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Corporate Lobbying In The U.S. And Implications For Vietnam Do Thi Thao   K39 E18
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    Corporate Lobbying In The U.S. And Implications For Vietnam Do Thi Thao   K39 E18 Corporate Lobbying In The U.S. And Implications For Vietnam Do Thi Thao K39 E18 Document Transcript

    • RETENTION AND USE OF THESIS I hereby state that I : Do Thi Thao, K39A18, being a candidate for the degree of Bachelor of Arts (TEFL) accept the requirements of the College relating to retention and use of Bachelor’s Graduation Paper deposited in the library. In terms of these conditions, I agree that the origin of my paper deposited in the library should be accessible for the purpose of study and research, in accordance with the normal conditions established by the librarian for care, loan, or reproduction of the paper. Signature Do Thi Thao Hanoi, May – 2009
    • ACKNOWLEDGEMENTS I would like to extend my sincere gratitude and appreciation to a number of people, without whose support, this graduation paper would not have been completed. First and foremost, I am deeply indebted to my supervisor Nguyen Thi Bach Thao, M.A., for her continuous support, encouragement, patience, careful instruction, and critical feedback during the process of fulfilling this study. What I was given from her is priceless, without which I cannot finish my graduation paper. Special thanks are due to my classmates at group K39 E18 and other friends for their encouragement and support of collecting materials for this study. Finally, from the bottom of my heart, I wish to express my heartleft thanks to my family for their understanding and constant encouragement, without which I could not manage to finish this paper. i
    • ABSTRACT In the United States of America (U.S.), lobbying has long been a fundamental part of American society. To American businesses, lobbying to influence government policies and regulations in the way that maximizes their interests has popularly been used. However, until now, lobbying is still little known among Vietnamese people and enterprises. Thus, this study is conducted as an attempt to help Vietnamese people, especially Vietnamese businesses to get profound understanding on major motivations for American companies’ participation in lobbying, and their lobbying strategies and tactics. The study also suggests some implications for Vietnam’s enterprises. In the study, lobbying activities conducted by American companies were examined through surveying, comparing and contrasting different related documents such as books, journals, articles. The investigation found that there are two main factors attributing to American enterprises’ involvement in lobbying activities namely the increasing impact of government on business operations and severe competition between companies in market. As regard lobbying strategies and tactics, the investigation in the paper revealed that American companies often direct their lobbying effort to government officials who are already on their side, and those who are undecided. Today, they often employ both direct and indirect lobbying tactics. When deciding which types of lobbyists between in-house and contract lobbyist, there is a tendency among American companies to use both types. However, companies whose lobbying expenditure is limited and location is far from Washington, D.C., contract lobbyists are primary choice. ii
    • TABLE OF CONTENTS PAGE Acknowledgements i Abstract ii Lists of tables and figures vi CHAPTER 1: INTRODUCTION 1.1. Statement of the problem and the rational 1 1.2. Aims and research questions 3 1.3. Scope of the study 3 1.4. Significance of the study 3 1.5. Methodology 4 1.6. Organization of the paper 4 CHAPER 2: OVERVIEW ON LOBBYING IN THE U.S. 2.1. Lobbying 5 2.1.1. Definition of lobbying 5 2.1.2. Lobbying components 7 2.2. Lobbyists 10 2.2.1. Definition of lobbyists 10 2.2.2. Types of lobbyists 11 iii
    • 2.3. The roles of lobbying and lobbyists in American society 13 2.4. Factors encouraging the practice of lobbying in the U.S. 15 2.5. Laws regulating lobbying 18 2.6. Summary 20 CHAPTER 3: MOTIVATIONS FOR U.S. COMPANIES’S INVOLVEMENT IN LOBBYING ACTIVITIES 3.1. Increasing impact of government on business operations 22 3.1.1. Government policies and regulations vs. cost of production 23 3.1.2. Government policies and regulations vs. companies’ revenue 24 3.1.3. Government policies and regulations vs. new entrants 26 3.1.4. Government policies and regulations vs. substitutes 27 3.1.5. Government policies and regulations vs. methods of competition 28 3.2. Severe competition from rivals 29 iv
    • 3.3. Summary 31 CHAPTER 4: LOBBYING STRATEGIES AND TACTICS 4.1. Choice of lobbying targets 32 4.1.1. Targeting allies 33 4.1.2. Targeting fence-sitters 34 4.2. Choice of tactics 34 4.2.1. Direct lobbying tactics 34 4.2.2. Indirect lobbying tactics 36 4.3. Choice of lobbyists 38 4.4. Summary 40 CHAPTER 5: CONCLUSION 5.1. Summary of the study 41 5.1.1. Motivations for U.S. companies’ involvement in lobbying activities 41 5.1.2. Lobbying strategies and tactics 42 5.2. Implications for Vietnam 42 5.3. Limitations of the study 44 5.4. Proposal for further study 45 REFERENCES v
    • vi
    • LISTS OF FIGURES AND TABLES Table 1: Different definition of lobbying Figure 1: Relation between components of lobbying Figure 2: Number of federal lobbyists (1998-2008) Figure 3: Distribution of groups lobbying government Figure 4: Separation of powers and check and balance Figure 5: Lockheed Martin's annual revenue by customer Figure 6: Government spending on defense contracts vs. Lockheed Martin's revenue Figure 7: Choice of lobbyists to lobby government vii
    • Corporate lobbying in the U.S. and implications for Vietnam CHAPTER 1: INTRODUCTION 1.1. Statement of the problem and the rationale for the study Lobbying has long been a legal practice in many democratic regimes in the world. In the United States (U.S.), the right of people to lobby the government is protected by the First Amendment to the Constitution. Congress shall make no law […] abridging the freedom of speech […] or the right of the people peaceably […] to petition the government for a redress of grievances. Madison, J. (n.d.) By nature, lobbying refers to activities designed by interest groups to influence policy- and decision-makers to “propose, pass, or defeat legislation or to change existing laws” (United States Senate, n.d.). Lobbying acts as important communication channel that helps interest groups and legislator communicate with each other. To interest groups, lobbying brings their voices and concerns to legislators so that they can ensure and protect their rights and benefits. In turn, legislators are informed about interest groups’ views before making decisions. Thus, it has great impact on the process of making policies and laws of the government. Lobbying even has become a fundamental and cultural feature of American politics. This makes lobbying an indispensible tool for any individual, business, organization or even nation who seeks to influence the American government’s policies and legislation to protect and maximize their benefits. For foreign governments and enterprises, including Vietnam, lobbying is a master key to be successful in relationship with the U.S, especially in trade relation. Yet it did not receive due attention from Do Thi Thao-K39 E18, HULIS 1
    • Corporate lobbying in the U.S. and implications for Vietnam Vietnam’s government and enterprises. According to a report of the U.S. Department of Justice, until the end of 2004, while other countries and territories in Southeast Asia spent thousands of dollars lobbying the U.S government, only Vietnam and Laos did not involve in this activity (cited in Hanh Phuong, 2006). Not until shrimp and catfish dumping lawsuits in which Vietnamese firms are defendants, that Vietnam’s businesses appreciate the value of lobbying activities. For example, Southern Shrimp Alliance and Louisiana Shrimp Association, who sought anti-dumping measures against Vietnamese shrimp producers, hired scores of famous lobbying firms such as Livingston, Jones Walker, Waechter, Poitevent & Denegre, etc. to persuade the U.S. government to levy punitive tariff on imported shrimp from Vietnam whereas Vietnamese producers take no action to lobby American government (Mashimaro, 2007, August 16). As a result, the U.S. Department of Commerce imposed anti-dumping tariff on imported shrimp from Vietnam, which had adverse impact on Vietnamese shrimp processing industry. To cut a long story short, Vietnamese enterprises have been suffering many disadvantages in competing with other enterprises in the American market because most of them lack understanding on lobbying and its significance in trade relation with the U.S. Hence, it is urgent to do comprehensive studies on lobbying in general and lobbying activities by American businesses in particular to help Vietnamese enterprises get profound knowledge of lobbying and adopt it effectively. This has intrigued the researcher to conduct her graduation paper on the topic “Corporate lobbying in the U.S and implications for Vietnam”. Do Thi Thao-K39 E18, HULIS 2
    • Corporate lobbying in the U.S. and implications for Vietnam 1.2. Aims and research questions The thesis’s primary aim is to investigate corporate lobbying activities in the U.S. To be more specific, the reasons why American companies get involved in lobbying and lobbying strategies and tactics which they use to lobby the government were taken into investigation. Besides, the researcher would suggest some implications for Vietnamese enterprises to adopt when they do business in the U.S. In brief, these objectives were specified in the following research questions. 1. Why do American businesses get involved in lobbying? 2. What are strategies and tactics businesses use to lobby government at federal level? 1.3. Scope of the study In the U.S., lobbying takes place at all levels, ranging from local to federal level. However, this study just covered lobbying activities aimed at the federal government. Besides, only the clout of corporate lobbying was considered in this paper since business firms and trade associations dominate lobbying activities at federal level (Baumgartner & Leech, 1998; cited in Brady, Drutman, Schozman, & Vebra, 2007). 1.4. Significance of the study Once having been finished, this research would bring about some benefits. First, the research can provide a deep insight into corporate lobbying in the U.S. Thus, it helps Vietnamese people in general and Vietnamese enterprises who desire to do business successfully with the U.S. in particular acquire a clear and proper perception about this practice. Besides, the study suggests some down-to-earth implications for them to apply lobbying effectively. Moreover, the research would serve as a Do Thi Thao-K39 E18, HULIS 3
