Business in Politics and Society
An Introduction to our special feature, Business in Politics and Society.
Since the turn of the century, there has been a strong resurgence of scholarly interest in the role of business in European politics and society. After a period in which the study of business had been pushed to the margins in many disciplines, the role of individual firms and business groups as economic, political, and social actors has once more become a matter of key concern to political scientists and sociologists. Perhaps more than in the past, this resurgent scholarship straddles conventional disciplinary boundaries, and benefits from academic cross-fertilization through mutual exchanges with contributions from the disciplines of business history, business administration, and innovation studies. These new studies have something in common: a commitment to generating insights that are relevant and useful to policymakers and business interest groups, more than a commitment to a particular theoretical approach or research method.
This special feature of EuropeNow offers some glimpses into the results of recent research into the role of business interests in European politics and society. They seek to answer some of the most salient questions of the day, including: What role do business interests play in European politics and society? How do they deal with political challenges to their interests such as the rise of right-wing populism that threatens the open markets upon which multinational corporations depend? What fingerprints have they left on major European projects such as the adoption of the Economic and Monetary Union? And how did they perceive initiatives to strengthen employee participation rights and co-determination?
The feature consists of six short essays by emerging as well as established scholars in the field that present findings of recent and ongoing projects that promise new substantively relevant insights into how business interest groups in Europe shape, as well as respond to, major social, political, and cultural developments. It was edited and compiled by the Council for European Studies’ Business in Politics and Society Research Network. The research network intends to be a forum for the discussion of ongoing research in the field by organizing paper panels and roundtable discussions at the annual meeting of the Council of European Studies, a conference that is frequently attended by scholars in the field. The remainder of this editorial briefly introduces the six contributions.
Magnus Feldmann and Glenn Morgan provide an overview of their edited book Business and Populism: The Odd Couple, which is forthcoming with Oxford University Press. Feldmann and Morgan observe that there is a gap in the literature when it comes to the relationship between business and populism. Feldmann and Morgan help to fill this gap by extending Hirschman’s classic exit, voice, loyalty typology to show how businesses deploy exit strategies, soft and loud voice, and implicit and explicit loyalty in response to populist governments. Feldmann and Morgan submit that loud voice is risky, costly, and comparatively rare. By contrast, they expect implicit loyalty to be very common and the default strategy for most firms. Their contribution points to the challenges that the rise of right-wing populism poses to business interest groups, as well as to the diverse ways in which business interest groups respond to those challenges.
Beverly Barrett investigates the relationship between national governance and foreign direct investment flows at the national and regional level. The essay identifies major trends in foreign direct investment flows, both globally and in Europe, and explains how these relate to shifting political and economic landscapes. The analysis builds on prior research that has suggested that governance indicators are an important indicator of foreign direct investment flows and utilizes six indicators of good governance defined by the World Bank. The essay also pays attention to the impact of the 2009 financial crisis and the COVID-19 pandemic.
Christakis Georgiou analyzes the role that large corporations have played in the introduction of the European Monetary Union and its subsequent institutional development. Georgiou argues that while existing intergovernmental perspectives have been quite successful in explaining some of the dynamics of the Eurozone’s development, they are nevertheless inadequate because they fail to account for the key formative role played by European business groups. By focusing on both the instrumental and structural sources of business power, Georgiou shows how large corporations and business groups have played a crucial role in persuading the German government to support the introduction of the Economic and Monetary Union, despite skeptical public opinion and firm opposition from powerful institutions such as the German Bundesbank. He also shows how business groups operated in a strategic manner to subsequently persuade the European Union member states to gradually expand the union’s fiscal capacity in the wake of the 2010 financial crisis and more recent COVID-19 crisis.
