Corporate Lobbying And Its Importance For A Company
Lobbying has been a controversial issue over the years. First Amendment lobbying protects lobbying in the United States informs the government on the needs and issues of the Citizens. Corporations have the right to citizenship, which enables them to involve lobbyists to raise their concerns to the government. The main objective of lobbying is to communicate the desires of a particular group of people to the government. Lobbying focuses on specific issues such as tax rates. Raising citizens’ concerns enables the government to understand topics related to taxes by allowing interest groups to give their opinion. There have been concerns about the impact of cooperating lobbying to a business. Discussion on whether some lobbying groups are more influential and have more political influence. Lobbyists often draw business managers to political processes. Companies also tend to invest more on lobbyist to have tangible results. However, due to the legislative nature, issues are presented to the government, but little is done about it. Despite the complex nature of the legislation process, corporate benefits from the specific interest groups leading to increased profits.
The growth of corporate lobbying has been increasing over the last years. Corporate lobbying addresses the problems related to businesses. Some of the issues include protection from international competition and protection against economic shocks, among others. The need to gain more power has resulted in an increase in corporate lobbying. However, the activity has altered the policymaking environment in several ways. Competition in the market has increased. Lobbying strategies have changed and become more aggressive. The activity has been more robust. The lobbying group is striving to remain relevant and learn more by enhancing a more intellectual environment.
Furthermore, the competition has resulted in changes in policymaking. Defenders of the status quo benefit more from the structural feature, so the government (Drutman 65). The lobbying groups may raise concerns about a particular issue, but the legislation process takes time for the problem to be addressed. For instance, the issue of tax reforms has been in existence since the nineteenth century. Tax reform has undergone numerous changes, and when an issue regarding the reform is raised, the claim is not considered since the reform challenges the benefits of some companies.
An increase in corporate lobbying and the changes in the environment have created challenges in the political environment. Competition in the environment will require considerable resources to challenge the status quo position (Drutman 65). It depicts that it will be necessary for corporate to dig more into their pockets to find the lobbying groups. Notably, the wealthier organization will have an advantage over other organizations, which depicts that they are in a better position in advocating or changes. However, the current degree of polarization has impacted political processes. Studies show that the increased level of corporate lobbying constraints the political agenda, which reduces the possibilities of changing the status quo (Drutman 66). The gridlock makes kit challenging to change the policies regardless of polarization. Hence, corporate may end up wasting money rather than benefit from the groups.
Competition in corporate lobbying has impacted the legislation process, making it less productive. The presentation of issues by lobbyists makes the process difficult as every group emphasizes on their interests. Considering the different interests of corporate makes the legislation process complex (Chari et al. 35). For instance, in 2010, the government passed legislation on the Affordable Care Act (Chari et al. 36). The bill was a top priority by the government despite its impact on taxes and government expenditure. Later the bill was regarded to be lengthy and complicated. Congressional leaders worked with groups to pass the bill.
Furthermore, for the bill to be passed, many lobbyists collaborated with governmental offices to ensure that the interest of lobbyists’ clients was considered. More than 514 businesses used the groups to raise concerns about the bill (Chari et al. 37). Taking into account the different interests of the clients makes the legislative process slow and complicated. Notably, less legislation is passed compared to the past when the interest groups were few. The process has become more expensive, hence costing the corporate more.
Several scholars have argued that lobbyists help to increase corporate profits. A research conducted in the USA showed that operating margins for most business has increased as a result of corporate lobbying. However, Chari et al. suggest that increases in profit margin results in economic inequality and stagnant wages and greater inequality to wages. An increase in profit may represent a reduction in the competition, which reduces economic dynamism. In a dynamic economy, innovative firms tend to have higher profits, while weak performing firms have low profits. Firms engage themselves incorporate lobbying to have regulations that protect their market, instead of innovation to enhance competition in the market.
Several factors influence the profitability of a firm. The actors include investing in technology, research and technology, advertising, and investing in lobbying. A survey conducted in the actors influencing the performance and profits of business showed that regulation and lobbying impact more on lobbying compared to research and development. Lobbying enhances regulatory changes that are favorable to a company, which increases the return on investment of a company. For instance, a study by Berry, showed that for every dollar spend on lobbying for favorable tax reforms, and a company earns a profit of more than $220.However, regulation is not necessarily associated with higher profits. In some situations, laws that increase costs impacts indirectly on the firm's profits, because of costs to the incumbent’s act as barriers. When regulations reduce prices, firms also benefit. Corporate lobbying is responsible for a significant increase in profits. Firms often influence the legislative process by enhancing changes suitable or the growth of the company. However, the impact of the lobbying groups is evident in a specific type of business. Hence, some firms may fail to benefit from the groups despite investing in lobbying.
Lobbyists are resourceful to the government. The complexity in the intellectual environment has resulted in the government depending on lobbyists in the policymaking process. It is challenging for the government to have adequate knowledge about the impact of the policies (Berry,40). Thus, rely on the knowledge from the interest groups, corporate lobbyists offer technical expertise to the government. Research conducted shows that lobbyists act as educators and are necessary for the policymaking process. Lobbyists help to drat policies and provide an analysis of the impacts and the effects of a particular policy. When lobbyists act as a subsidiary of the government, the legislators tend to focus on the interests that can afford the costs of organizing campaigns and also financing or the corporate that support them (Hojnacki et al. 265). Policy expertise is essential in making the rules that govern the business environment. Congress tends to seek solutions that minimize the complaints of the agency. Businesses take advantage of the lawmaking to analyze the requirements needed to pass a policy. Therefore, the effectiveness of the groups requires funds to convince the bureaucrat on the importance of the system.
In conclusion, corporate lobbying is essential to a company. However, changes in the political environment have resulted in challenges in the legislature process. Corporate is spending in the groups, but the process of acting to the issue is slow. Hence, firms tend to spend more with minimal returns. Although the legislative process is time-consuming, when a law is enacted, the corporate enjoys long term profits.
Works Cited
- Berry, Jeffrey M. Lobbying for the people: The political behavior of public interest groups. Princeton University Press, 2015.
- Chari, Raj, et al. Regulating lobbying: a global comparison. Manchester University Press, 2019.
- Cunningham, Kevin, and Michael Marsh. 'Voting behavior.' Politics in the Republic of Ireland. Routledge, 2017. 137-163.
- Drutman, Lee. The business of America is lobbying: How corporations became politicized and politics became more corporate. Oxford University Press, 2015.
- Hojnacki, Marie, et al. 'Assessing business advantage in Washington lobbying.' Interest Groups & Advocacy 4.3 (2015): 205-224.