    • Corporate lobbying in the U.S. and implications for Vietnam precious reference for Vietnamese researchers who are interested in studying business lobbying. 1.5. Methodology This research is a secondary research and the approach applied is comparative document analysis. Different documents related to business lobbying conducted by American companies in the U.S. are collected from internet, books, magazines, journals. These documents are synthesized, analyzed, compared, contrasted and evaluated to find out conclusion for each research questions. 1.6. Organization of the paper Chapter 1 – Introduction describes the study’s rationale, aims, objectives, research questions, significance, scope and methods. Chapter 2 – Overview on lobbying in the U.S lays the theoretical foundation for the research by discussing (1) lobbying, (2) lobbyists, (3) the roles of lobbying and lobbyists in American society, (4) factors encouraging the practice of lobbying in the U.S., (5) laws regulating lobbying. Chapter 3 – Motivations for companies’ lobbying activities explains motivational factors that encourage companies to involve in lobbying. Chapter 4 – Lobbying strategies and tactics provides an insight into strategies and tactics that companies use to lobby government. Chapter 5 – Conclusion ends the study by summarizing American businesses’ experience of lobbying and suggesting some implications for Vietnamese enterprises. Do Thi Thao-K39 E18, HULIS 4
    • Corporate lobbying in the U.S. and implications for Vietnam CHAPTER 2 OVERVIEW ON LOBBYING IN THE U.S. Since the 19th century when it first came into being, lobbying has always been a principal part of political involvement of American people in general and business companies in particular. Nearly all American corporations and their trade associations have their finger in lobbying pie. Annually, they invest millions of dollar into lobbying activities with the intention of influencing legislation. Why do companies pay so much attention to lobby the government? To find the answers for the question, it is essential to understand lobbying first. This issue will be discussed in this chapter. 2.1. Lobbying 2.1.1. Definition of lobbying From the time the term was born, definition of lobbying has always been part of its controversy. As stated by political scientists Frank R. Baumgartner and Beth L. Leech that “the word lobbying has seldom been used the same way twice by those studying the topic,” there are many ways to define lobbying (cited in Nownes, 2006). Not only scientists studying lobbying but the U.S. Congress also provides different legal definitions of lobbying in laws that regulate this practice (Mayer, 2007, p.24-33). In the U.S., lobbying originated in 19th century, according to the Oxford English Dictionary (OED). As quoted in the OED, the term was originally perceived as “buying votes with money in the lobbies of the Hall of Congress” while on the word of Stephanos Anastasiadis (2006) from International Centre for Corporate Social Responsibility, initially lobbying Do Thi Thao-K39 E18, HULIS 5
    • Corporate lobbying in the U.S. and implications for Vietnam was “the act of special interests approaching someone with political power.” Until now, the question about defining the term “lobbying” is still under debate. Table 1 provides an illustrative overview of different meanings of lobbying in accordance with viewpoints of some scientists and organizations. Definitions of lobbying Source “Lobbying is advocacy of a point of view, American League of either by groups or individuals.” Lobbyists (2006) Lobbying “conveys most information to Hansen & Mitchell (2000) policy-makers concerning policy preferences, is most instrumental and is most likely to result in an exclusive benefit, such as regulatory relief or a government contract.” Lobbying “means the deliberate attempt to Woodstock Theological influence political decisions through various Center (2002) forms of advocacy directed at policymakers on behalf of another person, organization or group.” “Lobbying is about investment in Figueiredo (2002) information accumulation, organization and transferred by corporations and interest groups.” Lobbying “in its commonly accepted sense” United States v. Rumely, is “representations made directly to the 345 U.S. 41, 47 (1953), cited Congress, its members or its committees.” in Mayer (2007, p. 4) Lobbying is “attempt to influence legislation Logan & Patten, cited in in any way whatsoever.” Mayer (2007, p. 4) Lobbying is “the process of petitioning the History of the Lobbying government to influence public policy.” Disclosure Act (2005, para. 4) Do Thi Thao-K39 E18, HULIS 6
    • Corporate lobbying in the U.S. and implications for Vietnam Lobbying is “the communication of Biggs & Helms (2007, p. information …in an effort to influence the 102) production of public policies.” Table 1 – Different definitions of lobbying The definition of lobbying is a matter of differing interpretation. Some people consider lobbying as a specific action while others perceive it as “any attempt” to influence policy-makers. Neither highly specifically nor highly generally defining lobbying is useful. The former will not cover all activities of lobbying while the later will make people confuse lobbying with other actions to influence legislators such as campaign contribution. The definition of lobbying adopted in this paper is based on the definition suggested by the Woodstock Theological Center: lobbying means the deliberate attempts to influence the political decisions through communication directly and/or indirectly with members of government on behalf of another person, organization, or group. This definition is broad enough to encompass all ranges of lobbying activities, but narrow enough to differentiate lobbying from other actions attempting to influence policy outcomes. Corporate lobbying means attempts conducted by trade associations, business firms to influence government decisions. 2.1.2. Lobbying components Though lobbying is differently defined, there is a strong consensus among scholars on basic components constituting lobbying namely access, communication, information, and credibility (Anastasiadis, 2006). Stephanos Anastasiadis noted in his study that: Lobbying seeks to affect public policy by providing key stakeholders – notably policy makers – with specific information Do Thi Thao-K39 E18, HULIS 7
    • Corporate lobbying in the U.S. and implications for Vietnam about preference for policy or policy positions […].It may involve providing information on the costs and benefits of different issue outcomes […]. The ultimate target of lobbying input is the legislator or political decision maker […]. In addition to seeking desired policy outcomes, one goal of lobbying is to develop a strong reputation, so that the decision-makers are inclined to trust the information provided and turn to the lobbying organization for information when developing or discussing policy or policy positions. (2006, p. 14) Access, which means willingness of government officials to meet lobbyists1, listen to their arguments and trust information they provide, has long been considered precondition for lobbying (Austen-Smith, 1995; Lerbinger, 2006). Only when lobbyists have access can they present their position on a pending issue and influence legislative decisions. Without access, interest groups, through their lobbyists, cannot make their voice heard. Many scholars contended that access to government officials depends critically on credibility of lobbyists, their clients and the information they provide. Empirical studies indicated that information plays a critical role in lobbying (Figueiredo, 2002; La Pira, 2008). Austen-Smith confirmed that lobbying is “strategic information transmission”. In policy-making process, legislators are those who are in need of information to make sound decisions. Lobbyists possess information that legislators need and strategically transmit them to legislators with a view to influence policy outcomes. Hence, it can be said that information is the core content of lobbying process. Without it, lobbying becomes meaningless. Similarly, communication is a crucial part of lobbying. To put it simple, lobbying itself is a communication process, in which legislators and lobbyists exchange information. It is the process of communication that transmits information on preference for or positions on a specific 1 For definition of lobbyists, see 2.2. Do Thi Thao-K39 E18, HULIS 8
