Etsi
  • Klaus Ilmonen

Business is Becoming Political

Corporations are entering the political domain - international corporations are taking a stand on human rights issues; car manufacturers agree on tougher emissions regimes over federal requirements and tech-employees refuse to work on military-related projects. Business is becoming political.


One reason for these phenomena is that stakeholders are using the corporation as an avenue for political action as political institutions have not been able to establish sustainable policy responses to political needs. Politics is polarized and fragmented and instead of offering solutions is increasingly becoming part of the problem.


Another reason is that current institutions are unable to address global challenges - but new technology and new business models may produce responses that we need. There is clearly room for business-driven solutions - in healthcare, in environmental issues, in infrastructure.


Third, investors and other stakeholders see that the corporation should maximize their welfare - not necessarily just their monetary profits. For example, long-term investors, such as pension institutions, see that corporate action may well undermine their long-term goals and increase their future liabilities through corporate externalities.


We will see an increase in the political role of corporations - which will raise new issues related to governance, business and politics. Corporations cannot and should not duck their responsibilities in these matters - they are very much more a part of the solution than the problem.


An article on this theme is available in the Finnish business weekly Talouselämä

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