Managing socio-political issues and environments has become a top concern for corporations in the contemporary world. A glimpse of the daily business press reveals a wide variety of issues that corporations need to tackle: How can multinational enterprises (MNEs) adjust their production facilities and supply chains in the face of geopolitical hazards? What role do MNEs play in addressing grand challenges such as climate change? How should firms respond to the backlash in some U.S. Republican-led states regarding environmental, social, and governance (ESG) investments? How can firms manage the demands of social movement activists both old (e.g., civil rights) and new (e.g., #metoo and Black Lives Matter)?

Our article, published in the Journal of Management Studies, takes stock of extant scholarly research in areas of corporate political activity (CPA) and corporate social responsibility (CSR), and proposes a new concept – corporate socio-political engagement (CSPE) – to reflect a more holistic perspective to understanding complex interactions among firms and their social and political stakeholders. It also serves as an introductory article of the special issue on “The Management of Socio-political Issues and Environments: Organizational and Strategic Perspectives,” which contains ten papers showcasing the cutting-edge research on CSPE.

What is Corporate Socio-political Engagement?

Conventional research on the interplay between business and society concentrates on two areas: CPA concerns how firms interact with and respond to governmental action and actors (e.g., lobbying, campaign contributions, and executive/board political connections) while CSR research explores how firms interact and respond mainly to nongovernmental stakeholders (e.g., sustainability practices, CSR reporting, and corporate philanthropy). Furthermore, the last decade has witnessed a burgeoning stream of research that looks into the complementarity and (mis)alignment between CPA and CSR within a firm.

Notwithstanding the rich insights generated from the prior research, we contend that the growing complexity of socio-political environments, the heightened salience of socio-political forces, and the increasing interaction of social and political issues and actors, call for a more integrative approach to thinking about corporate activities in this realm. We contend that CSPE better captures these firm responses and strategies. It highlights the concurrent or sequential interactions between firms and their social and political stakeholders and allows for the possibility that they can be the subjects or agents of that engagement (in a strategic sense), the object or respondent to that engagement (when firms face regulatory/stakeholder pressures), or both.

A recent issue helps illustrate and underscore our CSPE concept. U.S. companies have been increasingly considering ESG issues in their strategies and operations. The investment industry — banks, institutional investors, and money managers — have similarly been assembling funds that evaluate ESG in the companies in which they invest. This trend has generated a wide range of responses and initiatives, including backlash by conservative state attorneys general who reject the notion of investments based on “woke” policies. Criticism has centred on the unreliability and increasing politicization of ESG measurement. The Securities and Exchange Commission has issued draft rules that would tighten up ESG reporting expectations of companies. A number of activist investors specializing in ESG, such as Engine No. 1, have also become involved by proposing socially oriented shareholder proposals to urge companies to improve their social and environmental performance. Students and other social-movement groups have demonstrated to convince pension funds and university endowments to divest from fossil fuel. Paradoxically, the Business Roundtable has opposed mandatory climate disclosures referenced above, prompting some accusations of hypocrisy and suggesting that corporations use voluntary ESG disclosure to avoid regulatory oversight rather than serve stakeholders.

The Need for a New Perspective

The above case demonstrates numerous societal and political dimensions that are unfolding at multiple levels of analysis, and involves a broad, complex, and recursive range of actions and interactions that transcend traditional notions and tactics of CPA and CSR.

First, the context we describe reflects a wider range of stakeholder demands and much more complex socio-political issues than those portrayed in the conventional literature, which typically concerned a single, well-established dimension of nonmarket activity, such as lobbying and CSR reporting.

Second, CSPE underscores the need for a more integrated/holistic solution to inextricable social and political challenges than CPA or CSR research is able to provide. As can be seen from the above ESG case, companies and executives are confronted with pressures from various financial, social, and political stakeholders with different and oftentimes conflicting demands. The sheer complexity involved in the socio-political environment dwarfs that of the research settings in most conventional nonmarket strategy research.

Third, even in the case of specific strategies targeted toward political or social stakeholders, firms employ a wider range of tactics than is traditionally portrayed in the conventional CPA/CSR literature. Notable examples include U.S. CEOs assuming political positions/stands and communicating them to stakeholders; MNEs engaging with multiple host-country actors to find innovative substitutes for bribery in developing economies; corporate self-categorization through the use of labels, rhetoric, and narratives to achieve a strategic fit with nonmarket actors and environments; and aspirational political practices to exploit nationalism sentiments and win the hearts and minds of external stakeholders.

Finally, echoing political CSR researchers’ call for understanding how corporations (should) become political actors by engaging the provision of public goods, we are interested in both the instrumental and normative aspects of CSPE. We view these two strands of research as largely complementary rather than rival in understanding corporate engagement with socio-political issues and actors.

Implications

We situate the special issue articles in two-dimensional framework, which captures the identity of socio-political actor or the nature of socio-political issues (political, social, or both) as well as the relevant level of analysis at which the interactions unfold. Together, these articles shed light on the nature, antecedents, management, consequences, and public/private regulation of CSPE. Moreover, the multilevel analyses and different theoretical approaches they employ have produced a pioneering set of papers on the interplay between business and society that will enrich and strengthen the nonmarket strategy field. We then outline some promising future research directions with respect to the (mis/non)alignment of CPA and CSR, psychological and ideological characteristics of CSPE, regulatory capture, and stakeholder management. We hope future research will extend the contributions of these studies and generate fresh insights into CSPE activities across the globe.