    • Corporate lobbying in the U.S. and implications for Vietnam legislation from lobbyists to legislators. In turn, lobbyists also gain information on changes in government policies to inform their clients. In addition, Anastasiadis pointed out that credibility of lobbyists and the organization they represent is “indispensable”, both to get a “foot in the door” in the first place, and then have communication taken seriously. Since lobbying is “a process based upon trust”, credibility is vital for successful lobbying and the maintenance of relationship between lobbyists, interest groups and government officials. It is “power of persuasion tool” for both organizations and their lobbyists (Cotton, 2004). Credibility requires that lobbyists establish a reputation for being knowledgeable about relevant policy issue, being reliable and honest when providing information (McGrath, 2006, p.76). For organizations, they must have good reputation being professional and reliable. If credibility is damaged, lobbyists will lose their relationship with legislators or administrators and cannot access them anymore. In conclusion, lobbying is “about communication of credible information” and before lobbying any public official, interest groups must have access to that one (McGrath, 2006, p.76). Credibility is crucial to gain and maintain access to these people. Thus, information, communication, access and credibility are at the heart of lobbying. These components link so closely with each other that without one of them, lobbying cannot happen. The following diagram clearly illustrates not only the basic components of lobbying, but also the relationship between them. Do Thi Thao-K39 E18, HULIS 9
    • Corporate lobbying in the U.S. and implications for Vietnam Figure 1: Relation between components of lobbying 2.2. Lobbyists 2.2.1. Definition of lobbyists Carland & Gihring (2003) contended that in the eyes of Americans, the terms “lobbyist” has long carried negative connotation. Stereotypical lobbyists were those wearing expensive clothes, smoking cigar and bribing legislators with lots of money (Walman, 2000). American newspapers in the past even described a lobbyist as a monster in the Capitol building: Winding in and out through the long, devious basement passage, crawling through the corridors, trailing its slimy length from gallery to committee room, at last it lies stretched at full length on the floor of Congress-this dazzling reptile, this huge, scaly serpent of the lobby. (Public Affair Links, 2007) Lobbyists operating in the U.S today are far cry from those of the early day. They work more professionally and transparently. They are Do Thi Thao-K39 E18, HULIS 10
    • Corporate lobbying in the U.S. and implications for Vietnam defined as people “acting for a special interest group […] to influence the introduction of or voting on legislation or the decision of government administrators”2. 2.2.2. Types of lobbyists For years, many political scientists have taken great pains to categorize types of lobbyists (Birnbaum, 1992; Thomas & Hrebenar, 2003, cited in Thomas, 2004; Gelak, 2008). However, it is really challenging as there are thousands of lobbyists acting in the U.S and this number gradually increases (see figure 2). Today, more than 17,000 lobbyists are performing at the federal level alone, outnumbering lawmakers in U.S. Congress by about 30 to one (Eagleton, 2006). Besides, another factor that makes scholars face lots of difficulties in categorizing lobbyists is the appearance of many new types of lobbyists since lobbying first came into being in 19 th century. Source: Centre for Responsive Politics (2008) Political scholars presented many different points of view on types of lobbyists, but the classification of lobbyists suggested by Thomas and 2 Webster’s New World Dictionary of American English, 1994, p. 793 Do Thi Thao-K39 E18, HULIS 11
    • Corporate lobbying in the U.S. and implications for Vietnam Hrebenar (2003) are widely accepted. Based on kinds of organizations that lobbyists represent, they classified lobbyists into five types that are (1) contract lobbyists; (2) in-house lobbyists; (3) government legislative liaisons; (4) citizen, cause or volunteer lobbyists; (5) private, “hobbyist”, or self-appointed lobbyists. However, within the scope of this study, only the two types contract lobbyists and in-house lobbyists are taken into consideration. Contract lobbyists refer to those who are hired by contract specifically to lobby the government (Encyclopedia Britannica Online, 2009). They can represent several clients. A majority of contract lobbyists are ex-government officials or lawyers (Milbrath, 1963, Salisbury, 1986; cited in Thomas, 2004). Contract lobbyists who are former government members have two extraordinary advantages over most other lobbyists: immediate access to powerful members of the House and Senate or the administration, and years of “mastering the tricky world of legislation” (Walman, 2000). Similarly, lawyer-lobbyists also have deep knowledge of the law and law-making process. In-house lobbyists: in contrast with contract lobbyists, in-house lobbyists are those who work for and are employed by the organization which they lobby for. In addition to being a lobbyist, they are often executive directors, presidents, vice presidents and managers of the organizations that they lobby for. Nelson et al. (1987) pointed out that in- house lobbyists often serve their employers many years before becoming lobbyists and many of them have no government experience nor they are lawyers (cited in Thomas, 2004). However, they have expert knowledge on the specific field that they work in many years. Besides, in-house lobbyists have better understanding of the goals of the organization they represent than contract lobbyists due to years of working for that organization (Deason, 2004). Do Thi Thao-K39 E18, HULIS 12
    • Corporate lobbying in the U.S. and implications for Vietnam 2.3. The roles of lobbying and lobbyists in American society What is the role of lobbying in American society? To Americans, this question is so simple. It is said that lobbying is as American as apple pie to this country. Apple pie, an America’s especially beloved dessert, is one of the most popular symbols of American culture. Similarly, lobbying has been an intrinsic and vital part of American culture and society. Without lobbying, individuals, groups, organizations could not perform the function of interest articulation that is required for the maintenance of the American political system (Eulau, 1964). Through lobbying, groups make their voice heard, put pressure on government’s decisions to seek for political outcomes. Lobbyists are their agents that represent their interests, bring their concerns to the government and negotiate with government for political outcomes which benefit them most. Additionally, thanks to lobbying, groups also have their finger on legislation. A lobbyist is not only a representative, a communicator for his clients but also an instructor that helps his groups accommodate, adapt, and adjust to changes in government and legislation. To the government, the role of lobbyists is vital too. Senator John F. Kennedy (1956) once declared that: Lobbyists are in many cases expert technicians capable of examining complex and difficult subjects in clear, understandable fashion. They engage in personal discussion with members of Congress in which they explain in detail the reasons for the positions they advocate [...] Because our congressional representation is based upon geographical boundaries, the lobbyists who speak for the various economic, commercial and other functional interests of the country serve a useful purpose and have assumed an important role in the legislative process.quot; Meyers & Associates Inc. (n.d.) Do Thi Thao-K39 E18, HULIS 13
    • Corporate lobbying in the U.S. and implications for Vietnam History has proven that lobbying and lobbyists play crucial role in government’s policy and regulation-making process. Through lobbying activities initiated by groups, organizations, unions, etc. government is aware of issues that are highly concerned by people, their opinions and attitude about government’s actions, regulations and policies, which help government make rational and timely decisions and enhance the quality of law-making. Lobbyists provide invaluable information and support to government officials to fulfill their responsibility to the public and enhance their possibility to be re-elected as well as re-appointed. Everyday policymakers are responsible for keeping up with hundred of pending bills, tracking multiple committee hearings, responding constituents questions and problems, attending and participating on-going debates, and performing numerous other official and political acts. As having to deal with thousands of subjects and respond to numerous issues related to various fields and sectors, government officials are in need of lots of information, both technical information and their constituents’ likely opinions on those issues to make adequate decisions. However, due to pressure of workload and limited time, they cannot collect all of needed information by themselves. Additionally, government officials can hardly have sufficient expertise to know all nuances of every single issue they have to deal with. Thus, lobbyists are significantly important to them. Lobbyists can provide important facts, arguments, intelligence to support legislators and administrators, as they are often specialists in the field they lobby. In many case, lobbyists even draft bill for legislators. They also educate legislators on practical aspects of proposed legislation – who it would help, who it would hurt, who is for it, and who is against it. Lobbyists ensure that public officials are adequately informed before making decisions. Without them, legislators, administrators and their staffs could not be expected to do the “right thing”. The statement of a scholar Do Thi Thao-K39 E18, HULIS 14
