Decisions made in corporate boardrooms are often as political in nature as those made by government officials because the two organizational systems share the characteristic of being comprised of multiple stakeholders, both internal and external to the decision-making body (18). In other words, there are numerous influences, competing interests, and individuals who have a stake in the decisions that are made by corporate boards, as is also the case in the government. Board members, like politicians, then, are required to negotiate motives and needs that are often in conflict, attempting to forge compromises among those who have a vested interest in decisions and their potential consequences.
Board members and politicians share other characteristics as well. Both sets of decision makers are elected by a larger body, the members of which expect the elected individuals to represent them and their interests (19). Yet once the decision makers are elected and have assumed their posts, their decision-making processes are largely closed to the public; as a result, accountability is limited (19). Indeed, as the textbook contends, there is a close and mutually beneficial relationship between the decision makers of the corporate boardroom and those who hold political office (19). Specifically, “The government has delegated to the private sector primary responsibility for mobilizing and organizing society’s economic resources” (19), and the government clearly benefits from the success of the board members to fulfill that responsibility.
There are both positive and negative implications of corporate policies. One of the positive features of corporate policies and the corporate decision-making process is that in its best expression it can be an efficient means of crafting policy that represents a vast number of people who cannot logistically take part in the decision-making process. Yet this benefit is often truncated by the replacement of what is supposed to be a representative decision-making process with one that is “elastic” (19). When a board or a government forgets—or simply ignores—its mandate to represent a larger body of people that has elected it, the public’s confidence in and support of both the decision-makers and their policies wanes, creating negative ripple effects throughout society. The decrease in confidence can have tangible social, political, and economic implications (19). Because companies make decisions about policies and programs that will impact the society at large, some critics view boardroom members as wielding far too much power (18). The fact that corporations in the United States are permitted to operate with relatively little external or governmental oversight only exacerbates such a perception (18). While corporate operations are vital to the performance of the national economy, the textbook adopts the position that corporations are potentially as dangerous as they are beneficial, and recent corporate scandals seem to support such an argument.
The legislative arm of any government is charged with addressing a mind-boggling array of social, economic, and political issues through the crafting and passage of policy and law. In order to make an otherwise unwieldy process more manageable, the federal government in the United States relies upon a system in which committees and subcommittees are appointed to review and study certain issues in depth before vetting a policy proposal before the entire legislative branch (121). As part of their policy-making work, committees and subcommittees are given “wide latitude to conduct hearings on, investigate, and review legislation within their jurisdictions” (121). These different processes permit committee and subcommittee members to understand the nature of the issue, the people who any policy will affect, and the potential implications of each alternative that is available for addressing the particular concern (121). Once the committee or subcommittee members are satisfied that they have a full understanding of the matter at hand, they formulate a proposal in the form of a bill, and bring it before their colleagues, who will debate and discuss the matter, and, in some cases, render a decision in the form of a law (121).
There are many obstacles (and often, many years), however, between the proposal and its conversion into law. First, crises or other critical current events may distract attention away from what some view as a “minor” issue being reviewed by a committee or subcommittee, effectively tabling the matter for an indefinite period of time (122). So too might the political climate determine a legislator’s or committee’s willingness to tackle a particular issue. As the textbook points out, “[a]ction is postponed primarily because everyone waits until the end to get the best deal…. Legislators also delay action in the hope that unfavorable political conditions will improve” (135). Secondly, legislators keep their “doors open to a broad range of views” (122), and each lawmaker considers the competing interests that influence him or her, formulate an individual opinion, and then bring it before the legislature. While this is a system that attempts to be cognizant of all stakeholders’ needs, feelings, and opinions, the same attempt may frustrate or prevent the very efficiency that the committee and subcommittee system was designed to avert. The fragmentation of the legislature into committees and subcommittees can have other unappealing effects as well, namely, that special interest groups with the power of money can unduly influence committee and subcommittee members by pitching information to them that may be one-sided or even inaccurate. Thus, the legislature at large may not always feel confident that the committee or subcommittee has remained untainted by outside interests (126). Although the committee-subcommittee system was established for good intentions, it often because subject to political games that make the efficacy of the system questionable.
