An International Company:
Political Actor? (2009)
If a company needs to be aware of and manage political risk, does this mean that it is in fact a political
actor? This need and should not be the case. We can draw an analogy to an individual citizen living in a
large city with a high incidence of crime. This person wants to avoid becoming a victim of crime: They make
themselves aware of recent trends in criminal targeting and dangerous neighbourhoods, take common sense
precautions to avoid crime (such as travelling with friends in high-risk areas, or taking taxis to get through
bad neighbourhoods, etc), have the police emergency number pre-programmed into their mobile phone,
and take a self-defence course to enable them to escape a rough encounter relatively unhurt. These
precautions do not make the person a police officer. They are not obligated to seek out and defeat crime,
nor do they directly compete against criminal interests. They do not, in that respect, become a “player.”
Companies operating in high-risk political environments are in a similar position. They take precautions,
and they build useful relationships in the context of their operations, but they need not become political
actors. Their objective is to safely execute their legitimate business, and this need not extend to changing
the political landscape or to adjusting prevailing ideologies to better suit foreign business interests. The
presence of foreign businesses might adjust the political landscape over time, not just through investment
but also inter-cultural interaction, but any one firm is there to fulfil its legitimate business interests within
the parameters of ethical business standards, period. There is no need to become a political actor to
achieve this.
Second, there are good reasons to avoid becoming, or being perceived as, a political actor. Although there is
still an array of perspectives on international businesses, some decidedly unfriendly, by and large there is
widespread consensus that the legitimate pursuit of profit is socially valuable, and that private companies
are best positioned to undertake this pursuit. By sticking to business and avoiding over-extension into the
political domain, a company can maintain a degree of political neutrality, and can thereby avoid the harsh
treatment which political actors, whether state or non-state, are often subjected to by trying to influence
the distribution of political authority or prevailing social values. If one considers the survival skills of an
experienced government or opposition group, they are very unlike those of a private company, and most
firms simply could not compete as a political stakeholder, nor would they want to given the social
expectations of a company’s behaviour.
Furthermore, taking on a political role can dramatically erode the perception of a company’s performance in
corporate citizenship. If a company oversteps the limits of political risk management, and goes from self-
resilience to actively seeking changes in its political environment, it is by most standards seeking to create
an uneven playing field, and concealing a power agenda behind what seems like a thin veneer of legitimate
business interests. Such behaviour can also justify and spread notions that the company is an agent of
political interests which could well be antithetical to political ideals in its host communities. After all,
companies have actually been used as fronts for political subversion and clandestine activities in the past.
Where do companies draw the line between making themselves resilient in the face of political risk, and
becoming political actors? This is an awkward boundary, and some companies have overstepped it in the
past. For example, there have been several alleged (though well documented) cases of direct corporate
collusion with Western governments in the overthrow of anti-capitalist Latin American, African and Middle
Eastern regimes who threatened nationalisation of foreign assets, as well as the hiring of mercenaries to
militarily secure local operating environments experiencing civil war. Such cases have inevitably incurred
political wrath, increased risk, and damaged reputation. So too have cases involving the bribing of political
stakeholders.
The best, or perhaps most feasible, answer to where the boundary lies is that efforts to make oneself
resilient while adhering to legal and ethical standards are within a firm’s right and would be perceived as
such, while efforts to alter the political operating environment, aside from support to legitimate peace-
building initiatives, would make a company a political actor.
Companies do need to engage with their political environments and build relationships with political actors
in the context of specific operations, but they must remain very sensitive to this boundary. When in doubt,
a second opinion from reputable NGOs and respected donors who do not have a direct stake in the
situation can be a useful cross-check. There is no easy answer, but being aware of the issue and keeping it
on the radar is the best possible starting point.
Copyright: Harmattan Associates