    • Corporate lobbying in the U.S. and implications for Vietnam that the lobbyist is “teacher in the school of politics” who “frames the intellectual issues, pointing out the subtleties in a situation, and implying a conclusion” strongly illustrates this point (Thomas, 2004). To sum up, lobbying and lobbyists are crucial to both people and government. Rubin (2000) emphasized that they foster understanding, build an important bridge between people and government administrators, and without them American political system could not function properly. 2.4. Factors encouraging the practice of lobbying in the U.S. Nowhere on Earth experiences lobbying development as strong as it does in America. There are two major factors that make the U.S a heaven for lobbying activities. They are the development of organized interest groups and the structure of government. The establishment and development of organized interest groups characterize American society. An organized interest group is a group of people who “are united and actuated by some common impulse of passion, or of interest […] or to the permanent and aggregate interests of the community” (Madison, 1787). According to James Madison, the “Father of the Constitution”, organized groupings are “sown in the nature of man”. In 1834, the famous chronicler Alexis de Tocqueville remarked that American was a nation of joiner (cited in Ragone, 2004). And more than a century later, Kieffer (2007) found that there is no American today who is not represented (whether he or she knows it or not) by at least a dozen organized interest groups. The main function of these groups is to influence policy and policy maker to protect and maximize their interests. Tocqueville asserted in his famous book Democracy in America (1864) that “in no country in the world has the principle of association been more successful used, or applied to a greater multitude of object, than in America”. Among groups and organizations that lobby the government, Do Thi Thao-K39 E18, HULIS 15
    • Corporate lobbying in the U.S. and implications for Vietnam business groups, which represent interest of firms and industries, are the most active ones. They account for 62% of lobbying activities in the U.S. (see figure 3). Source: Baumgartner & Leech (2001) Besides, the structure of government also encourages the development of lobbying in the U.S. American government is extraordinary open to external influence. Fearing that concentrated power in one institution can lead to tyranny, the Founding Fathers of the Constitution established the government based on the principle of separation of powers (Steiner, 2005). Powers of the government are divided between three branches – legislative, executive, and judicial with considerable independence and powers to check and balance each other (see figure 4). No single branch can control the other two, but rather, each branch checks the other two to make sure that the other branches do not have too much power. This means that the action of one branch do not fully define policy, which enables organized interest groups to lobby one branch to counter the decision of another branch. Do Thi Thao-K39 E18, HULIS 16
    • Corporate lobbying in the U.S. and implications for Vietnam Figure 4: Separation of powers and check and balance Source: Costa, 2006 Additionally, the division of powers between the federal government and state government also facilitates lobbying activities at different level. At the same time, the system of election finance, in which candidates mainly depend on contribution of citizens and organized interest groups for electoral campaign fundraising, presents countless opportunities that individuals and organizations advance their interests. 2.5. Laws regulating lobbying The fact that through lobbying the government interest groups can greatly influence policy- and law-making process raises public concerns about potential concentration of power over government within a small group of people. In efforts to prevent abuse of lobbying and to make lobbying transparent, Congress has passed numerous laws regulating lobbying activities. Among them, the Foreign Agents Registration Acts Do Thi Thao-K39 E18, HULIS 17
    • Corporate lobbying in the U.S. and implications for Vietnam (FARA) of 1938, the Federal Regulation of Lobbying Act (FRLA) of 1946, and the Lobbying Disclosure Act (LDA) of 1995 are the most important and significant ones. The Foreign Agents Registration Acts (FARA) was enacted into law in June 8, 1938. Its primary purpose is to restrict the influence of foreign agents and propaganda on American public policy. A foreign agent is defined as “any individual or organization which acts at the order, request, or under the direction or control of a foreign principal, or whose activities are directed by a foreign principal who engages in political activities; acts in a public relations capacity for a foreign principal; solicits or dispenses anything of value within the United States for a foreign principal; represents the interests of a foreign principal before any agency or official of the U.S. government” (Sourcewatch Encyclopedia Online, n.d.). Under FARA, all foreign agents are required to disclose the name of each individual person they lobby in any branch of government along with the date of the contact to the U.S. Department of Justice’s Criminal Division. Under FARA, foreign agents also must to disclose the actual legal agreement between them and those they lobby. After FARA was enacted, in 1946 Congress approved the Federal Regulation of Lobbying Act, the first comprehensive lobbying disclosure law for domestic lobbyists. The focus of FRLA was to require public disclosure of lobbyists’ finance and of the interests they represent. However, FRLA contained a score of loopholes that lobbyists can exploit. For instance, it applied only to lobbying activities that directed at members of Congress. Lobbying directed at congressional staff or the executive branch and indirect lobbying were not covered under FRLA. Besides, FRLA failed to require lobbyists to disclose the overall objective of lobbying activities. For such flaws, just after some years since it was Do Thi Thao-K39 E18, HULIS 18
    • Corporate lobbying in the U.S. and implications for Vietnam passed, FRLA became obsolete. In 1995, it was replaced by the Lobbying Disclosure Act (LDA). Compared to FRLA, the Lobbying Disclosure Act (LDA) of 1995 is a substantial progress of Congress to create an effective system of lobbying disclosure. The enforcement of the LDA contributes greatly to making lobbying more transparent and professional. Senator Carl Levin stated in 1992 when he first introduced LDA to Congress that the LDA “tells the public who is being paid how much to lobby whom on what”. LDA closes many loopholes contained in the FRLA. Generally, it requires lobbyist to register with the Clerk of the House of Representatives or the Secretary of the Senate, state their purpose for lobbying, and make semiannual report disclosing the specific issues and bill worked on, the amount of money spent and the branch of government contacted. The LDA also requires lawyers who represent foreign entity or US-owned division of foreign- owned companies to register with Congress. Under the LDA, lobbyists are those who spend at least 20% of their time for particular lobbying activities, have multiple contacts with legislative staff, members of Congress, or high-level executive branch officials, and work for a client paying more than $5,000 over the six months for that service. In addition to the LDA and FARA, lobbying is also regulated by some other rules of the Houses and Senate such as “revolving door”, gifts and travel rules. The “revolving door” is the phenomenon that former members of Congress and the executive branch become lobbyists. Going in, these people can easily access to legislators or administrators, who are their former colleagues, to carry out lobbying activities. To limit potential corruption, the Congress issued a rule that requires ex-members of Congress or the executive branch to wait at least two years before registering as lobbyists. Besides, lobbyists and foreign nationals are Do Thi Thao-K39 E18, HULIS 19
    • Corporate lobbying in the U.S. and implications for Vietnam prohibited from financing private travels for officers and employees of both Congress and the executive branch. As regard receiving gifts, “members of Congress and their staff may not accept gifts amounting in value to $50 or more at any one time or amounting to $100 or more from a single source per year. For the executive branch, the limits are $20 and $50, respectively” (Public Citizen, 2005). In conclusion, American Congress continuously has tried to limit the negative side of lobbying without violating the right of people to lobby the government. The rules governing lobbyists are great endeavors of Congress to ensure that people’s voices have fair opportunities to be heard by the government. Besides, they also prevent potential corruptions, which preserve the confidence of the public in political institutions and enhance transparency of lobbying activities and government operations. Thanks to these laws, lobbying activities have become more transparent and professional. 2.6. Summary Chapter 2 has presented a general overview on lobbying activities in the U.S. First, it examined various definitions of lobbying to find out an adequate definition for this study. Then it continued to examine the three main components of lobbying namely access, information, communication, and credibility. Lobbyists and types of lobbyists were considered after that. The third part of this chapter provided an insight into the roles of lobbying and lobbyists in American society. Factors that stimulate the practice of lobbying in the U.S. were the content of the fourth part. Chapter 2 ended with information about laws governing lobbying activities in the U.S. Chapter 3 will continue by investigating reasons for companies’ involvement in lobbying. Do Thi Thao-K39 E18, HULIS 20
    • Corporate lobbying in the U.S. and implications for Vietnam CHAPTER 3 MOTIVATIONS FOR U.S. COMPANIES’ INVOLVEMENT IN LOBBYING ACTIVITIES It is often said that lobbying is a long-standing game in American political arena and business firms are top and extremely experienced Do Thi Thao-K39 E18, HULIS 21
