Summary by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida
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Judicial, legislative, and regulatory disruptions around controversial issues such as climate regulation, reproductive rights, and gun control will have a direct impact on most companies. Today's business organizations cannot avoid these issues and need to develop a political strategy that is consistent with stakeholder values.
Some of the disruptions mentioned include the effects of U.S. Supreme Court cases like Dobbs v. Jackson Women's Health Organization that overturned Roe v. Wade, and New York State Rifle and Pistol Association v. Bruen that invalidated New York's minimal concealed-weapon restrictions. There are some well known research studies that show these cases will most likely have unintended consequences that are detrimental to stakeholders. For example, one study published in 2001 shows a strong correlation between reproductive freedom and sharp declines in crime rates in the decades following Roe v. Wade.1 Another study indicated that looser restrictions on concealed weapons increases firearm related violence.2
Stakeholder Capitalism
Many publicly traded companies have changed their narrow focus on investors to include a much broader group of stakeholders. Stakeholders include customers, employees, suppliers, and local communities, as well as investors. Stakeholder values include diversity and inclusion, environmental sustainability, trust and transparency, healthy work environments, and the responsible introduction of technology. However, a commitment to stakeholder values requires actions, not just words in glossy ad campaigns. Stakeholders expect actions such as reducing carbon emissions, explicit policies that support reproductive rights, gender equality, and LGBTQ rights.
Take Action
Every company should develop an actionable political strategy based on five principles.
1. Be fast: Protect your brand and markets by rapidly evaluating the impact of court decisions, legislation, and regulatory changes that affect your stakeholders' values.
2. Be consistent: Create and execute specific tactics that are consistent with the commitments imbedded in your brand.
3. Be honest: Your communications should be clearly stated, candid, and timely.
4. Be organized: Partner with trade associations, chambers of commerce or business roundtables to formulate unified and effective responses to political disruptions.
5. Be proactive: Develop and support litigation that aligns with your stakeholder values.
Your political strategy should prioritize the interests of employees, customers, and other stakeholders over the short-term and frequently contradictory goals of elected officials. Research indicates that consumers want CEOs to engage politically and tend to trust businesses over governments or the media. This creates both opportunity and responsibility. How companies respond to political disruptions in stakeholder values will not only determine how it affects their brand, but also how it affects the environment we create for future generations.
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1 Donohue, J. J. III and S. D. Levitt. 2001. The impact of legalized abortion on crime. Quarterly Journal of Economics 116(2): 329-420.
2 Donohue, J. J., S. V. Cai, M. V. Bondy et al. 2022. More guns, more unintended consequences: The effects of right-to-carry on criminal behavior and policing in U.S. Cities, working paper 30190, National Bureau of Economic Research, Washington, D.C.
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