Managing sociopolitical issues

Citation

Ali, A.J. (2008), "Managing sociopolitical issues", Competitiveness Review, Vol. 18 No. 4. https://doi.org/10.1108/cr.2008.34718daa.001

Managing sociopolitical issues

Article Type: Editorial From: Competitiveness Review: An International Business Journal, Volume 18, Issue 4

In a turbulent business world, executives are pressed to be imaginative and to rethink their corporate priorities. Indeed, there have been profound changes in the way executives view their business boundaries and arenas of conduct. While demographic and economic factors still top the list of executives’ concerns, emerging sociopolitical issues (e.g. climate change, diseases, poverty, global unrest and turmoil, and foreign policy) are increasingly becoming an integral part of normal business deliberations and in fact now commonly have a place in formal corporate agendas. The McKinsey Quarterly (2008) reported that, according to a recent global survey, 80 percent of global executives regard climate change as strategically important. Though the survey results show that only a few companies act on these opinions, the fact the corporations are rethinking their social roles and paying close attention to societal expectations represents a turning point in the history of modern corporations.

The above development should be understood in a broader context. When executives show interest in and commitment to sociopolitical issues, it manifests a profound change in the role of corporations in society. Specifically, these issues become strategic and are linked to business evolution and growth. Though some executives, over the years, have directly or indirectly engaged in addressing sociopolitical subjects, these involvements have been limited and or pursued purely to further and serve the narrow business interests of their respective companies. This attitude, however, appears to be shifting as more and more executives assume wider roles in addressing social and political issues at both national and global levels.

For many years, executives in Europe and Asia have felt relatively more comfortable about tackling sociopolitical issues than their counterparts in the USA. The emphasis on short-term profit results, fears of possible fallouts, and a narrow understanding of stakeholders’ values have significantly curtailed US executives’ direct participation in shaping public debate in the social and political arena. The globalization of business, political blunders in Washington, the rising influence of NGOs along with the growing understanding of societal needs, have motivated these executives to ponder their roles socially and politically and to navigate avenues to sustain their involvement.

In a survey of US executives, the McKinsey Quarterly (2007a) reported that executives show a willingness to play a much greater role in shaping sociopolitical debate. The magazine reported that there is an increasing understanding among the participant executives that today’s social and political forces can define and swiftly remake a company’s reputation and that regulatory environment can dramatically alter an industry’s strategic landscape and market opportunities over the long-term. Nevertheless, these executives have indicated that most of them are not playing leadership roles in shaping the debate on sociopolitical issues.

In reviewing the trade and corporate literature on managing sociopolitical issues, I reached the conclusion that the literature is in its early stage of infancy. Nevertheless, it is possible to suggest four types of executives: the indifferent, opportunist, spirited (moralist, social entrepreneurs, and passionate activist), and pragmatic managers. The indifferent executives often show no interest in participating or being involved in any environmental or politically driven projects. This used to be the common form but in most recent years its base appears to be eroding. The McKinsey Quarterly (2007a) reported that 6 percent of executives showed no interest in playing any role in efforts to address public issues. The opportunists, for their part, are driven by profit motives, seizing lucrative opportunities, and or inspired by corporate power instead of corporate citizenship.

Spirited executives are those who are primarily driven by concerns for good deeds and protecting the planet and its inhabitants. These are the moralists (many of whom are religiously inspired individuals whose beliefs are reinforced by recent trends among religious institutions in espousing the green movement, debt relief for developing nations, poverty elimination, and human rights causes), social entrepreneurs (those who see certain ills in society and are determined to address or confront them by themselves;, e.g. collecting old or new items such as books, bicycles, laptops, among others, and shipping them to poor countries; providing computer training to citizens in poor countries to reduce digital illiteracy or bridging the digital divide; training individuals in poor parts of the world to cultivate entrepreneurial skills), and passionate activists (those who are concerned with problems which are global in their scope and who reach and offer programs to minimize or eliminate them (e.g. Anita Roddick, Ted Turner, Ellen J. Elliott, etc.).

Pragmatic executives are those who understand that in a globalized world they have to deal with various actors including governments, NGOs, lobbyists, civic leaders, political and religious organizations, and the media; that transparency and accountability are essential for corporate legitimacy; that independent stakeholders are neither passive nor indifferent and actively seek to shape and redefine the market environment; that the politics of globalization simultaneously offer opportunities and risks; and that there are ample opportunities for businesses to learn from, be part of, and contribute to ongoing social and political discourse.

These types of executives are found across nations. Their presence differs considerably and their expectations, even in the same category, may not be the same. While the first two typologies used to be common, the last two appear to be on the rise. It is these two that are changing the role of corporations in society and building the foundations for other executives and corporations to follow suit in addressing sociopolitical concerns.

In managing sociopolitical issues, however, there is a gap between reality and rhetoric. Many executives are not committed to taking part in social and political debate and even those who do participate in sociopolitical issues often do not yet exercise leadership roles. Worse, some executives play leadership roles selectively when it is either thought to enhance profits or strengthen the power of their own corporations. Nevertheless, the results of the McKinsey Quarterly (2007a) reveal a positive trend – those executives who play leadership roles (two out of three) report that they act as private citizens and their comprehensive understanding of public issues and networking with peers who share similar interests make it easier for them to debate public issues. The latter, while underscoring the significance of positive peer pressure, manifests a growing awareness in the corporate world, particularly among the influential business class, that social and political issues are becoming strategic and are essential for differentiating competitive organizations from the rest.

Executives and their corporations should consider managing sociopolitical issues as a logical business choice and as a strategic pursuit. That is, alleviating social and political issues to a level which corresponds to their rising importance is a prerequisite for firms to situate themselves as global players. In its survey, the McKinsey Quarterly (2007b) reported that in managing sociopolitical issues, executives most frequently rely on media, public relations (44 percent), lobbying regulators, governments (44 percent), and improving compliance with laws, regulations (32 percent). The overemphasis on media campaigns and lobbying governments/regulators may give credence to critics who claim that corporations use their involvement in social and political activities merely for the immediate and selfish pursuits of their interests or are using their involvement as public relation tools. Corporations have the resources and capacity to prove otherwise.

Sociopolitical issues must not be managed through proxy or on a part-time basis. Rather, the management of social and political issues should be a part of senior executives’ strategic activities. These issues are critical for competing effectively in a globalized world where there is a blurring of political and social concerns with business issues at home and abroad. The legitimacy and the revitalization of corporations have been increasingly linked to their societal roles. Strategically driven firms are those that close the gap between their rhetoric and the reality of their social and political participation.

Abbas J. Ali