Business Preference Formation Essay ⋆ Political Science Essay Examples ⋆ EssayEmpire

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The scholarly literature on the formation of employers’ preferences seeks to understand how managers conceptualize their interests in public policy. Three debates anchor this literature. First, scholars diverge on the relative importance of economic conditions and institutional constraints in guiding human action. A second debate concerns the level of analysis at which corporate preferences are formulated: Some believe that business interests are largely defined and acted on at the micro fir m level, while others believe that preferences are formed in the collective deliberative processes of national employers associations. A third debate reflects on the appropriate causal agent in constructing preferences—employers may autonomously formulate their policy positions or they may follow the lead of government policy entrepreneurs.

These debates suggest four broad causal determinants of preference: economic characteristics of firms and sectors, firms’ internal institutions for evaluating public policy, business associations (and other institutional vehicles for firm coordination), and government structures and agents that shape employers’ positions on public policy.

First, some analyses derive employers’ political preferences from the economic characteristics of the firm or structure of the industry to which it belongs. This economic model of preference underlies public choice and many pluralist theories, and assumes that individuals are motivated by readily apparent material circumstance.

Second, institutional analyses suggest that decision making almost always occurs under conditions of bounded rationality in which full information is not available. Institutional permutations within the firm deliver quite different competitive strategies, which, in turn, lead to very different preferences for public policy. Companies’ positions on policy issues depend, in part, on the firms’ organizational capabilities for gathering information; therefore, firms with in-house policy experts have different preferences from those firms without such experts. Company policy experts like Powell and DiMaggio (1991) bring ideas from the external community of policy makers back to others within the firms, a process called boundary spanning. Companies with government affairs offices also tend to be more supportive of government policies, because these units increase collaboration between business and government.

Third, some scholars highlight the importance of business organization to employers’ preferences for economic and social policy outcomes. Corporatist employers’ associations, for example, are more likely than pluralist associations to produce business positions that are supportive of social welfare spending. Corporatist associations bring employers together to discuss their broader, shared concerns and bind firms to negotiated outcomes; therefore, members will be more willing to commit to longer-term goals, even if these goals detract from shorter-term interests. Hall and Soskice (2001) argue that the institutional profiles of different “varieties of capitalism” also bring employers to assume quite different policy preferences across settings.

Finally, the state influences the formation of business preferences in both long-term structural and short-term strategic ways. Institutional structures of government (such as constitutional structure and veto points) shape the manner in which employers can press their claims on government; for example, separation of powers and federalism generally translate into greater business resistance to government, because these permit managers to try to influence successive veto points until they find a sympathetic hearing. Political entrepreneurs also may seek to mobilize business allies in support of specific pieces of legislation; in these cases, political leaders lead employers to form specific policy positions.

Bibliography:

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Grier, Kevin, Michael Munger, and Brian Roberts. “The Determinants of Industry Political Activity, 1978–1986.” American Political Science Review 88 (December 1994): 911–926.
Hall, Peter, and David Soskice, eds. Varieties of Capitalism. New York: Oxford University Press, 2001.
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