A simple corporate strategy for a better political game

CORPORATIONS often have a complicated relationship with the government. They strive to access state-controlled resources and influence policymaking by cultivating ties to officials. But if they are not careful, those very ties could make them vulnerable to political demands. To gain a net advantage, corporate strategists need a more sophisticated game.

To begin with, as my latest research suggests, they ought to be aware that government officials and lawmakers don’t always work towards the same goals. Different branches of government can have divergent, indeed conflicting, agendas. Firms position themselves on higher ground by discerning the goals and key performance indicators (KPIs) of the power brokers they deal with. Those that don’t, risk being overwhelmed by waves of political pressure.

Checks and balances

Taiwan, a former authoritarian regime that democratised in the 1990s, provided fertile ground for the research I conducted with Chi-Nien Chung and Weiting Zheng. We studied the period from 2002 to 2005, during which the Taiwanese government pushed for corporate governance reforms after Taiwan joined the World Trade Organization. The reforms encouraged firms to appoint independent directors.