP Morgan Chase hired around 100 interns and employees at the request of government official in china and Asia, children of Chinese officials in exchange for resources business in china and deals with state owned enterprises (Mintz, 2016). This is a clear example of how a firm can become a political actor as the bank has tried to engage with public officials in order to gain influence through political activities (Van Veen, 2015). In 2012 JP Morgan spent $8 million on lobbying, more than any other bank for financial reform and other things (Gongloff,2013). Banks usually oppose stricter regulations and so use politicians and those higher in the state to help them achieve their goals, which makes them politically involved and in the limelight of political media, as well as portrayed unethical by the public.

On the other hand, firms can be seen as political actor through lobbying. (Anastasiadis 2013) defines lobbying as an activity which aims to influence legislative outcomes and sway or even bribe governments and policy makers into changing their regulations to suit business purposes and make it easier for firms to run page 263. (Anastasiadis 2013) argues that NGO’s and businesses gravitate towards each other, this is because NGO’s that are closely linked to business are known as corporate front groups that promote their business interests disguised as public concerns. Partnerships lobbying groups identify and qualify as NGO’s, rather than providing for citizens in a CSR way, lobbying is seen as different and even criticised by CSR and NGO activists as it breaches some of their ideas and morals, due to some firms’ sneaky actions through actions like manipulation and bribing. (Kim and Osgood, 2019)argues that US manufacturing firms that lobby on trade issues are larger than other firms, this is because larger firms support trade liberalisation and are more likely to engage in trade related lobbying page 405 reword. Trade lobbying is important for firms because of protectionist trade policies like tariffs and quotas which may hinder larger firms’ success and growth. As a result, firms may have the power to lobby some policies and aim for lower tariffs.

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An example of trade lobbying can be Huawei technologies co, who focused on export control and trade sanctions. This can be seen as a tactic to overcome US pressures as Trump blocked it from buying American technology over national security concerns has meant that the use of lobbying has also been dragged into a trade war. This is a way of seeing how firms can be political actors as the involvement of political leaders as well as political motive due to the restrictions the are wanting to overcome. Aside from the use of lobbying Hawaii is seen as a political actor due the action taken of hiring law firm Sidley Austen who is defending the phone company over charges that they defrauded banks by hiding business dealings in Iran which is a violation of US sanctions. This means that it has become a political actor in the sense that it has directly caused issues that have led to action being taken by Donald Trump (Brody, 2019). As a result of extensive lobbying from Huawei Trump was able to lift some bans and allow companies such as Intel and Micron to sell their products to Huawei (Phelan, 2019). They also lobbied countries like the UK, Australia and Canada, as they were also affecting the firm with decisions that would affect whether or not they could sell in their country, or whether the Chinese telecom would be part of the 5G network (Ghoreishi, 2019). as a result of this trade war and political involvement in whether or not Huawei should be banned, they have been temporarily lifted the ban, however even today the US is still trying to ban them from the UK 5g. (McCaskill, 2020) states that MPS and intelligence chiefs have suggested that there is no reason to excuse Huawei and that the decision is a political one, which shows to what extent the firm has become politically involved and potentially increased tensions between the US and Chinas trading.

Huawei can also be seen as a political actor through its CSR motives and actions in helping developing countries like those in Kenya. Their CSR report states many ways Huawei is planning on becoming more sustainable. For example, their plans on ‘bringing hope to underdeveloped regions’ and providing digital connections which would be more difficult for states to do as undeveloped countries usually have weaker states. They have worked in countries like Kenya in partnership with Kenyan governments ministry of IT and the UN to use ICT to drive the big 4 agenda, which is universal healthcare, affordable housing, manufacturing and food security (World Bank, 2019) and improve the countries socio economic situation page 22 (Huawei, 2018). It has also launched mentorship programmes for women in technology in Kenya to enhance their employability and bridge the gender gap (Xinhua, 2019). Huawei is providing that expertise and education that the government may not be able to provide, which shows how corporates are able to take up government responsibility and can be perceived as political actors in this way.


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