    • Corporate lobbying in the U.S. and implications for Vietnam players in this game. Being one of the first players of the game as soon as it was born, they have comprehensive knowledge about the rules of the game and its operation mechanism. Each year, companies and their trade associations are willing to pour huge amount of time, money, and human resources into lobbying activities. This fact raises a question that why companies and their associations enthusiastically participate in this game? The answer of this question will be covered in this chapter. For years, there are scores of scholarship conducted to find out reasons for firms’ decision to get involved in lobbying activities. Scholars have contended that increasing impact of government on business operations and severe competition in market place are key factors that encourage firms to lobby the government. 3.1. Increasing impact of government on business operations Businesses do not function in vacuum. Their functioning is always affected by external environmental factors surrounding them3. Among these factors, scholars contended that government is the most important one (Hillman & Hitt, 1999; Hillman, Zardandkoohi, & Biernam, 1999; Lord, 2000; Sadrieh & Annavarjula, 2005; Jacobson, Lenway, & Ring, 1993).The impact of government on business firm has long been widely acknowledged. However, that influence has never been as dramatic as it is today. Over the last decades, the U.S. has witnessed a considerable expansion in the federal government size and activities (Keim, 1985), which has strongly stimulated its impact on business operations. It is said that there is hardly any company today that is not somehow affected by government. Government makes and enforces policies and regulations which have direct impact on all dimensions of every company such as how they conduct their operation, how they compete with each others, how 3 See Jain, Trehan, & Trehan, 2006 for more detail Do Thi Thao-K39 E18, HULIS 22
    • Corporate lobbying in the U.S. and implications for Vietnam much they can earn, etc. Following is the analysis of the relation between government policies and regulations with main factors that directly affect companies’ operation, competition, and profitability. They are cost of production, revenue, new entrants into market, substitutes, and methods of competition. 3.1.1. Government policies and regulations vs. cost of production On the cost side, cost of production is one of the first issues that companies concern as it directly affects how their business is conducted and how much they have to invest into production. Government policies can alter cost of production through various policies and regulations such as policies on natural and human resources, requirements on technical and safety standard of product, environmental and labour laws, etc. For instant, to companies in industries that directly use natural resources in their production process, government taxes on exploiting natural resources have direct impact on cost of production. An increase in these taxes will lead to rise in cost of input materials. Regarding labour cost, government policies on human resource development directly affect the quantity and quality of human resource, which in turn decide price of labour. Besides, requirements on technical and standard of products, health and environmental standard decide how much companies have to invest into production line and technology. The higher these requirements, the more money companies have to invest. One example is the standard of carbon dioxide (CO2) emission on companies that exhaust CO2 to environment in production process. That the government increases the standard will push costs of these companies due to extra investment into upgrading or installing technology to eliminate CO2. Do Thi Thao-K39 E18, HULIS 23
    • Corporate lobbying in the U.S. and implications for Vietnam 3.1.2. Government policies and regulations vs. companies’ revenue Revenue of a company has close relationship with cost of production, hence, that government policies have influence on the latter also result in direct and/or indirect effect on the former. Besides, through policies relating to tax, trade, administered price, spending, etc. government can exert great influence on companies’ revenue. For instance, that government imposes high tax on petrol will directly affect revenue of car producers, transportation companies, etc. The U.S. government policy on protecting agriculture industry has deep effect on revenue of businesses operating in this industry. That the U.S. government sets high floor price for agricultural products brings enterprises in agriculture industry $10-11 billion each year (Friedman, 1999; cited in Vining et al., 2005). Government can affect companies’ revenue not only through imposing tax, or administering prices but also through buying products of companies. In the U.S., federal government is key customer to thousands of companies ranging from multinational corporations to the smaller ones. Government expenditure on purchasing goods and services will directly affect revenue of these companies. The case of Lockheed Martin (L.M.) typically represents this point. L.M. is the largest contractor for government’s defense contracts. Revenue from the U.S. federal government accounts for the largest proportion of L.M.’s total annual revenue (see figure 5). Therefore, any change in government policy on defense spending will immediately affect L.M.’s revenue. The swelling of government spending on defense contracts over eight-year period under Bush’s administration resulted in dramatic growth in the company’s revenue, from $23.9 billion in 2001 to $42.7 billion in 2008 (see figure 6). Do Thi Thao-K39 E18, HULIS 24
    • Corporate lobbying in the U.S. and implications for Vietnam Source: wikinvest.com Source: usaspending.com 3.1.3. Government policies and regulations vs. new entrants Operation and profitability of companies in a market are always threatened by new entrants. When a new competitor enters a market, it brings new capacity and a desire to gain market share, to attract customers, Do Thi Thao-K39 E18, HULIS 25
    • Corporate lobbying in the U.S. and implications for Vietnam etc., which in turn puts pressure on existing companies’ profitability in the market. The more new companies enter market, the lower profitability of existing companies is. Meanwhile, government is the powerful “gatekeeper” who decides to open and close market for new competitors. Through various policies and regulations, government can hinder or aid new entrants directly. Government can directly limit or even foreclose entry to a market through licensing requirement, restricting foreign firms’ entry through quotas, tariffs or non-tariff barriers, regulations on product quality, etc. The higher the entry barrier, the lower number of firms can go into market and vice versa. The case of quota on Vietnamese textile and tariff on shrimp and catfish imported to the U.S. are clear examples. Besides, through regulations on quality standards of product, government just opens market for companies whose products satisfy the standards, while those whose products fail to meet the standards will have no chance to enter the market. However, there are also many government policies encouraging new players to enter market such as lowering tax, granting subsidies, financing basic research and making it available for all firms, and so on. 3.1.4. Government policies and regulations vs. substitutes Substitutes are goods and services that can be used to satisfy the same needs, one in place of another (Piana, 2005). When product of one company is substitute for product of another firm, competition of the former will affect profitability of the latter. Government influences competitiveness of substitutes through research and development (R&D) policy, tariffs, law on intellectual property rights, health and environment policies, and so on. Government decisions on financing research and development of new product or technology can lead to the appearance of new substitute products and in many cases, it can lead to the dissolution of an existing industry. Christensen (1997) proved that government R&D Do Thi Thao-K39 E18, HULIS 26
    • Corporate lobbying in the U.S. and implications for Vietnam support of laser technology was an important factor in the displacement of vinyl record from the recording market place (cited in Vining et al., 2005). Law on intellectual property rights (IPR) also can affect the emergence of substitutes. When intellectual property law is weak, it will inhibit innovative activities and the discovery of new substitutes and vice versa. Tariff on substitute products protects domestic companies from the product of foreign companies; therefore it is in similar effect to tariffs as entry barrier. For instance, in the American shrimp market, imported shrimp and domestic shrimp are substitutes. That the U.S. government imposed high tariff on imported shrimp greatly affected competition of imported shrimp in terms of price. This fact encouraged customer to buy domestic shrimp instead of imported shrimp. Thus, competitive position of foreign shrimp exporters will be lowered due to decrease in market share. 3.1.5. Government policies and regulations vs. methods of competition Regulating methods that companies can use in their competition is another important way that government can exert influence on firms. Through antitrust law, government prevents anticompetitive methods that are used by companies to gain or maintain their dominant position in market. A clear example is the case of WorldCom. WorldCom ranks after AT&T as the second largest telephone company in the United States with worldwide interest in long-distance and internet service. In 1999, WorldCom proposed to merge with Sprint, the America’s third largest long-distance carrier in a $115 billion deal which would solidify WorldCom’s position as the leading rival to AT&T in global telecommunication market. However, the deal was blocked by Department of Justice (DOJ) because according to DOJ, the merger of WorldCom and Do Thi Thao-K39 E18, HULIS 27
