Corporate Political Reputation

The corporate political reputation of a firm is what the political community thinks about—and how it evaluates—the political attributes, political capabilities, and political savvy of that firm. A firm, for example, may be seen by the political community as politically aggressive or passive, politically sophisticated or naive, politically involved or absent, or politically partisan or bipartisan. A political reputation is significant because it is intimately linked to a firm’s overall corporate political behavior. A respectable corporate political reputation provides the firm with a demonstrable edge—a measurable level of clout—over politicians or its commercial competition. A valued political reputation gives the firm a leg up to get what it wants from government while denying the same to its competition. A firm with a credible political reputation sets cues for both its peers and politicians; it has an easier time accessing political figures and attracting political capital than does a firm lacking a credible corporate political reputation. This entry covers the different types of corporate political reputations and the steps companies need to take to establish political reputations.

Generally, there are three overarching types of corporate political reputations, each with its likely associated behavior. First, firms can have a “restrictive” political reputation. Firms with this reputation tend to be peer followers. If they have a political action committee, it has minimal funding, and any lobbying role is also diminished. Restrictive political reputation firms are seldom policy or political initiators. They tend to be passive politically and show abundant signs of political naiveté. Second, firms can have a “normalized” political reputation, whereby they are avid issue coalition joiners but not seen as leaders. These firms usually have a political action committee and government relations function, but even so, the firms are not really comfortable in the political environment. They are followers first and step-out companies only when faced with a major policy threat. These firms are minimally engaged in politics and can be partisan or nonpartisan. Finally, there are firms with an “influential” political reputation. Such firms lead their peers, embrace uniqueness elements, have a well-heeled political action committee and an aggressive government relations team, and have company executives interested in and active in the political world. Firms with an influential reputation do not wait to be told what to do. They have the resources and experience to initiate strategic political action. These firms are usually politically sophisticated, engaged in multiple aspects of political life, and aggressive policy advocates.

Corporations do not have to be stoic bystanders when it comes to their political reputation; they can take steps to build a new one or alter an existing one. First, to build a political reputation requires a firm to take chances and become known to the political community. Usually, this means adopting a high-profile position on an issue or choosing sides in a political race where the political community has a robust interest. Firms need to be judicious, however. Simply being publicly recognizable does not always translate into a positive reputational buzz, but attaining a sustainable corporate reputation is not possible without assuming some measure of visibility risk.

A second political reputation building block is this: Firms need to be seen as different from their political competition. Firms trying to establish a viable political reputation need to be front-row seekers—they need to set the political pace. They need to stake out their own posture and invite others to join. A company that wants to build an effective and respectable political reputation cannot be a peer follower. It must be a path builder.

A third building block revolves around the need for corporate credibility. Whether in political endorsements or issue stands, having and holding credible public positions is essential to developing a positive political reputation. A firm that shows excessive political vacillation on issues or deliberately dodges political contests that might be important to the firm, a firm that lacks an inner political core or perspective, or a firm that discards authenticity for political expediency will seldom forge a valued and emulated political reputation. A firm with a whimsical political reputation will likely never gain the trust of its peers or politicians. When it comes to governing decision time, such a political reputation is more a detriment than a help. This does not mean that firms are forever stuck with a political position that is outdated or shown to be false or misleading. Reputational credibility can be hurt by being stubborn in the face of overwhelming contrary evidence. Firms can and should adapt to changing political circumstances.

While all of this is important to constructing a corporation political reputation, there is an additional crucial element: the political astuteness of a firm. Politically, astuteness is sometimes known as political intelligence, political acumen, or political smarts. However labeled, it simply means that a firm has the ability to grasp its political arena and possesses the political capacity along with the experience to maneuver through political events, contests, and circumstances. Not all firms are politically astute, but those that are share—in various quantities—certain characteristics such as an active and well-developed political action committee for campaign financing, a government relations function staffed by professional lobbyists, an internal corporate unit dedicated to public policy analysis, a corporate organized employee advocacy program, and an executive leadership both interested and skilled in politics. All of these elements can be built through appropriate political investments. Compared with other firms, companies known to be politically astute reinforce a compelling corporate political reputation.

A corporate political reputation is, in many instances, an adjunct to a firm’s overall reputation. The political reputation adds dimension and fullness to the firm’s posture and is an important enabler of corporate political behavior.