An International Company: Political Actor?
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
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
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