    • Corporate lobbying in the U.S. and implications for Vietnam Sprint, if successfully went through, would give WorldCom monopoly position in the U.S. internet backbone traffic and private line communication between the U.S. and at least 12 other countries. To sum up, government, as the framer and enforcer of policies and regulations, has great power over operation and performance of every company in the economy. Accordingly, it is crucial for companies not only to constantly monitor but also know the way to influence government policies and regulations. Otherwise, they can face potential risks or even damage to their operations due to uncertainty over government legislation. That fact greatly motivates companies to lobby government. Lobbying not only brings them up-to-date information about policies, regulations, emerging policy issues but also enables them to exert influence on government legislation in the way that favors their interests most. Thanks to that, companies can have their finger on the pulse of government legislation, which greatly mitigates uncertainty and helps them in making appropriate and timely response. More importantly, enterprises can both prevent harmful policies and enhance their performance by actively lobbying government for policies and regulations that favor their interests best and deter competition from their rivals. It can be said that lobbying government has been becoming a vital part of companies’ development strategy. Carroll and Hall (1987) strongly emphasized that even the best competitive strategies accompanied by superior products and unique firm resources will not survive without attention to government (cited in Hillman, Zardandkoohi, & Biernam, 1999). Many companies which are reluctant to involving in lobbying for various reasons often end up in engaging in these activities (Chen & Parsley, 2008). 3.2. Severe competition from rivals Do Thi Thao-K39 E18, HULIS 28
    • Corporate lobbying in the U.S. and implications for Vietnam The ever-increasing competition between companies in American market requires each of them to have effective competitive strategies and methods to survive and develop. With the growing impact of government policies and regulation on business operations, more and more enterprises are aware that lobbying is one of the most effective ways to fight against their competitors. Through lobbying government, companies can seek for government subsidies, tax relief, regulations and policies that enhance their performance and deter competition of their rivals. For instance, they can lobby government to levy a higher tax on product of their rivals compared to that of their product, which brings their product advantage in terms of price over product of other companies. This action is often used by domestic firms to deal with strong competition from foreign competitors. Many industries and corporations have gained enormous advantages over their foreign competitors as they succeed in lobbying the U.S. government to impose high or antidumping tariff on imported goods. The U.S steel industry is one of the most successful industries in mastering this tactic to deter competition of imported steel. Additionally, companies facing the fierce competition from their rivals can seek government intervention by initiating lobbying campaign against their rivals in anti-trust lawsuit. The case of Microsoft is a typical example. The antitrust case against Microsoft in 1998 was the result of a 3- million dollar lobbying campaign carried out by the company’s rivals such as Netscape, IBM, ALO, Sun, etc. to persuade the U.S. Department of Justice (DOJ) to file an antitrust suit against the company. When (DOJ) sued Microsoft for violation of antitrust law, it was Microsoft’s rival- Netscape that sponsored a 222-page white paper on monopolistic actions of Microsoft that formed basis of DOJ’s suit. Other rivals of Microsoft such as IBM, AOL, and Sun carried out grassroots campaigns to influence public opinion, participated in hearings of Senate committee to give evidence Do Thi Thao-K39 E18, HULIS 29
    • Corporate lobbying in the U.S. and implications for Vietnam against Microsoft and to present their damage caused by anticompetitive actions of Microsoft. All of these lobbying actions aimed at weakening dominant position of Microsoft in market. In many cases, companies can lobby government to tighten regulations on product quality standard, health and environmental standard because they are able to meet the proposed standard more easily than their competitors. A typical example is the case of the U.S. pharmaceutical industry. To erode competitiveness of small firms, the largest companies in this industry lobbied Food and Drug Administration to tighten regulations on administering drug production and standard. As a result, small firm suffered serious reductions in research productivity while the largest firms gained substantially in sales (Thomas, 1990, cited in Vining et al., 2005). 3.3. Summary Chapter 3 has presented thorough investigation of two main factors motivating companies to lobby government. The first part of this chapter presents the influence of government on companies’ operation. Through policies and regulations, government strongly affects costs of production, revenue of a company, competitiveness of substitutes, new entrants, and methods of competition between companies in market. Such strong and comprehensive of government policies and regulations on companies greatly motivate companies to lobby government to both monitor and seek favorable policies and regulations. The rest of this chapter continues to investigate the second motive for companies’ involvement in lobbying activities. Severe competition from rivals strongly encourages companies to get involved in lobbying activities. Chapter 4 will continue by investigating strategies and tactics that companies use to lobby government. Do Thi Thao-K39 E18, HULIS 30
    • Corporate lobbying in the U.S. and implications for Vietnam CHAPTER 4 LOBBYING STRATEGIES AND TACTICS In the U.S. today, the number of companies and trade associations join in lobbying activities are numerous, but not all of them succeed in this game. Whether a company or a trade association can be successful in lobbying government or not depends on many factors, of which strategies and tactics it uses are the key one. Appropriate and comprehensive strategies together with rational tactics are prerequisite for success in lobbying government. In general, a lobbying strategy is an overall plan that a company implements to gain access, influence, and secure its specific policy goals while tactics are a group of specific actions taken to reach these goals (Harris & Fleisher, 2005). A lobbying strategy consists of a set of strategic considerations in which an enterprise has to choose lobbying targets, tactics to employ, and type of lobbyists to use. 4.1. Choice of lobbying targets Do Thi Thao-K39 E18, HULIS 31
    • Corporate lobbying in the U.S. and implications for Vietnam The choice of whom will be targeted is the first and foremost decision that a company has to take into consideration when making a lobbying strategy. Correctly targeting lobbying efforts is essential for a victory in every company’s lobbying campaign. Normally, a company can direct their lobbying effort to three types of government officials: those who are their allies, those who are presupposed against their position, or those who are undecided (fence-sitters) (Austen-Smith & Wright, 1994). Many scholars contented that companies mainly direct their lobbying efforts to their allies and undecided government officials. 4.1.1. Targeting allies Government officials who are considered as allies to a company or its associations are those who share the same predisposition toward an issue with the company, and those who the company has established relationship with. Identifying and lobbying the allies is crucial for a company as these people are those who will officially support its position, speak for its interest, negotiate on its behalf with colleagues, give it important and hard- fought votes, consult about what is winnable or not, who are undecided and opponent to its position, etc. (Shuzlt, 2003). Empirical studies proved that companies always pay special attention to lobbying their allies in government agencies and institutions because it is the “easy path”. Bauer, Pool, & Dexter (1963) explained it is much easier for companies to carry on activities within the circle of those who are on their side than those who are against them (cited in Hojnacki & Kimball, 1999). Besides, Milbrath (1963) argued that legislators often make up their mind before any lobbying effort of companies who seek to influence their decision, thus they only grant access to and hear those who share their predispositions (cited in Thomas, 2004). Companies and their lobbyists understand that and only press issues with legislators who are on their side. Do Thi Thao-K39 E18, HULIS 32
    • Corporate lobbying in the U.S. and implications for Vietnam A company can enlist more easily their allies in government agencies and institutions to act as agents on its behalf to lobby their colleagues, shape legislations in line with its preference, etc. Empirical studies indicated that companies often assign high priority to build allies with influential policymakers such as members of key committees, committees and subcommittees’ chairs, party leaders, etc. due to their significant role as cue givers to their colleagues and their big influence over other policymakers and government decisions as a whole (Wright, 1990; Hojnacki & Kimball, 1999). 4.1.2. Targeting fence-sitters Fence-sitters, who are uncommitted to or undecided on standing on which side, are the other important lobbying target of a company’s lobbying campaign. Scholars proved that companies can anticipate huge payoff from lobbying fence-sitters as they are the most likely to be swayed (Denzau & Munger, 1986; Baumgartner & Leech, 1996; Victor, 2006). The more fence-sitters a company can lobby successfully, the more allies and votes they have. In close vote, lobbying fence-sitters is extremely important as they are those who can make the difference. 4.2. Choice of tactics Employing appropriate tactics to approach and influence government officials plays a crucial role in success of a lobbying strategy of every company. Based on types of contact with decisions-makers, lobbying tactics can be grouped into two broad categories namely direct and indirect lobbying (Paquette, 2002). 4.2.1. Direct lobbying tactics Direct lobbying, sometimes known as “inside lobbying”, is those tactics that bring lobbyists of companies or their trade associations into Do Thi Thao-K39 E18, HULIS 33
