From User to Shaper: Firm Reputation and Business–Government Relations

Abstract The relationship between firms and governments has long been characterised by mutual dependence. Firms rely upon governments to facilitate market exchanges and to issue licences to operate, and governments rely upon firms for resources when constructing public policy. Historically, when evaluating a firm’s ability to contribute to the policymaking process, politicians and bureaucrats have relied upon its reputation for delivering high-quality information that is both technically and politically relevant. Using the United States as its primary case, this chapter examines how, in recent years, increased political competitiveness, changes in the policymaking process, and a rise in political polarisation have reshaped the role that firm reputation plays in policymaking and politics more broadly. Specifically, it argues that with the rise of affective polarisation—in which individuals’ politics have become rooted in social identity rather than ideology—the importance of a firm’s reputation for providing quality information has decreased in importance, while the partisan valence of a firm’s sociopolitical involvement has increased. Further, as several short cases show, this new emphasis on partisan positioning as a heuristic for a firm’s reputation has decreased firm agency in non-market strategy and has also led politicians that were previously sympathetic to corporate interests to use firms as political foils.