Risky business: Why executives keep finding themselves in political firestorms
In the ensuing political firestorm, the state of Florida revoked Disney’s 55-year-old favored tax and regulatory status, sparking legal disputes that lasted well into 2024.
- In the ensuing political firestorm, the state of Florida revoked Disney’s 55-year-old favored tax and regulatory status, sparking legal disputes that lasted well into 2024.
- Business leaders are increasingly at risk of political sparks igniting into firestorms that can devastate their companies.
- In our recent research we developed a new theory, rooted in the realities of American politics, that provides a three-part answer.
American politics are increasingly dysfunctional
- From middle-aged blue-collar workers to recent college graduates and beyond, people across American society are becoming increasingly disillusioned with the social contract.
- Second, American political parties are using voters’ disillusionment and anger to drive fundraising.
- We believe that ineffective government and policy uncertainty have undermined the American dream.
- As a result, disillusioned people are increasingly turning for help to the only other institution with enough resources to tackle these challenges: business.
Business leadership is becoming more difficult
- Culture-war firestorms can quickly overwhelm the conventional demands of setting and implementing business strategy.
- Executives must now spend substantial amounts of time, money and attention dealing with controversies.
- For example, research suggests that business investments that also benefit local stakeholders, such as communities and employees, get larger returns over the long term.
- For example, Disney’s theme parks and hotels in Florida are difficult to relocate, despite adverse shifts in state government policy.