Business elites and populism: understanding business responses

Abstract

This article analyses the challenges to business associated with the rise of right-wing populism. It discusses how the populist turn has weakened key underpinnings of business power in the neoliberal era, notably the prevalence of quiet politics and network governance. This article analyses the complex strategic dilemmas these challenges create for business. Extending Hirschman's classic model of exit, voice and loyalty, it develops a novel typology of five business responses to the rise of populism: exit, soft voice, loud voice, explicit loyalty and implicit loyalty. The extended typology highlights two key dilemmas related to the appropriate degree of engagement with politics which business faces in the populist era and which are reflected in the contrast between two types of voice and loyalty. The article analyses the factors shaping which strategy businesses are likely to choose and reflects on the broader implications of this analysis for state-business relations and business power.

A Responsibility to Whom? Populism and Its Effects on Corporate Social Responsibility

“…This reality also means that firms need to be able to retool their own risk management in a populist world to understand which CSR may be threatened under populism or, alternatively (and following from Markus, 2012), which may help a firm be insulated in the event of a populist electoral victory. Indeed, as Feldmann and Morgan (2021) note, a firm might even fight back against populist pressure, defiantly maintaining some CSR activities or channeling their efforts into CPA to build a larger stakeholder base and force capitulation (if not outright regime change). Follow-on work should then also concentrate on the ways in which firms are able to circumvent populist pressure and make their CSR initiatives more impervious in a populist political environment.…”

“…While some firms may rely on corporate political activity (CPA; Hillman et al, 2004; Lawton et al, 2013; De Villa et al, 2019) to mitigate political risk, these activities may take a long time to work with insulated populist leaders and some populist parties—especially of an actively anti-business bent—may look unkindly on such overt strategies. For smaller firms or those without the ability to generate political connections, firms may instead adopt a number of coping mechanisms (Feldmann & Morgan, 2021), which could include a reorientation of processes away from populist unfriendly or “peripheral” activities.…”

Political CSR and Populism: Toward an Information-Based Theory of Political CSR

“…Our context-specific framework of PCSR strategy, which is attuned to populism in different political contexts, demonstrates that different political regimes, such as democratic, authoritarian, and hybrid, give rise to distinct PCSR strategies. While the wider business and populism literature has begun to acknowledge the presence of institutional heterogeneity (Feldmann & Morgan, 2022), extant literature has tended to focus on single contexts (see Kinderman, 2020) and specific geographic regions or political regimes (see de Sousa et al, 2021), the strategic implications populism poses for local and global firms (Butzbach et al, 2020; Devinney & Hartwell, 2020), and firms’ strategic responses to populism (Feldmann & Morgan, 2022). Little attention is given to non-market strategies, such as PCSR.…”

“…Insights from the wider populism-business literature recognize that populism can “alter the rules of the game” for business (Hartwell & Devinney, 2021a, p. 248) but have largely focused on the strategic impact and responses of firms (Butzbach et al, 2020; Cumming et al, 2020; Feldmann & Morgan, 2022; Hartwell & Devinney, 2021a) and say little on how it impacts a firm’s social responsibilities. Similarly, while extant PCSR research has acknowledged that populist political shifts can make PCSR even more controversial than before (Korschun & Rafieian, 2019), such research has not substantially addressed how the populist turn impacts PCSR theory and practice.…”

Effect of populism on the internationalization of emerging market firms

“…Academic interest in populism and its implications for the strategic responses of firms is increasing (Blake et al , 2022; Feldmann and Morgan, 2022; Hartwell and Devinney, 2021). However, the IB literature focuses on advanced economies due to watershed events that shook the political setting of countries with institutionally robust democracies such as the British vote to leave the European Union (Brexit) and the election of Donald Trump to the US Presidency.…”