My friend and law school classmate Charles Elson, who heads up the fabulous Weinberg Center on Corporate Governance at the University of Delaware edits Directors & Boards magazine. This issue is devoted to the growing controversy over corporate involvement in politics. Charles has a great editorial on the topic in the issue.
Charles begins by making a basic point that most people seem to be overlooking; namely, that the current wave of corporate political engagement differs dramatically from past engagements:
Historically, corporations avoided politics except where the company’s basic interest was Involved ....
Charles continues by explaining why corporate engagement on issues that are tangential to its core business is problematic:
The corporation and its various constituencies reflect the diversity of the body politic. Employees, customers, suppliers and shareholders hold viewpoints that may be quite divergent within their ranks. For a CEO to direct a particular position which reflects his or her own viewpoint may equally be opposed by as many constituencies that support it
For a business to be successful, there must be a near unanimity of purpose. A position on a controversial social issue taken by the CEO will offend as many as who embrace it, ultimately harming the success of the business. Companies were created to supply good products at fair prices to the public in a lawful manner. Anything outside of this sphere that detracts from this objective should be avoided no matter how noble one views the purpose.
Precisely. Go read the whole thing.
