Motives of corporate political donations: industry regulation, subjective judgement and the origins of pragmatic and ideological corporations

Abstract

What motivates corporate political action? Are corporations motivated by their own narrow economic self-interest; are they committed to pursuing larger class interests; or are corporations instruments for status groups to pursue their own agendas? Sociologists have been divided over this question for much of the last century. This paper introduces a novel case - that of Australia - and an extensive dataset of over 1,500 corporations and 7,500 directors. The paper attempts to understand the motives of corporate political action by examining patterns of corporate political donations. Using statistical modelling, supported by qualitative evidence, the paper argues that, in the Australian case, corporate political action is largely motivated by the narrow economic self-interest of individual corporations. Firms' interests are, consistent with regulatory environment theory, defined by the nature of government regulation in their industry: those in highly regulated industries (such as banking) and those dependent on government support (such as defence) tend to adopt a strategy of hedging their political support, and make bipartisan donations (to both major parties). In contrast, firms facing hostile regulation (such as timber or mining), and those without strong dependence on state support (such as small companies) tend to adopt a strategy of conservative partisanship, and make conservative-only donations. This paper argues that regulatory environment theory needs to be modified to incorporate greater emphasis on the subjective political judgements of corporations facing hostile regulation: a corporation's adoption of conservative partisanship or hedging is not just a product of the objective regulation they face, but also whether corporate leaders judge such regulation as politically inevitable or something that can be resisted. Such a judgement is highly subjective, introducing a dynamic and unpredictable dimension to corporate political action.

Who is donating to political parties in Queensland, Australia? An analysis of political donations from the food industry

“…In contrast, a 'pragmatic' strategy of bipartisan hedging in political donations is more likely to be adopted by industries who are already regulated, or for whom regulation is 'inevitable' (30) .…”

“…Industries donate in a bipartisan manner to gain access to regulators regardless of who is in power (30) . For example, we found that the sugar industry, one of Queensland's most lucrative crops, donated approximately equally to both the ALP and LNP.…”

“…Donations can influence the policymaking process by facilitating increased access to politicians and consequently, allowing representatives from the harmful commodities sector to develop long-term relationships with these decision makers (12,15,34,36) . Research suggests that industry representatives who donate multiple times within a year are more likely to have meetings or contact with politicians (30,34) . This gives commercial entities the opportunity to talk about industry-related issues or gain a 'sympathetic hearing', which may potentially influence a political outcome (35,36) .…”

Party Identification, the Policy Space and Business Donations to Political Parties

“…The nature and the extent of the power of business donations depend on their motivation. Business donors have pragmatic or ideological motivations (Harrigan, 2017). ‘The pragmatic motivation seeks private goods … pragmatic money is interested money’ (McMenamin 2013b: 8).…”

If Money Talks, What Does It Say About Brexit?

“…The nature and the extent of the power of business donations depend on their motivation. Business donors have pragmatic or ideological motivations (Harrigan 2017). "The pragmatic motivation seeks private goods … pragmatic money is interested money" (McMenamin 2013, 8).…”