    • Corporate lobbying in the U.S. and implications for Vietnam personal and direct contact with government officials. Companies often employ direct lobbying tactics when they want to privately convey sensitive and specialized information to policymakers without making their opponents know or have access to for a number of reasons (Wright, 1996, cited in Hojnacki & Kimball, 1999). Direct lobbying typically includes scores of tactics such as meeting person-to-person with policy makers; phone, email, or snail mail contacts, informal contacts, testifying at hearings, drafting legislation, etc. Person-to-person meetings with policymakers are the most favorite tactic which enables representatives of companies to lobby government officials in private. However, since policymakers’ limited time, companies can alternatively use phone calls, emails, snail mails to contact with them. Testifying at hearings is also popularly used by companies to express their preference on existing or pending legislation and policies. According to Biggs & Helms (2007), testifying at hearings include two parts: oral testimony and written statement accompanied by supporting documentation. Drafting legislation is another important tactic which enables companies to influence wording and content of legislation, rules or regulations by providing law- and policy-makers technical information and support in drafting legislation process. These tactics mainly rely on long-term relationships with government officials, financial resources, and substantive expertise as a basic for influence (Gale & Walker, 1991, cited in Victor, 2007, p. 827; Smith, Roberts, & Wielen, 2006). Relationships with government officials play a crucial role in direct lobbying tactics as relationships bring companies access to government officials. Access, in turn, will enable companies to present their perspective and information to government officials so as to influence their viewpoints on a pending issue. Companies can build relationships with policymakers through using personal relations Do Thi Thao-K39 E18, HULIS 34
    • Corporate lobbying in the U.S. and implications for Vietnam between companies’ leaders with government officials and their staff, employing lobbyists who have a network of relations with government officials, or making financial contribution to electoral campaign of elected officials. It is widely accepted among lobbyists, economic and politic scientists that money plays a crucial role in enabling companies to cultivate relationships with government officials and gain important information to lobby policymakers. For instance, money enables companies to hire famous lobbyists having lots of relations with policymakers. They are those who make the path for companies to access government officials. Besides, to build relationships between legislators, especially those who are elected, companies can donate money to legislators’ electoral campaigns. In turn, the legislators grant access to their contributors. That is the reason why many people believe that money can buy votes of legislators. Actually, money is no more than intermediary between lobbyists and legislators, it only brings lobbyists chances to exercise influence on decision-makers. Whether lobbyists can be successful in lobbying legislators or not totally depend on credibility, usefulness, and persuasiveness of information they provide. 4.2.2. Indirect lobbying tactics Compared with direct lobbying, indirect lobbying is more “circuitous” (Hofrenning, 1995, p. 54). Generally, it aims at influencing the views of the public, which in turn will affect the preference of government officials through grass root campaigns. Indirect lobbying (is also called outside or grass root lobbying) includes a host of tactics such as talking with the press and media, organizing letter-writing campaigns, holding press conferences, advertising, protesting, and so on. Indirect lobbying tactics are especially effective when a pending issue can have potential impact on a great deal of people in society. Do Thi Thao-K39 E18, HULIS 35
    • Corporate lobbying in the U.S. and implications for Vietnam Means of communication such as the media, the press, telephone, letter, internet, etc. play crucial role in indirect lobbying tactics as they are important intermediaries which transmit the message of companies to the public. Accordingly, companies can appeal support of the public to their positions on debating issues. The public, in turn, will affect government officials’ position though writing letter or email, making telephone calls, participating in demonstrations held by these companies, etc. In recent years, thanks to rapid development of communication technology, indirect lobbying tactics have been increasingly used by companies. Companies employ indirect lobbying tactics when they want to create the public’s pressure on government officials’ decisions (Kollman, 1966). Policy- and law-makers cannot make legislation without considering the public opinions, especially those who are elected. It is well acknowledged that the most important goal to any elected officials is re- election (McGrath, 2004). Through indirect lobbying, companies show elected legislators how their constituents might react to legislation and their possibility of being re-elected. A legislator can face electoral consequence in his run for a seat in Congress if he does not vote in favor of his constituents because a constituent will not vote for a candidate that does not represent for his interest before Congress. It is said that constituency pressure and votes are the key to success in indirect lobbying. Today, companies and their associations often combine indirect lobbying and direct lobbying tactics to maximize effectiveness when lobbying government. The case of Microsoft is a typical example. To defend itself against antitrust suit filed by the Department of Justice, Microsoft conducted scores of intensive lobbying activities using both direct and indirect tactics. For instance, Microsoft poured a load of money to hire priciest and well-connected lobbyists to lobby government officials. Its contract lobbyists surrounded government officials with conversations, Do Thi Thao-K39 E18, HULIS 36
    • Corporate lobbying in the U.S. and implications for Vietnam phone calls, emails. Additionally, Microsoft’s president and senior officers also had many meetings with government officials in order to advocate the company’s cause and influence government officials’ viewpoints on its suit. Besides, the Redmond-based company also took numerous actions to call upon the support of the public. It hired a dozen or more prominent academics and writers who would make arguments and give interview advocating Microsoft’s positions on newspapers and the mass media. The company also used its advantage in internet services to mobilize its clients and users to contact government officials. A comprehensive campaign to advocate its position through advertising on numerous websites, chat rooms, emailing to its users, etc. was conducted. 4.3. Choice of lobbyists Choosing which types of lobbyist to employ is another important decision that directly affects the effectiveness of a lobbying campaign. A company or its trade associations can carry out its lobbying by its own through using full-time staff (in-house lobbyists) or outsourcing to a lobbying firm (hire contract lobbyists) (see figure 7). Each type brings real difference in strength to the lobbying process. Figure 7: Choice of lobbyist to lobby government Do Thi Thao-K39 E18, HULIS 37
    • Corporate lobbying in the U.S. and implications for Vietnam Source: Steiner (2005) As mentioned in chapter two, in-house lobbyists are full-time employees of a company which they lobby for. They only present one client who is the company they work for. Thus, they are more committed and loyal than contract lobbyists who often present more than one client at one time (Deason, 2004). Furthermore, in-house lobbyists also have a better understanding of the goals of the company they represent than contract lobbyists do. Companies often use in-house lobbyists when they want to transfer specialized and sensitive information. Moreover, in-house lobbyists often have deep knowledge on the issue which their company is lobbying. On behalf their company, in-house lobbyists can strategically provide valuable and technical information to government officials, which significantly contribute to building direct relationship between their companies and government officials. As regard contract lobbyists, their strategic advantages over in-house lobbyists are instant access to government officials and mastery of law- making process. They have a network of extensive relationships with members of government; therefore hiring contract lobbyists, companies do not have to spend time and resources cultivating relationships with government officials from scratch. Additionally, extensive relations with government officials also enable contract lobbyists to gain lots of experience in dealing with various government officials. Thus, they know where, when and how to approach and persuade different types of policymakers. Besides, as most of contract lobbyists are lawyers and former government members, they have mastery of decision-making process. Companies who hire contract lobbyists immediately experience benefit from their relations and experience. However, a big disadvantage of using contract lobbyists is that as companies do not lobby directly on their own but hire contract lobbyists, their connection with government officials Do Thi Thao-K39 E18, HULIS 38
