The demands of populism on business and the creation of “corporate political obligations”

Abstract

Populism is an ideologically fluid political vehicle which increases political risk and forces firms to adapt. As populist parties claim to speak exclusively for the people, any activities that could be perceived as going against populist ideals or leaders are problematic from the corporate point of view. These obligations need not require firms to actively support the populist party or to champion causes dear to the populists, as they may simply expect that firms refrain from challenging the status quo. But these expectations can alter firm operations and planning, particularly intangible activities such as corporate social responsibility, making a firm divert resources away from what it may desire to compete in the economic marketplace and forcing it instead to compete in the social and political marketplace. In this paper, we explore these obligations imposed on firms and term them corporate political obligations (CPO), a specific type of corporate political activity but one which is imposed from the outside. Through our examination, we find that CPO is the dark side of stakeholder capitalism, with states utilizing power to claim rights within the marketplace that are not theirs to claim.