OBJECTIVES AND FUNCTIONS OF LOBBYING FOR BUSINESS

Lobbying offers companies the chance to procure information from politics which is an important and necessary basis for their own business decisions. Business is part of society and ‘politics for the people’ is inconceivable without ‘politics with business’. In the same way, business relies on attractive economic conditions and has a vested interest in the abolition of unnecessary regulation. 'Business without politics' is thus also out of the question.

Such interdependence renders the regular, complementary exchange of views and perspectives necessary, yet business representatives and economists regularly criticise politics’ or politicians’ competency in business affairs. Politicians’ lack of expertise produces political results far from ideal in business terms; political aims and beliefs are not based on realistic working assumptions-  that is the tenor of criticism. This view is both right and wrong. Communication between business and politics is often clearly at cross purposes; politics, too, often loudly expresses a lack of sympathy for demands from business circles. It is also true that political processes and decisions do not follow purely cost-benefit calculations: they are the products of compromises which can only be understood in the context of the political process. Many political results are from an economic perspective only 'second-best solutions', often shaped by the principle of basic consensus a far cry from the ideal of economic efficiency criteria. Yet these precise characteristics are the main constituent of politics. The criticism of insufficient political competency in business matters is unfounded.

The main reason for the climate of mutual incomprehension which often exists between politics and business is the difference in the perceptions and basic assumptions of the two groups of actors. In business, profit maximisation and (cost) efficiency are standard focuses, whilst in politics these categories have little significance - power and governance are instead the central concepts. Divergent conceptual bases are one expression of the functional distinctions which define modern society. A feature of a modern society based on the division of labour is thus permanent differentiation between a number of different subsystems within society such as the political system, the economic system, the legal system, etc. Forming a common basis of communication between politics and business is all the more important.

Professional, structured and targeted lobbying can make an integrative and necessary contribution to this process by creating, structuring and supporting ways to overcome system boundaries through mutually comprehensible communication between politics and business. Politics and business present their needs and expectations and exchange information, and on this basis then reach the necessary decisions.

Every company is not just a player on the economic markets. It also and more importantly interacts with society and politics. Companies are a fundamental part of the social order and the choice and scope of action open to them are consequently not solely dependent on customer, market or sector but also defined by the ‘contextual environment’, which produces normative restrictions such as legislative, regulatory and political decisions, for example laws and regulations. Decisions from a company’s contextual environment can have a direct or indirect effect on the economic conditions in which it operates and must therefore be considered in business decisions. Contextual environment decisions include employment standards, official regulations and environmental requirements. That is why, in a globalised world in which businesses are faced with and must respond to an increasingly rapid succession of new economic, social and cultural movements and trends, (. . .) active involvement in shaping this environment is essential.

Actors in the contextual environment can be seen as the secondary stakeholders in a company, the primary stakeholders being first and foremost the shareholders and potential investors. Whilst relations with primary stakeholders are managed through investor relations, a channel of communication with secondary stakeholders is also required. This is the role of political representation of interests in the form of governmental relations. Representation of interests, like investor relations, thus has a strategic management function for analysing, interpreting and helping to shape the political environment with the company’s objectives in view. Practical functions include both monitoring the political arena and analysing political and social developments, and representing the company’s interests in the political field.

A measure of the importance of lobbying in business practice is the extent to which the political framework affects a company’s business activities. The political framework in general is one of the most important context factors for a company, but there are certain sector-specific and segment-specific differences. Effective lobbying is above all vital to companies operating in highly regulated sectors (e.g. energy, telecommunications, logistics and transport): precise knowledge of relevant political procedures of the ‘how, when and why’ of key decision-making processes from the company’s perspective and the correct identification of the major decision-makers almost inevitably gives a company advantages over competitors which largely leave their supply of political information to chance (a common approach). Lobbying has consequently increasingly become a 'modern management discipline'. The expertise required should, moreover, also have considerable influence on a company’s strategic information management. In turn, the products or services a company generates often directly affect or at least influence society. From this interaction comes the business obligation to actively contribute to the political, legal, regulatory and administrative framework in one’s own interests to avoid damage to the company.

If one sees the interests of a company as a resource, then the function of lobbying is primarily a strategic one. Lobbying can also be defined from a business perspective as ‘political risk management’ aimed at ensuring a company can quickly and efficiently meet the ever more rapidly changing challenges and demands of customers, an informed public and the legislature. The most important aspect is a clear awareness of how things stand at the earliest possible stage. Political risk management therefore means picking up on and defining relevant issues beforehand, and having various possible courses of action ready. Stopping or changing the fundamental course of a political process already underway and headed in a certain direction is, as a rule, difficult. The ultimate goal is to obtain information advantages from the contextual environment - the process is similar to market research to analyse customer preferences, or to competitor monitoring and sounding out the situation in the sector. Carefully monitoring the political arena is, however, not in itself enough to safeguard the interests of the company; these interests must also be actively and strategically presented in the contextual environment. In many cases only the latter guarantees successful lobbying. It must naturally be done in a fair and honest manner in strict adherence to the standards for professional lobbying,  in particular the legal framework, and to the company’s own compliance guidelines (which usually go considerably further than statutory requirements). Governmental relations must from a functional perspective therefore be integrated into the top management of the company. As lobbying is aimed at achieving competitive advantages or preventing competitive disadvantages, it must be part of the highest level of management in the company organisational structure. Only thus can optimal use be made of lobbying’s value creation potential.