    • Corporate lobbying in the U.S. and implications for Vietnam is only maintained by contract lobbyists. If they do not hire these contract lobbyists, they lose the connection. Hence, today, there is a tendency for companies to use both in-house and contract lobbyists when lobbying government. Besides, Deason (2004) also emphasized that companies whose lobbying expenditure is limited and location is far from Washington, D.C. tend to choose contract lobbyists rather than in-house ones. He argued that hiring contract lobbyists is more economic for these companies as in- house lobbyists require annual salaries, while contract ones can be paid for part-time or temporary work. Companies located far from the capital find that contract lobbyists with daily presence is necessity. 4.4. Summary In conclusion, chapter four has comprehensively presented lobbying strategy and tactics that American companies and/or their trade associations employ to lobby government. Forming a lobbying strategy, companies and/ or their associations has to take great pains to consider which government officials will be targeted, which tactics will be used to approach and influence them and which types of lobbyist to employ. They are three strategic and crucial elements which determine the success of a lobbying campaign. Do Thi Thao-K39 E18, HULIS 39
    • Corporate lobbying in the U.S. and implications for Vietnam CHAPTER 5: CONCLUSION The current study investigates why American companies and trade associations lobby the U.S. federal government and what are their strategies to conduct a lobbying campaign. 5.1. Summary of the study 5.1.1. Motivations for companies to lobby government In this paper, the investigation reveals that in the U.S., lobbying is a legal practice and popularly used by companies and trade associations to influence government’s policies and regulations. It has been becoming a fundamental part in the development and competition strategy of many American companies ranging from multinational corporations to smallest ones. They are active in lobbying activities due to two main reasons. Firstly, companies are motivated to lobby government because it increasingly has great impact on their operation and profitability. Through making policies and regulations, government exerts enormous influence on every dimension of companies such as cost of production, revenue, method of competition, etc. Any change in government policies and regulation can have potential effect on companies’ operation. Hence, companies are aware that they need to have a voice in government’s policy and law-making process so as to protect and enhance their interests. Lobbying is proved to Do Thi Thao-K39 E18, HULIS 40
    • Corporate lobbying in the U.S. and implications for Vietnam be one of the most effective ways for them to make their voice heard. By lobbying government, companies not only can anticipate potential changes in government policies and regulations, but they also can alter these policies and regulations in the way that favor them most. Secondly, the ever-increasing competition between enterprises strongly encourages companies to lobby government. Government with its power to make and enforce policies and regulations is a powerful tool which brings enterprises great support to fight against their competitors. Involving in lobbying, businesses can influence government’s policies and regulations in the way that enhance their performance and erode the competitiveness of their rivals. Lobbying can help companies gaining and sustaining competitive advantages over their competitors. 5.1.2. Lobbying strategies and tactics Lobbying is complicated political game and in order to play well, each player must have effective strategy. The investigation in this paper shows that a comprehensive and effective lobbying strategy is a set of choices about lobbied target, tactics and lobbyists. It is shown in this paper that companies normally lobby government officials who are already on their side and those who are undecided to stay on which side. To lobby government, companies can decide to use direct tactics or indirect ones. Today, more and more companies tend to employ both of them when lobbying government. As regard companies’ decision to use in-house lobbyists or contract lobbyists or both, the investigation finds that more and more companies use both types. However, to companies whose expenditure on lobbying activities is limited and location is far from Washington, D.C., hiring contract lobbyists is the primary choice. 5.2. Implications for Vietnam Do Thi Thao-K39 E18, HULIS 41
    • Corporate lobbying in the U.S. and implications for Vietnam The U.S. is one of strategic markets that more and more Vietnamese enterprises aim at. The findings in this paper suggest that in order to be able to enter and compete with other enterprises in this highly competitive market, it is advisable for Vietnamese enterprises to lobby the U.S. government. Lobbying government’s policies and regulations with the intention to gain for competitive advantages and enhance performance has long been mastered by American companies in competition with their rivals. Accordingly, Vietnamese businesses should assign high priority to this practice; otherwise, they will face potential risks and disadvantages which result from lobbying activities of American businesses to fight against them. Getting involved in lobbying, they can anticipate and prevent sudden and negative changes in the U.S. policies and regulations. More importantly, they can gain business opportunities, contracts, competitive advantages, etc. In short, in the context that lobbying has become an indispensable part of American business culture, Vietnamese companies have no choice but to engage in this practice if they want to do business smoothly and successfully in this market. To lobby successfully, building relationships with the U.S. government officials is essential. Hence, Vietnamese enterprises should actively cultivate relations with the U.S. government officials as soon as possible. Long-term and close relationships with the U.S. government officials will be great advantages for Vietnamese businesses to lobby the government successfully. Regarding choosing types of lobbyists, it is advisable for Vietnamese businesses to hire contract lobbyists. Most of Vietnamese enterprises hardly have adequate knowledge, skills, and experience of lobbying in the U.S., and access to government officials as well. Therefore, it is nearly impossible for them to carry out lobbying activities on their own. Under the circumstances, hiring contract lobbyists who are professionals in this field Do Thi Thao-K39 E18, HULIS 42
    • Corporate lobbying in the U.S. and implications for Vietnam will be rational choice for Vietnamese enterprises. Contract lobbyists have deep knowledge and extensive experience of lobbying, mastery of the government’s policy and law-making process, and long-term relationships with government officials. They are elements that are indispensable for successfully lobbying the U.S. government. Additionally, in terms of location, Vietnamese enterprises base out of the U.S., it is difficult for them to get up-to-date information about alternations in the U.S. government’s policies and regulations. A contract lobbyist with daily presence in the U.S. in general and Washington, D.C. in particular is a sensible choice for them. However, in long term, a permanent staff with good knowledge of American laws as well as lobbying activities, and capability to lobby the U.S. government on behalf of their companies is also essential for Vietnamese enterprises. Accordingly, they should actively invest time and resources to enhance their understanding, accumulate experience, and improve skills step-by-step in order to be able to carry out their lobbying activities on their own. Finally, Vietnamese enterprises are normally much smaller than American businesses in terms of size and financial resources; it will be difficult for each company to lobby the U.S. government on their own. The pressure they can create is limited and the possibility that the U.S. government officials perceive their concern is low. Accordingly, they should join in coalition with other companies or found associations when lobbying the U.S. government. Doing so, they can create greater pressure and have more funds to carry out lobbying activities. Their voice will be more likely to be heard. 5.3. Limitations of the study Though the research has been conducted to the best of the researcher’s effort, there remain some limitations due to scope of the study. Do Thi Thao-K39 E18, HULIS 43
    • Corporate lobbying in the U.S. and implications for Vietnam The researcher only investigated lobbying activities at federal level while in the U.S. lobbying occurs at all levels of government. Each state of the U.S. has its own government, policies and regulations which are sometimes greatly different from the federal ones. Besides, only American enterprises were investigated in the study, meanwhile many foreign companies also have strong and effective lobbying activities to influent the U.S. government. The two limitations have influence on the generalisability of the findings. 5.4. Proposal for further study Further study can expand on the study in several ways. First, additional studies on corporate lobbying in the U.S. should involve lobbying activities at state to increase the generalisability of the findings. As different states in the U.S. government have their own governments, policies and regulations that are quite independent from the federal ones, therefore, lobbying in different states require different strategies and tactics. Secondly, future study can also study lobbying activities conducted by foreign companies in the U.S. In the U.S., not only American companies are master in using lobbying but foreign companies also have strong and comprehensive lobbying activities to influence the government. They are significantly contributing to alternations in the U.S. government policies and regulations. Thus, studying lobbying activities of foreign companies can bring closer and sufficient view on lobbying activities in the U.S. Last but not least, it is also worth studying various lobbying cases to understand how different companies employ lobbying strategies and tactics in different situations. The findings of these studies together with those of this research would be useful reference for those who are interested in lobbying in the U.S. Do Thi Thao-K39 E18, HULIS 44
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