Political Activism Improves Business Performance

Study shows businesses engaged in corporate political activities see about a 20 percent higher performance rate.

 

By Lorie Briggs

Special to USF.edu

 

TAMPA, Fla. (Dec. 8, 2010) Participating in corporate political activities improves company performance, according to research by University of South Florida business professor Sean Lux.

 

Lux’s research study titled, “Mixing Business with Politics: A Meta-Analytical Study of Corporate Political Activity in the United States,” found that businesses that engage in lobbying and make campaign contributions increase their bottom line by roughly 20 percent. The study, co-authored by Russell Crook and David Woehr of The University of Tennessee, will be published in the January 2011 edition of the Journal of Management.

 

An analysis of more than 7,000 businesses found that the larger the company, the more likely it was to be politically active. The research also found that incumbents, and those with a high degree of political power, were more likely to receive corporate attention.

 

Lux and his colleagues observed that the U.S. Supreme Court decision in Citizens United vs. Federal Election Commission likely makes way for even higher levels of corporate political activity and less transparency. The January 2010 decision overturned a long-standing law limiting company spending on political campaigns. More money was contributed by businesses to politicians during this past election cycle despite a floundering economy and a non-presidential election.

 

“I can’t begin to speculate as to why corporate political activity bolsters businesses’ bottom lines,” Lux said, referring to the research study. “But I can say that corporate political activity is only going to continue to increase because of the Supreme Court’s ruling, and that should cause some concern.”

 

He added, “While such support is not illegal, it does restrict the flow of the natural business market.”

 

Lux, an assistant professor in the College of Business, teaches graduate-level courses at USF’s nationally-ranked Center for Entrepreneurship. His research has been published in such journals as the Journal or Management, Academy of Management Conference Best Paper Proceedings, and the Handbook of Organizational Behavior. He earned a PhD in management from Florida State University, an MBA from USF, and a bachelor’s degree in civil engineering from Norwich University.

 

Lorie Briggs can be reached at 813-974-7280.