Astrid Hedin analyzes the 1976 legal codification of employee representation at the workplace, known as the Codetermination Law. Hedin takes issue with the interpretation that fear of Soviet communism motivated Swedish business to accept codetermination. Instead, ever since the 1940s, the Swedish employers’ confederation SAF had supported workers’ councils. During the 1960s, SAF actively sponsored practical experiments on workplace democracy and innovative academic thinking on the topic. Hedin’s studies show how the early 1970s radicalization of the Swedish labor movement surprised SAF – and eventually led to a breakdown of the Swedish labor market consensus. In effect, the net Soviet impact on the Swedish labor market was arguably to polarize the political landscape.
Gábor Scheiring’s contribution enters the debate concerning the relationship between populism and neoliberalism: are they antitheses, as is commonly thought? Drawing on his recent article in Socio-Economic Review, which uses a mixed-method approach relying on three primary data sources, Scheiring argues that they are not. He makes the case for the existence of a national-populist mutation of neoliberalism, a compromise between the core of neoliberalism on one hand and national interests and the national capitalist class on the other. According to Scheiring, economic nationalism serves to integrate national capitalists into the rule of Hungarian Prime Minister Viktor Orbán and his Fidesz party, while populism appeals to a large segment of the Hungarian population, even those who have been harmed by Orbán’s rule, by reframing distributive conflicts as issues of identity politics. In sum, populism is compatible with neoliberalism and enjoys substantial business support.
Finally, Niels Selling asks why corporations are less inclined to take stances on moral issues in Europe compared to in the United States. Today, corporations are under pressure not only to act responsibly in their own business affairs, but to take stances in public on broader issues with moral implications, such as, for instance, gun control or racial disparities in voting rights. Corporate moral advocacy can be a source of societal legitimacy for firms, and meet expectations of stakeholders, including employees, investors, and customers. Yet, as Selling documents, corporate moral advocacy is more widespread in the US compared to Europe. Selling traces these differences to aspects of the institutional environment. The pluralist system of interest representation in the US allows firms to speak up on political and moral issues more than the corporatist systems of many countries in Europe do. Differences in employee activism is another factor that matters. In addition, Selling highlights the heterogeneity of European countries. In short, Selling’s contribution points us to the rising expectations on corporations to take public stances on issues of ethics and on socio-cultural controversies, as well as variation in the ways corporations respond to those expectations.
The Chairs of the Council for European Studies Business in Politics and Society Research Network thank each of the contributors to this special edition for their compelling research, all of which forwards this publication’s mission of stimulating vibrant discussion about and a deeper understanding of the players and the phenomena shaping Europe today. Finally, we would like to thank the CES chair, Karen Anderson, the CES conference coordinator, Rusudan Zabakhidze, and our copy editor, Maura Welch, whose tireless efforts were crucial in making this special feature possible.
Daniel Kinderman is an associate professor in the Department of Political Science & International Relations and Director of the European Studies program at the University of Delaware. He is interested in the role(s) of business and business organizations in society, ranging from prosocial behavior to aggressive interest group advocacy. His current research focuses on business responses to right-wing populism. He received his Ph.D. from the Department of Government at Cornell University and he has published in a variety of different journals.
Dennie Oude Nijhuis is university lecturer at Leiden University’s Institute of History. He specializes in comparative political economy of labor market and welfare state development. He is the author of various books, which include Labor Divided in the Postwar European Welfare State (Cambridge University Press, 2013) and Christian Democracy, Labor and the Postwar Development of the Dutch Welfare State (Amsterdam University Press, 2018), De Polder Werkt: Vijfenzeventig jaar Stichting van de Arbeid (Prometheus, 2020).
Thomas Paster is an associate professor in Business and Public Policy at Roskilde University, Denmark. He holds a PhD in Social and Political Sciences from the European University Institute, Florence, and specializes in business-politics relations, welfare state politics, and industrial relations. He is the author of the book The Role of Business in the Development of the Welfare State and Labor Markets in Germany (Routledge, 2012). He is a co-chair of the Council for European Studies’ Business in Politics and Society Research Network.
Published on November 2, 2022.